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Cuba Wins Lawsuit Against Vulture Fund In London Court

Above Photo: The facade of the Royal Courts of Justice, where the High Court and Court of Appeal of England and Wales are located in London, United Kingdom. David Castor/File photo.

In a hearing held on Tuesday at the High Court of England and Wales, Judge Sara Cockerill notified the lawyers for the parties of the judgment corresponding to the lawsuit filed by the vulture fund CRF 1 Limited against the Republic of Cuba and the Banco Nacional de Cuba (BNC).

The ruling accepted the standpoint sustained by the Cuban side during the process and dismissed CRF’s claim against the Cuban state.

According to the court ruling, the wrongdoings by BNC officials, subject first to a criminal investigation and then a court ruling, were reasonable grounds for the Cuban government to deny its consent to pay the debt in favor of CRF.

According to the document and as argued by Cuba, the BNC does not have the legal capacity or authority to represent the country.

CRF is a stranger to the loans claimed against Cuba and does not have the right to establish the claim in London. Therefore, the ruling confirmed that Cuba is immune to English jurisdiction and has no obligation to respond with its assets to this claim.

The central purpose of the judicial process was to determine if the English court had jurisdiction to hear the claim of CRF as a creditor of the BNC and the Republic of Cuba.

According to the sentence, CRF is not a creditor of the Cuban state. Thus, the country is out of the lawsuit.

From now on, the process will continue only against Banco Nacional de Cuba (BNC), which will be entitled to establish the claims permitted by English law.

Background: Cuba’s reasons for being in London, facing a vulture fund

Since January 23, the High Court in London has been hearing the lawsuit filed by CRF I Limited (CRF), an entity incorporated in the Cayman Islands, against the National Bank of Cuba (BNC) and the Republic of Cuba.

The plaintiff claimed to be the holder of two financial instruments of Cuban public debt contracted in 1984. However, the BNC and Cuba always maintained that CRF was never a creditor.

1.– What are the public debts that are the subject of the lawsuit, and when were they acquired?
During the 1970s and 1980s, Cuba borrowed from sovereign states and commercial lenders. At that time, the BNC was the central bank. While exercising its central bank functions in 1984, BNC signed the two loans that are the subject of the lawsuit.

In both cases, the BNC acted as the borrower, while the lenders were Credit Lyonnais Bank Nederland NV in one case and the Italian Banking Institute in the other case.

2.– Were the contracts signed by the BNC in accordance with Cuban law and international standards?
Yes, both loans were in accordance with Cuban law and international standards for this type of business. Without the approval of the BNC and Cuba, the transfers would not have been legally valid.

3.– Was the plaintiff in the English court the original creditor?
No. The CRF plaintiff was not the original creditor of these loans.

4.– Who sued the BNC and Cuba?
CRF, a vulture fund incorporated in the tax haven Cayman Islands. Vulture funds buy up a country’s debt at a low cost through any mechanism, including illegal operations. The practices of vulture funds produce harmful effects both for the country in question and for international economic relations.

5.– Why didn’t the BNC and Cuba recognize CRF as a legitimate creditor?
For three fundamental reasons. First, because being a vulture fund, it would not be accepted in any case as a creditor. Second: they resorted to illegal mechanisms to present themselves as creditors. Third: the illicit means used led to serious wrongdoings committed by BNC officials in violation of the law.

6.– What infringements were committed during the alleged process of assigning the public debt to CRF?
Representatives of the vulture fund suggested to a BNC official to violate the procedures regulated by Cuban law for the approval of the transfer of public debt.

As a result of this proposal, the official knowingly acted contrary to the law, which is why he was criminally sanctioned. The document for the alleged transfer, issued by that official, failed to comply with the legal requirements established both in the agreements subject to English law and the internal regulations of the BNC and Cuban law. For that reason, it is null and void.

7.– Who represented BNC and Cuba in the trial?
A team of prestigious English lawyers, assisted by lawyers from a notable Spanish law firm, together with Cuban lawyers of proven professional solidity and representatives of organizations responsible for managing the Cuban public debt.

8.– What was subject to the decision of the English court in this trial?
A plea of ​​jurisdiction. The court was charged with determining whether or not CRF is a legitimate creditor of the BNC and Cuba and, therefore, whether or not the English court has jurisdiction to hear the claim. The trial evaluated only this procedural aspect.

9.– Did the possible decision of the English court affect the Cuban economy?
No. This hearing only dealt with the procedural question of jurisdiction, so in no case were the financial amounts of the debt discussed. Therefore, regardless of the court’s decision, the finances of the BNC and Cuba were not compromised.

10.– What was the position of the BNC and Cuba regarding the payment of their debts and relations with their legitimate creditors?
Both the BNC and Cuba never disregarded the debts contracted as long as they were valid, legal, current, enforceable and binding. Additionally, they always maintained their interest in negotiating with entities that are legitimate creditors.

Vulture Fund always intended to sue the National Bank and the Republic of Cuba

Since the first week of the trial for the lawsuit filed by the vulture fund CRF I Limited in the High Court of England, the witnesses’ statements brought to light the evidence exhibited by the Cuban side.

Representatives of the fund, questioned by the defense on behalf of Banco Nacional de Cuba (BNC) and the Republic of Cuba, admitted to taking steps to try to win the debt titles, which were part of the dispute.

In the evidentiary material presented, emails and several documents revealing the irregular actions of the plaintiff stood out, and with it, the identification of the behavior of a vulture fund.

CRF sought to acquire two Cuban debt titles illegally at low prices and to condition possible agreements with the BNC and Cuba as the only option to avoid the lawsuit before the English jurisdiction.

CRF also claimed to be the legitimate creditor of two debts contracted in the 1980s. To support their position, the plaintiffs evidenced the document issued by a BNC official, where he gave the presumed consent of the bank, and therefore Cuba, for the creditor’s rights to be transferred in favor of CRF.

The Cuban official responsible for the preparation and signing of the document, the cornerstone of the vulture fund’s claim, admitted before the Court, in real-time from Havana, that they were aware it was an illegal action outside of their powers and that it did not meet the legal requirements for validity.

According to the witness, the official’s actions were the result of a handout promised by representatives of the fund.

From Havana, two former BNC executives and two workers who carried out tasks associated with the transfer also offered their statements. All confirmed the invalidity of the issued document and procedural violations.

The absence of the Ministry of Finance and Prices in this supposed transfer was another key element to invalidate the alleged rights claimed by the fund.

The arguments heard in the High Court of England and Wales showed clear evidence. A financial entity tried to claim two Cuban debts illegally and, in the absence of agreement and approval of these acts by the BNC and Cuba, immediately started the lawsuit in London.

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