Four cruise companies engaged in prohibited tourism to Cuba

In a consequential ruling Monday night, a Miami federal judge said four major cruise lines with South Florida ties — Carnival, Norwegian, Royal Caribbean and MSC Cruises — engaged in “prohibited tourism” and “trafficking activities” by carrying passengers to Cuba and profiting from the use of Havana port facilities confiscated by the Fidel Castro-led government, the first decision of its kind that could affect similar lawsuits.

“By using the Terminal and one of its piers in various ways, Carnival, MSC SA, Royal Caribbean and Norwegian committed trafficking acts,” U.S. District Judge Beth Bloom concluded.

READ MORE: A Miami judge said cruise lines violated the ban on Cuba tourism. Read her reasons here.

According to court records previously reviewed by the Herald, the companies earned at least $1.1 billion in revenue and paid $138 million to Cuban government entities.

The companies’ cruises to Cuba “constituted tourist activities and not proper people-to-people activities, paying millions of dollars to the Cuban Government to engage in impermissible travel,” the judge wrote.

The judge sided with Havana Docks, a company that held a concession to operate the port of Havana. The company filed lawsuits against the four cruise lines for their use of the port of Havana between 2015 and 2019, when cruise travel to Cuba was authorized. In 1960, Castro ordered the nationalization of port facilities and never paid their owners. The Helms-Burton Act, a law signed in 1996 also known as the Libertad Act, allows aggrieved owners to sue companies that later engaged in commercial activities or benefited somehow from the confiscated properties.

“The Court provided a careful and meticulous analysis of the evidence and the law,” said Havana Docks’ lawyers Bob Martinez and Stephanie Casey, partners at Colson Hicks Eidson law firm in Coral Gables. “Havana Docks is pleased with the ruling and looks forward to a trial on damages.”

The case will now go to a jury trial, already scheduled for May, that will decide the damages that the cruise lines should pay. The Helms-Burton law includes several formulas to calculate the money owed to the owners.

According to court records, Carnival’s chairman and Miami Heat owner Micky Arison told President Donald Trump — who allowed the lawsuits regarding confiscated property in Cuba to go to court — that the measure could expose his company to penalties over $600 million.

“With Judge Bloom’s ruling, the four cruise lines are nearing a binary choice: accept a jury trial or negotiate a settlement,” said John Kavulich, president of the U.S.-Cuba Trade and Economic Council, who has been tracking these lawsuits. “As the plaintiffs seem to be seeking compensation based upon what the Libertad Act permits, the four cruise lines will determine if a decision by a jury would be more costly than using the Libertad Act formulas to calculate what is owed to the plaintiffs. Key to remember: The jury will be residents of the Miami, Florida, area, and will certainly include individuals of Cuban descent.”

The U.S. government’s authorization to “provide carriers services by vessels” to allow cruises to Cuba under a brief detente promoted by the Obama administration was limited by a complex web of regulations and laws that enforce the U.S. embargo against Cuba and that the cruise companies did not follow, the judge wrote in a 168-page ruling.

In particular, cruise companies were authorized only to transport Americans traveling under 12 legal categories. At all times, tourism activities were prohibited by law and by the Cuban Asset Control Regulations administered by the U.S. Treasury Department.

Instead, the four companies hired Cuban government agencies to provide “tourism services,” including excursions to beaches, nightclubs and sightseeing tours that the judge said were “classic” tourism activities. The companies argued their tours were “educational” and promoted “people-to-people” exchanges. Carnival, for example, said the evening tours to nightclubs like the famous Tropicana cabaret in Havana did not comply with the Treasury regulations, but that didn’t matter because other day excursions offered did.

The cruise lines also contended that all their activities were legal because they conducted business under U.S. government authorizations called licenses. That was a key defense argument, because the Helms-Burton Act includes an exception from liability if the use of the confiscated property is related to “lawful travel.”

But Judge Bloom dismissed all those arguments and concluded that the cruise lines interpreted regulations promoting “people-to-people” exchanges “impermissible broadly” and that they did not conduct “lawful travel” to Cuba during those years.

“The fact that [the Treasury Department] promulgated licenses for traveling to Cuba, and Executive Branch officials, including the President, encouraged Defendants to do so, does not automatically immunize Defendants from liability if they engaged in statutorily prohibited tourism,” she wrote.

In Carnival’s case, even if the daytime excursions complied with the Treasury regulations, neither the laws nor the regulations “support the proposition that a passenger can spend the night at the Cuban nightclub simply because they spent the day engaged in people-to-people activities,” she wrote.

It is not clear if the judge’s ruling concluding that the four companies broke the law would trigger an investigation by the Treasury Department. A Treasury spokesperson said the agency cannot comment on any “potential or possible investigations.”

A Norwegian Cruise Holdings spokesperson said the company does not comment on pending litigation. The other three cruise companies did not immediately respond to emails seeking comment.

You can read the full document here.

This is a developing story. It will be updated.

This story was originally published March 22, 2022 7:00 AM.