"Maduro Board" of the Central Bank of Venezuela v "Guaido Board" of the Central Bank of Venezuela

Factual and Procedural Background

This appeal arises from a judgment concerning two preliminary issues aimed at determining which of two competing claimants is entitled to give instructions to financial institutions in England on behalf of the Central Bank of Venezuela ("the Bank"). The Bank of England holds approximately US $1.95 billion in gold reserves for the Bank, and Deutsche Bank holds about US $120 million from a gold swap contract, currently managed by court-appointed receivers.

The dispute centers on the competing claims of two groups, referred to as the "Maduro Board" and the "Guaid Board," representing rival factions aligned with two individuals claiming to be President of Venezuela: the Maduro faction, asserting legitimacy based on the 2018 presidential election, and the Guaid faction, claiming interim presidency based on alleged flaws in that election and constitutional provisions.

The Maduro Board claims to be the sole validly appointed board of the Bank, authorized by Maduro as President, while the Guaid Board claims to be an Ad Hoc board appointed by Guaid, authorized to manage the Bank's assets in this jurisdiction under a statute known as the Transition Statute. The Maduro Board challenges the validity of these appointments under Venezuelan law.

The procedural history includes arbitration proceedings initiated by Deutsche Bank due to conflicting instructions, the appointment of receivers, and subsequent court actions involving the Bank of England. The court directed that the preliminary issues concerning recognition and the validity of appointments be determined first. The initial judge ruled in favor of the Guaid Board on both issues, prompting this appeal.

Legal Issues Presented

1. Whether Her Majesty's Government (HMG) formally recognises Juan Guaid or Nicolás Maduro as President of Venezuela, and if so, in what capacity, on what basis, and from when.
2. Whether the English court can consider the validity and constitutionality under Venezuelan law of the Transition Statute, decrees issued by Guaid, and appointments made by Guaid, or whether such acts must be regarded as valid and effective without inquiry pursuant to the foreign act of state doctrine.

Arguments of the Parties

Maduro Board's Arguments

• The Foreign Secretary's statement recognising Guaid and the FCO's confirmation must be understood in context, including ongoing diplomatic relations with Maduro's government and refusal to accord diplomatic status to Guaid's representative.
• The recognition of Guaid is de jure only, not de facto, and does not extend to head of government recognition.
• The "one voice" principle does not apply to recognition de jure alone, which is a statement of opinion on foreign law.
• The judge erred in holding that the "one voice" principle precludes recognition of Maduro as de facto President and in disregarding evidence of diplomatic relations.
• Recognition of Guaid as President de facto would be unlawful under customary international law as coercive intervention in a foreign state's internal affairs.
• The Transition Statute and related appointments are not valid legislative or executive acts under Venezuelan law, as held by the Supreme Tribunal of Justice (STJ).
• The act of state doctrine does not apply to unlawful acts or acts taking effect outside Venezuelan territory.

Guaid Board's Arguments

• The Maduro Board's assertions regarding Maduro's control and diplomatic relations are outside the scope of the preliminary issues and irrelevant due to the "one voice" principle.
• The STJ decisions lack legitimacy due to lack of due process and partiality and should not be recognised by English courts.
• The Foreign Secretary's statement unequivocally recognises Guaid as legitimate President, without need to classify recognition as de jure or de facto.
• Recognition de jure necessarily includes recognition de facto unless expressly stated otherwise; no such exception exists here.
• The "one voice" principle prohibits scrutiny of HMG's conduct for implied recognition inconsistent with formal recognition.
• Recognition does not constitute unlawful intervention under international law.
• The official acts of Guaid as recognised President engage the foreign act of state doctrine, barring English courts from questioning their validity regardless of Venezuelan constitutional challenges.
• The limitations on the act of state doctrine argued by the Maduro Board do not apply; the doctrine covers unlawful acts, acts within the territory, and extends beyond property and personal injury matters.

Table of Precedents Cited

Court's Reasoning and Analysis

The court first addressed the issue of recognition, focusing on whether the Foreign Secretary's statement of 4 February 2019 constituted formal recognition of Guaid as President of Venezuela. The court found the statement to be a clear and unequivocal recognition of Guaid as interim President and head of state, applying the "one voice" doctrine which requires courts to accept HMG's official position as conclusive. The court distinguished recognition of a head of state from recognition of a government, noting that continued diplomatic relations with Maduro's representatives did not negate recognition of Guaid as President.

The court analysed the distinction between recognition de jure and de facto, explaining that while it is possible in theory for HMG to recognise different persons as de jure and de facto Presidents, the Foreign Secretary's statement was ambiguous on this point. The court held that while the recognition of Guaid as de jure President is conclusive, it does not preclude the possibility that HMG may also recognise Maduro as de facto President. This ambiguity necessitates further clarification from the Foreign and Commonwealth Office (FCO).

Regarding the foreign act of state doctrine, the court noted that if Guaid is recognised as the sole President, then the English court must accept the validity of the Transition Statute and related appointments without inquiry. However, as the STJ has declared these acts null and void under Venezuelan law, the court must consider whether to recognise those judgments. The court observed that the act of state doctrine does not apply to judicial decisions of foreign states, and the issue of recognition of the STJ's rulings remains open.

The court further analysed whether the act of state doctrine applies to executive acts that are unlawful under foreign law. It concluded that there is no binding authority requiring English courts to treat unlawful executive acts as valid, particularly where the foreign courts have declared them null and void. The court emphasized the principle that English courts should not "sit in judgment" on foreign sovereign acts, but this does not extend to disregarding foreign judicial decisions invalidating such acts.

The court declined to definitively resolve the act of state issues at this stage, deferring them pending clarification on the recognition issue and further evidence regarding the status of the STJ judgments and the scope of the Transition Statute.

Finally, the court rejected the submission that recognition of Guaid as President de facto would breach customary international law prohibiting coercive intervention, reasoning that recognition is a sovereign act that does not constitute coercive interference.

Holding and Implications

The court ALLOWED THE APPEAL and set aside the previous judge’s answers to the preliminary issues.

The court held that Her Majesty's Government has, since 4 February 2019, formally recognised Guaid as the de jure President of Venezuela, i.e., the person entitled to be regarded as President. This recognition is conclusive for determining who is the de jure President but leaves open the possibility that HMG may also recognise Maduro as the de facto President. Consequently, the court ruled that the second preliminary issue concerning the act of state doctrine is not capable of being answered at this stage.

The matter is remitted to the Commercial Court for further proceedings, including seeking clarification from the FCO on whether HMG recognises Maduro as de facto President. The court emphasized the necessity of clear issue framing and evidence before final determination.

No new legal precedent was established beyond clarifying the application of the "one voice" principle and the scope of the act of state doctrine in this context. The direct effect is to require further factual and legal inquiry before definitive rulings on the validity of appointments and control over the Bank's assets can be made.