In CRF 1 Ltd v Banco Nacional De Cuba & Anor [2024] EWCA Civ 1409, the Court of Appeal has handed down judgment in an internationally important jurisdiction appeal, dismissing the former central bank of Cuba’s appeal, and reaffirming that the English High Court has jurisdiction to determine a creditor’s claim to enforce Cuban sovereign debt from the Castro era.
The claim in question concerns US$72 million of debt and accrued interest owed under loan agreements entered into by Banco Nacional de Cuba (“BNC”) in the late 1980s, when it was still the central bank of Cuba. The claim has been brought by CRF I Ltd (“CRF”), the owner of about US$1.3 billion in Cuban sovereign debt and accrued interest to whom the rights under the loan agreements had been assigned, in circumstances were BNC and the Republic of Cuba had declined to engage with CRF and to negotiate a restructuring of Cuba’s sovereign debt over many years.
At first instance, BNC had challenged the jurisdiction of the English Court to determine the claim on the grounds of sovereign immunity, contending that CRF was not entitled to the benefit of express waivers contained in the loan agreements. It pointed to a provision in the loan agreements requiring “prior consent, not to be unreasonably withheld” and said that no valid prior consent had been given. Among the reasons advanced were that the individual who had (factually) given prior consent was not authorised to do so as a matter of Cuban law. It was defeated. The High Court concluded that the individual who gave that consent on behalf of BNC was authorised to do so as a matter of Cuban law. In any event, as CRF had argued, BNC had adopted the transactions and thus ratified the assignments on its own behalf as a matter of Cuban law.
On appeal, BNC advanced three grounds of appeal. The first was that that the trial judge had misunderstood the applicability of an internal BNC regulation called the “Signature Rules”, which she had concluded did not apply in principle when giving consent to the assignment of historic BNC debt. It was said that those rules were applicable to every act of giving consent by BNC officials, that they were not complied with, and in consequence that the individual who gave prior consent was not properly authorised to do so on behalf of BNC. The second argument was that the trial judge was wrong to find (as a matter of fact) that BNC had ratified the transactions in question: it was said that closer inspection of what went on would have been needed for a finding of ratification. The third (described by both the trial judge and the Court of Appeal as “unattractive”) was that notice of the assignments ought to have been sent to an address designated in 1987 rather than to the one actually used by market participants.
The first ground of appeal failed. The Court of Appeal found that the trial judge had indeed misunderstood the applicability of the Signature Rules: the relevant Cuban law meant that they did in principle apply when giving consent to an assignment ([45]-[57]). The trial judge was, however, right for a separate reason. As CRF had argued at first instance, and reiterated by Respondent’s Notice, the individual who gave prior consent had authority to do so by virtue of her role as a head of department at BNC. That was quite separate from any authority granted by the Signature Rules, which did not therefore need to be complied with ([58]-[64]).
The second ground of appeal was parasitic on the first. Having dismissed the first, the Court of Appeal did not think it necessary to consider the second ([65]).
The third ground of appeal could be dismissed in a few paragraphs ([66]-[73]). The address designated in 1987 was expressly described in the agreements as an ‘initial address’. The trial judge was amply justified in holding that BNC had indicated to market participants that it was no longer the right address to use. That was not a variation of any term of the agreements, but a variation pursuant to the terms the agreements, and so did not fall foul of the ‘no oral variation’ clause.
The result was that the appeal was dismissed. The decision is of major significance in the international community, in circumstances where Cuba is seeking to reintegrate itself into the world economy. The litigation has been widely covered in the press.
Jawdat Khurshid KC and Andrew Pearson were instructed by Anthony Field, George Jackson and Tracy Tsao of Rosenblatt for CRF.
