Tuesday, May 26, 2015

Cuba’s open for some American business — so here come the lawyers

Cuba's open for some American business — so here come the lawyers

Peter Quinter was a U.S. Customs Service attorney in Miami in the early
1990s. His job: enforcing the embargo against Cuba, making sure people
and products didn't illegally make their way to the island.

Flash forward some two decades. Quinter, who left the government in 1994
and went into private practice, is leading a delegation of 37 lawyers on
a Florida Bar Association trip to Cuba, where they'll meet with Cuban
lawyers and academics and learn about the island's business and legal
system. The group leaves Wednesday for the four-day trip.

Quinter, a shareholder at GrayRobinson and head of the Florida Bar's
International Law Section, and his fellow lawyers will be discussing the
new rules of the game under the rapprochement between the United States
and Cuba announced by President Barack Obama and Raúl Castro on Dec. 17.

"It is a flip for me," said Quinter, who early in his career cracked
down on Americans who tried to skirt the embargo by sending products to
Mexico or Panama and then to Cuba, or who traveled to Cuba via other
countries. "Now I'm going to Cuba for the first time, and I'm interested
to see what it's really like."

Under the opening, not only can more Americans travel to the island than
at any time since the embargo was phased in during the early 1960s but
they are allowed to import some products and services from private Cuban
entrepreneurs, participate in joint ventures to improve Cuba's
antiquated telecommunications system, and send exports to Cuba destined
for the fledgling private sector.

So far there have been a handful of announcements by U.S. companies of
new Cuba-related ventures, but little concrete business has transpired.
Still, there is one group that's already cashing in: the lawyers.

From taking clients on scouting trips to Cuba and advising them on what
they can and cannot do under the new rules to helping them submit
applications for ferry service, registering trademarks, researching old
claims and even working on the deal that brought Airbnb to Cuba, South
Florida lawyers have been in the thick of the new Cuba business.

"Clients now have a change in perspective on Cuba," said Pedro Freyre,
chairman of the international practice group and a partner at Akerman.
"Before, they worried about doing something that was not allowed. Now,
they are worried about being left behind."

Family ties to the island, Spanish-language fluency, proximity, and
experience with Cuban affairs and international law have made the local
legal community a natural place to turn to for advice on Cuba and U.S.
laws related to it.

"Many practitioners are first- and second-generation Cuban-Americans. I
think the firms in Miami are the best positioned nationally to take
advantage of what's going on," said Yosbel Ibarra, who came to the
United States from Cuba as a 6-year-old in 1980 and is now co-chair of
Greenberg Traurig's Latin American and Iberian practice group.

It's not the first time in the past few decades that local lawyers have
trained their sights on Cuba. This is at least the fourth go-around,
said Carl Fornaris, a Greenberg Traurig attorney who specializes in
financial matters.

In the early 1990s, with the collapse of the Soviet Union and the end of
Cuba's economic lifeline, many analysts were betting the collapse of
Cuba and the end of the embargo couldn't be far behind. The business of
getting ready to do business with Cuba became almost a cottage industry.

The getting-ready-for-Cuba era ended abruptly on Feb. 24, 1996 when
Cuban MiGs shot two small Brothers to the Rescue planes out of the sky
and an angry Congress and president approved the embargo-tightening
Helms-Burton Act.

But a provision of Helms-Burton that allowed U.S. citizens to sue
foreign investors trafficking in confiscated Cuban properties in federal
court once again started to send clients — both potential plaintiffs and
European and Canadian companies that were concerned they might be sued —
through lawyers' doors.

Some lawyers jokingly called Helms-Burton the "full employment for
lawyers act."

Local firms set up practices to help families recover assets, but since
then U.S. presidents have routinely invoked waivers, suspending
enforcement of the lawsuit provision every six months.

In the meantime, that hasn't stopped clients who claimed they suffered
at Cuba's hands from filing civil suits and piling up judgments worth
billions of dollars after winning their cases by default because Cuba
has chosen not to defend itself.

There was also an uptick in clients seeking legal advice in 2006 when
Fidel Castro became ill and some expected his imminent death. "There
wasn't as much legal activity for this one," Fornaris said.

Now, almost nine years later, Fidel Castro is still alive, and his
brother Raúl is firmly at the helm of the Cuban government.

"Now we're once again seeing the mobilization of the legal community
akin to what we saw in the early 1990s," Fornaris said.

Jim Whisenand is one lawyer who has stuck with Cuba business since the
early 1990s. Whisenand, who did a lot of work during the transition in
Eastern Europe as well as on large privatizations in Poland, thought his
expertise would transfer well to Cuba in 1991 as the economy soured and
it appeared a government transition might be near at hand.

After Helms-Burton, he took on work for non-U.S. companies that wanted
to make "informed decisions" about the Helms-Burton implications of
properties they were interested in on the island. He's also helped
clients get licenses from the U.S. Treasury's Office of Foreign Assets
Control to do permissible business in Cuba.

Cuba-related work has constituted about 10 percent of his practice for
the past 24 years. His clients have included European governments,
multinationals and Fortune 100 companies.

Whisenand represented Puerto Rico-based America Cruise Ferries in its
successful OFAC application for a license to offer ferry service to
Cuba. The ferry operator, now active in the Caribbean market, wants to
offer thrice-weekly service between Miami and Havana. "They continue to
do planning and are having meetings in Cuba," he said.

While Whisenand said he's seen a lot more interest in Cuba by both U.S.
and foreign companies since Obama began rolling out his new Cuba policy,
he still likens the U.S-Cuba relationship to a giant funnel, with the
U.S. representing the broadest part of the funnel and Cuba, the end of a
spigot "about the size of a pinhole."

"They control the pinhole and it moves very slow," he said. "It takes a
lot of patience to do things in Cuba."

Pursuing opportunities in Cuba isn't for everyone, he said. "If you want
the same safeguards and regulations of investing in New York or Miami,
then you should be investing in New York or Miami."

Cuba, he said, is a "frontier market, and by definition, you're on the

Freyre and fellow Akerman lawyer Augusto Maxwell say their Cuba work
falls into four categories: OFAC-licensed companies allowed to do
business in Cuba under exceptions to the embargo; clients making
professional research trips to Cuba; third-country clients who have
operations in the United States and don't want to trip over U.S. laws
and regulations regarding Cuba; and companies that see potential in Cuba
after the embargo is lifted and are taking this time to prepare.

The pair travels regularly to Cuba on behalf of clients and sometimes
accompany them on fact-finding missions. Under the new regulations, they
no longer need to apply for licenses for such trips or abide by strict
per-diem expenditure limits.

"The client interest has really taken us by surprise. Not a week goes by
that we don't have a new prospect or two, three, four, five prospects,"
said Freyre. "It doesn't let up, and now the inquiries are coming from
significant players."

Much of the interest is coming from the travel industry, Maxwell said.
He represented San Francisco-based Airbnb in its recent launch in Cuba.
It now has more than 2,000 listings of private Cuban residences that
provide lodging.

Twenty years ago, Freyre said, it would have been very difficult for
such a business opening toward Cuba to occur. "The debate about the
opening goes on in Miami, but it has not been acrimonious or personal
the way it was in the past. Some folks don't like it, some don't like it
and live with it, and there are also those who like it."

Meanwhile, he said there's an appetite for legal advice as people
grapple with what it all means. "Folks are adjusting and trying to
understand the new rules of engagement," he said.

George Harper, of Harper Meyer, has been involved in giving legal advice
on Cuba since the flurry of business interest in the early 1990s and is
an expert in Cuban claims. The value of the 5,900 certified claims of
American citizens whose property was taken after the Cuban revolution
was $1.8 billion in 1960. Today, the claims are worth $7 billion to $8
billion. Claimants had to present tax records and order records to prove
their claims, and the process is now closed.

The claimants ceded authority to settle their claims to the U.S. State
Department and the claims will have to be dealt with as the
normalization process between Cuba and the United States continues, said
Harper. His family has three certified claims for a cattle ranch, a
warehouse and his grandmother's home.

"It's in the interest of both sides to make as equitable a settlement as
possible," he said. For Cuba, Harper said, successful settlement of the
claims increases the chances of foreign investment coming into the island.

But Cuba has no money to settle the claims.

"The claims don't have to be settled 100 percent," pointed out James
Meyer, Harper's partner. "The Cubans will have to come up with creative
ways to do this." They might, for example, grant investment credits or
other concessions.

Meanwhile, many of the original claimants have passed on and their
claims will have to be probated, opening up another line of Cuba
business for lawyers.

With Cuba expected to be removed from the list of State Sponsors of
Terrorism in less than a week, Ibarra, of Greenberg Traurig's Latin
American and Iberian practice group, said he's already seen more
interest by Mexican, Spanish and Central American companies in doing
business with Cuba. Because the United States saw Cuba "as a bad actor,"
they didn't want to run afoul of U.S. regulations or risk potential
problems with financing, he said.

Removal from the list "takes the scarlet letter 'A' off of Cuba," Ibarra
said. "Mexican and Central American clients have said that now is the
time to go and cut a deal in Cuba before the Americans can really come in."

Ibarra said he sometimes has to rein in American clients' enthusiasm for
the possibilities in Cuba and "remind them that the embargo is still
very much there" and the "Cubans might not want to do business to the
extent you want to do business."

Even though the new policy allows U.S. banks to open correspondent
accounts in Cuba and permits authorized Cuba travelers to use credit or
debit cards issued by U.S. financial institutions, banks have been cautious.

"We're not seeing banks hungry to set up deals or units dealing with
Cuba," said Fornaris. "Banks in Miami and generally don't want to engage
in transactions with Cuba when there are still gadzillions of regulatory
hurdles to jump. So they are waiting until there is additional
regulatory liberalization or a lifting of the embargo."

Pompano Beach-based Stonegate Bank is an exception. It said last week
that it would become the banker of the Cuban Interests Section in
Washington and its employees. The Interests Section had been without a
bank for more than a year.

Even though relations with Cuba were frosty for more than a
half-century, many U.S. companies have kept their trademark
registrations current in Cuba with an eye toward the day when they could
once again do business with the island.

Jorge Espinosa, who has registered trademarks in Cuba for Citrix and Arm
& Hammer, among others, said he's received a lot of inquiries about
trademark registrations since Dec. 17.

"There's still a level of insecurity of where things are going in terms
of trademarks," he said. One of the problems is that companies in the
United States defend their trademarks and brands by using them, and that
hasn't been possible in Cuba.

"Companies are still trying to get information and they're a bit
cautious about making big investments to get their brands registered at
this point," said Espinosa. When it comes to doing business in Cuba, he
said, it's important to remember that "everything hasn't changed yet."

Source: Cuba's open for some American business — so here come the
lawyers | Miami Herald Miami Herald -

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