Two rival boards claimed authority over Venezuelan central bank assets in England. The first question was whom the UK Government recognised as Venezuela’s interim President at the relevant time. Its express recognition of Juan Guaidó bound the English courts. A separate question remained about the effect of Venezuelan court judgments invalidating appointments made by him. The Supreme Court therefore did not finally determine which board could control the assets.
The assets and the rival boards
The Bank of England held Venezuelan central bank gold. Receivers also held the proceeds of a gold swap. One board claimed to have been appointed by Nicolás Maduro and the other by Juan Guaidó. The Maduro Board relied on Venezuelan judgments declaring the rival appointments invalid.
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The Commercial Court tried two preliminary issues. The first was whether Her Majesty’s Government recognised Mr Guaidó or Mr Maduro, and in what capacity. The second was whether the English court could consider the validity under Venezuelan law of the Transition Statute, Mr Guaidó’s decrees, the appointment of a Special Attorney General, the appointment of the ad hoc board, and a resolution of the National Assembly, or had to treat those acts as valid and effective.
Events in Venezuela and the Government’s statement
Mr Maduro was elected President in April 2013. A presidential election in May 2018, which the United Kingdom considered deeply flawed, was followed by his being sworn in for a second term on 10 January 2019. On 15 January 2019 the National Assembly and its President, Mr Guaidó, announced, relying on the Venezuelan Constitution, that Mr Maduro had usurped the presidency and that Mr Guaidó was interim President. On 4 February 2019 the Foreign Secretary stated that the United Kingdom recognised Mr Guaidó as the constitutional interim President of Venezuela until credible presidential elections could be held. In March 2020 the Foreign and Commonwealth Office wrote to the Commercial Court confirming that this remained the Government’s position.
On 5 February 2019 the National Assembly passed the Transition Statute. It provided that the interim President could, with the authorisation of the National Assembly, appoint ad hoc boards to direct public bodies, including in order to protect state assets abroad, and could appoint a special attorney general to represent the state and state entities abroad. Mr Guaidó appointed a Special Attorney General and, by decrees issued in Caracas in July and August 2019, appointed the Guaidó Board to represent the Central Bank abroad in connection with international reserves, including gold. The Supreme Tribunal of Justice, Venezuela’s highest constitutional court, held that the Transition Statute and these appointments were unconstitutional and of no legal effect. The courts below made no findings about the status of those judgments or about who in fact exercised effective control in Venezuela.
The one voice principle and recognition
Lord Lloyd-Jones, giving the judgment of the Court, held that the recognition of a foreign head of state is entrusted to the executive. Under the one voice principle, the courts treat an express statement by the Government on that question as conclusive. They do so because the attitude of the executive is the fact that matters, and the executive’s statement is the only authoritative source of it. The statement of 4 February 2019, confirmed in the March 2020 letter, was a clear and unequivocal recognition of Mr Guaidó as interim President. Recognition of him necessarily meant that Mr Maduro was not recognised as President. There was no ambiguity on the face of the certificate, and the Court of Appeal had been wrong to read it in the light of other conduct, such as the continuation of diplomatic relations with representatives associated with Mr Maduro, or to treat it as leaving open an implied recognition of Mr Maduro as President de facto.
Implied recognition has no place in the English courts where the Government has made an express statement. The older distinction between de jure and de facto recognition was not used in the certificate and did not justify reading a dual recognition into it. Statements made to the Supreme Court on behalf of the Foreign Secretary confirmed that, from 4 February 2019, the United Kingdom recognised Mr Guaidó as interim President and no longer recognised Mr Maduro as head of state for any purpose. Whether Mr Guaidó was also recognised as head of government did not need to be decided. The appointments were made by him as President, and it was common ground that the Venezuelan Constitution makes the President both head of state and head of the national executive.
Acts of a foreign state
The Court held that English law includes a rule that, subject to important exceptions, the courts will not adjudicate upon the lawfulness or validity, under a foreign state’s own law, of an executive act of that state performed within its territory. The rule is not a rule of state immunity and is not required by international law. It limits the power of the English courts out of respect for the sovereignty and independence of foreign states. It applies whether or not the act was lawful under the foreign law. It is not confined to confiscations of property. It covers the exercise of a power of appointment to the board of a public body such as the Central Bank. The appointments were made in Venezuela and concerned the governance of a Venezuelan entity. Effects felt in England, where the assets were held, did not make the acts extra-territorial: the assets remained the property of the Central Bank, and the appointments were not an exercise of power over British territory. The challenge to the appointments was at the heart of the case, not a merely incidental issue.
A further rule is that the courts will recognise, and will not question, the effect of a foreign state’s legislation in relation to acts taking place or taking effect within that state’s territory. A direct challenge to the validity of the Transition Statute would normally fall within that rule.
The judgments of the Supreme Tribunal of Justice
These rules do not require an English court to prefer an executive act over a judgment of the foreign state’s own courts which has already held that act to be unlawful. Judicial decisions are not acts of state for this purpose. An English court which gives effect to such a judgment is not itself sitting in judgment on the foreign executive; it is recognising a decision of the foreign judiciary. Whether the judgments of the Supreme Tribunal of Justice should be recognised is therefore a question for the ordinary rules on the recognition of foreign judgments, including English public policy. Public policy includes the one voice principle. If, and to the extent that, the Tribunal’s reasoning depends on Mr Guaidó not being the President of Venezuela, its decisions cannot be recognised, because that would conflict with the Government’s recognition of him. The Guaidó Board’s allegations that the Tribunal’s judgments were given in breach of due process and by judges who were not independent also remained to be decided. Those questions were outside the preliminary issues and were remitted to the Commercial Court.
Verdict: The Supreme Court unanimously allowed the Guaidó Board’s appeal in part and dismissed the Maduro Board’s cross-appeal. It sent the case back to the Commercial Court to decide whether the Venezuelan judgments should be recognised in England. It made no final order handing the gold to either board.
