Digesting What Changes To Cuba Policy Mean: Might Libertad Act Lawsuits Impede Or Benefit U.S. Travelers And Travel Providers?
/Will Internet-Based Reservation Platforms Return Cuba To List Of Options While They Defend Themselves In Lawsuits?
US$6,800.00 May Protect Travelers; US$4.35 May Not Protect Travel Organizers
Title III Lawsuits Create New Compliance Focus?
“Stay At Our Hotel- We Settled With Owners”
Airbnb Needs To Be Proactive And Support Direct Correspondent Banking
On 16 May 2022, the Biden-Harris Administration (2021- ) announced it will reverse some of the Trump-Pence Administration (2017-2021) reversals of some of the Obama-Biden Administration (2009-2017) policies and regulations relating to commercial, economic, and political engagement with the government of the Republic of Cuba, with citizens of the Republic of Cuba, and with owners and managers of privately-owned companies in the Republic of Cuba. The Biden-Harris Administration also announced new policies and regulations.
Nine days since the announcement, neither the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and Bureau of Industry nor the Security (BIS) of the United States Department of Commerce have published new and revised regulations.
An excerpt from the statement by United States Department of State (5/16/22): Strengthen family ties and facilitate educational connections for the U.S. and Cuban people by expanding authorized travel in support of the Cuban people. We will authorize scheduled and charter flights to locations beyond Havana. We also will implement regulatory changes to reinstate group people-to-people and other categories of group educational travel, as well as certain travel related to professional meetings and professional research, including to support expanded Internet access and remittance processing companies and to provide additional support to Cuban entrepreneurs. We are not reinstating individual people-to-people travel…. We will not remove entities from the Cuba Restricted List (https://www.state.gov/cuba-sanctions/cuba-restricted-list/).
Senior Biden-Harris Administration Official (5/16/22): “So, I mean, what I'll say -- and I'll allow my colleague to weigh in on this -- is that, certainly, the senator’s [Robert Menendez (D- New Jersey] concerns about establishing the group people-to-people travel under general license opens the door to tourism. We -- I think one thing to underscore is that the Treasury Department has the authority to audit groups that are organizing travel. And we will ensure that that travel is purposeful and in accordance with U.S. law.”
The retention of the Cuba Restricted List (CRL) maintained by the United States Department of State and the lawsuits filed since the 2 May 2019 implementation of Title III of the Cuban Liberty and Democratic Solidarity Act of 1996 (known as “Libertad Act”) will impact BOTH those who organize travel to the Republic of Cuba and those who travel to the Republic of Cuba. The CRL has not been updated since 8 January 2021. The CRL focuses upon entities controlled by or affiliated with the Revolutionary Armed Forces (FAR) of the Republic of Cuba.
Many hotels in the CRL are in locations where people-to-people travel groups, group educational travelers, and individuals may find convenient, desirable, and necessary for their itineraries. Many of the hotels in the CRL located in the Republic of Cuba are within the quality range acceptable to travelers and travel organizers subject to United States jurisdiction.
Due to a constricted hotel room inventory, a primary beneficiary of the Biden-Harris Administration decisions will be properties listed on the www.airbnb.com platform. In 2017, there were approximately 20,000 residences registered with Airbnb. In 2020, there were approximately 35,000 residences registered with Airbnb.
Republic of Cuba nationals who are owners and managers of properties listed on the Airbnb platform will directly benefit because of the constraints imposed by the CRL- a limited inventory of large properties which can accommodate people-to-people groups and educational travel groups.
If, as expected, the government of the Republic of Cuba authorizes direct equity investment in and direct financing to micro, small, and medium-size enterprises (MSMEs), not unreasonable to expect that existing Airbnb-listed properties will upgrade and expand their portfolios- with many imports of products and supplies sourced from the State of Florida and delivered using the regularly-scheduled commercial flights from airports in Miami, Fort Lauderdale, and Tampa; and not surprising will be to learn about an enterprising Republic of Cuba national and an individual or entity located in the United States who will petition to construct a boutique hotel in the Republic of Cuba.
LINK: Airbnb Successfully Lobbied Trump Administration. Airbnb Should Now Focus On Biden Administration To Advocate For Direct Correspondent Banking So Hosts In Cuba May Access Funds Directly, Efficiently. April 06, 2022
The Trump-Pence Administration made operational Title III of the Libertad Act. Title III authorizes lawsuits to be filed in United States District Courts against companies and individuals who are using a certified claim (5,913) or non-certified claim (unknown number) 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. To date, 44 Lawsuits Filed (15 certified claimants & 29 non-certified claimants). LINK
The Libertad Act Title III lawsuits filed since 2 May 2019 are consequential: 90+ Law Firms; 262+ Attorneys; 65,000+ Filed Court Documents; US$24.5+ Million Law Firm Billable Hours (estimated 75% by defendants); 16 Countries Impacted; 121 Plaintiffs (some in multiple cases); 4 Class Action Requests; 82 Defendants (including corporate parent, subsidiaries; some sued in multiple lawsuits); 26 United States Defendants (not including subsidiaries); 15 Republic of Cuba Initial Defendants (eleven remaining); 31 Non-United States Defendants; 10 European Union-Based Defendants; and 5 Companies Notified As Potential Defendants.
“For filing an action brought under Title III of the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996, P.L. 104-114, 110 Stat. § 785 (1996), US$6,800.00. (This fee is in addition to the filing fee prescribed in 28 U.S.C. § 1914(a) for instituting any civil action other than a writ of habeas corpus.)” The cost to send a one-ounce certified letter using the United States Postal Service (USPS) is US$4.35.
The high cost for filing a Libertad Act Title III lawsuit in a United States District Court will protect individual travelers from becoming defendants. Seeking restitution from an individual who spends two nights at a hotel which is located on expropriated property is not cost-effective.
However, a travel organizer, particularly a large travel organizer who has meaningful revenue- and meaningful revenue from activities relating to the Republic of Cuba, may find that revenue stream an attractive magnet for a filing- and delivering the notice would cost a potential plaintiff US$4.35.
Among defendants included in Title III lawsuits: Booking.com, Expedia.com, Hotels.com, Orbitz.com, Travelocity.com, Tripadvisor.com, Trivago.com along with hotel management companies Accor, Barcelo, Blue Diamond, Iberostar, Jolly, Melia, and NH Hotels. Unknown if any of the defendant companies will again make available the same properties located in the Republic of Cuba that were included prior to the company becoming a defendant in a Libertad Act lawsuit.
Because Title III lawsuits are in the public domain, widely reported and easily searchable, both those organizing travel and those traveling are charged with having knowledge of Libertad Act Title III claims which may impact their travel-related decisions. There may be no “get of out of jail free card” by having the courage of one’s ignorance.
A provision in the Libertad Act authorizes “private settlements” between those seeking to use an asset upon which there is a claim (certified and non-certified) and those who own the claim (certified and non-certified). This avenue of protection may be an important tool for use in protecting an authorized traveler subject to United States jurisdiction who plans to visit the Republic of Cuba and the organizer of the travel.
A traveler and an organizer may now be on notice to investigate and tasked to confirm in advance of arrival whether a hotel is on property where the structure and/or the property are defendants in an existing Title III lawsuit, might have a certified claim which is identifiable through the data base maintained by the Foreign Claims Settlement Commission within the United States Department of Justice, or might be subject to a non-certified claim.
In July 1997, then-New York City, New York-based ITT Corporation and then-Amsterdam, the Netherlands-based STET International Netherlands N.V. signed an agreement whereby STET International Netherlands N.V. would pay approximately US$25 million to ITT Corporation for a ten-year right (after which the agreement could be renewed and was renewed) to use assets (telephone facilities and telephone equipment) within the Republic of Cuba upon which ITT Corporation has a certified claim valued at approximately US$130.8 million. ETECSA, which is now wholly-owned by the government of the Republic of Cuba, was a joint venture controlled by the Ministry of Information and Communications of the Republic of Cuba within which Amsterdam, the Netherlands-based Telecom Italia International N.V. (formerly Stet International Netherlands N.V.), a subsidiary of Rome, Italy-based Telecom Italia S.p.A. was a shareholder. Telecom Italia S.p.A., was at one time a subsidiary of Ivrea, Italy-based Olivetti S.p.A. The second-largest certified claim (International Telephone and Telegraph Co, ITT as Trustee, Starwood Hotels & Resorts Worldwide, Inc.) valued at US$181,808,794.14 is now controlled by Bethesda, Maryland-based Marriott International.
You Can Stay If You Can Pay
Some travel organizers might formalize an agreement with a claimant or group of claimants for use of some of the most visible and likely accessed locations.
Plaintiffs in existing Libertad Act Title III lawsuits and others with certified claims and non-certified claims together could create an Internet portal where travel organizers could obtain an electronic pass key. Input the location(s) to be visited in the Republic of Cuba and if there is a match with a claimant then the travel organizer can make a payment to the claimant using a credit card. Then both the traveler and travel organizer would be protected from any legal exposure. This would require certified claimants and non-certified claimants to collectively merge their interests- and undertaking requiring a meaningful investment of time and money.
There might also be an opportunity for a hotel (including the owner and management company) in the Republic of Cuba which is subject to a Title III lawsuit or has not yet been listed as a defendant to seek a settlement or fixed-period abatement with a claimant. A result could be the hotel then presenting itself as free of any Libertad Act exposure- which may be a marketing benefit. There is an example of one such potential agreement, which did not come to fruition:
On 12 March 2002, Meliá Hotels International reportedly offered US$5 million to the descendants of Mr. Rafael Lucas Sanchez Hill as payment for "trafficking" relating to the Sol Rio de Oro Hotel in response to enactment in 1996 of the Libertad Act. On 26 March 2002, Sol Melia International, reportedly believing the [Bush-Cheney Administration (2001-2009] 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. 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.
LINK: 44th Libertad Act Lawsuit Filed. Plaintiffs Suing Melia Hotels In Spain Now Suing Expedia In U.S. "Expedia Group does not list hotels on the Expedia Group websites for charitable purposes." March 25, 2022
LINK TO COMPLETE ANALYSIS IN PDF FORMAT
