Castro-era Cuba debt case in hands of UK judge

Can the Cuban government be sued for unpaid debts from the early 1980s – debts so old they are denominated in a currency that no longer exists?

That’s the question before a judge at the UK High Court after a seven-day trial marked by chaotic protests, a bribery accusation and remote testimony from an imprisoned Cuban banker.

The trial ended last week, but it could be months before the judge, Sara Cockerill, renders judgement in the case of CRF vs Banco Nacional de Cuba & Cuba. Her decision is central to whether Cuba may finally be forced to pay back billions of dollars in unpaid debts.

The trial is seen as a test case. CRF1, formerly known as the Cuba Recovery Fund, owns more than $1 billion in face value of European bank loans extended to Cuba in the late 1970s and early 1980s, when Fidel Castro still ruled the island. Cuba defaulted on the debt in 1986.

CRF1, which began accumulating the position in 2009, is suing Cuba and its former central bank over only two of the loans they own for more than $70 million dollars. If CRF wins on this small slice of Cuba’s total outstanding commercial debt, which is estimated at $7 billion, it could lead to further lawsuits from other debt holders, with claims against Cuba rising into the billions.

While the most dramatic testimony has focused on an accusation of bribery, much of the trial has focused on the arcana of Cuban and English law.

Were there enough signatures from Cuban bank officials on the paperwork when the loans in question were “reassigned” or transferred to CRF?  Was the paperwork stamped with a dry-pressure seal or a wet-ink stamp and did they use the correct blue security paper? At one point the barrister for CRF cited a British property case regarding the lease of a fried fish shop.

The question before the judge is of whether the fund has the right to sue Cuba. Still, experts said she could issue a summary judgement in which she rules not only on jurisdiction but also on substance, meaning not just whether CRF can sue, but also whether Cuba must pay.

Throughout the trial, representatives of the fund have repeatedly stated that they did not want to sue Cuba but did so only as a “last resort” after the government ignored their requests to negotiate for 10 years.

“Even at this late date, in a case where we expect to prevail, CRF is willing to settle,” David…