The Legal Blog

The Original Gold Rush

A few months ago, while cleaning out some old boxes, I came upon some old stock certificates for a gold mining company.  For just a moment, I thought “wow, I might be rich.” It’s kind of like when you buy that lottery ticket but the numbers haven’t yet been drawn.  A bit of research and I realized the value of these certificates were solely in the “coolness factor.”

As I researched these certificates, I became fascinated by the courage and entrepreneurial spirit of those who traveled westward in the mid 1800s to find their fortunes during the California Gold Rush.  The folks seeking their fortunes at this time found mining hazardous and difficult with absolutely no guarantee of success. It was those business-savvy individuals who were the most successful.

The Cuba Gold Rush

Today,  doing business in Cuba is very much the same.  

As you consider providing your services in Cuba, think like those successful California Gold Rush entrepreneurs.  Be that business and legal-savvy “Cuba Gold Rush” participant.

What does it mean to be a business and legal- savvy participant in the “Cuba Gold Rush”?  For ease of understanding, let’s break up the discussion into “In-Country” and “Project” Considerations.

In-Country Considerations

Work Permits

The US government currently approves of US citizens traveling under one of 12 specific categories for a valid visit to Cuba. You won’t need to actually apply for a visa or license if you’re traveling for one of these 12 reasons, however, you must be able to offer proof that your trip actually fits into one of these categories if requested by the US government or a customs officer. It’s also recommended that you keep records and receipts of everything you did in Cuba for up to five years after you return.  

Safety and Insurance

With an official status of Level 2, the U.S. State Department currently recommends visitors use “increased caution.”   Further, most U.S. health insurance cannot be used in Cuba. In case of an emergency more serious than what your first aid kit can handle, you’ll want to have healthcare and travel insurance valid in Cuba ahead of time..  Any agreements you enter into will need to address who is responsible if you are injured, fall sick etc., while in-country.   

Legal Rights

During the mid-1800s, California existed in the unusual condition of a region under military control.  The early gold miners lived under a confusing and changing mixture of rules and personal dictates. Cuba today is somewhat the same.  If you travel to Cuba to perform your services, you will need to be mindful of the constantly changing Cuban rules and regulations. As a U.S. citizens in Cuba, you are subject to Cuban laws; and the U.S. Embassy cannot negotiate or secure a U.S. citizen’s release from jail, for example.   Be mindful of and do your best to minimize your risk when you enter into agreements to do work in Cuba as well as when in-country.

Credit cards 

Financial transactions in Cuba can be challenging.  The card payment infrastructure in Cuba isn’t yet in place for widespread acceptance of credit cards. Cuba is basically stuck in a time warp, meaning they don’t have the financial infrastructure that would make it easy for an American to make transactions on the island. Since only a few credit cards can be used in Cuba you will either need to carry cash or obtain one that is accepted in Cuba.  the additional burden/cost involved may best be addressed in any agreements you enter into.

Hotels, Restaurants, Stores

The recent U.S. State Department’s Cuba Restricted List (CRL) bans Americans from entering into any contract with a company run or controlled by the Cuban government. Most of the economy is run by the state and most of the workforce is employed by the state.  This makes understanding the CRL critical to your savvy approach in-country. It will be important for you to closely analyze proposed activities in order to anticipate and avoid transactions with CRL-listed entities.  It will be very important that you book and utilize only non-CRL-listed hotels, restaurants, stores, and the like.

Project Considerations

Project Timeline

In the 1800s, the life of a gold miner involved difficult work and great responsibility.  Similar conditions will be experienced today in Cuba. In-country you will face challenges and difficulties in communication, technology, and overall working conditions. Therefore, it will be important that any agreement you enter into does NOT impose a penalty if project dates are missed. For example, simple logistics may be difficult – finding supplies you need in-country etc.  Further, since you may incur unforeseen additional costs for lengthening of project timelines, those vague unknown costs should be included in the agreement up front.

Technology Transfer Regulations

Broad restrictions remain in effect by the U.S. Government for most transactions involving Cuban Government and government-owned/controlled enterprises as mentioned previously.  If your client falls into either of these categories, you will be legally restricted from performing your services at all. Further, the U.S. government restricts the export of many U.S. origin goods, software, technology, and services. Restrictions include for participation, approval or facilitation of such transactions by non-U.S. persons, or evasion of the sanctions regulations.  These regulations are for transferring the controlled technology into Cuba to anyone or any reason. (not just government controlled entities) You will have to be careful even of presentations you may give in Cuba or conversations you may have. The best approach is to set up a standard process to do an Export Control review and approval of everything being provided to a Cuban national or in-country Cuba.  

Internet 

In the 1800s, a key concern for the gold miners was their inability to keep in touch with family remaining at home.  Beneficially, this demand led to the development of new communication tools that would help them bridge the distance.  It is expected that modern day Cuba may soon achieve similarly an improved communication capability. However, not today.  Most hotels in Cuba do provide Internet at an additional rate. Typically, Internet comes in the form of a prepaid card where you scratch off a code and connect with your own devices.  The spotty and basic lack of Internet may impact your project. Further, there is no guarantee of Internet security, which could impact your ability to keep your confidential material confidential.  Basically, you’ll are advised to use a different methodology that is “disconnected” for a consultancy in Cuba.  

Cellphone

Since you won’t be able to get much roaming service in Cuba on your US cell phone (if you can manage to get it to work, it won’t be cheap), you have a few other options.  You could rent a cellphone in Cuba but it still may not be reliable. Just like the Internet conditions, this may impact your project and your ability to retain confidentiality.

If you’ve read to the end of this article, you hopefully have the courage and entrepreneurial spirit to travel southward to be an active and successful participant in the “Cuba Gold Rush.”  I wish you every success as you do so.

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