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Property Rights and Restitution: The Cuban Context

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Castillo de Malaga 2The study of restitution was once a major field of activity in U.S. academic circles. As a nation founded firmly on an understanding of the natural gift of property rights, the theory of returning original property to original owners who were deprived of it against their will bears almost a metaphysical power – an owner’s connection to his property is not just a function of will nor of desire nor of political expediency, but one of right and justice and even the truth against all competitors to his claim. Troublingly, restitution has faded from view, however, and this is a symptom of decades of misguided thought on the philosophical basis of a property claim and the difficulty in ensuring satisfactory outcomes in restitution. Poor philosophy and unsound outcomes in restitution are part of a wider problem. As Professor Hanoch Dagan notes, the study of restitution is a window into a larger project of social understanding; Dagan argues that restitution is a vital part of nation-building itself.1 Understanding the connection between nation building, programs of restitution, and the philosophical basis of property rights is thus integral to constructive discussion of the emergence of failed economies from degradation to prosperity.

Property rights classically form one of three solid pillars that support a functioning market economy – free trade, competitive domestic markets, and protection of property rights.2 The property rights pillar bears even more of the market load when countries are in the process of developing their approach to privatization, or are in transition between centrally-planned economies and market economies. Property rights themselves are a vital part of the competitive market process because they form the essential material with which firms compete. Without strong property rights protections there is no foundation for a competitive market.

In historical contexts in which vast sums of private property were confiscated, expropriated, or otherwise nationalized, a program of restitution forms the necessary bridge between the end of centrally commanded regimes to a future prosperity of rightful ownership. More than as a mere remedy for unjust enrichment, restitution is a critical element of property rights protection and thus of the functioning market economy. Not surprisingly, states that have not shown a positive approach to property restitution have generally failed to demonstrate a healthy environment for foreign investment.

With this article we endeavor to revitalize the primacy of restitution schemes, particularly as they relate to contexts such as Cuba’s, where voluminous claims on enormous sums of expropriated property stand as an obstacle to the future development of the nation as a whole. We introduce first the basic legal and philosophical roots of property theory, surveying the competing theories of natural rights and state-authored property. No discussion of restitution can hold ground without a foundation in a philosophical scheme of ownership. Following our foray into the theory of property, we give a brief overview of the forces of expropriation and privatization that have acted in tension over the past century. This section also covers restitution schemes laid out in international trade agreements, modern schemes of restitution mainly in the post-communist Eastern Bloc, and the United States’ special position on its claims against Cuba. Following, is a discussion of sovereign immunity, the Act of State doctrine and the varying levels of interference it presents to appropriate restitution programs. Lastly, we explore the unique case of expropriation of highly valued artwork and how such heritage-pieces ought to be treated with special and enduring protections. These treatments are recommended in detail for Cuba and beyond…   

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Shanker A. Singham

About the Author:

Shanker A. Singham is the Managing Director of The Competitiveness and Enterprise Development Project at Babson Global. Previously he was a partner with Squire Sanders (US) L.L.P. and focused his practice on the areas of antitrust and international trade law including WTO and market access issues. He advised global companies and national governments on antitrust, international antitrust, trade barrier issues, as well as regulatory issues. Mr. Singham is both a US and European competition and trade lawyer and began his career in London with a global law firm. He is chairman of the International Roundtable on Trade and Competition Policy, Inc, a not-for-profit foundation dedicated to ensuring a better understanding of trade and competition issues by governments around the world. He has lectured on competition and trade issues at a number of venues including the London School of Economics, Georgetown University Law Center and other universities throughout the world. He has also taught courses to trade negotiators from around the Western Hemisphere. Mr. Singham is a member of the Cosmos Club, Achilles Club and Old Pauline Club. He was educated at Balliol College, Oxford (M.A. (Hons)), Guildford College of Law (C.P.E. (with commendation)), and University of Miami (J.D. cum laude, Order of the Coif).

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