Gowlings enters thawing Cuban market

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Prompted by the historic talks between Cuba and the United States to normalize their relations, Canadian law firm Gowling Lafleur Henderson LLP is launching a Cuba initiative aimed at advising clients seeking to invest in the Communist island as it opens up.

The move, to be officially announced on Tuesday, will see the firm counsel Canadian and European businesses looking to set up shop in Cuba, where observers say a building boom is in the offing to prepare for a flood of U.S. tourists, who will need new hotels, roads and other infrastructure.

The diplomatic talks with the U.S., brokered by Canada and made public on Dec. 17, follow a series of market-based economic reforms in recent years by Cuban President Raul Castro. But it is expected to take years before the U.S. trade embargo on Cuba lifts.

"The real opportunity for Canadians is, we have a normal relationship now. There's obviously going to be a significant opening up, but at the moment we are not competing with U.S. companies to enter into the market," said Scott Jolliffe, chairman and chief executive of Gowlings, in an interview.

The law firm's initiative involves well-known long-time Conservative fundraiser Ralph Lean, a lawyer who had been working with clients interested in Cuba for several years while he was at his previous firms, Cassels Brock & Blackwell LLP and Heenan Blaikie LLP.

The initiative will be led by Gowlings partners Paul Fornazzari and Stuart Olley, and involve a Havana-based Canadian lawyer, Gregory Biniowsky, who previously worked with Heenan Blaikie. Recently hired Spanish-speaking merger-and-acquisitions partner France Tenaille is also involved.

Foreign law firms are not allowed to practice law in Cuba, but Gowlings – under the banner Gowlings Consulting Inc. – says it will be partnering with a local law firm, and its staff will continue travelling frequently to the island.

Mr. Jolliffe says his law firm will be unaffected by the U.S. embargo, which has seen other Canadian business people active in Cuba banned from entering the United States, as Gowlings is not actually establishing a permanent Cuban office. He also said Gowlings will be able to assist American companies in using Canada as a vehicle to avoid the embargo and invest indirectly in Cuba.

Already, Mr. Lean says, Gowlings has about 10 clients, including construction companies as well as a medical tourism business that aims to take advantage of Cuba's well-known medical system by flying in patients seeking hip replacements and other procedures.

Mr. Lean, who travels frequently to Cuba and had worked with Mr. Biniowsky before, said the Dec. 17 announcement of the U.S.-Cuba talks prompted an increase in calls from prospective clients looking to do business there. That prompted him to bring the idea of establishing a formal Cuba practice to his bosses at Gowlings: "It's a dream, because I am a cigar guy."

It's not the first liberalizing Communist country where Gowlings has set up shop. The firm opened its Moscow office in 1990, before the final collapse of the Soviet Union but just months after the fall of the Berlin Wall.

In a phone interview from Havana, Mr. Biniowsky says Cuba is rife with opportunities for Canadian businesses. In tourism alone, the island is expected to skyrocket past its current pace of three million visitors a year, once it opens to the U.S.: "You have a tourist infrastructure that has to double, if not triple, in size. … That's a lot of hotel rooms, a lot of airport space, that's a lot of cruise ship terminals."

Mr. Jolliffe, the law firm's chairman and CEO, clients are not being dissuaded by concerns about a handful of Canadians and other foreign businessmen rounded up in recent years in what was described as an anti-corruption sweep, or fears about demands for bribes from poorly paid Cuban officials.

"We see that everywhere, no matter what country," Mr. Jolliffe said. "If the pace of that [imprisonments of foreign businessmen] increases then people may get cold feet. But I don't see it."