Fidel Castro inspects the May Day parade at Revolution Square on May 1, 1998 in Havana, Cuba.
Sven Kreutzmann | Mambo Photography | Getty Images
Can the Cuban government be prosecuted for unpaid loans from the early 1980s – loans so old they are denominated in a currency that no longer exists?
That is the question facing a judge in Britain’s High Court after a seven-day trial marked by chaotic protests, allegations of bribery and remote testimony from a jailed Cuban banker.
The trial ended last week, but it could be months before the judge, Sarah Cockerill, makes a decision in the case of CRF v. Banco Nacional de Cuba and Cuba. His decision is central to whether Cuba can be forced to pay billions of dollars in unpaid debts.
The trial is seen as a test case. CRF1, formerly known as the Cuban Recovery Fund, owns more than $1 billion in face value of European bank loans granted to Cuba in the late 1970s and early 1980s, when Fidel Castro was still in power. were ruling the island. Cuba defaulted on the loan in 1986.
CRF1, which began accumulating positions in 2009, is suing Cuba and its former central bank over just two of the more than $70 million in loans. If the CRF wins this small portion of Cuba’s total outstanding commercial debt, estimated at $7 billion, it could lead to lawsuits by other debt holders, raising claims against Cuba by billions.
While the most dramatic testimony has focused on the bribery allegation, much of the trial has focused on the mystery of Cuban and English law.
Were there enough signatures on paperwork from Cuban bank officials when the loans in question were “reassigned” or transferred to the CRF? Was the paperwork dry-pressure sealed or wet-ink stamped and did they use the correct blue security paper? At one point the CRF’s barrister cited a British property case regarding the lease of a fried fish shop.
The question before the judge is whether the Fund has jurisdiction to sue Cuba. Nevertheless, experts said she may issue a summary judgment in which she rules not only on jurisdiction but also on substance, meaning not only whether the CRF can sue, but also whether Cuba should have to pay.
Throughout the trial, representatives of the Fund have repeatedly stated that they did not intend to sue Cuba, but did so only as a “last resort” after the government ignored their requests to negotiate for 10 years. done.
CRF chairman David Charters said at the conclusion of the trial, “Even at this late date, in a case where we expect to win, the CRF is prepared to settle.”
During testimony, representatives of the CRF said they made more than one proposal to the Cuban government that would not reduce the island’s current cash flow and help improve its economy. He described offers of debt for long-term non-coupon bonds and equity swaps, either of which would force Cuba to come up with cash in the near term or even longer, depending on the deal. Will not
Cubans have argued that the CRF always wanted to sue and have described them as a vulture fund that is taking advantage of a poor country.
No matter what the judge rules, the Cuban government still owes money. And they won’t be able to borrow from the international capital markets until they pay off all their old debts. Cuba has not been able to borrow from the markets since 1986, when the country defaulted. Since then, Cuba has survived on the generosity of the former Soviet Union and, more recently, other countries such as Venezuela and China.
Cuba is not a member of the IMF or the World Bank, institutions that would normally be involved in helping a poor country restructure its debt and re-emerge in the international financial system.
The Cuban government did not respond to requests for comment.