Cruises to Cuba Part 4

For the last five years cruises to close-by Cuba have been so far away. In cruise ports of Havana, Cienfuegos, and Santiago de Cuba are welcoming people, anxious to share culture and history. While land travel continues, cruise travel abated in 2019, when a lawsuit was filed in United States court by Havana Docks Company claiming damages arising in the 1959 Castro regime and Marxist nationalization of property. At issue in the case is a $109 million judgement for seized property to be collected from cruise lines porting in Cuba.

For background on the court case see CTH blog posts – Will Cruises to Cuba End? Part 1, Will Cruises to Cuba End? Part 2 from May 2019 and Cruises To Cuba Part 3 from April 2023, as the case wound through the courts. Simply put, in 1996 the US Congress took charge of the 1964 US Embargo of Cuba when Cuban citizens lost private property to the government. Part III of the Helms-Burton Act, also known as the Cuban Liberty and Democratic Solidarity Act, created a right for US citizens to sue non-government parties “trafficking” in their “confiscated property” in Cuba, in US courts. 

From 1996, each president issued an executive order holding the Act in abeyance. President Trump failed to do so, opening the door to a flood of lawsuits in 2019, seeking damages for lost assets against US companies doing business in Cuba. Most cases resolved quickly, due to the passage of time. Havana Docks Company right of action remained. Immediately, cruise lines ceased port calls in Cuba, awaiting resolution of the case.

Havana Docks Company was owner of a concession to operate docks in Havana for 99 years from 1905. The Company incorporated in Delaware and was registered as a business in Kentucky. (Havana Docks was not the only Cuban company incorporated in the US. See CTH Itinerary VIII Puerto Rico Rum Universe for the Bacardi story). In 1971, when US law allowed review of claims against Cuba for consideration of government-to-government action, Havana Docks presented its case. The US Claims Court determined Havana Docks Company had a loss of $179,000, accruing 6% interest until paid.   

Note: The following is an attempt to distill court opinions as an explanation of circumstances, not a legal analysis. What follows is not a legal opinion. The federal trial court is in the Southern District of Florida. On October 22, 2024, the Eleventh Circuit Court of Appeals issued an opinion reversing in part the trial court, which in 2023 granted judgement to Havana Docks against cruise lines utilizing the port of Havana in the amount of $109 million. The Eleventh Circuit comprises Florida, Alabama, and Georgia.

Part III of the Helms-Burton Act has a two-part requirement. First, a US citizen must prove a “claim to confiscated property.” Second, the claim amount will be assessed against “any person that … trafficks in [such] property.” (11^th Cir, page 15).

On the first part, the trial court found that Havana Docks is a US citizen and on this point the 11^th Circuit agreed. There was no dispute that Cuba seized the docks in 1959, and the Company lost its business. However, the trial court issued a ruling that assumed Havana Docks lost an ownership interest that was ongoing, and by extension the cruise lines utilizing the docks from 2016 to 2019 “trafficked” in “confiscated property.” The appeals court made no assumption of ongoing ownership. It did not define “trafficked.”

In a lengthy discussion, filled with legal citation on every point, without adjectives or assumptions that filled the even longer trial court opinion, the Eleventh Circuit found that Havana Docks had a concession that ended in 2004, not an ongoing ownership interest in the docks. The 11^th Circuit considered the contract between Havana Docks and Cuba, which by agreement could be terminated at any time by the government. Termination required payment to the concession owner for materials and other costs in building the docks. The docks were built in 1930. At the end of the contract term, the concession owner was to relinquish the docks in good condition. Nothing in the contract allowed Havana Docks to assume they could unilaterally extend the concession contract.

The appeals court found that the cruise lines docking in Havana harbor from 2016 to 2019, were not docking within the period of “confiscated property.” Thus, they could not have “trafficked” in confiscated property and the judgement determining loss issued in 1971 was not collectable against them. The trial court was reversed and the case for use of the harbor after 2004 was dismissed. Only one cruise line, Carnival, the owner of Costa, which ported in Havana harbor prior to 2004, fell into the period of use of “confiscated property.”

The case of Havana Docks versus Carnival was sent back to the trial court to determine if use of docks by the cruise line constituted “trafficking.” The trial court assumed all cruise lines using the docks were “trafficking,” as they made a profit selling cruises to Cuba and selling shore excursions. At trial, the cruise lines argued that though they made profit overall, they did not necessarily profit on the Cuba port or its shore activities. They also argued trafficking did not include lawful activities of cultural exchange authorized by the US and Cuban governments. These arguments were not considered by the trial court.

There was a dissenting opinion stating that once monetized, ownership was ongoing, not just in loss, but by extension ownership interest in the docks, and agreeing with the trial court that making profit from cruise business is trafficking. The Helms-Burton Act excludes authorized travel from trafficking. In 2019, attorneys for Carnival argued that travel activities were government authorized, thus were not “trafficking.” Litigation is now narrowed in scope to focus on definition of the term.

Before returning to voyages to Cuba, cruise lines may wait to see if Havana Docks will appeal to the Supreme Court, and if the high court will consider the case. Since private cases under the Act are resolved, there is no issue in whether US presidents hold the Act in abeyance. There is still an opportunity for Congress to resolve the embargo.

For stories of Cuba, see Atlantic Ports of North America with Cuba and Bermuda Itinerary 6.

Find all 16 Cruise through History storybooks on Amazon.com.