Collecting overdue receivables is challenging in any cross-border context, but debt collection in Cuba presents unique legal, political, and practical obstacles for American companies. U.S. exporters trading with Cuban counterparties must navigate not only commercial law, but also sanctions, currency controls, and enforcement limitations. Understanding these realities is essential for increasing the chances of successful recovery.
Legal and Regulatory Context
Cuba operates under a state-influenced economic system where many “companies” are state-owned or closely supervised by government entities. This means that traditional assumptions about corporate autonomy, asset ownership, and insolvency do not always apply. From a U.S. perspective, additional complexity arises from U.S. sanctions administered by the Office of Foreign Assets Control (OFAC). Even when trade is licensed or permitted, debt recovery actions must remain compliant with U.S. law.
Before initiating any collection effort, an American company should confirm that pursuing payment, receiving funds, or enforcing a judgment does not violate sanctions regulations. In many cases, specific OFAC licenses may be required to receive payments from Cuban entities.
Contractual Foundations Matter
The most effective debt collection in Cuba starts long before a payment default occurs. American exporters should ensure that contracts are carefully drafted, ideally including:
Clear payment terms and deadlines
Governing law clauses (preferably neutral or international law)
Arbitration clauses with a recognized international arbitration forum
Defined dispute resolution mechanisms
Cuban courts are rarely a practical venue for foreign creditors, and foreign judgments are difficult to enforce locally. Arbitration awards, while still challenging, may provide more leverage in negotiations.
Practical Collection Strategies
When a debt becomes overdue, direct litigation is often less effective than structured negotiation. Cuban companies may face liquidity shortages, currency conversion restrictions, or bureaucratic delays rather than intentional non-payment. Early engagement, formal demand letters, and involvement of local counsel or international collection specialists can help clarify whether the debt is disputed or simply stalled.
American exporters should also assess whether the Cuban debtor has:
Assets or receivables outside Cuba
Relationships with international banks
Ongoing trade dependencies that can be leveraged
In some cases, collection efforts are more successful when focused on offshore assets or payments routed through third countries, always ensuring sanctions compliance.
Key Recommendations for American Exporters
To improve recovery prospects, U.S. companies should:
Conduct enhanced due diligence on Cuban buyers before extending credit.
Use advance payments, letters of credit, or escrow arrangements where possible.
Limit credit exposure and avoid rolling unpaid balances.
Act quickly once payment delays arise; time weakens leverage.
Engage legal counsel experienced in sanctions and debt collection in Cuba.
Conclusion
Recovering debt from a Cuban company is complex but not impossible. Success depends on proactive contract structuring, regulatory awareness, and realistic enforcement strategies. For American exporters, prevention is the strongest tool, but when disputes arise, informed and compliant action can significantly improve the chances of recovery.
Author of the material - Grandliga.
