NEWS RELEASES
GOVERNMENT INTRODUCES LEGISLATION TO COUNTER U.S. HELMS-BURTON ACT
September 16, 1996 No. 163
GOVERNMENT INTRODUCES LEGISLATION
TO COUNTER U.S. HELMS-BURTON ACT
The Government today introduced legislation in the House of Commons to help
protect Canadian companies against foreign measures such as the U.S. Helms-Burton
Act regarding Cuba.
Foreign Affairs Minister Lloyd Axworthy and International Trade Minister Art
Eggleton said that the legislation amending the Foreign Extraterritorial Measures
Act (FEMA) will give Canadian companies more legal tools to defend themselves
against U.S. court claims under Helms-Burton.
"This package of amendments is a key element of Canada's leadership role in the
international campaign against Helms-Burton," said Mr. Axworthy. "Despite
President Clinton's decision in July to suspend the right of U.S. companies to
sue, the Act is still in effect, and remains a serious breach of international
law. These amendments send a strong signal that we are not backing down, and that
we are prepared to take strong measures to protect both Canadian interests and
international law."
"Helms-Burton is an unwarranted move to extend the arm of U.S. law into trade
between other countries," Mr. Eggleton said. "The FEMA changes are a deterrent
against U.S. companies seeking to penalize Canadian firms doing legitimate
business with Cuba. We will continue our joint efforts with other countries to
oppose Helms-Burton."
Under the Helms-Burton Act, U.S. nationals may launch lawsuits in U.S. courts
against Canadian and other foreign firms allegedly "trafficking" in property
expropriated from these American citizens by Cuba. It also provides for
restrictions on temporary entry into the United States of corporate officers and
controlling shareholders of these companies, along with their spouses and minor
children.
The proposed FEMA amendments:
allow the Attorney General to issue "blocking" orders declaring that judgments
handed down under any objectionable foreign law, such as Helms-Burton, will not be
enforced or recognized in Canada;
permit Canadians to recover in Canadian courts any amounts awarded under those
foreign rulings, along with their court costs in Canada and the foreign country --
a measure known as the "clawback"; and
give the Attorney General of Canada the authority to amend a schedule listing
pieces of objectionable foreign legislation that, in his or her view, violate
international law.
The Government is also amending FEMA to update penalties so that Canadians will be
less likely to abide by objectionable foreign laws and more likely to follow
Canadian law. Under these amendments, Canadian courts will be given criteria to
vary the penalty according to circumstances.
U.S. President Clinton announced on July 15, 1996, that U.S. claimants' right to
sue would be suspended for a six-month period. This suspension could be renewed
for further six-month periods.
Some Canadians have already been informed that they would be barred entry to the
United States as of August 24.
Ministers Axworthy and Eggleton announced the Government's intention to amend FEMA
on June 17, 1996.
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A backgrounder is attached.
For further information, media representatives may contact:
Catherine Lappe
Director of Communications
Office of the Minister of Foreign Affairs
(613) 995-1851
Nicole Bourget
Director of Communications
Office of the Minister for International Trade
(613) 996-6271
Media Relations Office
Department of Foreign Affairs and International Trade
(613) 995-1874
This document is also available on the Department's Internet site:
http://www.dfait-maeci.gc.ca
Backgrounder
CANADA'S FOREIGN EXTRATERRITORIAL MEASURES ACT (FEMA)
AND THE U.S. HELMS-BURTON ACT
Canada's Foreign Extraterritorial Measures Act
The Foreign Extraterritorial Measures Act (FEMA) became law in February 1985, and
was designed to defend Canadian interests against attempts by foreign governments
or courts to apply unreasonable laws or rulings in Canada.
FEMA currently gives the Attorney General of Canada, in agreement with the
Minister of Foreign Affairs, the authority to forbid compliance in Canada with
extraterritorial measures that, in the Attorney General's view, infringe Canadian
sovereignty. In addition, there is authority to restrict provision of documents
to foreign courts if such an action infringes Canadian sovereignty.
The Act is now being strengthened and updated to allow Canada to respond to
changing circumstances, such as recent attempts by the United States to attack
legitimate Canadian business interests under the Helms-Burton Act.
The proposed FEMA amendments would permit the Attorney General of Canada to block
any attempt by a foreign claimant to enforce a judgment under a law such as Helms-Burton in Canada. They would also give Canadian companies recourse in Canadian
courts -- the "clawback" -- if awards are made against them in U.S. courts under the
Helms-Burton Act. The FEMA amendments would provide a right to claim damages in
Canada for an equivalent amount against the American claimant.
In the future the Attorney General, with the agreement of the Minister of Foreign
Affairs, could place other foreign laws the Attorney General considers
objectionable on a list under FEMA.
Here is how one of these changes, the "clawback", might apply in a hypothetical
example:
A U.S. national might win a suit against a Canadian in a U.S. court under the
Helms-Burton Act.
If the Canadian had no assets in the United States, the U.S. national would have
to ask a Canadian court to enforce the judgment. The Attorney General of Canada
could issue an order blocking this process.
If the Canadian has paid damages in the United States to an American, he or she
could then sue the American in Canadian courts to recoup the full amount of the
award. This amount plus court costs in both countries would be applied against
the American's assets in Canada.
The amendments would also allow a Canadian forced to fight a Helms-Burton court
action in the U.S. to try to recover court costs from the American party in
Canadian courts even before the case is over in the U.S.
Penalties
Financial penalties under FEMA will also be increased to discourage Canadians
from complying with objectionable foreign laws.
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Under the current system, a Canadian company, faced with conflicting demands
under foreign and Canadian law, might well choose to obey the law of the
foreign country if the penalties there are substantially greater than in
Canada. Under the FEMA changes, courts will be able to vary the penalty
according to mitigating circumstances.
Current penalties range up to C$10,000 or five years imprisonment, or both, upon
indictment. The amendments will increase the maximum penalty to C$1.5 million.
Comparable maximum financial penalties under the U.S. Cuban Assets Control
Regulations are up to US$1 million.
The U.S. Helms-Burton Act: Title III
This section of the Act allows U.S. nationals with claims on expropriated
property in Cuba to sue in U.S. courts in order to recover money from foreign
companies or people who "traffic" in that property.
For example, a Canadian firm that invests in a property that a U.S. national
claims was expropriated by the Cuban government at some time in the past could
face a lawsuit in U.S. courts.
In mid-July, President Clinton suspended the right of companies to sue under
Title III for six months. But the title still became law, and the President could
reverse his decision at any time.
The U.S. Helms-Burton Act: Title IV
Title IV of the Helms-Burton Act allows the U.S. government to deny entry to
senior executives of companies that the U.S. State Department determines have been
"trafficking", after March 12, 1996, in property subject to a U.S. claim. This
provision also applies to agents, spouses and minors of these executives.
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The American government sent letters to some Canadians in July, informing
them that they would be banned from entering the United States as of August
24.
Canada's Moves to Oppose Helms-Burton
Canada has rallied international opposition to the Act at the world's major
economic and political fora.
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At a meeting of the World Trade Organization's (WTO) general council, Canada
made its opposition to the Act clear, in concert with the European Union
(EU), Mexico and Japan.
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As part of talks on a Multilateral Agreement on Investment in June, Canada
asked members of the Organization for Economic Co-operation and Development
(OECD) to ban boycotts of firms that invest in third countries. There was
almost unanimous support for the proposal.
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Canada's opposition to Helms-Burton led the Organization of American States
(OAS) to refer the law to the Inter-American Juridical Committee to
investigate whether the Act is consistent with international law.
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The EU is drafting legislation similar to Canada's FEMA, and other nations
are considering such a move. Mexico has already introduced legislation into
its Senate.
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International Trade Minister Art Eggleton raised the issue in person with
then-U.S. Trade Representative Mickey Kantor and with EU ambassadors.
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Foreign Affairs Minister Lloyd Axworthy has stated his concerns directly to
U.S. Secretary of State Warren Christopher.
Canada is also pursuing this issue through the North American Free Trade
Agreement (NAFTA), which has rules governing investment and temporary entry.
NAFTA consultations were held with the United States in late April and again in
May. Mexico participated in both sessions and shares Canada's concerns.
Canada and the U.S. held a meeting of the North American Free Trade Agreement
Commission in late June. Canada is now in a position to request a dispute
settlement panel under the NAFTA should it feel this move is warranted.
Helms-Burton: Key Dates
February 24: The Cuban air force shot down two U.S. civilian aircraft. President
Clinton threw his support behind the bill soon afterward.
March 3-4: International Trade Minister Art Eggleton raised the issue in a
Washington meeting with his American counterpart, then-U.S. Trade Representative
Mickey Kantor.
March 4-5: The Summit of Caribbean Community leaders, including Prime Minister
Chrétien, issued a communiqué in Grenada strongly objecting to the bill.
March 5: Mr. Eggleton met with the ambassadors of EU countries plus 17 other
countries to outline Canada's concerns about Helms-Burton and to suggest working
together on the issue in international organizations.
March 12: The Helms-Burton bill was signed into law by the U.S. President. On the
same day, Canada requested formal consultations with the United States under NAFTA
Chapter 20.
March 14: Canada raised Helms-Burton at the negotiating group of the Multilateral
Agreement on Investment in Paris.
March 28: Foreign Affairs Minister Lloyd Axworthy expressed Canada's concerns
about Helms-Burton in a meeting with U.S. Secretary of State Warren Christopher in
Washington.
April 16: At the WTO General Council meeting, Canada joined other countries,
including the EU, Mexico and Japan, in expressing strong opposition to Helms-Burton.
April 22: EU foreign ministers issued a statement in Luxembourg condemning the
Helms-Burton Act and indicating an intention to consider a challenge under the
WTO.
April 26: The first round of NAFTA consultations, involving both Canada and
Mexico, was held in Washington.
May 3: The EU formally requested WTO consultations on Helms-Burton.
May 16: Prime Minister Chrétien and Central American leaders from Nicaragua,
Honduras, Guatemala, El Salvador, Costa Rica and Belize issued a communiqué
stressing the right of sovereign states to maintain trade and commercial links
according to their own foreign policies and laws.
May 21-22: Mr. Eggleton strongly registered Canada's concerns at an OECD
ministerial meeting in Paris.
May 22-23: Mr. Axworthy raised the Helms-Burton issue with foreign ministers in
Argentina and Brazil during a visit to those
two countries.
May 28: A second round of NAFTA consultations was held in Washington.
May 29: The U.S. government sent out advisory letters to three companies,
including one Canadian firm, informing them that they were potential
"traffickers".
June 4: EU-U.S. consultations were held in Geneva under the auspices of the WTO.
June 4: The OAS issued a resolution at its General Assembly in Panama, calling for
the Inter-American Juridical Committee to investigate whether the Helms-Burton Act
is consistent with international law.
June 11: Mexican President Zedillo expressed strong concerns about Helms-Burton in
a speech to the Parliament of Canada while visiting Ottawa.
June 28: Canada and the U.S. held a meeting of the North American Free Trade
Agreement Commission. Canada is now in a position to request a dispute settlement
panel under the NAFTA should it feel this move is warranted.
July 15: U.S. President Clinton suspended the right of companies to sue under
Helms-Burton for six months.
August 30: President Clinton's special envoy on Cuba, Ambassador Stuart Eizenstat,
met with Ministers Axworthy and Eggleton in Ottawa.
September 16: The amendments to FEMA will be introduced in Parliament for first
reading.
September 20: The FEMA amendments will undergo second reading. Ministers Axworthy
and Eggleton will address Parliament.
November 1: Those who deal in expropriated property in Cuba will be considered to
be in a position of legal liability, even though the right to sue has been
suspended.
January 1997: U.S. President Clinton must announce whether to continue the
suspension of the right to sue under Helms-Burton for another six months.
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