United States: New Regulations Further Ease Maritime Transport And Travel Restrictions On Cuba

Last Updated: October 8 2015
Article by Matthew J. Thomas, Jonathan K. Waldron and Stefanos N. Roulakis

Action Item: The Administration further implemented its new Cuba policy facilitating passenger vessel service to Cuba and opening opportunities in Cuba's maritime, telecommunications, and construction sectors. Considering the rapidly-developing opportunities in Cuba for U.S. businesses, entities that think they may benefit from doing business with Cuba should examine their strategic plans for entering the Cuban market and consult counsel to optimize opportunities with Cuba while maintaining compliance with U.S. laws.

New Developments

On Friday, September 20, 2015, President Obama's administration announced its most recent steps in expanding relations with Cuba. Following this announcement, the Treasury and Commerce Departments each published new regulations (collectively, the "Regulations") on Monday, September 21, 2015. The new Regulations largely focus on fostering U.S. business growth in sectors of Cuba's economy, particularly in the maritime, telecommunications, and construction industries.1

Notably, the Regulations represent a watershed moment for passenger carrier service between the United States and Cuba. Under the Regulations, persons under U.S. jurisdiction no longer need a specific license from either the Department of Treasury (issued by Office of Foreign Assets Control ("OFAC")) or the Department of Congress (issued by Bureau of Industry and Security ("BIS")) to operate a passenger carrier between the United States and Cuba, with certain restrictions. Restrictions on cargo vessels, physical offices and employees, and various other activities in Cuba also have been liberalized.

Background

As described in our December 2014 Advisory (available here), the Administration has turned a corner on 50 years of U.S. sanctions against Cuba. In January, amidst the restoration of diplomatic relations, the Administration lifted various restrictions on the free flow of people, money, merchandise, and information. For example, OFAC amended the Cuba Sanctions Regulations (30 C.F.R part 515) to allow U.S. institutions to work with financial institutions in Cuba, authorize a broader range of remittances, and allow travelers in approved categories to visit Cuba without individual licenses. In the maritime industry, cargo vessels were allowed to call on the United States after port calls for a broader range of purposes in Cuba, and OFAC and BIS adopted a new policy of licensing passenger services on a case-by-case basis.

The Regulations recently promulgated by the Administration signal a broader policy shift in relations and trade with Cuba. The Regulations did away with the agencies' prior policy that vessel operators under U.S. jurisdiction must apply for an OFAC-issued specific license and a BIS-issued vessel export license to operate passenger carrier service to and from Cuba. The new changes put maritime transport back on a level playing field with air carriers, who were authorized by general license to offer regularly-scheduled services to Cuba in January of this year.

Analysis

Department of Treasury, OFAC Licenses

Under the newly published OFAC regulations, passenger carrier operators subject to U.S. jurisdiction no longer need a specific license from OFAC to provide ferry services to, from, or within Cuba, in connection with passengers who are authorized to travel. See 31 C.F.R. § 515.572. In other words, the new regulations grant blanket authorization for persons subject to U.S. jurisdiction providing passenger carrier services to Cuba. The authorization to provide carrier services is limited to direct travel between the United States and Cuba and does not allow for stops in a third country.

Passenger carrier operators are also now authorized to provide lodging services onboard passenger carriers during travel to, from, or within Cuba as well as when docked at a Cuban port (subject to the 14-day limit in the BIS export regulations described below). The authorization to provide lodging is a nod by the Administration to the currently constrained state of Cuba's hotel sector, which at this point is not well-positioned to absorb a substantial increase in U.S. travelers.

The OFAC general license for passenger carrier services is limited to the transportation of authorized travelers as defined by OFAC regulation. Authorized travelers include, among others, (i) persons traveling under one of the 12 categories of travel provided under 31 C.F.R. § 515.560 (note that general tourism is not one of the twelve approved categories) or under a specific license from OFAC; (ii) some Cuban nationals applying for admission to, present in, or taking up residence in the United States; and (iii) foreign nationals traveling on official business of the U.S. government.

Passenger carrier operators must receive a certification from each passenger indicating the provision of the regulations that authorizes the passenger to travel to Cuba. OFAC officials have advised that unless confronted with reason to believe that a passenger's certification is falsified, carrier operators do not have a duty to independently verify such certification (e.g., by policing travelers' itineraries). Operators must retain, however, the name and address as well as said certification for each passenger for at least five years from the date of the transaction. In the case of a customer traveling under a specific license, a copy of the license must be maintained on file.

In addition, U.S. carriers, travel providers, and some shippers and charterers for the first time are now permitted to open physical offices and employ staff in Cuba, eliminating another obstacle to establishing operations in that market. OFAC's new regulations provide that persons subject to U.S. jurisdiction will be allowed to establish and maintain a physical presence (e.g., an office, retail outlet, or warehouse) in Cuba if they are operating in the following sectors: news bureaus; exporters of goods authorized for export or re-export to Cuba by BIS and OFAC (including agricultural products and construction materials for privately owned buildings); entities providing mail or parcel transmission services and certain cargo transportation services; providers of telecommunications or Internet-based services; entities organizing or conducting educational activities; religious organizations; and providers of carrier and certain travel services. These individuals and entities will also be authorized to employ Cuban nationals, open and maintain bank accounts in Cuba, and employ persons subject to U.S. jurisdiction in Cuba.

Department of Commerce, BIS Licenses

Under new BIS regulations, a much broader range of vessels are now exempt from the requirement that they obtain an export license from BIS prior to sailing to Cuba. Specifically, the new regulation applies to vessels conducting temporary sojourns for (i) cargo vessels for hire for use in the transportation of items; (ii) passenger vessels for hire for use in the transportation of passengers and/or items; and (iii) recreational vessels that are used in connection with travel authorized by OFAC. See 15 C.F.R § 740.15

A vessel operator, however, must submit a license application to BIS if the vessel would remain in Cuba for longer than 14 days before departing a country to which the vessel could be exported without a license to the U.S.

In addition, passenger carriers used to transport both passengers and items to Cuba may transport automobiles only if the export or re-export of the automobiles to Cuba would have been authorized by a separate license issued by BIS.

Continuing Role of Cuban Authorities

While the U.S. progressively relaxes its requirements for travel and transport providers, it is important to underscore that Cuba maintains its own regulatory processes for evaluating new entrants. Prior to last week's policy shift, Cuban authorities required that any new provider of passenger services be fully licensed by OFAC and BIS prior to formal application for operating authority from Cuba. Notwithstanding the new blanket authorization given by the U.S. side, the Cuban authorities likely will continue to carefully screen new entrants on a case-by-case basis. Presentation of proposed new services and business plans, and efforts to construct new relationships with Cuban marine terminals, agents, and other local partners will still need to be carefully coordinated with relevant Cuban authorities. To date, there have been no public announcements of any U.S. passenger operators receiving approval from Cuban regulators to commence service.

Conclusions and Recommendations

The policy shift reflected by the Regulations provides an opportunity for a variety of industries, including, in particular, the maritime industry and passenger carriers. Changes in Cuba policy and opportunities to enter the Cuba trade are evolving quickly, especially in light of the past half-century's dearth of trade and diplomatic relations. Parties that stand to gain from these developments should consult with counsel sooner than later to ensure opportunities do not pass them by.

Footnote

1. See http://www.treasury.gov/press-center/press-releases/Pages/jl0169.aspx.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Stefanos N. Roulakis
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions