Venezuelan gold continues to be held at the Bank of England

Which representative of two rival governments of Venezuela is entitled to deal with the Bank of England in relation to nearly $2 billion of gold reserves it holds on behalf of the Venezuelan Central Bank? This is the question recently considered by the Court of Appeal in Maduro Board of the Central Bank of Venezuela v Guaidó Board of the Central Bank of Venezuela [2020] EWCA Civ 1249, which has partly allowed the appeal brought by the Maduro Board against the judgment of Teare J on two preliminary issues and remitted the case back to the Commercial Court for further consideration. The decision over-turned the earlier ruling that the Bank of England can only deal with Mr Guaidó’s appointees. In the absence of an unequivocal statement of recognition by Her Majesty’s Government of Mr Guaidó as the President of Venezuela, further actions are necessary to find out which of the rivals prevails, insofar as the UK is concerned.


Many financial institutions have commercial dealings with sovereign states. This is different from dealing with a corporate counterparty, as it requires consideration of risks such as sovereign immunity (addressed by, for example, resolving disputes through arbitration and ensuring that self-help remedies are available), but also raises potentially difficult points about who precisely is permitted to represent the state or state entities. This case illustrates very well the legal uncertainty which can emerge when political events overtake the contract. In this instance, as is well known, the legitimacy of the administration led by Mr Maduro in Venezuela has been contested, with many foreign states, including the UK, choosing to recognise a rival government led by Mr Guaidó and largely operating outside Venezuela. If disputes arise in relation to contracts entered into by the state, and the two rivals both want to take actions (or even commence proceedings) in relation to the contract, which should the financial institution deal with? The answer will be driven by thinking about the court or tribunal which would deal with any dispute, and working out which of the rivals would be recognised in that forum. In the UK, the “one voice” doctrine holds that the courts must adopt the same approach as Her Majesty’s Government.

HMG has recognised Mr Guaidó as the person entitled to be recognised as the President of Venezuela. This case considers what that recognition means for the purposes of two legal proceedings involved in the Venezuelan Central Bank. At first instance, it was held that the English court could only recognise the appointees of Mr Guaidó in light of Her Majesty’s Government’s (“HMG”) statement. The Court of Appeal disagreed and has concluded that, notwithstanding the terms of the formal recognition of Mr Guaidó, it was possible that HMG was also still impliedly recognising Mr Maduro as, in fact, the President, because of on-going inter-state dealings. The Court of Appeal decided that this question could be resolved by asking HMG to clarify, or (if no answer is given) by the first instance court making findings on whether HMG was impliedly recognising Mr Maduro. The court also considered the boundaries of the “act of state” doctrine, which deals with whether an English court is entitled to question the act of another foreign state. This issue did not arise for determination in light of the conclusion on recognition and would require further consideration of events in Venezuela in any event. As the Court of Appeal noted, this case also illustrates that preliminary issues may not always be as helpful as hoped, when it comes to the efficient resolution of a case.

The Court of Appeal allowed the appeal but remitted the case back to the Commercial Court pending further statements from the FCO. Following an expedited three-day hearing in September, the Court of Appeal on 5 October 2020 allowed the appeal brought by representatives of Mr Maduro (“Maduro Board”) against the judgment of Teare J on two preliminary issues which had concluded that Mr Guaidó’s appointees (“Guaidó Board”), rather than the Maduro Board, were allowed to instruct the Bank of England regarding $1.95 billion worth of gold reserves it holds on behalf of the Central Bank of Venezuela. The Court of Appeal remitted the case back to the Commercial Court, deciding that it was not possible to rule fully on the two preliminary issues without further information, in particular clarification from the Foreign and Commonwealth office (“FCO”) if the FCO is willing to give it, regarding whether HMG recognised Mr Guaidó as the only President of Venezuela.

The appeal relates to two different legal proceedings in which the same issue has arisen (including one stakeholder claim in which a bank has referred to the court the question of which of the rival Venezuelan governments it should deal with in connection with certain transactions). Only the Maduro Board and Guaidó Board participated in the appeal hearing.

First preliminary issue: recognition of the rightful President of Venezuela. The first preliminary issue was whether HMG had formally recognised either Mr Guaidó or Mr Maduro as President of Venezuela, and therefore whether that recognition should bind the present court pursuant to the “one voice” doctrine whereby the judiciary and the executive must speak with one voice and not contradict one another.

The Court of Appeal found that HMG’s recognition is not be conclusive. Teare J had held that the announcement made by the Foreign Secretary on 19 February 2019 demonstrated that Mr Guaidó had been unequivocally recognised as the President of Venezuela by HMG. On appeal, the Maduro Board argued that although the FCO’s statement may have constituted a recognition that Mr Guaidó was the President de jure, that is, the individual that HMG considered should be entitled to exercise the powers of Presidency, Mr Maduro had impliedly been recognised by HMG as the de facto President, exercising at least some of those powers in practice. The Court of Appeal found that recognition of Mr Maduro as de facto President would mean that actions of Mr Guaidó, including the appointment of the Guaidó Board, would be a nullity. This would have the consequence that, in the eyes of an English court, the Guaidó Board would have no standing to give instructions on the relevant transactions. The question of whether HMG impliedly recognised Mr Maduro as de facto President therefore needed to be resolved because the FCO’s statements are not clear. The case was sent back to the Commercial Court to resolve that issue: the FCO will be invited to state whether Mr Maduro is recognised as de facto President, and if it declines to answer, there will be a hearing, with consideration of evidence from both parties, to determine whether HMG has impliedly so recognised Mr Maduro by its words and conduct.

A recognition of Mr Guaidó as the de facto President would not be a breach of customary international law. Separately, the Court comprehensively dismissed the Maduro Board’s new argument on appeal that a recognition of Mr Guaidó as the de facto President would have constituted a breach of the rule of customary international law which prohibited coercive interference in the internal affairs of other states.

Second preliminary issue: applicability of the act of state doctrine. The second preliminary issue had arisen because the Guaidó Board did not claim to have authority to give instructions to the Bank of England solely by virtue of Mr Guaidó’s status as President, but also because the Transition Statute, legislation passed by the National Assembly on 5 February 2019, empowered the President to make the appointments to the board. The question was whether this statute was a legislative act protected from scrutiny by the English courts under the act of state doctrine which provides that courts must recognise, and not question, legislative and executive acts of a foreign state taking effect within that state’s territory.

It is premature to decide on the act of state issue. The Maduro Board submitted that there was no such legislative or executive act to which the act of state doctrine could apply, because the Supreme Court of Venezuela (“STJ”) had declared both the Transition Statute and the appointments to the Guaidó Board, null and void. As the act of state doctrine is not applicable to judicial decisions, whether the Court of Appeal should give effect to the STJ rulings and consider the Transition Statute and the appointments null, as the Maduro Board argued, or disregard the STJ rulings because they had been given by an illegitimate judiciary, as the Guaidó Board argued, was beyond the scope of the preliminary issues, and would be informed ultimately by the answer to the first preliminary issue.

Emma Scheuer, Associate in London

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