The reestablishment of diplomatic relations between Cuba and the United States has captured the attention of many investors, governments, international organizations, academics, and law firms from all over the world. In our recent paper, entitled “An Overview of the Law of Business Organizations in Cuba: Challenges and Proposal for a Future Reform” (available in Spanish), we analyze the current regime governing business organizations and foreign investments in Cuba. Then, we point out some challenges of Cuban business law and we propose a set of reforms to promote foreign investments taking into account the legal, political, institutional and economic features of the country.
Cuban business law is mainly governed by the Cuban Commercial Code and, very especially, the 2014 Law for Foreign Investments. The Cuban Commercial Code was enacted in 1886, as an extension of the 1885 Spanish Commercial Code. The Code is divided into 4 books regulating general aspects of merchants and business activities, contracts (including corporations), maritime law and bankruptcy, respectively. After the Cuban Revolution in 1959, the Commercial Code started playing a minor role in the Cuban legal system. On the one hand, the private company and the old-fashion joint stock company existing in the Cuban Commercial Code were substituted for the state owned socialist enterprise as the primary legal entity in the Cuban system. On the other hand, many sections of the Commercial Code and several business laws were abolished.
The enactment of the Law for Foreign Investments served as a de facto new legal framework for business organizations in Cuba –especially taking into account that private property is exclusively owned by foreign investors. The current law for foreign investments was enacted in 2014 and it regulates 3 types of legal vehicles to invest in Cuba: (i) a joint venture (this form of investment represented around 45% of the total foreign investment in Cuba in 2014); (ii) a joint stock company entirely owned by foreign investors (representing about 5% of total foreign investments in 2014); and (iii) a joint stock company owned by both the Cuban Government and foreign investors (representing around 50% of foreign investments in 2014). In addition to providing these legal vehicles to invest in Cuba, this law establishes many provisions regarding corporate law, tax law and the protection of foreign investors. In fact, this law for foreign investments has probably become the primary source of Cuban business law nowadays.
Since the reestablishment of diplomatic relations between Cuba and the United States has captured the attention of many foreign investors, it seems particularly relevant to analyze, as a way to encourage investments and economic growth in the country, the current situation and future challenges of Cuban business law. For that purpose, on December 8-9, 2016, the University of La Habana will host the 2nd Annual Conference of the Ibero-American Institute for Law and Finance. This event will be held in both English and Spanish and it will gather many leading scholars, practitioners and policy-makers from all over world.
Aurelio Gurrea Martínez is a Fellow of the Program on Corporate Governance at Harvard Law School and Executive Director of the Ibero-American Institute for Law and Finance and Natacha Mesa Tejada is a Lecturer in Business Law at the University of La Habana and Coordinator of the Ibero-American Institute for Law and Finance in Cuba.