Cuba Law Update
April 2010 / Issue 2
A Monthly Review of Cuban Legislation
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C uban C ruis e Indus try
By Rolando Anillo-Badia
The cruise industry reappeared in Cuba during the
Cuban Special Period (1992-1993) due to Cuba’s
need of finding alternative solutions to the economic
crisis. Starting on November 12 1995, an Italian
corporation, Costa Cruises, operated the first foreign
cruise for about three years until Carnival Corporation
purchased the Italian company and the operation was
discontinued due to the U.S. embargo.
During 1998, Cuba authorized the creation of the
first joint venture between Cuban company, Cubanco,
S.A., and the foreign company, Silares Terminales del
Caribe from Italy. The purpose of the joint venture
was to operate the cruise terminals in the ports o f
Havana, Santiago de Cuba and Punta Frances in the
Isle of Youth (Isle of Pi nes). The Cuban Executive
Council of Ministers granted this joint venture the
exclusive concession to operate several ports and to
conduct maritime services for 20 years with the
option for another 20-year term. However, the Cuban
government cancelled the concession and agreement
and transferred the cruise operations to a Cuban
enterprise of the Cuban Ministry of Transportation,
named Aries Transporte S.A. in 2005. The official
version of the reason for the termination of the joint
venture was the supposed lack of compliance with
the Cuban rules and regulations.
Despite the cancellation of the contract, Cuba
continued operating the crui se terminals without any
significant decline in number of passengers (only
10%) from 2005-2006. During this period Cuba
received over 100,000 cruise line passengers.
The largest decline took place in October 2006 when
Spain’s Pullmantur Cruises was purchased by Royal
Caribbean Cruises LTD and all the operations in Cuba
conducted by Pullmantur ceased as a result of the US
embargo. Pullmantur Cruises operated the Holiday
Dream Cruise; which was the last cruise sailing from
Cuba (Cuban mother port) with services in three
different Cuban ports.
Only 11,000 cruise line
passengers visited Cuba in 2007 and the number o f
passengers has remained insignificant since then.
There are still some cruise lines visiting Cuba, mainl y
during the winter season. This prior winter Le Levant
cruise visited Havana and three other ports in Cuba.
Fred Olsen’s Braemar cruise is also offering a trip to
Caribbean including Cuba. Hapag-Lloyd’s top-rated
408-berth flagship Europa has visited Santiago de
Cuba and other Cuban ports since 2009. HapagLloyd’s other main line cruise ship, the 420-passenger
Columbus, whose charter has just been renewed until
2011, will be making a turnaround in Havana. A former
Costa ship, the 1,500-berth Costa Europa, to become
Thomson Dream in April, will not only be offering
regular opportunities to visit Havana on overnight calls
but will also be boarding some of its passengers in
Havana.
According to a report of U.S. International Trade
Commission in 2007, the number of U.S. cruise and
ferry passengers that would visit Cuba in the absence
of sanctions would range from 50,000 to 481,000.
The American Society of Travel Agents (“ASTA”)
forecasted that 481,000 U.S. cruise visitors would visit
Cuba by the third year of unrestricted travel.
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Cuba Law Update
Page 2
Cuban Cruise Terminals
Cuba operates cruise ship terminals at the Port of
Havana, the Port of Santiago de Cuba and on the Isla
de la Juventud (Youth Isle). There is a fourth
passenger-ship terminal at the Cuban port of
Cienfuegos.
Havana Port
The port of Havana is the largest, busiest, most
versatile and most promising sea link Cuba has with
the rest of the world. Since the Cuban economy has
always depended on foreign trade and always will, its
port will remain a key component of Cuba’s
economic development. The port of Havana can
handle a wide array of cargo and cruise-ship
passengers. The harbor offers 41 berths for a variety
of cargoes. The cruise terminal (Sierra Maestra
Terminal) consists of 3 concrete general cargo
terminal and office buildings. Featuring 6 berths with
26 to 32 draft. It has 270,000 square feet of roofed
warehouse capacity.
Santiago de Cuba Port
Santiago is Cuba's second-largest city and the port is
the second most important commercial port in Cuba.
The bay is quite spacious, well sheltered and landlocked. There are a number of covers and inlets
indenting the natural harbor, entered through a
narrowed 80m (263 ft.) entrance channel. The port
has
the
capacity
to
operate
13
vessels
simultaneously, including tankers, bulk grain, dry
cargo and coastal trade vessels. Discharging
operations are also frequently carried out at the Inner
Anchorage. Reportedly, a roll-on roll-off ramp has
been constructed at this port. Also reportedly,
vessels up to 214m (702 ft.) in length with a
maximum draft of 10.9m (35 ft.) may enter in the
morning, while vessels up to 183m (600 ft.) may
enter at other times. The port has an area specialized
in cruises (terminal) with additional services to
ferries.
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Cuba Law Update
Page 3
Cienfuegos Port
Concession Request Process
Cienfuegos is one of the largest ports in the
The applicant will provide the following information:
Caribbean and third most important port in Cuba. It
is the marketing and processing center of a region
producing sugarcane, tobacco, coffee, and rice; it
also
has
Cienfuegos
rum
distilleries
as
the
and
capital
of
fish
canneries.
Cuba’s
most
industrialized province is a major hub of industry,
commerce, and trade. With its expansive, deep bay,
the city receives much of the shipping business for
goods needed by other industrialized cities in the
area.
Cienfuegos
development
and
has
enough
could
land
accommodate
for
a
future
cruise
terminal. Four piers are located at Cienfuegos,
providing 5 berths ranging in length from 91m to
203m (300 ft to 666 ft.), with depths of 7.9m to
10.1m (25 ft to 33 ft.).
• name and domicile of the applicant;
• description
of
the
objectives,
activities,
organization and services in accordance with
the master plan to develop a particular port;
• description of the area and its location;
• a technical, financial and economic feasibility
plan;
• capital contributions and capital composition;
• chronology of the investment plan, including
initial
investment
and
contributions;
subsequent
• economic solvency affidavit, identity of the
parties and documentation of the legal person;
• additional
documentation
relevant
to
the
project.
Cuban legislation related to ports:
Concession Approval Process:
Decree-Law 230 of 2002: Decree-Law of Ports
The General Council of the National Port Authority
Decree 274 of 2002: Regulation of the Cuban ports
will review all the documentation presented prior
submission to the Cuban Ministry of Transportation
Resolution 143 of 2006: Classification of ports
for its opinion. Once the Ministry of Transportation
completes the file, it will be presented to the
Cuban Port Concession Authorities:
Executive Council of the Cuban Ministers for a
The Executive Committee of the Council of Ministers
decision.
is the entity responsible for granting administrative
The approval or denial of the request will be made
and foreign natural or foreign legal persons may
request
concessions in the Cuban ports. Cuban companies
request
the
concessions.
approval
The
of
concession
the
administrative
request
will
be
within a term of 60 natural days from the date of the
was
presented.
The
decisions
will
be
provided to the applicant through the Ministry of
Transportation.
presented to the Cuban Ministry of Transportation
through the National Port Administration.
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355 Alhambra Circle, Suite 801, Coral Gables, Florida 33134 Phone (786) 364-8400 Fax (786) 364-8401
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Cuba Law Update
Page 4
The concession agreement includes the
Reasons for revocation of the concession:
following information:
•
not compliance with the object, obligations
legal personality of the concessionaire;
and/or
•
conditions;
period longer than 180 days;
•
investment schedule;
•
•
•
•
•
•
•
applicable special regime;
•
contractual obligations;
•
operation of authorized services;
limit the performance of his activities to the
the assets subject to the concession;
fulfillment of the objectives of the approved
•
invest, at least, the minimum amount of
•
concession within 180 days from the date of
•
•
lack of appropriate insurance coverage as well
as the lack of environmental protection;
breach
of
any
obligations
or
established in the Cuban legislation.
conditions
the registry of the concession in the Official
Observations:
maintain the infrastructure
The Cuban legislation contemplates a bureaucratic
Registry of Concessionaires;
•
assignments or transfers of concessionaire
as the lack of maintenance and conservation of
capital required in the approval of the
•
acts against third parties involved in the
rights without approval of the authority as well
project;
•
lack of compensation to third parties due to
concession or by non compliance with its
Concessionaire Obligations:
•
interruptions and changes in the services
damages originated in the operations of the
terms of the concessions;
•
•
concession
higher tariffs than approved;
development activities;
not exceeding the original term.
•
the
rendered without just cause or by applying
characteristics of the project;
years and may be renewed for successive periods
•
of
agreement as well as the lack of activity for a
geographical description of the port;
The term of the port concession will not exceed 30
•
conditions
in accordance
with the concession and guarantee adequate
structure that creates obstacles for future investments
report the results of the operations, as
Cuban
the authority that granted the concession;
Caribbean, that dominate the industry, will require a
contamination of the area;
These players will need to invest millions of dollars in
conditions in the workplace;
in the cruise industry. However, the opening up of the
stipulated in the concession agreement, to
multinational corporations such as Carnival and Royal
protect the environment and prevent the
dramatic change in the current rules and regulations.
stay current in his tributary obligations;
market
to
new
players,
mainly
Cuban ports infrastructure.
improve the efficiency of the port and
allow regular inspections;
register in the concessionaire register;
apply the Cuban labor legislation
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to
large
Cuba Law Update
Page 5
Headline News on Cuba
government may scuttle a move in Congress to ease
Travel Ban Bill
sanctions.
Sen. Richard G. Lugar and Rep. Howard L. Berman
published an editorial in The Miami Herald in which
they questioned why “Cuba is the only country on
earth where Americans cannot go freely”. Both
asked for a change in the travel ban.
“prevented
contact
between
Cubans
and
ordinary Americans, who serve as ambassadors for
the democratic values we hold dear”.
added
that
“such
contact
would
They also
help
break
Havana's chokehold on information about the
outside
world.
improving
the
And
image
it
of
would
the
on the Ladies in White protest marchers, the latest in a
string of abuses in Cuba, might delay or derail
congressional efforts to ease sanctions on the Castro
government, even supporters of a thaw acknowledge.
According to the U.S. congressmen, the travel ban
has
Tamayo also stated that the recent brutish crackdown
contribute
United
to
States,
particularly in Latin America, where the U.S.
embargo on Cuba remains a centerpiece of antiWashington grievances”.
International condemnations rained down on Havana
for the Zapata and Ladies in White cases. President
Barack Obama blasted Cuban authorities, saying they
``continue to respond to the aspirations of the Cuban
people with a clenched fist.''
Some backers of easing Cuba sanctions agree the
recent events have impacted their cause. They continue
to argue, however, that U.S. policies have produced no
changes in Havana.
Cuban Tourism Activity in 2009
U.S. Senator Byron Dorgan said he will bring a bill
to lift the ban on travel to Cuba to the Senate floor
this summer and that more than 60 Senators will
vote for it.
island in 2009 which represented a 3.3% increase from
prior year. However, total annual revenues from
The North Dakota Democrat spoke by telephone
from Washington to a conference of Cuban and
American
Cuba reported that 2.4 million tourists visited the
tourist
Cancun, Mexico.
industry
representatives
in
Cuban actions impacted efforts to ease sanctions
In an article published by Juan O. Tamayo on March
28, 2010 in The Miami Herald, the journalist wrote
that some monumental misbehavior by the Castro
tourism activities declined by $300 million or 15% from
2008. According to Cuban Ministry of Tourism, the
decline in revenues was due to the global economic
crisis.
Miguel Figueras, an adviser of Cuba’s tourism ministry,
has recently stated that Cuba has about 480,000 hotel
rooms,
including
15
hotels
under
joint
venture
contracts with foreign companies and 49 hotels
managed by international partners.
Fowler Rodriguez Valdés-Fauli
355 Alhambra Circle, Suite 801, Coral Gables, Florida 33134 Phone (786) 364-8400 Fax (786) 364-8401
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Cuba Law Update
Page 6
Mr. Figueras has also mentioned that Cuba is
John
looking to build 30 more hotels with 10,000 rooms
development for Miami-based Royal Caribbean
other tourism attractions. Furthermore, he said that
Miami.
over the next five years as well as golf courses and
“Americans are welcome in Cuba” and that he
Tercek,
vice
president
of
commercial
Cruises Ltd, said at an industry conference in
agrees with the American Society of Travel Agents
"Our business has grown so much that these ports
excluding cruise ships and family visits.
Spanish conquistadors, that size of ports, they're
that 835,000 US tourists will visit Cuba every year,
According to the Cuban Minister of Tourism, Manuel
Marrero,
the
Cuban
government
puts
"no
restrictions for foreign hotel chains, including from
the United States, from administering a hotel." The
official made the statement to the press in Cancun,
in Cuba that were established in the time of the
going to need a lot of infrastructure improvement."
Mr. Tercek was also quote saying “When Cuba
opens up, it's going to be great for everybody,"
"We'll all find interesting ways to grow with it."
Mexico on March 26, 2010 where he attended a
Experts agree that If U.S.-Cuba relations thawed,
tourist industries.
likely be the smaller ones. It could take four or five
gathering of representatives from the US and Cuban
the first U.S. cruise ships to call on Cuba would
years to refit Cuba's ports to accommodate the
U.S. cruise lines say return to Cuba would take time
megaships carrying thousands of passengers.
In article published by Jane Sutton on March 17,
2010 in Reuters, she quoted some cruise industry
officials saying that “U.S. cruise companies are
"The moment Cuba comes into the market, I think
it's another star," said St. Lucia Tourism Minister
Allen Chastanet.
eager to add Cuba to their itineraries; but even if
U.S. policy allowed that, Cuba's ports would need
years of rebuilding to accommodate the ships.”
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355 Alhambra Circle, Suite 801, Coral Gables, Florida 33134 Phone (786) 364-8400 Fax (786) 364-8401
For more information, please visit our webpage at www.frvf-law.com