This paper examines the legal process of entering into a joint venture with the Cuban public water system through a joint venture in a Post-Fidel Castro Cuba. Although Fidel is no longer at the helm, the Cuban Communist party is still in power. Since Cuba has a state planned economy, we place great emphasis upon the Cuban state procedural requirements for foreign direct investment. We also analyze the applicable substantive legal issues; specifically real estate, labor, and taxation. Before discussing the legality of entering into a joint venture with the Cuban water company, a general understanding of the history and current situation of foreign investment on the island is necessary. Before 1959 there was a significant amount of foreign investment in Cuba. Most investment was from U.S. nationals. Matias F. Travieso-Diaz, partner at the international law firm of Pillsbury Winthrop Shaw Pittman, notes that the large amount of foreign investment in Cuba before 1959 suggests that in a favorable investment environment, foreign investment can thrive in Cuba. With the advent of Fidel Castro and his bearded revolutionaries to Havana in January of 1959, the investment environment rapidly changed. From 1959 to 1963 the Castro government expropriated the assets of foreign nationals. After evaluating thousands of claims from U.S. nationals whose properties where confiscated by the Castro regime, the United States Foreign Claims Settlement Commission (FCSC) certified 5911 claims with a total value of $1.8 billion in 1960 dollars. Spanish nationals were the next largest group of investors affected by the Cuban expropriations. In total Spanish investors lost $350 million.
[...] Leonard, Castro and the Cuban Revolution (1999). [xxxvi] Id. [xxxvii] USA Today, available at http://www.usatoday.com/news/world/2007-09- 12-cuba-raul_N.htm?csp=34. [xxxviii] Ana Julia Jatar-Hausmann, The Cuban Way (1999). [xxxix] Thomas M. Leonard, Castro and the Cuban Revolution (1999). Daniel C.K. Chow & Thomas J. Schoenbaum, International Business Transactions (2005). [xli] Id. [xlii] Id. [xliii] Id. [xliv] Id. [xlv] Antonio R. Zamora, Cuba's Businesses Enterprises: How Business is Conducted on the Island Fla. J. Int'l L (2003). [xlvi] Id. [xlvii] Id. [xlviii] Law 77, The Foreign Investment Act, art [xlix] Id. [...]
[...] Approval of the Written Request to the Cuban Executive Committee of the Council of Ministers for a Joint Venture Before addressing the substantive Cuban law, we start with the procedural Cuban law for foreign investment in Cuba. Under Law 77, all foreign investment must be authorized by the Executive Committee of the Council of Ministers.[xxix] The Executive Committee is composed of the most important and powerful policy makers in Cuba. The committee consists of eight people: the president of the republic (who is the maximum leader of Cuba and has the final say in all decisions), two ministers of the government, the secretary of the Executive Council, and the four vice presidents (who are often deemed as possible successors to the president).[xxx] Even in a post-Fidel Castro Cuba, it is essential that the request for approval to invest in the island appeals to the nationalist and socialist sentiments of the Cuban Communist Party. [...]
[...] Returning to Article 33 which provides that in exceptional cases and with the proper authorization, a joint venture may directly hire all of the companies' employees, we assert on behalf of our client that this is an exceptional case because of the importance of the modernization of the water system for the entire Cuban nation.[lxxiv] There is also a textual argument within Article 33 that support's our client's goal. Article 33 states workers in joint ventures who are Cuban or permanent residents in Cuba, with the exception of the members of the management or administration (emphasis added), are contracted by an employing entity (emphasis added) proposed by the Ministry of Foreign Investment and Economic Cooperation, and authorized by the Ministry of Labor and Social Security.”[lxxv] Since the mentees work closely with the chief administrators of the joint venture, the mentees have characteristics of those individuals in management. [...]
[...] Foreign Claims Settlement Comm'n, Final Report of the Cuban Claims Program, exh (1972). [vii] Michael W. Gordon, The Settlement of Claims for Expropriated Foreign Private Property Between Cuba and Foreign Nations Other than the United States Law. Am 458- (1973). [viii] Id. Constitucion de la Republica de Cuba [hereinafter Cuban Const.] art. XIV. Id. art. XV. Id. art. XXIII. [xii] Ana Julia Jatar-Hausmann, The Cuban Way (1999). [xiii] Id. [xiv] Id. Id. [xvi] Id. [xvii] Id. at 45. [xviii] Id. [...]
[...] Moving on to the benefits for Cuban entrepreneurs, twenty-four hour a day access to drinking water lets small restaurants (called paladares in Cuba) to conduct a normal day of business, without worrying about when water is available.[lxxxvii] This, in turn, translates into better service for customers. With food and drink in the paladares priced in foreign currency, satisfied customers means more business; more revenues for the paladares equals higher income tax revenues for the Cuban government and more access to foreign currency. [...]
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