In the lawsuit over parts of Cuba’s old debts, a first verdict was handed down on Tuesday at the British Royal Court of Justice in London. Accordingly, the lawsuit of the investment fund CRF I Ltd. against the Cuban state was dismissed. CRF bought old Cuban state bonds since 2009 and demanded in court the repayment. However, this does not take the case off the table, as the Cuban Central Bank is now liable.
CRF, a Cayman Islands-based fund, is seeking repayment of government debt dating back to 1984 in the amount of about 72 million euros as part of the lawsuit. After failing to reach an out-of-court settlement in 2018, the case landed in the U.K.’s highest court earlier this year.
Cuba said in the lawsuit that the fund was not a legitimate holder of the debt securities because there was never any approval from the central bank to sell debt to CRF. The debt arrived at the fund through “illegal means and under serious irregularities,” “committed by a central bank official and in violation of the law,” the government said in a statement, calling CRF a “vulture fund.”
The court confirmed Tuesday that the irregularities committed by Banco Nacional de Cuba (BNC) officials were a valid reason for the Cuban government to withhold its consent to the assignment of the debt in favor of CRF. These irregularities would first have to be criminally investigated and then judicially sanctioned. The head of the department at the time, Raúl Eugenio Olivera, who has since been sentenced to 13 years in prison, confirmed having been offered a payment of $31,000 for the assignment of the debt papers. CRF denied this, but apparently failed to convince the judge. The case can now proceed only against Banco Central de Cuba (BCC), as Cuba’s central bank is now known. “CRF was successful against the BNC […] at the same time it lost against Cuba,” Judge Sara Cockerill summarized the ruling at the hearing.
Cuban media hailed the ruling as a victory. “The Republic of Cuba is out of the case,” state news portal Cubadebate reported.
“The BNC was Cuba’s central bank and remains responsible for managing this unpaid Cuban debt. […] We welcome Justice Minister Silvera’s statement that Cuba will recognize our legitimate debt and legitimate creditor, as CRF is both,” CRF Chairman David Charters said. He added that Cuba “won a technical point in the judgment.” In the context of the current economic crisis, a “mutually beneficial solution” will now be found “that will have no impact on the Cuban budget for at least five years,” said Charters, who at the same time said he was confident of achieving a “complete victory” in court.
The outcome of the trial will be closely watched by Cuba’s Western creditors after a temporary suspension of debt repayments since the economic crisis began in the wake of the Corona pandemic and tightened U.S. sanctions from 2020.
This article was first published on Cuba Heute, a German-language news portal.