Ruling against cruise lines may send chill to other U.S. travel

The Carnival Paradise at the Havana cruise terminal, which is subject to a U.S. claim

CUBA STANDARD — Rejecting the cruise lines’ argument they engaged in lawful travel, a federal judge in Miami ruled that Carnival Corp., Royal Caribbean Ltd., Norwegian Cruise Lines Holdings, and MSC Cruises violated U.S. travel restrictions and must therefore compensate the heir of a confiscated business who filed a lawsuit under the Helms-Burton law.

The Cuba cruises for U.S. passengers “constituted tourist activities and not proper people-to-people activities, paying millions of dollars to the Cuban Government to engage in impermissible travel,” Judge Beth Bloom wrote in the ruling.

The Helms-Burton Act exempts companies from liability if they use a confiscated property while providing “lawful” travel services, but the judge’s opinion is now sending a chilling signal to other U.S. companies engaged in travel to Cuba.

Bloom had already ruled in February that the case by Havana Docks Corp. against the four cruise companies must go before a jury in May; the 169-page text now explains the judge’s reasoning.

Jury trial: Face it or settle?

The jury, set to convene May 23 in Miami, will have to decide on the amount of damages. The Helms-Burton law includes several ways of calculating damages. If each ship docking is counted as a case of “trafficking” in confiscated property, the cruise lines would be liable for hundreds of millions of dollars in compensation.

The ruling presents the cruise companies with a choice of going before the jury or negotiate settlements, wrote John Kavulich on the website of the New York-based US-Cuba Trade and Economic Council, which he presides, calculating the plaintiff could ask for up to $400 million. Because the Miami jury will quite certainly include Cubans, the cruise lines should not expect much sympathy, he suggests.

First mediation efforts began fall 2020, but a settlement has remained elusive. In another Title III case, Swiss cement giant LafargeHolcim last year agreed to settle, marking the first time a company goes on record for paying claimants for use of their property in Cuba.

The prospects for an appeal are uncertain. While the appeals court might lean in favor of the cruise companies, the conservative Supreme Court’s take is unpredictable.

Judge Bloom’s ruling might also have repercussions for other U.S. companies that have been sued under Title III.

The Havana Docks suit

In 2019, Mickael Behn, grandson of the Havana Docks Corp. founder, sued the four cruise lines under TItle III of the Helms-Burton law, alleging they engaged in “trafficking” of confiscated property when their ships docked at the Havana cruise terminal from 2016 to 2019.


Behn is represented by Bob Martinez and Stephanie Casey, partners at the Miami law firm of Colson Hicks Eidson.

The lawsuit was made possible by the Trump administration’s activation of Title III in 2019, which allows U.S. nationals to sue companies in U.S. court.

The cruise companies’ lawyers argue they had to use the Havana cruise terminal to engage in educational “people-to-people” travel for U.S. passengers. They also contend they did not act with the intent of “trafficking” and that the plaintiff can’t make a claim because Behn resides in Britain and is not a U.S. national.

Major achievement: Bob Martinez …

In her ruling, the judge found that Havana Docks qualifies as a plaintiff because it maintains an office in Kentucky.

Judge Bloom scrutinizes shore excursions

Just because the U.S. government granted licenses for travel to Cuba and U.S. officials encouraged cruise lines to engage, the companies are not automatically immune to liability if they engaged in prohibited tourism, the judge ruled.

… and Stephanie Casey of Colson Hicks

At the center of the judge’s argument are shore excursions contracted with Cuban state entities. Contracted to state enterprise Havanatur S.A., these tours included the Tropicana Cabaret, vintage car tours, cocktail-mixing classes, and beach visits. Because of this, they did not amount to “people-to-people exchanges” as required by U.S. regulations, the judge argued.

According to the plaintiffs, the Cuba cruises generated revenues of $1.1 billion, and the companies paid $138 million to Cuban state entities.

U.S. rules require a “full-time schedule of activities intended to enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities.”

In court documents, Carnival Corp.’s lawyers countered that, while the cabaret outings did not comply with U.S. regulations, most other aspects of the program did, which in turn made it compliant.

Bloom rejected that argument, saying that regulations do not “support the proposition that a passenger can spend the night at the Cuban nightclub simply because they spent the day engaged in people-to-people activities.”

In the ruling, the judge also said the cruise lines continued to use the terminal after learning of the certified claim of Havana Docks.

Havana Docks held a 50-year concession in the port. In 1960, Cuba confiscated the port facilities, but compensation has been held up by contentious U.S.-Cuba relations. During the last weeks of the Obama administration, a bilateral committee began discussions about settling claims, but these talks have been suspended since 2017.

Three of the cruise lines are U.S. companies (Geneva-based MSC is the only foreign defendant). A lawyer close to Carnival says that Helms-Burton was not designed to be used against U.S. companies engaged in lawful interactions with Cuba.

“The law was not intended as course of action against American companies,” said George Fowler, a trial lawyer with Jones Walker LLP in New Orleans and former counsel for the Cuban American National Foundation who was involved in drafting the original law in the 1990s. “There is a clear-cut exemption if you’re there on legal business.”

The cruise companies are expected to focus on the legality of their services during the jury trial and a possible appeal.

Last year, another Miami judge dismissed a similar lawsuit against a cruise company over use of port facilities in Santiago. Judge James King of the Federal District Court in Miami, who presided over the case of Javier García-Bengochea against Carnival, dismissed the case for lack of standing. García-Bengochea, a Jacksonville surgeon, inherited a 32.5% interest of port facilities in Santiago de Cuba harbor from a relative with Costa Rican citizenship.

King ruled against the plaintiff because he inherited the claim after the enactment of Helms-Burton in 1996 and because it was originally held by a Costa Rican individual, rather than a U.S. person.

Chilling signal to other U.S. travel providers?

Cuba Standard did not get many responses to inquiries with U.S. travel providers about any possible effects of the Miami court’s ruling. One tour operator was adamant the ruling will have few ripple effects for her or her competitors.

“I feel certain that most tour operators who operate land-based programs to Cuba have been careful,” said Peggy Goldman, owner of two U.S.-based tour operators offering Cuba travel. “Friendly Planet and InsightCuba have, from Day One, followed the very strict OFAC guidelines, because we treated Cuba as a unique opportunity to get close to the people. This required a great deal of creativity on our part because we had to follow strict rules while making sure everyone had a great time. Ironically, by following the rules, we created an awesome cultural experience for travelers. While there may be some tour operators who didn’t comply with the precise letter of the law, most, in my opinion, were fastidious.”

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