Outcome of Cuban €42mn ‘sovereign debt’ related trial awaited

6th February 2023

The case before the High Court in London to determine whether an offshore Cayman company, CFR I is a legitimate creditor of the Cuban Government and the Banco Nacional de Cuba (BNC), has now ended. It is unclear when any ruling in the high-profile trial may be made public.

The case revolves around €72mn (US$78mn) in commercial debt which CRF I accumulated; whether CRF I is as such a legitimate creditor of the BNC and Cuba, or as Cuba argues, the “CRF is not a creditor of the BNC or of Cuba and has never been”; and whether the UK commercial court has jurisdiction in the matter. (Background Cuba Briefing 16 January 2023).

During the trial Cuba argued that CFR I is not a legitimate creditor on the basis that the fund obtained the debt illegally, and that the debt “was contracted by the BNC before 1997 when it had functions as the Central Bank.” Since then, the Banco Central de Cuba (BCC) says “the BNC has had no authority to act on behalf of the Cuban government.”

Cuba’s legal counsel and Cuban officials and ministers, in some cases giving evidence in person, argued that correct procedures were not followed in relation to the acquisition of the debt, and that CRF I was not a “responsible” creditor but rather a “vulture fund” seeking redress through litigation. During the proceedings a former worker at the BNC convicted of bribery testified electronically from a Cuban prison.

In response CFR I, argued that it acquired the debt correctly, it was a legitimate creditor, that some of the evidence given lacked veracity, and that it was not as alleged a “vulture fund”.

Following the end of the trial on 2 February, the Cuban Justice Minister, Oscar Manuel Silvera, who attended the court’s closing days, praised “the seriousness and strict adherence to the rules by the English court and its authorities.” In an interview with Cubadebate he also expressed gratitude to the judicial authorities for their willingness to enable witnesses to testify from Havana in real time. Asked about when the outcome of the proceedings will be known, Silvera said that the finding of the court and its judgment would not be immediate.

The formal court finding on whether CRF I is a legitimate creditor of Cuba in respect of its claim is expected to take many weeks, may not necessarily be made public, and may well be appealed.

Any judgment favouring the plaintiff could have complex longer terms implications for the Cuban government and Cuban economy as with such an outcome further court cases could follow relating to recompense being sought against Cuban state assets held overseas.

The Spanish news agency EFE reported that CRF I “is the largest holder of Cuba’s sovereign debt and has accumulated bonds of €1.2bn” (US$1.3bn). The details of the case and the evidence given has had wide if partisan coverage in Cuba’s state media and the exile press.

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