CRF I Limited v (1) Banco Nacional de Cuba (2) Republic of Cuba [2023] EWHC 774 (Comm)

The Commercial Court (Cockerill J.) has handed down judgment in a keenly-watched jurisdiction trial, dismissing the former central bank of Cuba’s challenge to the jurisdiction of the English Court to determine a creditor’s claim to enforce historic Cuban sovereign debt.

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 1980s, when it was still the central bank of Cuba.  It has been brought by CRF I Limited (“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 where 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.

BNC 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.  BNC originally had argued that the assignment of the debts had been procured by bribery, but there was no foundation to that allegation, and it was abandoned shortly before trial.

BNC’s remaining contentions were that: (1) it had not provided its “prior consent” to the assignments as required under the loan agreements; (2) the individuals who acted on behalf of BNC in connection with the assignments were not authorised to act on its behalf; and in any event (3) it did not have capacity or authority to provide the requisite consent absent approval from the Cuban Ministry of Finance and Prices, which had not been obtained.  The Court roundly rejected all three contentions.

As to the first, the Court had no difficulty in concluding that, as a matter of fact, “prior consent” was given.  As to the second, the Court concluded that the individuals who gave that consent on behalf of BNC were authorised to do so as a matter of Cuban law; and in any event that BNC had adopted the transactions and thus ratified the assignments on its own behalf as a matter of English law.  As to the third, the Court found that, as a matter of Cuban law, BNC had capacity and was authorised to consent on its own behalf to an assignment of historic Cuban sovereign debt, without any need first to obtain approval from the Cuban Ministry of Finance and Prices.

BNC could not consent on behalf of the Republic of Cuba to an assignment of a guarantee of Cuban sovereign debt.  CRF has thus asked the Republic of Cuba itself to consent to the assignment of the guarantees executed in connection with the debts owed by BNC under the loan agreements.

The decision has attracted significant interest in the international community, in circumstances where Cuba is seeking to re-integrate itself into the world economy, and has been widely covered in the press.

Jawdat Khurshid KC and Andrew Pearson were instructed by Harvey Rands and George Jackson of Rosenblatt for CRF.

To view a copy of the judgment, please click here.