Court In Spain Requires Government Of Cuba And Gaviota Tourism Company Be Included In "Unjust Enrichment" Lawsuit Against Melia Hotels International
/On 29 May 2019, descendants of Mr. Rafael Lucas Sanchez Hill, acting as Central Santa Lucia L.C., filed a lawsuit in Spain seeking US$10 million from Palma de Mallorca, Spain-based Melia Hotels International S.A. (2019 revenues approximately US$2 billion) seeking damages for the use of land upon which a hotel is located in the Republic of Cuba. The lawsuit is not using provisions of Title III of the Cuban Liberty and Democratic Solidarity Act of 1996 (known as “Libertad Act”).
On 24 November 2020, a judge in Palma de Mallorca, Spain, held a hearing to narrow the issues between the parties prior to the trial and determine how to proceed.
On 11 January 2021, the judge issued a ruling. Melia Hotels International requested the inclusion of the government of the Republic of Cuba, and Revolutionary Armed Forces (FAR) of the Republic of Cuba-controlled Gaviota S.A., and Panama City, Panama-based Gesmesol S.A. which is referenced as controlled by Melia Hotels International S.A.
Gaviota S.A. is a subsidiary of Grupo de Administración Empresarial S.A. (GAESA) which is controlled by the FAR. GAESA has with interests in the tourism, financial investment, import/export, and remittance sectors and includes businesses incorporated in Panama.
NOTE: GAESA is on the State Department’s List of Restricted Entities and Subentities Associated with Cuba (“Cuba Restricted List” or “CRL”). The CRL is a list of entities and subentities “under the control of, or acting for or on behalf of, the Cuban military, intelligence, or security services or personnel with which direct financial transactions would disproportionately benefit such services or personnel at the expense of the Cuban people or private enterprise in Cuba.” GAESA is on the List of Specially Designated Nationals and Blocked Persons by the OFAC pursuant to the Cuban Assets Control Regulations (CACR), 31 C.F.R. part 515.
On 11 January 2021, the judge ordered the inclusion of the government of the Republic of Cuba and Gaviota S.A., but not Gesmesol S.A. Plaintiff attorneys objected as the complaint alleges “unjust enrichment” only against Melia Hotels International S.A. Plaintiff attorneys did not appeal the order to avoid the risk of a dismissal. Plaintiff attorneys are serving the government of the Republic of Cuba and Gaviota S.A. through the required diplomatic channels. The government of the Republic of Cuba may claim sovereign immunity, but Gaviota S.A. is subject to the jurisdiction of the court. The government of the Republic of Cuba and Gaviota S.A. are not subject to plaintiff claim of “unjust enrichment,” but are deemed necessary parties by the judge since they are responsible for the initial expropriation and current operation of property of plaintiff.
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Mr. José Luis Iriarte, Of Counsel [to Madrid, Spain-based Lupicinio law firm] in an interview on Radio Marti: "The most likely thing, I would dare to say for sure, although in law to be sure is too bold, is that the Ministry of Foreign Affairs will say that no action can be taken against the Cuban State".
Lawsuit Background
On 12 March 2002, Melia Hotels International reportedly offered US$5 million to the descendants of Mr. Rafael Lucas Sanchez Hill as payment to prevent the United States Department of State from using Title IV relating to the Sol Rio de Oro Hotel in response to enactment in 1996 of the Cuban Liberty and Democratic Solidarity Act of 1996 (known as "Libertad Act").
Title IV of the Libertad Act restricts entry into the United States by individuals who have connectivity to unresolved certified claims or non-certified claims. Employees of one Canada-based company is currently known to be subject to this provision based upon a certified claim.
On 26 March 2002, Sol Melia International, reportedly believing the [George W. Bush Administration; 20 January 2001 to 20 January 2009] United States Department of State would neither implement Title III nor Title IV of the Libertad Act, Melia Hotels International withdrew the offer of US$5 million and proposed US$3,197.75 representing a value (.06%) based upon the twenty-nine (29) acres of land occupied by the Sol Rio de Oro Hotel of the approximately 120,000 acres of land claimed by the descendants of the owners of the property. The US$3,197.75 was determined by Melia Hotels International as the corresponding percentage of the US$5 million tax loss carry-forward amount with the Internal Revenue Service (IRS) in the 1960's.
On 29 May 2019, descendants of Mr. Rafael Lucas Sanchez Hill, acting as Central Santa Lucia L.C., filed a lawsuit in Spain seeking US$10 million from Meliá Hotels International seeking damages for the use of land upon which a hotel is located in the Republic of Cuba. The lawsuit is not using provisions of Title III of the Libertad Act.
Title III of the Libertad Act authorizes lawsuits in United States District Courts against companies and individuals who are using a certified claim or non-certified claim where the owner of the certified claim or non-certified claim has not received compensation from the Republic of Cuba or from a third-party who is using (“trafficking”) the asset.
