Legislación extraterritorial: la perspectiva del Reino Unido

• Author: Steve Cottingham
• Position: BA (Hons) Law
• Pages: 252-264

SECCIÓN ESPECIAL

252 REVISTA CUBANA DE DERECHO

VOL. 4, NO. 02, NÚMER O CENTENA RIO, PP. 252264, 2024

EXTRATERRITORIAL LEGISLATION  THE UK PERSPECTIVE

Legislación extraterritorial: la perspectiva del Reino Unido

Dr. Steve Cottingham

Abogado

BA (Hons) Law, Solicitor, practicing in London (UK)

swcottingham@btinternet.com

Abstract

This paper explains the eect of US extraterritorial legislation on businesses

and individuals in the United Kingdom with particular reference to Cuba.

It identies the measures taken by the UK Government to counteract the

eects of extraterritorial legislation, both directly and through Britain’s, former,

membership of the European Union. Examples are given to show the way in

which extraterritorial legislation has aected Cuban citizens in the UK; British

organisations with links to Cuba; and UK businesses who wish to trade with

Cuba. This paper shows the means by which it was possible to counter the

eects of extraterritorial legislation by using UK domestic law as well as political

and popular pressure.

Keywords: Extraterritorial legislation; UK legislation; EU regulation.

Resumen

Este artículo explica el efecto de la legislación extraterritorial estadounidense

sobre las empresas y los particulares en el Reino Unido, con especial referencia

a Cuba. Identica las medidas adoptadas por el gobierno del Reino Unido para

contrarrestar los efectos de la legislación extraterritorial, tanto directamente

como a través de la antigua pertenencia de Gran Bretaña a la Unión Europea.

Se dan ejemplos para mostrar la forma en que la legislación extraterritorial

ha afectado a los ciudadanos cubanos en el Reino Unido, a las organizaciones

británicas con vínculos con Cuba y a las empresas británicas que desean

comerciar con Cuba. Este documento muestra los medios por los que fue posible

contrarrestar los efectos de la legislación extraterritorial utilizando la legislación

nacional del Reino Unido, así como la presión política y popular.

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Extraterritorial legislation - the UK perspective

Palabras claves: legislación extraterritorial; legislación del Reino Unido;

regulación de la Unión Europea.

Summary

1. Introduction. 2. The Protection of Trading Interests Act 1980 (PTIA). 3. Cuba. 4. Helms-

Burton. 5. European Union. 6. Some examples of extra-territorial legislation impacting

on the UK. 6.1. Hilton Hotels. 6.2. UK Banks. 6.3. The Open University. 7. UK- the current

position. 8. Conclusion.Bibliography.

1. INTRODUCTION

Britain has a long history of opposition to extraterritorial legislation imposed

by other countries, most notably the US. Successive British Governments have

voted against the US blockade of Cuba at the United Nations, and Britain

maintains its opposition to US extraterritorial legislation. US attempts to assert

control over the activities of UK-based businesses, by legislation, litigation and

sanction, have caused tension between the UK and the US since the 1950s.

The US has passed legislation imposing extraterritorial jurisdiction over the

activities of businesses in other countries. Originally designed to enforce US

anti-trust laws, more recent extraterritorial legislation went beyond this aim by

seeking to enforce US sanctions against other countries, particularly Cuba. This

approach is currently encapsulated by the Helms-Burton Act 1996 (sometimes

referred to by the US as LIBERTAD), and the Iran and Libya Sanctions Act

1996 (ILSA).

Sanctions imposed by the US on the activities of non-US businesses in third

party countries have caused disputes between the US and some of its’ allies. US

claims to extraterritorial jurisdiction have impacted on UK businesses despite

the close economic, social and political ties between the two countries.

Britain’s opposition to US extraterritorial laws has been essentially pragmatic

and driven by economic factors rather than political imperatives. As a matter

of international law, the UK believes that a state may only exercise jurisdiction

over events occurring within its own territory and over the conduct of its own

citizens and businesses abroad. US extraterritorial legislation goes way beyond

these parameters by enabling US to sanction non-US businesses trading with

another country, even where there is no US involvement in the transaction.

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Dr. Steve Cottingham

These extraterritorial laws are seen in the UK as excessive and unfair. The

British government believes that the actions of UK companies and individuals

in countries outside the US should be subject to UK, and not US, laws. Since

1973, this also applied to EU legislation as well. The UK government sees

extraterritorial legislation as a burden on British businesses by requiring

complicity with US rules which conict with both UK and EU legislation. This

is regarded as creating uncertainty, which is bad for investment and trade, as

well as causing unnecessary conicts between countries which, otherwise,

would be allies.

2. THE PROTECTION OF TRADING INTERESTS ACT 1980 (PTIA)

The PTIA1 was passed by the UK Parliament in March 1980. This was well

before the advent of the Helms – Burton Act, but was passed in response to

a US threat to use its anti-trust legislation against a UK business involved in

trading uranium. The main purpose of the PTIA was to protect UK businesses

threatened by US laws concerning conduct in another country. The, then,

British Secretary of State for Trade, John Nott, told the House of Commons that

this legislation was passed “... to reassert and reinforce the defences of the United

Kingdom against attempts by other countries to enforce their commercial and

economicpolicies unilaterally on us”.2

The PTIA was directed against any foreign country that sought to impose

extraterritorial restrictions upon UK businesses; and was not solely designed

to protect trade between Britain and Cuba.

Section 1 of the PTIA confers powers on the, now, British Secretary of State for

Business and Trade to prohibit UK citizens and businesses from complying with

laws made by foreign countries which aect British business and damage, or

threaten to damage the trading interests if the UK. This includes requiring UK

businesses to report any threat of extraterritorial legislation made against them.

Under section 2, the Secretary of State can also prohibit any person in the

UK from providing commercial information or documents to a foreign court,

tribunal or authority. The PTIA makes it a criminal oence for a British citizen to

refuse to comply with an order made by the Secretary of State under the PTIA.

1UK legislation, Chapter 11.

2UK House of Commons debate, 15th November 1979.

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The PTIA goes on to prevent UK Courts from ordering the production of

evidence demanded by a foreign court which infringes the jurisdiction

of the UK or is prejudicial to the sovereignty of the UK. It also prohibits

British Courts from enforcing multiple awards of compensation imposed

by foreign courts. British citizens and businesses can recover the multiple

part of multiple compensation awards made against them in an overseas

court by an action in the UK Courts.

The PTIA enables the UK government to make additional Orders and Directions

on these issues.

The PTIA is generic. It oers a response to the use of extraterritorial measures

against British citizens or businesses without naming either the country

making the threat, or the third party country that is being targeted. The PTIA

was designed to provide direct protection to UK individuals and businesses

against the eects of extraterritorial sanctions imposed by other countries.

Indirectly, it was also hoped that this legislation would deter foreign countries

from attempting to use extraterritorial legislation against UK trading interests.

It has also been suggested that a UK business, defending a claim in a US court,

could raise a defense of foreign sovereign compulsion.3

Although the PTIA does not say so in terms, the main purpose of the Act is, in

practice, to protect UK business from the worst eects of US extraterritorial

legislation.

3. CUBA

The UK has applied the PTIA in the past, for example, in relation to the US’s

attempts to use its anti-trust legislation to prevent foreign companies from

supplying goods for use in the construction of the Trans-Siberian pipeline.

After a PTIA Order concerning the pipeline was made by the UK government,

with directions given to prevent corporations from complying with the US’

demands, the US withdrew their regulations in that regard.

In 1992 the UK government made an Order under the PTIA called the Protection

of Trading Interests (US Cuban Assets Control Regulations) Order 19924 (‘the

3 See DAVIDSON, Nicholas, “US Secondary Sanctions: the UK and EU Response”, Stetson Law

Review, vol. XXVII, 1998.

4UK statutory Instruments 1992, number 2449.

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Dr. Steve Cottingham

1992 Order’), with Directions prohibiting anyone in the UK from complying

with the extra-territorial aspects of the US blockade on Cuba, where it aected

activities in the UK or trade with the UK.

The PTIA provides general protection against extraterritorial legislation

irrespective of the origin or target. Although this predates Helms-Burton, the

1992 Order was specic to Cuba. It expresses the UK’s opposition to the US

blockade of Cuba by extending section 1 of the PTIA, which confers power on

the UK Secretary of State to make Orders protecting UK businesses from the

eects of extraterritorial legislation imposed by other countries.

The 1992 Order is very short. Its stated intention is to extend section 1 PTIA to

Part 515 of the US Cuban Assets Control Regulations of Title 31 of the United

States Code of Federal Regulations where they aect “... trading activities carried

on in the United Kingdom or the import of goods to or the export of goods from the

United Kingdom”. The 1992 Order was made following the US Congress passing

section 1706 (a) (1) of the National Defense Authorization Act for the Fiscal

Year 1993, known as the Cuban Democracy Act 1992 which would prohibit

the granting of licenses under the US Cuban Assets Control regulations for

certain transactions between US owned or controlled rms in the United

Kingdom and Cuba.

The 1992 Order denes “trading activities” widely, as including “... any activity

carried on in the course of a business of any description”.

4. HELMS-BURTON

The Helms- Burton Act (“Helms-Burton”) was passed in 1996. It is not the

purpose of this paper to repeat the content of that legislation, but the eect

was to extend US law and foreign policy objectives into the jurisdiction of

other countries. While it could be argued that pre-1996 US extraterritorial

interventions were made to stop wrongdoing, according to US standards,

Helms-Burton appeared to be designed to deter third party countries from

trading with, or investing in, Cuba. Reports from 1996 claim that Helms-Burton

had prevented Mexican investors from raising money for a project with Cuba,

which was then scrapped; the Mexican cement company CEMEX had halted

operations in Cuba; and exports of Cuban sugar had been adversely aected.5

5 See HILLYARD, MICK & Vaughn MILLER, “Cuba and the Helms-Burton Act”, Research Paper 98/114,

House of Commons Library 14th December 1998.

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Two British businessmen were soon barred from the US under Helms- Burton.

As directors of a Canadian company which traded with Cuba, they faced

allegations of tracking expropriated Cuban property. In 1996 the British

Foreign and Commonwealth Oce issued the following statement in response:

“Their business dealings with Cuba are entirely legitimate in the eyes of the British,

Canadian and Cuban Governments. The idea that excluding them from the US

will put pressure on the Cuban regime makes no sense whatsoever. It is simply

a wrong-headed restriction on their freedom to travel and do business. We are

taking this up vigorously with the US administration and pressing them to rescind

their decision”.6

The concern was that Helms-Burton forced UK businesses to break contractual

obligations to Cuban businesses and, possibly, those of other countries. Also

in 1996, Ian Taylor, a former minister from the UK department of Trade and

Industry commented:

“It is strange that the US should seek to compensate its own citizens by permitting

them to pursue claims against the rights and assets of companies from other

friendly states”.7

From its inception, Britain opposed Helms-Burton. In 1996 the UK government

sent a strongly worded diplomatic note to the US government protesting

at the content of the legislation. Britain was particularly concerned about

Title III of Helms-Burton which conferred rights on US citizens to sue foreign

companies who proted from property, allegedly, expropriated by Cuba.

Welcoming President Clinton’s decision to suspend Title III,albeit temporarily,

the, then, UK Foreign Secretary Malcom Rifkind issued the following statement

on 16thJuly 1996:

“I welcome the President’s suspension of the right to bring action. This means that

there will be no court proceedings this year. I am glad that the US Administration

have pulled back from the brink in this way.

At the same time, I regret the President’s decision not to waive provisions which

threaten companies doing legitimate business in Cuba and which are inconsistent

with a healthy world trade system”.

6Foreign and Commonwealth Oce statement, 11th July 1996.

7Speech to the Caritag Conference on Helms-Burton legislation, 2nd May 1996.

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5. EUROPEAN UNION

Britain joined the European Union (EU) in 1973 and left in 2020. During its

membership of the EU, the UK was obliged to accept Directives from the EU

and incorporate them into British domestic law.

The EU opposed Helms-Burton (and ILSA too). After the US passed Helms-

Burton into law, there were formal consultations on the issue with the EU. The

World Trade Organisation’s Dispute Settlement Body agreed on 20th November

1996 to the EU’s request to form a panel to consider the compatibility of Helms-

Burton with the USA’s WTO commitments. These Panel proceedings were

suspended in April 1997 to allow bilateral negotiations aimed at resolving

the EU’s concerns about both Helms-Burton and ILSA. This resulted in an

“Understanding” between the EU and the US government which included a

renewable six-monthly waiver of Title III.

On 22nd November 1996 the EU adopted the EC [now EU] Counter-measures

Regulation8 (“the 1996 Regulations”) “protecting against the eects of the

extraterritorial application of legislation adopted by a third country and actions

based thereon or resulting therefrom”. These Regulations were in response to

Helms-Burton, and apply to all EU member states and empower the Council of

the EU and the EU Commission to add to or amend these Regulations.

The 1996 Regulations were adopted in the UK in the Extraterritorial US

Legislation (Sanctions against Cuba, Iran and Libya) (Protection of Trading

Interests) Order 19969 (“the 1996 Order”). The 1996 Order is, again, quite short.

It requires EU companies aected by the laws covered by the EU Regulation to

submit information to the EU Commission relevant to the Regulation. The Order

blocks recognition or enforcement of decisions or judgements made under the

covered laws; prohibits compliance with the requirements or provisions of the

covered laws, unless authorized by the EU Commission; and confers the right

to recover damages caused by application of the covered laws (not just the

multiple part of damages awarded by foreign courts as provided by the PTIA).

This UK version of the 1996 Regulations make it a criminal oence to fail to

provide information to the EU Commission, punishable by a ne.

8EC Council Regulation 2271/96.

9UK Statutory Instruments 1996, number 3171.

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Extraterritorial legislation - the UK perspective

The 1996 EU Regulations were designed to protect EU based businesses from

the eects of Helms-Burton and ILSA. These Regulations were designed to

deter the passage of similar legislation in the USA and elsewhere, by providing

a mechanism for a swift response from the EU.

In 1998, Tony LLOYD, then a British Foreign Oce Minister told the UK House

of Commons:

“We have normal diplomatic relations with Cuba and support normal trade

relations in civil goods and services. The EU’s Common Position on Cuba, binding

on all Member States, enshrines the principle that constructive dialogue and

cooperation, not isolation, is the best way to promote change to a pluralist

democracy, and to encourage respect for human rights, in Cuba. UK rms are

encouraged to exploit the growing civil market opportunities which arise as Cuba

undergoes a process of economic liberalization”.10

This summed up Britain’s approach at the time. The UK wanted to develop

trade with Cuba but also felt able to raise allegations concerning human rights

as well. This two stranded approach continues to the present day.

Now that the USA brought Title III into force, in 2019, the strength of the

EU’s response will be tested. The position for UK businesses may be further

complicated by Britain’s departure from the EU in 2022. The British government

continues to review all legislation that emanated from the EU. Even if Britain

were to repeal the 1996 Order, leaving UK businesses without the protection

of the 1996 EU Regulation they would not be deprived of all protection against

extraterritorial legislation. In that case, UK citizens and businesses could still

rely on the PTIA and the 1992 UK Order (see above).

6. SOME EXAMPLES OF EXTRA-TERRITORIAL LEGISLATION

IMPACTING ON THE UK

6.1. HILTON HOTELS

In 2007, under questioning, the US owned Hilton Hotel group stated that they

had a policy of not allowing Cuban guests to stay in their hotels. That year, a

spokesperson for Hilton told the, British, Guardian newspaper:

10UK House of Commons debate 5th May 1978.

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“We are a US company. The dilemma we face is that [if we took a booking from a

Cuban delegation] we would be subject to nes or prison and if anyone [from the

Company] tried to enter the US, they would be arrested”.11

This ignited protests coordinated by the UK-based Cuba Solidarity Campaign,

involving members of the UK Parliament, the media, and trades unions. The

ocial British Commission for Racial Equality stated:

“The Hilton would be acting unlawfully under the Race Relations Act by refusing to

provide services to Cuban people”.12

Following a concerted campaign in the UK, Hilton Hotels dropped their refusal

to allow Cuban citizens in their hotels in the UK.

6.2. UK BANKS

In 2015, the Co-Operative Bank which had, for many years, provided banking

facilities for British progressive organisations and charities, abruptly closed the

account of the Cuba Solidarity Campaign (CSC) in the UK. The Co-Operative

Bank had recently been taken over by a US hedge fund.

The Bank initially denied that the account was closed due to US extraterritorial

legislation. Initially the Bank claimed that the account was closed due to

concerns about money-laundering and risk management. However, in 2016,

the British Daily Mirror newspaper reported a ‘secret international blacklist’. One

example that they quoted was the closure of the Cuba Solidarity Campaign’s

bank account. Cuba Solidarity Campaign Director Rob Miller commented:

“The Co-Operative Bank has nally admitted that the closure of the Cuba Solidarity

Campaign’s bank accounts is a direct result of the United States blockade policies

against Cuba”.13

Despite this, Cubans and Cuban organisations continue to experience

difficulties with carrying out even the most routine transactions through

the British banking system.

11See Cuba Solidarity Campaign website, https://cuba-solidarity.org.uk/news

12Ibidem.

13Idem.

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6.3. THE OPEN UNIVERSITY

The British based Open University provides open access courses, based on

distance learning, to students worldwide. In 2017 the Open University refused

to enrol a Cuban student. When challenged about this the Open University

issued a statement which included the following:

“The US has comprehensive sanctions in place against a number of countries,

including Cuba, meaning that it is not lawful for organisations subject to US

jurisdiction to supply educational services to those countries without a licence”.14

The statement went on to say that the Open University had applied to the

US Treasury Department’s Oce for Foreign Assets Control for licences which,

they said, would enable the University to enrol Cuban students.

Denying services to a person on the basis of nationality is a breach of the

race relations provisions in the UK’s Equality Act of 2010. The student, with

support and legal advice provided by the CSC, started a legal claim against

the Open University, alleging race discrimination. In addition, once again, the

Cuba Solidarity Campaign organised protests from teachers, academics,

trades unions and even the Open University’s own sta. Over 200 Members

of the British Parliament took up the case with the UK Government. In

response, the UK Government stated that it was “… a matter for the university

itself …”. The Open University initially refused to lift its ban. As a result, the

student, supported by CSC, took a legal case against the Open University on

the grounds of discrimination under the UK Equality Act of 2010. The Open

University eventually settled the student’s case before it reached a court

hearing and allowed the student to enrol with them one year later. Due to the

legal case and campaign, the Open University was forced to lift the ban on

Cuban students.

These are just a few of the many examples available.

7. UK, THE CURRENT POSITION

The UK has voted against the blockade at the United Nations, and continues to

do so. In a letter to the Cuba Solidarity Campaign dated 29th November 2018

the British Foreign and Commonwealth Oce stated:

14Idem.

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Dr. Steve Cottingham

“We believe that the US sanctions and other unilateral administrative and judicial

measures have a damaging impact on the economic situation of Cuba...”.15

The letter went on to say:

“The extraterritorial impact of these measures on the UK, in violation of commonly

accepted rules of international trade, negatively aect British economic interests,

which is why both the EU and UK have passed legislation to counteract the eects

of the embargo”.

In 2022, the UK government made amendments to the EU inspired Extraterritorial

US Legislation (Sanctions against Cuba, Iran and Libya) (Protection of Trading

Interests) Order 1996, to remove references to EU law and member states. This

was to enable the 1996 Regulations to remain in force now that the UK has

left the EU. In answer to questions in the UK Parliament, Viscount Younger, a

government representative remarked that the UK government:

“... continues to consider the activation of Titles 111and 1V of the Helms-Burton

Act, which strengthen and continued the embargo against Cuba, to be contrary to

international law”.16

The British government’s Department for Business and Trade oers advice to

businesses which want to trade with Cuba. While warning that US extraterritorial

legislation can cause uncertainty, and conicting legal requirements, it points

out that the UK’s Protection of Trading Interests legislation makes it illegal

for UK-based businesses to comply with extraterritorial legislation. It advises

against transactions in US dollars and recommends trading in Sterling or

Euros. It also suggests that businesses should take legal advice when trading

with Cuba.17

8. CONCLUSION

In theory, businesses in the UK can claim legal protection from the worst eects

of US extraterritorial legislation like Helms-Burton. In practice, despite the UK

government’s claim that compliance with the US blockade is unlawful, many

15Idem.

16Idem.

17https://www.gov.uk/government/publications/overseas-business-risk-cuba/overseas-

business-risk-cuba

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Extraterritorial legislation - the UK perspective

UK businesses do comply with extraterritorial legislation, or threats to use it, as

they do not want the inconvenience of dealing with litigation but do want to

trade with US businesses.

It is not easy to nd cases under the PTIA, the 1992 Order and the 1996 EU

Regulations. In any event this legislation has not, so far, ameliorated the eects

of Helms-Burton on British businesses, particularly those who want to trade

with Cuba. Evidence of the UK authorities sanctioning any person or business

which has complied with US extraterritorial legislation is hard to nd. Recent

developments concerning Titles 111 and 1V have drawn a response to the USA

from the EU and may well require action by the UK government.

British businesses have been, and continue to be, sanctioned by the US

authorities under their extraterritorial legislation. Beyond the coercive eect

of this legislation lies the psychological eect. The very existence of US

extraterritorial legislation is sucient to deter UK entities from investing in and

trading with Cuba. The British government advice (see above) does not provide

the type of assurance that would reassure a UK business or commercial investor.

The lessons that we have learned in Britain are that any legal response to US

extraterritorial legislation, though welcome, only provides a partial solution.

The eect of US extraterritorial legislation has been successfully countered in

the UK, for example in the Open University case (see above), by a combination

of legal action (under anti-discrimination law); public protest and adverse

publicity which have proved to be successful.

With this in mind, the Cuba Solidarity Campaign in the UK will be collecting

examples of the eects of US extra territorial legislation in various countries

as part of a campaign to highlight the negative eects of this legislation on an

international scale; and the wider eects of the blockade against Cuba.

BIBLIOGRAPHY

Doctrinal sources

DAVIDSON, Nicholas, “US Secondary Sanctions: the UK and EU Response”, Stetson Law

Review, volume XXVII, 1998.

UK statutory Instruments 1992, number 2449.

Foreign and Commonwealth Oce statement, 11th July 1996, via the internet.

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Dr. Steve Cottingham

HILLYARD MICK&MILLER VAUGHN, “Cuba and the Helms-Burton Act”, Research Paper 98/114,

House of Commons Library 14th December 1998.

UK House of Commons debate 15th November 1979.

Speech to the Caritag Conference on Helms-Burton legislation, 2nd May 1996.

UK House of Commons debate 5th May 1978.

Cuba Solidarity Campaign, website https://cuba-solidarity.org.uk/news

https://www.gov.uk/government/publications/overseas-business-risk-cuba/over-

seas-business-risk-cuba

Legal sources

UK legislation, Chapter 11.

UK statutory Instruments 1992, number 2449.

EC Council Regulation 2271/96.

UK Statutory Instruments 1996, number 3171.

Recibido: 15/1/2024

Aprobado: 7/2/2024