Trial in London (II)
Ruling of the Court of Appeal in London: CRF I Ltd. and the National Bank of Cuba's Debt
On November 19, 2024, the Court of Appeal of the High Court of Justice, which handles business and property cases in England and Wales and is based in London, issued a decision regarding a claim filed by the National Bank of Cuba (BNC) in connection with CRF I Ltd., a creditor that acquired the BNC's debt in January 1984. The original loan was granted by Crédit Lyonnais and Istituto Bancario Italiano. The BNC was represented by lawyers Alison Macdonald KC, Anton Dudnikov, and Mark Belshaw. The BNC claimed that CRF was not its legitimate creditor.
The court's main conclusions are as follows:
CRF I Ltd. is a legitimate creditor of the BNC, with a debt amounting to over €70 million.
The Republic of Cuba is not a guarantor of the debt.
BNC officials acted within their authority. Raúl Eugenio Olivera Lozano, then Head of Operations, and Londa Caridad Martí, Head of the External Debt Department, followed established procedures and were authorized to confirm receipt of the Notice of Assignment (of debt).
The BNC did not present valid objections at the time. According to the contract governing the debt acquisition, the BNC could only reject the assignment to another creditor if it had a solid argument, which was not provided.
The debt assignment is not a financial transaction. It did not involve a new debt commitment but rather a change in creditor for an existing debt.
The notice of change of creditor was valid and properly notified. The BNC's argument that the notice was not sent to the same address or individuals from 35 years ago was dismissed, as the bank failed to update its contact information with its counterparts.
What Does This Decision Mean for Cuba?
The BNC appealed for the court to determine whether CRF was a legitimate creditor. With this ruling, CRF will now seek to enforce the debt payment.
While it will be challenging for CRF to receive immediate payment, the court’s recognition of the debt as legitimate strengthens its position to collect in the future.
This case sets a dangerous precedent for the Cuban state, potentially encouraging other international creditors to seek justice against the Cuban government's refusal to settle its debts.
Meanwhile, another lawsuit is underway against the BNC. In September 2022, the Industrial and Commercial Bank of China (ICBC) filed a claim for over €1 billion. Although specific details regarding a possible agreement during Díaz-Canel's November 2022 visit to China remain unknown, it is speculated that payments may have been postponed or negotiated through re-exported oil.
The Cuban government’s failure to pay its debts undermines its credibility, making it more difficult to secure significant loans unless notarized in London or another major financial capital.
The Cuban government has few legal assets abroad. For instance, Havin Bank, owned by the BNC and based in London, holds less than $2 million in its accounts—a negligible amount for a country of 10 million people.
The ruling of the Court of Appeals sets a dangerous precedent for the Cuban government, highlighting its lack of financial credibility on the international stage. Cuba is bankrupt; we see in the news how the country has to wait for a ship to arrive to unload rice donated by Vietnam, or a ship carrying fuel to restart a power plant, or a ship with liquefied gas that takes over a month to be unloaded because the government needs time to pay. The Cuban government's ideological allies have grown tired of lending and giving money to a bottomless pit.
Note: This is a follow up from last year’s article: Trial in London ( Juicio en Londres ).
Original article: ForesightCuba
Sources: OFAC | Havin Bank | Cubatrade