With effect from 5 January 2023, the interim Venezuelan government led by Juan Guaidó was disbanded. Accordingly, the Government of the United Kingdom withdrew its ongoing recognition of Mr Guaidó as interim President of Venezuela. The Court of Appeal decided in Deutsche Bank AG (London Branch) v Central Bank of Venezuela & Ors [2023] EWCA Civ 742 that executive acts carried out by Mr Guaidó during the period he was recognised are acts of a foreign state. Now that the Government recognises neither Guaidó nor Maduro, the Commercial Court will need to determine the future course of the Venezuela gold litigation.

The dispute turns on who rightly governs the Central Bank of Venezuela. The ongoing dispute between the rival boards of the Central Bank of Venezuela (one appointed by Nicolás Maduro, and another by Juan Guaidó) revolves around gold reserves worth around USD1.95bn held by the Bank of England and a further sum of around USD120m representing the proceeds of a gold swap contract. In its recent decisions, the English courts have grappled with whether to recognise judgments of the Venezuelan Supreme Tribunal of Justice which impugned the lawfulness of appointments to the Guaidó Board.

The UKSC held that a judgment of the Venezuelan Supreme Tribunal of Justice, if recognised, could strike down the appointment of the Guaidó Board. The UK Supreme Court held that Her Majesty’s Government (“HMG”) recognised Mr Guaidó as interim President of Venezuela and that the act of state doctrine prevented English courts from adjudicating the legality, under Venezuelan law, of Mr Guaidó’s appointments to the Central Bank of Venezuela. However, the Supreme Court also held that the Maduro Board was able to rely on judgments of the Venezuelan Supreme Tribunal of Justice striking down Mr Guaidó’s appointments if those judgments met the requirements for recognition by the English courts (whether or not they did was remitted to the Commercial Court). See our post for further detail and analysis on the Supreme Court’s judgment.

The Commercial Court held that the relevant judgments could not be recognised. On remittal, Mrs Justice Cockerill decided that the relevant judgments of the Venezuelan Supreme Tribunal of Justice could not be recognised because they were not decisions in rem (i.e., made extraterritorially with international jurisdiction) [164]-[189]; and in any event, recognition was precluded by the doctrine that the executive and the judiciary must speak with “one voice” on matters concerning the recognition of foreign states, governments, and heads of state [191]. According to the test set out at [177] of the Supreme Court’s judgment: no recognition could be given to a foreign judgment if to do so would conflict with the recognition by HMG of Mr Guaidó as interim President. In her judgment, Cockerill J held that the judgments conflicted because they took as their starting point that Mr Guaidó was not the interim President of Venezuela: [194]-[205]. Cockerill J also found that there had been failings in natural justice [219]-[239].

The Court of Appeal upheld this decision but took a slightly different approach. In applying the “one voice” doctrine, the Court of Appeal upheld Cockerill J’s factual findings, but said that the relevant test was set out in [170] of the Supreme Court’s judgment (i.e., "if and to the extent that the reasoning of the STJ leading to its decisions that acts of Mr Guaidó are unlawful and nullities depends on the view that he is not the President of Venezuela, those judicial decisions cannot be recognised or given effect by courts in this jurisdiction because to do so would conflict with the view of the United Kingdom executive”) [70], [89]. In relation to whether the reasoning of the judgments could be severed from the fact of Mr Guaidó’s interim Presidency, the Court of Appeal said that Cockerill J’s findings were unassailable: the assumption that Mr Guaidó was not the interim President could not be disentangled from the rest of the reasoning of the relevant Venezuelan judgments [83]-[87]. The Court of Appeal refused to express views on other first instance findings that the judgments were not to be recognised because they were not equivalent to judgments in rem and because of failings of natural justice [44].

Withdrawal of HMG’s recognition of Mr Guaidó did not affect his prior acts. The Maduro Board took a further point that the “one voice” doctrine was irrelevant because (following the Commercial Court decision) the HMG had ceased to recognise Mr Guaidó as interim President of Venezuela (following the de facto disbanding of his interim government) [32]. The Court of Appeal rejected this submission on an analysis of HMG’s letter to the Court [45]. The Court found that the letter was clear that the non-recognition was forward-looking only as of 5 January 2023 [59]. Accordingly, the “one voice” doctrine still applied to Mr Guaidó's appointments to the board of the Central Bank of Venezuela whilst he was recognised as interim President.

The Court of Appeal remitted the case to the Commercial Court to determine the future course of the litigation, now that Mr Guaidó is no longer recognised by HMG. While the Commercial Court will resolve this matter once and for all, the judgment of the Court of Appeal is significant in that it provides assurance to financial institutions and firms dealing with sovereigns that, while each case will turn on its own facts, the express recognition of the government of a foreign state by HMG is unlikely to be withdrawn with retroactive effect; and that the “one voice” doctrine will preclude the recognition of foreign judgments departing from a position conflicting with the one taken by HMG.

Michael Munk (Managing Associate), Ben Ball (Managing Associate, Knowledge), Santiago Dutra (International Arbitration Intern), London.