Cruise lines ordered to pay over $400 million for ‘trafficking’ in confiscated property in Cuba

A federal judge ordered four Florida-based cruise lines that sailed to Cuba to pay more than $400 million in damages to the American company that had the concession to some of the port piers in Havana that had been unlawfully expropriated by Fidel Castro in 1960, the first of its kind ruling under a law that punishes ‘”trafficking in stolen property” in Cuba.

The much-anticipated decision by U.S. District Judge Beth Bloom on Friday follows another consequential ruling in March in which she concluded that the four companies — Carnival, MSC SA, Royal Caribbean and Norwegian — committed “trafficking acts” and engaged in “prohibited tourism” by taking U.S. travelers to Cuba and using the Havana port facilities that Castro had confiscated.

‘Prohibited tourism’: Miami judge deals major blow to cruise companies that traveled to Cuba

The Cuban government never compensated Havana Docks, the American company with the legal rights to the facilities and whose property claim was certified by the U.S. Justice Department’s Foreign Claims Settlement Commission.

The four cruise lines, which are registered outside the United States but keep their principal place of business in Florida, would have to pay Havana Docks $439 million in total plus attorney fees and costs, according to the ruling. Each company was ordered to pay the amount of the original property claim plus decades of simple interest.

But the number is even higher because the law that punishes using confiscated property in Cuba, the 1996 Helms-Burton Act or Libertad Act, permits the court to triple the amount of the damages awarded.

“Defendants’ offenses in these cases have been established, and the Court found that Defendants derived significant amounts of revenue — in the hundreds of millions of dollars each — from their wrongful trafficking activities, and to Plaintiff’s detriment,” the judge wrote. “A lower award as Defendants suggest would not effectively serve a deterrent purpose, since a lesser award could conceivably be considered merely a cost of doing business.”

The key provision in the Helms-Burton Act that allows lawsuits against those using unlawfully confiscated property in Cuba, called Title III, was suspended by each president since Bill Clinton signed it until Donald Trump came to office. Breaking with tradition, Trump enacted it in 2019, opening the gate to a flurry of lawsuits.

Still, skepticism continued on whether the claimants, mostly the Cuban and American heirs of the expropriated companies in the 1960s, would be able to jump through all the legal hurdles involved in these complicated cases and find sympathetic ears in court.

Is your family name on this list? Time to sue for property lost in Cuba might run out

While the Friday decision might be appealed, it proves that at least some Helms-Burton lawsuits could be won and end up with millions of dollars in judgments, offering hope to Americans, and especially Cuban-American families that have for many years hoped to get reparations for Castro’s actions. At the same time, the multimillion-dollar fine sends another chilling message to potential investors and those wanting to do business with the Cuban government on properties whose ownership is contested.

“This is a very important ruling by Judge Bloom,” said Bob Martinez, the head of Havana Docks’ legal defense team and partner at the Colson Hicks Eidson law firm in Coral Gables. “The commercial use of confiscated property in Cuba in violation of U.S. law carries clearly detailed and well-known and publicized legal consequences. After decades of pursuing its legal rights, Havana Docks is one step closer to justice. Havana Docks appreciates Judge Bloom’s thorough and careful review of the facts and law.”

The case was also closely followed because it sets a precedent for lawsuits dealing with travel providers like cruises and airlines. These companies have tried to argue in court that they were authorized by the Barack Obama administration to do business with Cuba and that their dealings were covered under a “lawful travel” exception in the embargo regulations.

But the judge dismissed that defense after lawyers for Havana Docks presented evidence of tourist activities offered by the cruise lines to their passengers, usually through hired Cuban government tourism agencies.

Despite the relaxation of some sanctions during the brief detente with Cuba under Obama, tourism to Cuba was prohibited at the time, and it remains so. Cruise travel to Cuba began in 2015 and ended in June 2019.

“The fact that the Treasury Department issued travel licenses and executive branch officials, including the president, encouraged Defendants to do so, does not automatically immunize Defendants from liability if they engaged in statutorily prohibited tourism,” the judge wrote in March.

Hundreds of court documents reviewed by the Herald showed that the cruise lines offered excursions to the beach, to the Tropicana cabaret in Havana, and cocktail-making lessons to learn how to make mojitos, among other activities that do not squarely fit the description of “educational” travel to encourage “people to people” contacts, which was the legal travel category invoked by the cruise lines to take Americans to Cuba.

According to the records, the companies earned at least $1.1 billion in revenue and paid $138 million to Cuban government entities.

A Carnival spokesperson told the Herald the company does not believe its actions were wrong.

“Carnival Corporation engaged in lawful travel explicitly licensed, authorized and encouraged by the U.S. government,” Jody Venturoni said. “We strongly disagree with both the ruling and judgment, and plan to appeal these decisions.”

The parties have been involved in fierce litigation for over two years over the question of whether or not, by docking at the port of Havana, the cruise companies “trafficked” on confiscated property. Havana Docks holds a U.S. government-certified claim for the loss of assets and a concession dating to 1934 to operate three piers at the Havana port that decades later were used as the cruise terminal welcoming American travelers.

Norwegian, MSC SA, and Royal Caribbean did not immediately respond to emails seeking comment.