Debt сollection in Cuba

The process of debt collection in Cuba begins with a legal, financial and documentary assessment of the debtor. At this stage, it is important to verify the basis of the obligation, the contract, invoices, delivery documents or service records, business correspondence, partial payments, debt acknowledgment, pending court cases, enforcement proceedings, and the actual possibility of identifying the debtor’s property, bank accounts or other assets in Cuba.

In Cuba, it is especially important to identify the type of debtor correctly. The strategy may differ if the debtor is an individual, a state entity, a micro, small or medium-sized enterprise, a non-agricultural cooperative, a self-employed person, a commercial company or another authorized form of organization. It should also be established whether the debtor operates through a branch, representative office, business unit or other place of activity in Cuba, as these factors may affect court jurisdiction, service of process and later enforcement.

If the debtor continues to conduct economic activity, there are no immediate signs of irreversible insolvency, and the debt is sufficiently supported by documents, an out-of-court stage may be used first. This stage helps clarify the debtor’s position, obtain written acknowledgment of the debt, negotiate a payment schedule and prepare evidence for possible court proceedings.

The out-of-court stage is based on documented negotiations with the debtor in order to obtain payment, agree on a payment schedule or reach another legally useful solution for the creditor, such as the return of goods, set-off, assignment of the claim to a third party or an equivalent commercial settlement.

Communication with the debtor may be carried out by post, email, telephone, messages or other available channels, but each contact should be preserved as evidence. In out-of-court debt collection, the purpose is not to apply improper pressure, but to formally record the claim, confirm the existence of the debt, identify the decision-makers, establish the debtor’s position and obtain a response that may be used at a later court stage.

Before going to court, a documented payment demand is made and evidence of sending, receipt, response or lack of response from the debtor is preserved. If negotiations do not produce a useful result, the debtor denies the debt without sufficient grounds, fails to comply with a payment schedule, or the initial analysis shows that an amicable route is not suitable, the creditor should prepare judicial debt collection.

Before initiating judicial collection, the creditor should verify the applicable limitation period. Under Cuban civil law, civil claims are subject to a five-year limitation period unless the law establishes a different term. Limitation periods cannot be changed by agreement of the parties, except where the law expressly allows it. The limitation period starts running from the moment when the action could be brought and may be interrupted by filing a claim in court, by an out-of-court demand or by any act of the debtor acknowledging the existence of the legal relationship. After interruption, a new period of the same duration begins to run.

When calculating the amount claimed, the creditor should separate the principal debt, damages, contractual penalties, expenses and possible interest. In Cuba, it should not be assumed that interest can be claimed automatically for any monetary obligation. Civil law takes a restrictive approach to interest in monetary and other obligations, except for obligations arising from credit institution operations or foreign trade transactions. Therefore, in judicial debt collection, each component of the claimed amount should be justified separately and supported by the relevant document.

Cuban law allows a creditor to seek payment through the courts when there is a due, enforceable and sufficiently documented obligation. In judicial debt collection, it is first necessary to determine whether the dispute falls within Cuban jurisdiction and which court is competent. Cuban courts may hear the case when the parties have expressly or tacitly submitted to their jurisdiction, when the applicable law chosen by the parties is Cuban law, when the debtor has a domicile or residence in Cuba, when a foreign legal entity has a domicile or representation in Cuba in relation to acts or contracts concluded by that representation, when the obligation must be performed in Cuba, or when the relevant act, contract or legal fact produces effects in Cuban territory.

In commercial matters, Cuban courts may hear disputes between individuals or legal entities arising from contractual relationships within a commercial, production or service activity for which both parties are authorized, as well as non-contractual claims for damages caused in the course of commercial activity. In the absence of express or tacit submission to a court, territorial jurisdiction may be determined by the place where the contract must be performed, the place where the damage occurred, the defendant’s domicile, or the location of a business unit, branch, representative office or other structure without separate legal personality when the claimed obligation must be performed through it.

Commercial disputes are heard under the ordinary procedure. The claim is filed in writing and must identify the claimant and the defendant, state the debtor’s domicile or location, set out the facts in numbered form, provide the legal basis, formulate the specific request, indicate the amount claimed and specify the proposed evidence. If the debtor conducts commercial activity, it is also useful to indicate available information about the bank account through which the debtor operates, the bank office and the locality. In debt collection cases, this information may help with later asset tracing and enforcement of a favorable judgment.

The claim should be accompanied by documents proving representation, the capacity in which the creditor acts and the right being asserted. In a commercial debt dispute, relevant documents usually include the contract, invoices, delivery documents, service records, account statements, correspondence, debt acknowledgments, partial payments, payment demands sent to the debtor and a detailed calculation of the claimed amount. In commercial claims, it is also necessary to prove that prior steps were taken to collect the debt or request performance of the obligation on which the claim is based. If certain documents are not in the creditor’s possession, the claim should indicate the archive, office or place where the originals are located. Documents issued abroad must meet the requirements for use in Cuban court proceedings.

Before the case proceeds, the court reviews whether there are procedural defects preventing the claim from being heard. If a defect can be corrected, the court grants the claimant a period of no more than five days to correct it. If the defect is not corrected, the claim may be rejected. Once the claim is admitted, the defendant is summoned to appear and respond within twenty days. If the defendant is outside the district where the court is located, or if another justified circumstance exists, the response period may be extended, but the extension cannot exceed twenty days.

If the defendant has a known domicile abroad and has no representative or attorney authorized to act on their behalf, service may be carried out through international legal assistance within the period set by the court, which cannot exceed ninety days. Service may also be carried out by another method that ensures the defendant is informed of the claim. If the foreign defendant’s domicile or location is unknown, the special procedural notification rules for such cases apply.

If the defendant does not appear within the legal period, the claim is deemed answered to the defendant’s detriment and the proceedings continue in default. A defendant declared in default may later appear to exercise the rights they consider appropriate, but this does not by itself return the proceedings to an earlier stage, except in cases provided by law. If the defendant appears within the term, they may fully or partially admit the claim, oppose it, raise procedural objections or file a counterclaim where permitted.

When the defendant admits the claim brought against them and the subject matter may be disposed of by the parties, the court may declare the proceedings concluded and issue a judgment without further steps within a period not exceeding twenty days. If there is opposition, procedural objections may be raised, including lack of subject-matter jurisdiction, lack of procedural capacity, improper representation, defects in the way the claim was filed, improper joinder of claims, a parallel pending proceeding, or improper formation of the procedural relationship.

If the dispute concerns only the application of law, interpretation of legislation, or facts already proven by the submitted documents and materials, the court may dispense with a hearing, declare the proceedings concluded and issue judgment within a period not exceeding twenty days. In other cases, after the response to the claim or after the response period expires, the court may summon the parties to a preliminary hearing, which must be scheduled within a period not exceeding ten days. The parties attend through their procedural representatives and present evidence in accordance with the court’s decision on admissibility.

The preliminary hearing is used to organize the dispute, examine procedural objections, define the disputed issues, assess the admissibility of evidence and promote settlement where possible. If the court considers that the parties may reach an agreement, it may suspend the preliminary hearing for a period not exceeding twenty days so that the parties can try to resolve certain issues outside the court. The dispute may also be referred to mediation where applicable. If a clear and final agreement is reached, the court may approve it; if no full agreement is reached, the proceedings continue.

If the evidence can be examined at the preliminary hearing, the court invites the parties to make their oral closing submissions and leaves the case ready for judgment, which must be issued within a period not exceeding twenty days. If all evidence cannot be examined at that hearing, the evidentiary stage must generally be completed within a period not exceeding sixty days. Before that stage ends, the parties may propose additional evidence in cases provided by law. After the examination of evidence is completed, the parties make oral closing submissions and the court issues its decision within the legal period.

The summary procedure applies to categories of cases determined by procedural law, mainly civil, family, labor and social security matters, as well as certain situations after a judgment has become final or when opposition arises in voluntary jurisdiction matters. In such cases, the claim is filed under rules similar to the ordinary procedure, the defendant responds within ten days, the period may be extended by no more than ten days where permitted, and the proceedings are concentrated, as far as possible, in a single hearing. If evidence cannot be fully examined at that hearing, it may be completed within a general period not exceeding thirty days, extendable by five days for justified reasons. Judgment is issued within a period not exceeding ten days after the proceedings are concluded.

In addition to the ordinary procedure, certain claims may be brought through the enforcement procedure for credit instruments when the creditor holds a liquid, due and enforceable title. Depending on the case, relevant documents may include public deeds, bills of exchange, promissory notes, checks with the required protests or equivalent declarations, credit operation contracts with financial institutions, guarantees arising from contracts, private documents whose signature or debt is recognized in a preliminary proceeding, or debt confession obtained in a preliminary proceeding. This route is especially important when the document has enforceable force and allows the creditor to seek payment without going through the full discussion typical of an ordinary declaratory procedure.

A first-instance judgment may be challenged by appeal within ten days from notification of the decision. The appeal is filed in writing and must state the reasons for disagreement. Non-appealing parties may submit reasoned objections within ten days, and the higher court may hear the case with a hearing where appropriate. After the hearing, or without a hearing if none is ordered, the court issues its decision within a period not exceeding twenty days. If the appeal is upheld, the decision may be revoked or amended; if it is rejected, the challenged decision is confirmed.

In cases provided by law, a cassation appeal may be brought against decisions of the Provincial People’s Court. It must be filed within ten days from notification of the challenged decision and must be based on legally admitted grounds, such as violation of procedural formalities and guarantees affecting the decision, arbitrary or unreasonable assessment of evidence, or a relevant error in the interpretation and application of legal sources. If the appeal is rejected, the decision is confirmed and becomes final; if it is upheld, the court may annul the decision, issue a new judgment or declare procedural acts void where necessary to remedy the violation.

If the creditor has already obtained a decision from a foreign court, it is necessary to assess the recognition and enforcement of foreign judgments in Cuba. Final foreign court decisions have in Cuba the effect granted by applicable treaties and, in the absence of an applicable treaty, may be enforced as domestic decisions where the conditions established by Cuban law are met.

In recognition and enforcement, several issues are examined, including whether the dispute does not fall within the exclusive jurisdiction of Cuban courts, whether the defendant was duly summoned and notified under the rules of the state of origin, whether the decision is not contrary to public order, whether it is not incompatible with an earlier Cuban decision or a foreign decision recognizable in Cuba on the same matter, whether the foreign proceedings were not initiated after Cuban proceedings involving the same parties, subject matter and cause, whether the foreign court had jurisdiction, and whether the document meets the required authenticity standards.

The application is usually filed with the Supreme People’s Court, unless a valid treaty provides for different jurisdiction. The application should include the document containing the foreign decision, an official translation into the language of Cuban court proceedings if the decision was issued in another language, and the relevant copies for the person against whom enforcement is requested. If enforcement is authorized, the enforceable instrument is sent to the competent court of the place where the obligated person is located in Cuba. Foreign arbitral awards may also require prior recognition by the Supreme People’s Court if enforcement is sought in Cuban territory.

After the judgment becomes final, the creditor may initiate the enforcement procedure before the court that heard the case at first or sole instance. Enforcement is carried out at the request of the interested party and in accordance with procedural rules. If the judgment establishes a specific monetary amount, the creditor may request the measures necessary to obtain actual payment. If particular amounts, damages, expenses or interest still need to be calculated, the successful party should submit the corresponding calculation when requesting enforcement.

In the enforcement of monetary obligations, the court may take measures against the debtor’s property, property rights, bank accounts and other assets. The court may also request information from state authorities, registries, banks and other organizations in order to identify the debtor’s property or property rights. For seized property, rules on valuation, allocation, judicial sale, payment to the creditor and third-party objections may apply. If the obligated person resists compliance, the court may use coercive measures, request assistance from state bodies and, where the conduct may constitute a criminal offense, refer the relevant information.

If the debtor shows signs of insolvency, the creditor should assess whether recovery can be achieved through an individual claim, through enforcement against specific assets, or through a broader strategy aimed at preserving property available for satisfying creditors. This assessment is especially important where the debtor stops paying overdue obligations, accumulates claims from several creditors, does not maintain sufficient assets to cover debts, or continues operating while artificially reducing the available asset base.

In an insolvency situation, the creditor should not limit the review to the existence of money in bank accounts or registered property. It is also necessary to determine whether, before or after default, transactions were carried out that unjustifiably reduced the debtor’s assets. In Cuba, this review may include sales of property below market value, free transfers of assets, transfers to related persons, artificial creation of debts or guarantees, removal of assets from the reach of creditors, personal use of company property, concealment of assets in accounting records, or submission of financial information that does not reflect the debtor’s real situation.

Cuban civil law allows a creditor to seek protection against acts carried out by the debtor in fraud of the creditor’s rights. If the debtor has carried out acts that prejudice recovery and the creditor cannot satisfy the claim otherwise, it may be relevant to challenge such transactions. Grounds for rescission or ineffectiveness of certain legal acts may also be analyzed where the legal conditions are met. The practical effect of such challenge may include restitution of property, fruits, price and interest, or restoration of asset value that can be used to satisfy the claim.

In more serious cases, the debtor’s conduct may have criminal relevance. Cuban criminal law provides for punishable insolvency in cases such as removing assets to the detriment of creditors, concealing them, simulating transfers or debts, moving assets abroad, disposing of property in fraud of creditors’ rights, or intentionally causing or aggravating insolvency in bankruptcy, creditors’ proceedings or suspension of payments. Submission of false financial information in such proceedings may also have legal consequences.

If directors, owners, shareholders or other persons who effectively control the debtor’s conduct participate in fraudulent asset transfers, concealment of property, simulated transactions, personal use of company assets or intentional aggravation of insolvency, civil and criminal consequences may arise in connection with those acts. Therefore, in debt collection in Cuba, insolvency analysis is not only used to assess the debtor’s ability to pay, but also to identify challengeable transactions, recover diverted assets and increase the practical chances of satisfying the creditor’s claim.

If you need assistance with debt collection in Cuba, Grandliga can analyze the documents, assess the debtor’s situation, define the recovery strategy and carry out the necessary actions at each stage of the procedure. Our work may include out-of-court payment demands, negotiations with the debtor, preparation of evidence, filing of court claims, coordination of court proceedings, recognition and enforcement of foreign judgments, monitoring of the enforcement procedure, and measures against insolvency, concealment of assets or fraudulent transfers of property. The goal is to build a practical international debt collection strategy adapted to the creditor, the specific debtor and the assets available in Cuba.

# DEBT COLLECTION AGENCY CUBA

26.08.2024

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