Cuban economist Pedro Monreal released an analysis this Friday cautioning that the latest reform to Cuba's foreign investment law eases certain operational aspects but fails to address the most crucial concern for any investor: if the investment fails, will there be a way to recover the funds?
Monreal's analysis, titled "Foreign Investment Law: The Cuban Diaspora Invited to Invest but Unprotected in Litigation," focuses on Decree-Law 128/2026. This decree was signed by the Council of State on July 28, 2026, and published in the Ordinary Official Gazette No. 73 just a day before, on September 3.
From the outset, Monreal clarifies that the regulation does not create a new foreign investment law. Instead, it amends specific articles of Law 118 of 2014, and his observations are made from an economist's perspective rather than a legal one.
Key Amendments Introduced
Among the concrete changes introduced by the decree are the removal of the requirement to hire workers through state employment agencies—allowing for direct hiring—the replacement of the previous authorization by the Central Bank of Cuba for opening accounts in foreign banks with a simple notification, and granting mixed and fully foreign-owned enterprises the authority to decide the destination of their profits.
However, the economist notes that none of these amendments address Chapter XVII of Law 118, which governs the resolution of disputes between investors and the Cuban state.
Investor Protection Remains Unchanged
"The revised regulation eases banking services, profit management, and employment conditions, but does not redesign the procedural guarantees for investors. In fact, it does not alter Chapter XVII 'On the Conflict Resolution Regime,'" Monreal wrote.
This chapter dictates that disputes are resolved as stipulated in the constitutive documents, with the possibility of turning to the Economic Chamber of the Provincial People's Court or arbitration bodies according to Cuban legislation, without guaranteed access to independent international arbitration.
"Practically speaking, the revised Chapter XVII of Law 118/2024 indicates that if a conflict arises, it will be challenging to submit it to a neutral arbitrator and enforce a favorable decision," warned Monreal.
Context of Legal Reforms
The analysis emerges amidst a wave of legal reforms that the Cuban regime has presented as a historic opening to attract diaspora capital, in the context of a severe economic crisis.
In April 2026, the Council of State approved Decree-Law 117/2026, which created a new migratory category of "Investors and Business" for Cubans residing abroad, published in the Official Gazette on May 5. This category allows emigrants to invest in SMEs, open foreign currency accounts, participate in investment funds, and develop agricultural businesses with usufruct land.
In July, Decree 153/2026 modified the regulation of Law 118 to expedite the evaluation and approval of investments. Despite this sequence of openings, Monreal has consistently argued throughout 2026 that without real legal guarantees—independent arbitration, guarantee funds against political risks, protection against expropriation, and commitments to non-retroactive regulation—many emigrants will prefer to continue sending remittances rather than risk capital on the island.
Monreal summarized his stance in the subtitle of his analysis: "Ease of Foreign Investment without Reducing the Risk of Non-Payment."
"The recent revision of Cuba's foreign investment law does not clearly answer a decisive question for any investment committee: 'if things go south, can we recover our funds?'" concluded Monreal, suggesting that legal experts could provide complementary analysis from their field of expertise.
FAQs on Cuba's Foreign Investment Law Revisions
What are the main changes introduced by the new decree in Cuba's foreign investment law?
The new decree eliminates the requirement to hire workers through state agencies, allows direct hiring, replaces the need for Central Bank authorization to open foreign bank accounts with a notification, and gives companies the power to decide the use of their profits.
Does the revised law provide any new protections for investors?
No, the revised law does not change Chapter XVII, which deals with conflict resolution, leaving investors without guaranteed access to independent international arbitration.
What is the new migratory category introduced for Cuban residents abroad?
The new migratory category, "Investors and Business," allows Cubans living overseas to engage in investment activities on the island, such as investing in SMEs and participating in investment funds.