Judge Clears Way for Cuban Libertad Trial Against Cruise Lines
A U.S. Federal Court Judge in Miami late on Monday issued a ruling clearing the way for a Libertad Act suit to proceed to trial against the four major cruise lines related to their travel to Cuba. The suit, in which plaintiffs are seeking damages for the cruise lines’ use of confiscated port facilities, could have broader ramifications for the commercial shipping industry which is facing similar legal actions related to their Cuban services.
The lawsuits stem from a provision in the 1996 Helms-Burton Act known as the Libertad Act that created a provision to allow companies that had property confiscated to seek compensation from companies such as the cruise lines that later benefitted from commercial activities using the confiscated properties. U.S. presidents routinely suspended Title III of the law which provided the authorization to seek compensation due to international objections and saying that the provision was an impediment to future settlements with Cuba.
Late in 2014, President Barrack Obama reversed decades-old U.S. policy and began efforts to establish diplomatic relations with the island nation saying that interaction with America would be the fastest course to reshaping Cuba. The move led to an increase in economic activity which had been banned by the United States and in May 2016 the cruise industry launched the first cruises directly from the U.S. to Cuba in nearly 40 years.
Set on reversing Obama-era policies, Donald Trump became the first U.S. president since the passage of the 1996 law to remove the suspension on the Title III provisions of the law in May 2019. A month later, the Trump Administration ended all ties with Cuba re-imposing the sanctions and travel restriction.
A company called Havana Docks held the concession to operate the docks in the port of Havana, Cuba before the 1959 Castro revolution. Within a year of seizing power, Fidel Castro nationalized the port facilities as well as many other properties in Cuba. American companies holding the concessions never received compensation and after Trump removed the suspension of the provisions from the Libertad Act they had the first clear path to seek restitution.
Carnival Corporation was the first of the cruise operators sailing from the United States to launch trips to Cuba first with a short-lived dedicated brand and then adding primarily Havana as a cruise stop for many of its brands. Royal Caribbean Group also launched dedicated cruises to Cuba as did Norwegian Cruise Line Holdings and MSC Cruises. All four companies were named as defendants in lawsuits filed by Havana Docks saying the cruise lines had illegally profited from the use of the company’s port facilities in Cuba. The cruise lines had contracted with Cuban companies to provide port operations for their cruise ships as well as other companies to arrange tours and excursions for passengers during the cruises.
The cruise lines used a provision in the Obama-era regulations to start the cruises reporting that they met the requirements for “educational” programming and “people-to-people” exchanges. The cruise lines received licenses from the U.S. Treasury Department using these provisions in the law that otherwise prohibited tourism solely for the sake of vacationing and travel. Trump’s reversal of the exemptions required the cruise lines to immediately suspend cruises to Cuba in June 2019.
Judge Beth Bloom from the U.S. District Court for the Southern District of Florida issued a 169-page decision on March 21 ruling in part that under the definitions contained in the Libertad Act the four cruise lines “committed traffic acts,” by their use of the piers. The cruise lines claimed they were excluded from penalties under the Libertad Act citing exemptions for travel.
The judge in her ruling found that the cruise lines had operated classic tourist programs offering typical tourist activities that did not qualify as educational or people-to-people exchanges. She cited passengers going to the beaches in Cuba and attending stage shows at nightclubs, among other activities. Judge Bloom dismissed the cruise lines' request for a summary judgment against Havana Docks saying the cruise lines had contracted Cuban companies for services and profited from the use of the confiscated docks. The court documents said that the cruise lines generated $1.1 billion in revenues from their cruises to Cuba.
The judge ruled that there was “enough to establish liability under the law,” clearing the way for the case to proceed to a jury trial scheduled for Miami in late May or the cruise lines could attempt a negotiated settlement with Havana Docks. While Havana Docks was only operating the port facilities under a concession from the prior Cuban government, the Libertad Act includes provisions for leaseholders that were harmed by confiscation similar to property owners.
Legal experts continue to follow the case closely because of its potential ramifications for others. To date, more than 40 Libertad Act suits have been filed including cases against commercial shipping companies Maersk, MSC, Crowley Maritime, and Seaboard Marine.