Initial Hopes of Sinking Helms-Burton Litigation Early May Die by Another Fate

Almost one year ago in the cases of Havana Docks Corp. v. Carnival Corp., 19-cv-21724-BB and Garcia-Bengochea v. Carnival Corp., 19-cv-21725-JLK, U.S. District Judges Beth Bloom and Senior U.S. District Judge James Lawrence King denied Carnival’s motions to dismiss both complaints filed in the Southern District of Florida by the plaintiffs, Havana Docks Corp. and Miami surgeon Javier Garcia-Bengochea. So initially, this meant that Carnival was stuck litigating both claims over its use of property seized by the Cuban government.

Both cases concerned Carnival’s use of the Port of Santiago, where the plaintiffs claim to have owned commercial property that was expropriated by the state of Cuba following the island’s communist revolution. The lawsuits were filed after the Trump administration allowed the suspension of Title III of the Helms-Burton Act to lapse on May 2. The move empowered U.S. citizens to pursue litigation against entities who purportedly traffic in Cuban property that had been privately owned prior to the revolution.

Carnival argued for the dismissal of the complaints on the grounds that its use of the waterfront property constituted “lawful travel,” thus immunizing the company from Helms-Burton claims. The cruise line also argued that the passage of its ships through the port was “incident to lawful travel to Cuba” and “necessary to the conduct of such travel.” The company also challenged the plaintiffs’ ”direct interest” and claims of ownership over the properties in question.

Both federal judges rejected Carnival’s arguments for dismissal, finding that the lawful travel exception is an affirmative defense to trafficking that must be established by Carnival, and that Helms-Burton does not expressly make any distinction as to whether such trafficking needs to occur while a party holds a property interest in the property at issue. The courts found that Carnival “incorrectly conflates a claim to a property and a property interest.” As a result, the courts found that the complaints sufficiently alleged that the plaintiffs own a claim to the property at issue.

Fast forward almost one year later and 26 Helms-Burton lawsuits have been filed. That is pretty incredible given the barriers to bring claims—the filing fee is $7,000 and the possibility of being countersued if the claimant seeks compensation from Canadian or EU companies. The U.S. Justice Department’s Foreign Claims Settlement Commission has certified nearly 6,000 claim on property confiscated by Cub with a principal value of $1.9 billion.

Judge King ultimately ruled in favor of Carnival, citing the dismissal of another Helms-Burton claim against Amazon and Susshi International. In that case, the plaintiff inherited the property less than 4 years ago. The statute only accommodates inheritances to 1996. Establishing jurisdiction has been the biggest struggle for claimants, as the claimant must prove that the defendants are “at home” in the Southern District of Florida. In a class action case against hotel booking sites including Expedia and Trivago, the plaintiffs argued the case was appropriate here because customers in the state can access the websites to make reservations at hotels on properties once owned by their families. U.S. District Judge Robert Scola disagreed and ruled that the plaintiffs failed to establish that the companies conducted enough activity in Florida to keep the case in Miami.

If you are interested in receiving a copy of any of these decisions or wish to discuss these cases further, please contact us at blog@miamimaritimelaw.co or 305.377.3700.

Further Easing of U.S. Cuba Sanctions Regulations

September 21, 2015

On September 18, 2015, the Department of the Treasury and the Department of Commerce announced additional revisions to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR).  The changes take effect on Monday, September 21, 2015, as published in the Federal Register. 

These measures are intended generally to do the following:

• to further facilitate travel to Cuba for authorized purposes;

• expand the telecommunications and internet-based services general licenses, including by authorizing certain persons subject to U.S. jurisdiction (which includes individuals and entities) to establish a business presence in Cuba, such as through subsidiaries or joint ventures;

• allow certain persons to establish a physical presence, such as an office or other facility in Cuba to facilitate authorized transactions;

• allow certain persons to open and maintain bank accounts in Cuba to use for authorized purposes;

• authorize additional financial transactions, including those related to remittances;

• authorize all persons subject to U.S. jurisdiction to provide goods and services to Cuban nationals located outside of Cuba; and

• allow a number of other activities, including those related to legal services, imports of gifts, and educational activities. 

These amendments also implement certain technical and conforming changes. Major elements of the changes in the revised regulations involving travel, transportation and legal services include the following:

Transportation by vessel of authorized travelers – between the United States and Cuba only and without stops in third countries – will be authorized by general license.  Certain related lodging services aboard vessels used for such travel will also be authorized.

License Exception Aircraft, Vessels, and Spacecraft (AVS) will authorize temporary sojourns to Cuba of certain categories of vessels.  Eligible categories of vessels are cargo vessels for hire for use in the transportation of items; passenger vessels for hire for use in the transportation of passengers and/or items; and recreational vessels that are used in connection with travel authorized by the Treasury.

License Exception AVS will authorize aircraft on temporary sojourn to remain in Cuba for up to 7 consecutive days and authorizes vessels on temporary sojourn to remain in Cuba for up to 14 consecutive days.

Close relatives will be allowed to visit or accompany authorized travelers for certain additional activities.  In the January changes, OFAC permitted close relatives to join visits related to official government business and certain educational activities, and to visit additional family members residing in Cuba.  Close relatives now also will be allowed to visit or accompany authorized travelers for additional educational activities, journalistic activity, professional research, and religious activities, as well as activities related to humanitarian projects and activities of private foundations or certain research or educational institutes.  For purposes of this provision, a close relative is defined as someone related to a person by blood, marriage, or adoption – and who is no more than three generations removed from that person or a common ancestor with that person. 

All authorized travelers will be allowed to open and maintain bank accounts in Cuba in order to access funds for authorized transactions while in Cuba.

Physical Presence and Operations in Cuba –

Persons subject to U.S. jurisdiction engaging in the following categories of authorized activities will be allowed to establish and maintain a physical presence, such as an office, retail outlet, or warehouse, in Cuba: news bureaus; exporters of certain goods authorized for export or re-export to Cuba by Commerce and OFAC, such as agricultural products and materials for construction or renovation of privately-owned buildings; entities providing mail or parcel transmission services or certain cargo transportation services; providers of telecommunications or internet-based services; entities organizing or conducting educational activities; religious organizations; and providers of carrier and certain travel services.  These individuals and entities will also be authorized to employ Cuban nationals, open and maintain bank accounts in Cuba, and employ persons subject to U.S. jurisdiction in Cuba.

License Exception Support for the Cuban People (SCP) will authorize certain exports and reexports of items to Cuba for use in establishing, maintaining, and operating a physical presence in Cuba.  Eligible end-users of the items include certain persons providing telecommunications or internet-based services; establishing telecommunications facilities; providing travel or carrier services; organizing or conducting educational activities; or transporting authorized items between the United States and Cuba.

Certain temporary reexports from a foreign country to Cuba will be authorized by License Exception SCP when the items are for use in scientific, archeological, cultural, ecological, educational, historic preservation, sporting activities, or in the traveler’s professional research and meetings.  Previously, this provision was limited to temporary exports by persons departing the United States.

Certain commodities and software for use in software development may be exported or re-exported to eligible end-users in Cuba pursuant to License Exception SCP.

License Exception SCP will authorize temporary exports and reexports to Cuba of additional categories of items, including certain tools of trade to install, service, or repair items; and certain commodities and software for exhibition or demonstration.

OFAC’s existing general license authorizing the provision of certain legal services to Cuba and Cuban nationals will be expanded to allow the receipt of payment for such services. Certain limitations will apply, related to payments from prohibited Cuban Government or Cuban Communist Party officials.  Additionally, a new general license will authorize persons subject to U.S. jurisdiction to receive, and make payment for, certain legal services from Cuba or Cuban nationals.

A case-by-case review policy will apply to license applications for exports and re-exports to Cuba of items to help ensure the safety of civil aviation and the safe operation of commercial passenger aircraft.  Items that are to be reviewed pursuant to this policy include aircraft parts and components; software and technology related to safety of flight; air traffic control, aviation communications, and aviation weather related equipment; airport safety equipment; and devices used for security screening of passengers and baggage.

Under an expanded general license, additional educational activities involving Cuba and Cuban nationals, including the provision of standardized testing services and internet-based courses, will be authorized.  Academic exchanges and joint non-commercial academic research with universities or academic institutions in Cuba will also be authorized.  Travel-related transactions in connection with these activities will also be authorized.

The provision of air ambulance and other related emergency medical services to travelers in Cuba will be authorized by general license, and a general license will clarify that the provision of nonscheduled emergency medical services to Cuban nationals in the United States is authorized.

To see the announcement in the Federal Register, please see here => FR-2015-09-21/pdf/2015-23587.pdf. Now it is up to the Cuban government as to whether they will go along with these expanded rights.

If you are interested in communicating with me, you may do so via this blog or at lawofficesofmov@gmail.com.

Yacht Broker Plans First US-Cuba Voyage Charter Under New Rules

August 04, 2015

It is reported that a Palm Beach County yacht broker received a license issued by the U.S. Office of Foreign Assets Control ("OFAC") to operate a 78-foot yacht between the United States and Cuba. Paul Madden, a longtime luxury yacht broker with Paul Madden Associates LLC, reportedly received the license on July 1 and the vessel is already scheduled to carry and documentary filmmaker and a Wall Street Journal reporter, along with other passengers.

As previously reported in my blog, several other vessel operators have received OFAC licenses to operate to Cuba, including Carnival Cruise Lines. Cruise and ferry companies have applied for government licenses to sail to Cuba since the Obama administration restored diplomatic ties with Cuba and loosened rules for U.S. travel to the island. Carnival is the first cruise line to obtain a license, which plans to start service in May.

But the 78-foot yacht will reportedly be the first vessel to sail between the United States and Cuba in decades. The 4-cabin vessel received a research license from OFAC and the trip is being arranged by a New York educational tour guide, Academic Arrangements Abroad. An advantage to traveling by yacht rather than other forms of transportation, such as planes, is the provision of lodging and food without having to rely on the Cubans. Additionally, a yacht can offer secure Internet access, which is severely limited in Cuba. Furthermore, a smaller yacht can be accommodated within the shallow depths of most Cuban ports. Cruise ships will require much more infrastructure to operate.

Fifteen people are booked to sail from Key West to Marina Hemingway nine miles west of Havana on the historic 4½-hour excursion. Passengers will stay on the yacht, which reportedly plans to proceed afterward to Havana Harbor, Cuba's main port. The plan is for the tour to head back to Key West.

The biggest challenges to passenger services to Cuba is the lack of Cuban infrastructure. In addition, most marine insurers will not insure travel to Cuba, as it is generally outside of the navigational limits of most marine insurance policies.

If you are interested in reaching me, you may contact me via this blog or at mov@chaloslaw.com.

Carnival Announces Cruises from Miami to Cuba

July 07, 2015

The world's largest cruise ship operator could be heading to Cuba by May 2016. Various sources report that Carnival Corp. has received U.S. government licenses to offer "purposeful" cruises from the U.S. to Cuba for people-to-people, humanitarian and other exchanges. Carnival says it would become the first American cruise company to visit Cuba since the 1960 trade embargo. The trips will be through its new "fathom" brand, which focuses on trips where passengers sail to a destination in order to volunteer there.

The weeklong cruises are reported to be aboard ADONIA, a small cruise ship which carries 710 passengers. ADONIA is relatively small for the industry, as ships sailing under the company's namesake line can carry nearly 3,000 passengers. ADONIA is a deluxe ship that offers no casino or Broadway-type shows but rather features Spanish classes and workshops on the island's art and heritage. The itinerary is still being finalized, as Carnival is awaiting approval from the Cuban government. The ship is expected to visit several ports and passengers will sleep onboard each night. Carnival is expecting high demand for the voyages and has priced them accordingly. Prices start at $2,990 per person plus taxes and port fees. A similar service-oriented trip on the same ship to the Dominican Republic starts at $1,540 per person.

Cruise ship ADONIA
Photo supplied by Carnival Corp.

Cuba is still closed for general tourism for Americans under the terms of the U.S. embargo against communist-led Cuba, unless they have family on the island. This measure must be lifted by Congress. Nevertheless, new rules permit U.S. visits to Cuba without a prior license in 12 categories of travel, including the people-to-people type tours now planned by Carnival. Carnival's license comes as part of recent approvals for six passenger vessels from the Treasury Department. The U.S. government has not named the companies who have received these licenses, though as I previously blogged on May 6, 2015, Airline Brokers Co., Baja Ferries USA, Havana Ferry Partners, United Caribbean Lines and America Cruise Ferries have all announced that they have received these licenses. See that article here => Ferries Between Florida and Cuba.

Of the six that have received the licenses, four of them are reportedly authorized to allow passengers and crew to spend the night aboard. The vessels are not allowed to stop at other countries, so an ADONIA cruise from Miami to Cuba will not be a typical Caribbean cruise where the ship will stop at four or five other ports.

There is a lot of interest in waterborne travel to Cuba. Tourism is reportedly a $2.6 billion-plus industry in Cuba and has been one of the main economic drivers keeping Cuba's economy sputtering along. Last year, the country reportedly welcomed a record 3 million visitors. Several sources report that Cuban officials estimate that 1.5 million Americans would travel to the island annually if all restrictions were removed, potentially adding some $2 billion a year to Cuba's economy.

There are many challenges ahead for the country as it opens up to U.S. visitors. There is not enough infrastructure to handle the demand. Reportedly major travel companies including Delta Air Lines, JetBlue Airways, United Airlines, Hilton Worldwide and Marriott International have been closely eyeing developments in Cuba. JetBlue, which has run charter flights from Florida to Cuba for years, just launched a new nonstop flight from New York. It is only open to travelers who are approved to visit Cuba. American Airlines and Sun Country Airlines also offer charters.

If you are interested in contacting me, you may do so by writing to me at mov@chaloslaw.com.