The authorities in Mexico say a US-owned hotel in Mexico City may have broken the law by expelling a group of Cuban officials.
The hotel now faces a big fine, Mexican officials say
The delegation was ordered out of the Hotel Maria Isabel Sheraton last week at the behest of Washington, because of the US embargo against Cuba.
Foreign Minister Luis Ernesto Derbez said the US law could not be applied in a third country.
Some 30 people held an anti-US rally outside the hotel.
The Cuban government said the incident showed US policy had been affecting other countries.
'Applying the law'
The Cuban officials were due to meet a group of US businessmen opposed to the embargo at the hotel on Saturday.
Starwood Hotels and Resorts Worldwide Inc., which owns the Sheraton chain, said the company was asked by the US Treasury Department to tell the Cubans to leave the hotel.
The meeting was then moved to a Mexican-owned hotel.
Speaking to the BBC on Tuesday, Foreign Minister Luis Ernesto Derbez said the US embargo (the Helms-Burton law) could not be applied outside the US.
Mr Derbez - who a day earlier announced an investigation into the incident - also said the hotel may have broken local laws which ban discrimination.
He said the Sheraton chain could be fined up to $500,000.
The office of Mexican President Vicente Fox said on Tuesday that the authorities were looking into the eviction, pledging to "vigorously apply the law" if any wrongdoing was found.
In Washington, State Department spokesman Sean McCormack said the Sheraton in Mexico City was a subsidiary of a US-owned hotel group and therefore subject to US laws and regulations.
"Very basically, US law would apply to US corporations or subsidiaries of US corporations, no matter where they may be - whether it's in Mexico City or in Europe or South America," Mr McCormack was quoted as saying by Reuters news agency.
The US embargo against Cuba is being enforced by the US Treasury's office of foreign assets control.