On the 1st of May the White House issued an executive order introducing wide-ranging secondary sanctions through its US Cuba sanctions program.¹ Prior to the release of this EO, the US sanctions program operated primarily as a jurisdictional regime, prohibiting US persons from engaging in virtually all dealings with Cuba and Cuban nationals under the Cuban Assets Control Regulations (CACR), with limited secondary reach against non-US persons.² The changes introduced now aim to alter the current status quo – sectors such as energy, defense and defense materials, metals and mining, financial services and security are now in scope of the newly introduced sanctions – with the legal ability of additional sectors of the economy to be added to the list at the Treasury Secretary’s discretion.³ The designation criteria are also broad: they capture not just direct operators in those sectors but anyone who owns, controls, or has materially assisted a designated person, any senior executive or board member of a designated entity, and — notably — adult family members of designated individuals.⁴
The Legal Architecture Behind the New Sanctions
The EO is based in the statutory documents — the International Emergency Economic Powers Act (50 U.S.C. 1701) (IEEPA), allowing for broader enforcement and extending into the secondary sanctions capability against non-US persons.²
The National Emergencies Act (NEA) provides the procedural framework, with the EO taking further steps pursuant to the national emergency first declared in Executive Order 14380 of 29 January 2026.⁵
Section 212(f) of the Immigration and Nationality Act provides the legal basis for the travel ban provisions in Section 3 of the EO, suspending entry into the United States of persons determined to meet the designation criteria.²
The EO also references Executive Order 14380, authorising secondary tariffs on nations engaging in certain dealings with Cuba — provisions rendered ineffectual when the Supreme Court ruled against them on 20 February 2026.⁵ The EO in effect aims to circumvent the US Supreme Court’s decision and represents a deliberate pivot away from the tariff-based mechanism struck down by the Supreme Court on 20 February 2026 in Learning Resources, Inc. v. Trump, substituting IEEPA-authorised sanctions — a separate and legally established power — to achieve similar economic pressure objectives.⁶
The Blocking Regulation Gap: Where EU and UK Protections Fall Short
In practice – for both EU and UK companies and financial institutions the newly created secondary sanctions risk is now live and operational – Neither the UK or the EU legal frameworks create a legal obligation or protection in respect of the new Cuba related EO. This automatically means that compliance decisions surrounding Cuban exposure in those sectors have to be made on a commercial and legal risk basis, without any specific legislation to rely on.
For financial institutions in particular, the FFI secondary sanctions provision — which mirrors the structure of the Iran secondary sanctions that caused significant derisking across European banks — should be the immediate focus of review.⁴
Alongside the designation actions, OFAC issued General Licence 1 on 7 May 2026, preserving all transactions already authorised or exempt under the Cuban Assets Control Regulations (CACR) — ensuring that existing CACR-licensed activity is not disrupted solely by reason of a counterparty’s concurrent designation under EO 14404.³ Separately, OFAC announced a limited non-targeting posture for non-US persons engaging in transactions ordinarily incident and necessary to winding down dealings with GAESA, or any entity in which GAESA owns, directly or indirectly, a 50 percent or greater interest, through 5 June 2026.³ This window is narrow, the GAESA ownership perimeter is wide — covering an estimated 40 percent or more of Cuba’s economy⁷ — and OFAC has explicitly cautioned that actions returning assets to GAESA or transferring them for its potential use remain subject to significant sanctions risk.³ Non-US persons unable to complete wind-down before the deadline are encouraged to contact the OFAC Compliance Hotline directly.³
Context: The Sanctions Landscape Before 1 May 2026
EU Framework
Article 5 of Council Regulation (EC) No 2271/96 prohibits EU operators from complying with the US Cuba measures listed in its Annex.⁸ The Annex currently captures the Helms-Burton Act, the Cuban Democracy Act, and the Cuban Assets Control Regulations.⁸ The 1 May 2026 EO is a new, freestanding legal authority created under IEEPA and the blocking obligation under Article 5 does not currently apply to it.
Whether the European Commission will add the Executive Order to the Annex is an open question. There is already established precedent for these types of changes and inclusion of new US legislation under the Article 5 of Council Regulation (EC) No 2271/96 umbrella — the EU Commission updated the Annex rapidly in August 2018 to capture the re-imposed Iran sanctions following the US withdrawal from JCPOA.⁹ But that was a politically motivated update driven by the EU’s interest in preserving the Iran nuclear deal. The political calculations and interests relating to Cuba in 2026 are different and not as strong as the Iranian and there is no guarantee of an equivalent response. Until and unless the Commission introduces such delegated regulation, EU operators are in a legal gap: the new secondary sanctions risk is real, but the blocking protection does not extend to it.
The Court of Justice of the EU, in Bank Melli Iran v. Telekom Deutschland GmbH, held that Article 5 prohibits compliance with US secondary sanctions even in the absence of a specific US enforcement action, and that an EU operator terminating a contract for reasons connected with US sanctions must, in principle, be able to demonstrate that the termination is unrelated to those sanctions.¹⁰ However, as with Article 5, the judicially established precedent obligation only applies to listed instruments — which the new EO is not, at least not yet.
UK Framework
Post-Brexit, the United Kingdom retained under UK law the EU Blocking Regulation as it stood in December 2020. The UK enforcement powers and penalties are set out in the Extraterritorial US Legislation (Sanctions against Cuba, Iran and Libya) (Protection of Trading Interests) Order 1996.¹¹ The UK instrument is therefore frozen at the pre-Brexit position — it captures the same listed instruments the EU Annex captured at that date, and has no mechanism for automatic updating to reflect new US measures. The UK would need to separately legislate or amend the 1996 Order to extend protection to the new EO. There is no indication of whether this is the government intention and that this is imminent.
The UK-Cuba Bilateral Investment Treaty: Protection Against Cuba, Not Against Washington
The UK and Cuba concluded their Bilateral Investment Treaty (BIT) in 1995, and it has remained in force since.¹² It sits within Cuba’s broader network of roughly 60 BITs, mostly with European and Latin American states,¹² and the UK-Cuba BIT is described by international investment law practitioners as among the most expansive of Cuba’s bilateral investment treaties.¹³
Substantive Protections and Their Limits
Cuba’s investment treaties, including the UK-Cuba BIT, include many of the key investment protections common to bilateral investment treaties worldwide: full protection and security, fair and equitable treatment, national treatment, most-favoured-nation treatment, umbrella clauses, and protections against expropriation.¹³
In essence, the BIT protects UK investors against action by the Cuban state. It creates no shield against third-country measures, including US sanctions — which is where the second part of your question becomes extremely significant. It is also important to note that any arbitration claim under the BIT would run against Cuba as the contracting state party — not against the United States — providing no mechanism whatsoever to challenge an OFAC designation or resist its consequences.¹³
Another UK legal instrument — The UK’s Protection of Trading Interests Act 1980 (PTIA) makes it a civil and criminal offence for UK-registered persons to comply with extraterritorial measures that conflict with UK trading interests.¹⁴ The UK has also retained the EU Blocking Regulation post-Brexit.¹¹ In principle, both legal instruments can prohibit UK persons from voluntarily complying with US Cuba sanctions. However, the protection those two legal instruments provide is largely theoretical — in practice, UK companies caught between the two will choose to de-risk from Cuba rather than risk losing US market access, dollar clearing capabilities and correspondent banking relationships. No UK company has successfully used the PTIA as a genuine commercial shield against US extraterritorial reach.¹⁵
Two UK-linked entities with publicly documented exposure across the named sectors illustrate the practical stakes. Havana Energy, a UK-incorporated company, holds a 51 percent interest in Biopower SA, a joint venture with Cuban state sugar group Azcuba’s subsidiary Zerus SA, established to develop biomass power plants in Cuba — the first of which was built at a cost of approximately $180 million and commissioned around 2020.¹⁶ As an operator in Cuba’s energy sector, Havana Energy falls squarely within the sector-based designation authority introduced by EO 14404.² CEIBA Investments Limited (LSE: CBA), a Guernsey-incorporated closed-ended investment company listed on the Specialist Fund Segment of the London Stock Exchange, holds Cuban real estate assets including a 49 percent stake in the Miramar Trade Center in Havana, with a net asset value of approximately $116.8 million as at December 2025.¹⁷ GAESA’s designation is directly material to CEIBA, given GAESA’s extensive footprint across Cuban real estate and commercial infrastructure.⁷ Both entities — and any UK financial institution servicing them — face live and immediate compliance decisions.
This article is for informational purposes only and does not constitute legal or compliance advice. Always consult a qualified professional.
Sources
[1] White House Fact Sheet, “President Donald J. Trump Imposes Sanctions on Cuban Regime Officials Responsible for Repression and Threats to US National Security and Foreign Policy”, 1 May 2026. https://www.whitehouse.gov/fact-sheets/2026/05/fact-sheet-president-donald-j-trump-imposes-sanctions-on-cuban-regime-officials-responsible-for-repression-and-threats-to-u-s-national-security-and-foreign-policy/
[2] Office of Foreign Assets Control (OFAC), Executive Order 14404, “Imposing Sanctions on Those Responsible for Repression in Cuba and for Threats to United States National Security and Foreign Policy”, 1 May 2026. https://ofac.treasury.gov/media/935581/download?inline
[3] Office of Foreign Assets Control (OFAC), Frequently Asked Questions 1251–1256, issued 7 May 2026 — official OFAC guidance on EO 14404, General Licence 1, the GAESA wind-down posture (FAQ 1254), and the relationship between EO 14404 and the CACR (FAQ 1252–1253). https://ofac.treasury.gov/faqs/added/2026-05-07
[4] Morrison Foerster LLP, “New Cuba Sanctions Broaden Targeting Authorities — and Risk to Foreign Financial Institutions”, 8 May 2026 — analysis of designation criteria, the FFI secondary sanctions structure, and its parallel with the Russia EO 14114 secondary sanctions model. https://www.mofo.com/resources/insights/260508-new-cuba-sanctions-broaden-targeting
[5] Federal Register, Executive Order 14380, “Addressing Threats to the United States by the Government of Cuba”, 29 January 2026 — the national emergency declaration and secondary tariff framework. https://www.federalregister.gov/documents/2026/02/03/2026-02250/addressing-threats-to-the-united-states-by-the-government-of-cuba
[6] Sidley Austin LLP, “United States Announces New Cuba-Related Sanctions Program”, 8 May 2026 — analysis of EO 14404, the Supreme Court ruling in Learning Resources, Inc. v. Trump (20 February 2026), and the administration’s pivot from tariffs to IEEPA-based sanctions. https://www.sidley.com/en/insights/newsupdates/2026/05/united-states-announces-new-cuba-related-sanctions-program
[7] US Department of State, “US Sanctions Target Cuba’s Military Regime, Elites”, 7 May 2026 — official press release on the first designations under EO 14404, including GAESA’s designation and its estimated 40 percent control of Cuba’s economy. https://www.state.gov/releases/office-of-the-spokesperson/2026/05/u-s-sanctions-target-cubas-military-regime-elites/
[8] Council Regulation (EC) No 2271/96 of 22 November 1996 (EU Blocking Regulation) — primary EU legislative text, including Article 5 prohibition on compliance with listed extraterritorial US measures and the current Annex. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A31996R2271
[9] Commission Delegated Regulation (EU) 2018/1100 of 6 June 2018, amending the Annex to Council Regulation (EC) No 2271/96 to capture re-imposed US Iran sanctions following the US withdrawal from the JCPOA. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32018R1100
[10] Court of Justice of the European Union, Bank Melli Iran v. Telekom Deutschland GmbH, Case C-124/20, judgment of 21 December 2021. https://curia.europa.eu/juris/document/document.jsf?docid=250543&doclang=EN
[11] The Extraterritorial US Legislation (Sanctions against Cuba, Iran and Libya) (Protection of Trading Interests) Order 1996, SI 1996/3171 — UK implementation of the blocking obligation, frozen at the pre-Brexit position. https://www.legislation.gov.uk/uksi/1996/3171/contents
[12] UNCTAD Investment Policy Hub, Cuba — International Investment Agreements — records Cuba’s bilateral investment treaty network including the UK-Cuba BIT and its current in-force status. https://investmentpolicy.unctad.org/international-investment-agreements/countries/52/cuba
[13] Lexology / Steptoe & Johnson LLP, “Back to the Future? Foreign Investment Protection in Cuba”, October 2016 — legal analysis of the UK-Cuba BIT as “among the most expansive of Cuba’s bilateral investment treaties,” covering its substantive protections and dispute resolution provisions. https://www.lexology.com/library/detail.aspx?g=f055cb7f-420c-4296-966a-191d90a4fada
[14] Protection of Trading Interests Act 1980 — UK primary legislation making it a civil and criminal offence for UK-registered persons to comply with extraterritorial legislation conflicting with UK trading interests. https://www.legislation.gov.uk/ukpga/1980/11/contents
[15] UK Government (FCDO / Department for Business and Trade), “Overseas Business Risk: Cuba”, updated June 2023 — official UK government guidance on doing business in Cuba, referencing the UK-Cuba BIT, the blocking statute, and the practical risks of US extraterritorial reach. https://www.gov.uk/government/publications/overseas-business-risk-cuba/overseas-business-risk-cuba
[16] Power Magazine, “Cuba’s First Biomass-Fired Power Plant Inaugurated”, 2021 — contemporaneous industry report on the Ciro Redondo plant, confirming construction cost of approximately $180 million, the Havana Energy / Zerus joint venture structure, and commissioning date. https://www.powermag.com/cubas-first-biomass-fired-power-plant-inaugurated/
[17] CEIBA Investments Limited, Annual Report and Financial Statements for the year ended 31 December 2025, published April 2026 — primary source for NAV of US$116.8 million, market capitalisation, and the 49 percent interest in Monte Barreto / Miramar Trade Center. https://www.rns-pdf.londonstockexchange.com/rns/4799C_1-2026-4-29.pdf
