Florida’s Cuba Contract Ban Blocked by U.S. Appeals Court

Florida lost a court bid to reinstate a law prohibiting state agencies from entering into contracts worth $1 million or more with companies that do business with Cuba.

The U.S. Court of Appeals in Atlanta said today that the Florida measure “reaches far beyond the federal law in numerous ways and undermines the president’s exercise of the discretion afforded him by Congress.” A three-judge panel upheld a July ruling by a lower court in Miami barring enforcement of the law.

The “Cuba Amendment” legislation was signed on May 1, 2012, by Florida Governor Rick Scott, a Republican, and covers an estimated $8 billion in annual state contracts, the appeals court said. The law, designed to apply economic pressure to the communist regime in Cuba beyond the U.S. government sanctions already in place, was challenged by Odebrecht Construction Inc.

Since its founding in 1990, Odebrecht has received 35 public contracts in Florida worth almost $4 billion, the appeals court said.

While Odebrecht Construction Inc. has never conducted business in Cuba, its parent company in Brazil, Odebrecht SA, owns foreign subsidiaries that do business on the island nation, the appeals court said.

‘Foreign Parents’

The Florida law “penalizes U.S. companies for the business activities of their foreign parents or their foreign affiliates, no matter how remote the connection,” the appeals court said.

Several foreign countries, including Canada, Norway, Switzerland and Singapore, have expressed concern that the Florida law conflicts with U.S. commitments under World Trade Organization agreements covering government contracts, the appeals court said.

John Lucas, spokesman for Florida attorney general Pam Bondi, declined to comment on today’s ruling.

The case is Odebrecht Construction Inc. v. Secretary, Florida Department of Transportation, 12-13958, U.S. Court of Appeals for the Eleventh Circuit (Atlanta).

To contact the reporter on this story: Andrew Dunn in New York at adunn8@bloomberg.net

To contact the editor responsible for this story: Andrew Dunn at adunn8@bloomberg.net

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