World News

Cuba facing UK court battle over unpaid government debt

LONDON (Reuters) - Cuba is facing a court battle in London over its unpaid government debt after one of the communist-run country’s creditors filed a formal claim at Britain’s High Court.

CRF I Ltd, an investor in defaulted Cuban sovereign debt since 2009, said it had filed the case in London after Havana refused a debt relief offer made by CRF and some other bond holders back in 2018.

Further contacts since then, including at the start of this year, have also failed, CRF said. Cuba’s government will now have two weeks to respond.

“CRF is an important holder of Cuban commercial debt and seeks a fair and equitable outcome for both Cuba and its commercial creditors and will endeavour to work constructively with Cuba towards that end,” CRF Chairman David Charters said.

“However, the board of CRF have made clear that the legal process now underway will not be halted unless there is a satisfactory prior negotiated settlement with the Cuban government.”

The communist-run island has seen its finances deteriorate in recent years following the deepening of Venezuela’s economic crisis, lower revenue from commodities and restrictions put in place by the U.S. administration under President Donald Trump.

In 2015, Havana reached a deal with members of the ‘Paris Club’ of creditor nations that saw roughly three-quarters of that debt written off. But having not dealt with its commercial creditors in the so-called ‘London Club’ the country remains shut out of international capital markets.

CRF has taken the decision to head to the UK High Court separately from the creditor group that made the 2018 offer, though it remains part of that group.

That creditor group represents a face value of $1.4 billion of Cuba’s debt it has said, though it is likely to be much more if interest and penalty payments were included.

Rodrigo Olivares-Caminal, the coordinator of the creditor group and a law professor at London’s Queen Mary University added CRF’s move was an “individual action”.

Reporting by Marc Jones; Editing by Alex Richardson