A lawsuit has been pursued in London between “Maduro Board” BCV and “Guaidó Board” BCV – named as such by the courts in the case – aimed at determining who has the legitimacy to dispose of assets deposited in banks in that country that amount to approximately US $ 2,000,000,000. This process has had three stages:
1 Before the Commercial Court
In this instance Maduro’s BCV lawyers requested in 2019 that a ruling be passed that would allow Maduro’s regime to withdraw those assets to allegedly “finance expenses related to the humanitarian crisis and the pandemic.” The lawyers appointed by the interim government contradicted this request and argued that Guaidó was the interim constitutional president and that the BCV authorities appointed by him had the legitimacy to dispose of those assets. The Secretary (Minister) of Foreign Affairs of the United Kingdom, at the request of the Court, sent the later a certification ratifying the recognition of Guaidó as Interim President of Venezuela, which he had done in previous months, upon which the Court issued a judgment favorable to Guaidó’s BCV.
2. Before the Court of Appeals
Maduro’s BCV lawyers appealed to the United Kingdom Court of Appeals, in which three points of law were discussed: (a) Nature of the recognition that the government of Her Majesty (HMG) had made of Guaidó as interim president of Venezuela , if it was de jure or de facto. (b) Possibility that an English Court would determine that despite the fact that there is an express recognition by HMG that the recognition had been ambiguous, which opened the door for an implicit recognition of Maduro as de facto president, while Guaidó was de jure. (c) Validity of the acts of the Supreme Court of Venezuela that annul acts of the interim government on the appointment of the Special Prosecutor, the Ad Hoc Administrative Board of the BCV and the hiring of lawyers by Guaidó’s BCV. The Court of Appeals reversed the lower court ruling and ordered the Commercial Court to consult HMG on its position on the nature of the recognition.
3. Before the Supreme Court of the United Kingdom
Guaidó’s BCV lawyers (the Arnold & Porter firm, assisted by two English Barristers) filed an appeal before the Supreme Court, which was admitted. The United Kingdom’s Foreign Secretary (FCO) requested authorization from the High Court to appear at the trial as an intervening party, which was granted. On June 14th, 2021, the FCO presented a statement to the Supreme Court in which it ratified for the third time the recognition of Guaidó as Interim President of Venezuela, reiterating the old doctrine of a single voice (one voice) that is based on the fact that only HMG can recognize the government of a foreign state, and that the courts cannot examine or contradict such acts, and reaffirms the doctrine of the act of state, in force in the United Kingdom forever, according to which the acts of governments recognized by HMG are considered valid and in force in the United Kingdom, so they cannot be examined by the English courts or declared invalid (State Act doctrine). The Guaidó government hopes to obtain a favorable final judgment in this trial during the current year.
THE INTERIM GOVERNMENT, THROUGH THE OFFICE OF THE REPUBLIC OFFICE AND THE AD HOC BOARD OF DIRECTORS OF THE CENTRAL BANK OF VENEZUELA REPORT ON THE LONDON GOLD TRIAL
The so-called London Gold trial was, initially, two trials in which the interim government of Guaidó and the usurper government of Maduro faced each other for the English Courts to determine who had ownership of assets that are part of Venezuela’s reserves, whose custody belongs to the Central Bank of Venezuela (BCV).
At the beginning of 2020, the head of Maduro’s BCV, Calixto Ortega, requested from the High Court of Justice, Business and Property Courts of England and Wales Commercial Court (QBD, hereinafter Commercial Court) through a law firm, an expedited trial to release the gold from the BCV’s reserves in the Bank of England, for an amount of 930 million pounds sterling, supposedly to finance healthcare and humanitarian assistance programs caused the crisis in Venezuela. On May 20th, 2020, the judge decided to dismiss that motion and instead hold a hearing to discuss only issues of English law involved in the matter.
Meanwhile, the London branch of Deutsche Bank A.G. had decided to terminate early a gold exchange contract or “Gold Swap Agreement” (Swap) in force since February 2016, based on the breach by the BCV of the representation clause provided in the Framework Confirmation Agreement, of the October 1st, 2015, which served as the basis for the Swap Contract, because the BCV had been sanctioned by the Office of Foreign Asset Management of the United States Department of the Treasury (OFAC). On May 13th, 2019, the Deutsche Bank initiated an arbitration procedure to determine the amount of money that it should deliver to the BCV and, in parallel, it initiated a judicial procedure before the Commercial Court, requesting the appointment of a recipient for the money involved in arbitration, the amount of which had been preliminarily estimated the sum of US $ 120,200,357.50.
On the instructions of Judge Teare, of the Commercial Court, of May 28th, 2020, the Bank of England litigation and the Deutsche Bank Case were accumulated, which meant that the procedures that were carried out in the second case were paralyzed, therefore that the processing of the matter would be done jointly and the decision issued in the first procedure will be applied in both cases.
The trial and First Instance ruling
In this trial, the banking entities involved at no time tried to ignore the ownership of Venezuela as the owner of the assets, the litigation was about who had the legitimacy to dispose of said funds, Maduro’s government or Guaidó’s government.
In the hearings that were held before Judge Teare, of the Commercial Court, from June 22nd through 25th, 2020, the parties presented their arguments on both accumulated cases, but before referring to them we must point out that the court appointed the parties to the dispute such as the ‘BCV of Maduro’ and the ‘BCV of Guaidó’, or as the ‘Board of Directors of Maduro’ and the ‘Board of Directors of Guaidó’.
The representation of the ‘BCV of Guaidó’ argued that the government of the United Kingdom clearly recognized Interim President Guaidó, as it is established in various public statements issued by the Government of the United Kingdom after February 4th, 2019, particularly in the statement of the aforementioned date of the then Secretary of Foreign Relations, the Honorable Jeremy Hunt, in which he stated:
The UK now recognizes Juan Guaido as the constitutional interim president of Venezuela, until credible presidential elections can be held.
The people of Venezuela have suffered enough. It is time for a new beginning, with free and fair elections in accordance with international democratic standards.
The oppression of Maduro’s illegitimate and kleptocratic regime must end. Those who continue to violate the human rights of ordinary Venezuelans under an illegitimate regime will be held accountable. The Venezuelan people deserve a better future.
On February 14th, 2020, after the hearings in the Deutsche Bank proceedings, Judge Robin Knowles wrote to the UK Foreign Secretary to ask, in relation to Venezuela, who is recognized by Her Majesty’s Government as Head of the State and as Head of Government. On the following March 20th, Mr. Shorter, Director for the Americas of the Ministry of Foreign Affairs, on behalf of His Majesty’s government, reproduced in his reply, verbatim, the statement of the then Minister of Foreign Affairs of that country transcribed above, and added that “I can confirm that this is still the position of Her Majesty’s Government.”
In this regard, given the legitimacy of Deputy Guaidó as Interim President of the Republic, he had designated the Ad Hoc Administrative Board of the BCV in accordance with Law to dispose of these funds and the Special Prosecutor to defend the Republic in judicial and extrajudicial proceedings where appropriate, and to hire the services of lawyers that may be required. Likewise, the lawyers of the Ad Hoc Board of the BCV (Guaidó Board of Directors) argued that the English Court does not have jurisdiction to consider the legality under Venezuelan law of the acts of the Interim President Juan Guaidó, including those related to the Statute for the Transition and the appointment of both the Special Prosecutor of the Republic and the members of the Ad-Hoc Board of the BCV, as they are acts of State which, according to the reiterated doctrine of English Law, are accepted by the courts of the United Kingdom as they have been issued by the government of origin, without being able to be examined or questioned by any court or other body in the United Kingdom.
Maduro’s BCV lawyers for their part, argued during the aforementioned hearing that the pronouncements of the United Kingdom’s Government related to Juan Guaidó do not generate a level of recognition that is binding on the Court. They based this firstly, on the fact that the United Kingdom had made a de jure recognition of Guaidó as interim president of Venezuela, which opened the possibility of considering that implicitly, there had been a de facto recognition of Maduro’s government . On the other hand, these lawyers indicated that the United Kingdom government still maintains relations with Maduro’s regime at the diplomatic level, and that control of the territory of Venezuela supposedly shows that Nicolás Maduro is recognized by the United Kingdom as the head of the Government of Venezuela.
On July 2nd, 2020, Judge Teare issued a judgment in which he declared that the effect of the recognition of Interim President Juan Guaidó by the United Kingdom Executive implies, according to the doctrine of a single voice or “one voice”, which states that since the Executive Power of the United Kingdom is the only one authorized to conduct foreign relations and recognize foreign States and governments, the English Court of Justice is obliged to recognize the authority of the Ad-hoc Board of the BCV designated by Juan Guaidó and therefore, cannot consider the resolutions of the Supreme Court of Justice of Venezuela (“TSJ”) that contradict that position. Accordingly, Judge Teare argued that the appointment of the Special Prosecutor of the Republic and the members of the Ad-Hoc Board of the BCV by Interim President Guaidó, were acts of the Venezuelan State that, in application of the doctrine of acts of state, should be considered by the English Courts as valid and effective acts, thus ruling out the various challenges made by ‘Maduro’s BCV’ lawyers against the validity of those appointments under Venezuelan law. As a complement to that ruling, Judge Teare rejected the permission requested by Maduro’s lawyers to appeal the aforementioned decision regarding the specific question regarding whether the doctrine of state acts should be applied even when said acts had been declared illegal by a court in that country, supposedly by violating higher standards of Venezuelan law.
The appeal procedure and ruling
On July 28th, 2020, ‘Maduro’s BCV’ filed a request in the Court of Appeals, in order to be authorized to appeal the judgment of July 2nd, 2020. Said request was agreed by Lord Justice Hickinbottom of said Court, on August 3rd, 2020, setting for this purpose the holding of hearings for September 22nd through 24th, 2020.
On the first day of the hearing, ‘Maduro’s BCV’ lawyer argued that the Court was not bound by the single voice or “one voice” doctrine to treat Guaidó as the legitimate President of Venezuela, since the UK government does not has allegedly made a clear statement of appreciation. Likewise, it argued that if the letter from the FCDO (Ministry of Foreign Relations), addressed to the Court, is taken into account as an acknowledgment by the Government of the United Kingdom to Juan Guaidó as President of Venezuela, both in fact and in law, it it would allegedly involve a violation of customary international law and would be outside the prerogatives of the government.
On September 23rd, 2020, the second day of hearings before the Court of Appeals was held. ‘Maduro’s BCV’ lawyer emphasized that the United Kingdom’s Government maintained relations with Nicolás Maduro’s regime which, according to said lawyer, supposedly demonstrated that the recognition of Juan Guaidó as President of the Interim Government was a de jure recognition by part of the UK Government, but not a de facto recognition.
‘Guaidó’s BCV’ lawyers argued, in response to the arguments of Maduro’s representation, that the words used by the UK government were not qualified in the manner suggested by Maduro’s Junta. The UK Government has never used the term “de jure” in its statements, so limiting them to that term is mere speculation. Regarding the one voice doctrine, they argued that it was unequivocally stated that the UK government chose to recognize Juan Guaidó as President of Venezuela, making it constitutionally inappropriate in the UK for the Court to question the foreign policy decision of the Executive (HMG) through which they have already recognized Interim President Guaidó in place of Mr. Maduro. Additionally, they indicated that there would be no basis in arguing that the one-voice doctrine applies only to a de facto recognition since in this case, there is no space to indicate that there have been separate recognitions of de jure and/or de facto presidents. Finally, and with regard to the maintenance of diplomatic relations with Maduro’s regime, the lawyers of the Ad-Hoc Board of the BCV indicated that such arguments by Maduro’s lawyers were contrary to the application of the one-voice doctrine and therefore, irrelevant, since the validity of the appointment of the members of the Ad-hoc Board of the BCV does not depend on diplomatic relations but on the unquestionable recognition by the Government of the United Kingdom of Mr. Juan Guaidó as the legitimate Interim President of Venezuela.
Ultimately, the Court of Appeals issued a decision on October 5th, 2020, in which it indicated that the public statement repeatedly issued by the Government of the United Kingdom constitutes a de jure recognition that Mr. Guaidó is the Interim President of Venezuela. And in this sense, they rejected ‘Maduro’s BCV’s’ argument that the UK Executive had violated customary international law. However, the Court of Appeals determined that it was necessary for the Commercial Court to invite the Executive of the United Kingdom (Her Majesty Government or HMG) to clarify its position with respect to Mr. Maduro, so that the Commercial Court can determine whether the UK government has implicitly recognized Mr. Maduro as the de facto President of Venezuela.
Likewise, the Court of Appeals considered it necessary for the Commercial Court to determine what weight it should give, if any, to the decisions of the Supreme Court of Venezuela through which both the Statute for the Transition as the rest of the actions of Interim President Juan Guaidó and the National Assembly.
Appeal to the Supreme Court
On November 2nd, 2020, the firm Arnold & Porter, lawyers of Venezuela, requested before the Supreme Court permission to appeal the judgment handed down by the Court of Appeals, to which ‘Maduro’s lawyers’ opposed. The Supreme Court rejected the objection note from Maduro’s lawyers the following December 9th, before the hearing set for the Commercial Court took place, and granted permission to appeal to the lawyers of Venezuela that had been requested and established that the appeal hearings will be held for three days, between July 19th and 21st, 2021. With this decision of the Supreme Court, the hearings before the Commercial Court that had been set by the Court of Appeals were nullified pending the decision of the Supreme Court.
In these hearings before the Supreme Court, the Republic was represented by the lawyers of the firm Arnold & Porter and assisted by the English barristers Andrew Fulton and Mark Tushingham.
At this highest level, questions of fact are not discussed, since it is an appeal. The questions of law referred substantially to three aspects:
1. The nature and characteristics of the recognition made by the government of the United Kingdom to Juan Guaidó as Interim President of Venezuela. Could it be admitted that this recognition was only de jure but not de facto? Is there in British law the possibility of establishing two types of recognition that favor two different governments of the same country? Can there be implicit recognition of a government, when there is a clear and express declaration in favor of the government of the same country? Does the declaration of recognition made by the government of the United Kingdom of Guaidó as interim president mean only that he “should” become president, or did he simply have the “right” to become president or rather that he was recognized as president with full effect as of February 4th, 2019?
2. The question of the act of State: The acts of a foreign government recognized by the United Kingdom, that therefore constitute acts of State, can be examined and ignored by a British Court by the fact that a court of the country of in question has declared them null and void, by application of the internal legal system?
3. The issue of the one voice doctrine: Once His Majesty’s government has recognized Guaidó as Interim President of Venezuela, can a UK court adopt a different position than the Executive as, to some extent Has the Court of Appeals done it when deciding in the second instance on this trial?
It is expected that the judgment of the Supreme Court of the United Kingdom, which will be conclusive on the trial, will most likely be issued in the second half of 2021. Meanwhile, Guaidó’s BCV lawyers are attentive to that decision with great optimism, for the following reasons:
In the first place, because this team of jurists has presented before the Supreme Court, and has ratified in the oral hearings, a dense study that covers all the points in discussion, largely based on precedents of English law, in which it is clearly demonstrated and without any ambiguity that the FCDO (Foreign, Commonwealth and Development Office) has fully recognized Juan Guaidó as Interim President of Venezuela, the errors of the Court of Appeals in the contested sentence are evident and it is argued without a doubt about the validity of Guaidó’s acts as acts of State.
Second, because in the trial before the Supreme Court the government of Her Majesty (HMG) has expressed, now for the third time, its decision to recognize Guaidó as the legitimate president of Venezuela. We will briefly refer to this act.
5. The UK Government Statement to the Supreme Court
On May 10th, 2021, the United Kingdom’s Secretary of Foreign Affairs, on behalf of Her Majesty’s Government (HMG), requested authorization from the Supreme Court to intervene in the proceedings before that body on the occasion of the appeal filed. for the representation of the BCV Guaidó and for the cross-appeal introduced by the lawyers of Maduro’s BCV, which was granted on the 14th of that same month. On June 18th, 2021, the Foreign Secretary presented a statement to the United Kingdom’s High Court on the recognition of Guaidó, which had been made by the Ministry of Foreign Affairs on March 19th, 2020, in response to an invitation from the Judge Robin Knowles to provide a written certificate in the context of the proceedings in the Commercial Court. The Ministry of Foreign Affairs referred in the Certificate to the declaration made by the then Secretary of Foreign Affairs on February 4th, 2019 that “[T] he United Kingdom now recognizes Juan Guaidó as interim constitutional president of Venezuela, until credible presidential elections can be held”, and then confirmed “that this remains the position of Her Majesty’s Government.”
In the Statement presented before the Supreme Court by the representatives on behalf of HMG, in June 2021, its position on this recognition is summarized as follows:
(1) The Certificate was clear and unambiguous. The Certificate expressly stated that HMG recognized Guaidó as Interim President of Venezuela on February 4th, 2019 and continues to do so. His language communicated HMG’s recognition of Guaidó, rather than Maduro, as of that date. The consequence is that, as of that date, Mr. Guaidó and no other was the individual recognized by HMG with the authority to act on behalf of Venezuela as Head of State.
(2) The Court of Appeal looked beyond the terms of the Certificate to matters of “context”. An interpretive approach that assesses HMG’s broader conduct undermines the purpose and function of an executive certificate. Courts should not conduct their own fact-finding in circumstances where HMG made an express statement of appreciation.
(3) However, if the Court finds it necessary and appropriate to assess HMG’s broader bilateral relationship with Venezuela, HMG’s conduct is consistent with its continued recognition of Mr. Guaidó as Interim President of Venezuela. The fact that it has been necessary for practical reasons for HMG to engage with elements of Maduro’s regime in relation to certain functions does not undermine its position in recognition. On the contrary, the HMG’s refusal to engage directly with Maduro underscores the UK’s position that he is no longer recognized as Venezuelan Head of State.
In the HMG Statement, special emphasis is placed on the issue of the recognition of the Venezuelan government, because from there derive the consequences on the subject matter under litigation. In addition to the observations made in the transcribed summary, the text of the declaration analyzes in detail other aspects that allow us to conclude on the evidence of recognition of Guaidó as Interim President and on the errors incurred by both the ‘Maduro’s BCV’ lawyers and the Court of Appeals in the analysis of the case, such as:
First, when the United Kingdom Government has issued an express declaration of recognition of a foreign government, as is the case in this case, an English Court is not allowed to investigate elements of judgment outside of what has been decided by HMG, to obtain its own conclusions. What the court can do is require the government’s will in this matter, since the jurisdiction corresponds exclusively to the Executive Power. As such, the United Kingdom Government considers that the Court of Appeals has acted incorrectly and points out four errors in which it has incurred.
Second, when ‘Maduro’s BCV’ lawyers allege, and the Court of Appeals considers it to be so, that the recognition of Guaidó as Interim President by the Foreign, Commonwealth and Development Office (FCDO) is ambiguous and that therefore, there is the possibility that this de jure recognition in favor of Guaidó opens the door to the de facto recognition of Maduro, this thesis of implicit recognition in contrast to the express recognition, is not correct, since it incurs five factors that make the declaration of the FCDO not ambiguous. The FCDO also points out that although in the 1930s the United Kingdom made the distinction between de jure and de facto recognition (by recognizing the Franco government as de facto and the Spanish Republic as de jure, as well as Mussolini as de facto in Ethiopia and King Haile Selassie as de jure), since that time the United Kingdom had stopped making that distinction and only recognized or did not recognize a government. In effect, this dichotomy in the recognition of two different governments was considered illogical and inconvenient and has not been applied any more since that time.
Third, the statement of recognition made by HMG is conclusive, it does not admit any appeal nor can it be questioned by any public body. The Court of Appeals cannot draw any conclusions on its own under the one voice doctrine that has been in force in the UK since ancient times. Even assuming that there was no express declaration by HMG, there could be an implicit acknowledgment, which would be derived from the government’s actions in its relations with the foreign country. But in that case the important thing is the government’s intention to make that recognition. Regarding the situation in Venezuela, in addition to the express recognition of Guaidó by the British government, there is no action by this government towards showing the intent to recognize Maduro as president. In this sense, the point made by the lawyers of ‘Maduro’s BCV’ that the English government has made an implicit recognition of Maduro’s government by maintaining diplomatic relations with it is erroneous, since such a decision is based on practical reasons, which includes the interest of continuing with a representative of the British Government in Venezuela. In addition to the fact that HMG has expressly recognized Guaidó as Interim President and has stated, in the same act of recognition that “The people of Venezuela have suffered a lot. It is time for a new beginning, with free and fair elections in accordance with international democratic standards. The oppression of Maduro’s illegitimate and kleptocratic regime must end. Those who continue to violate the human rights of ordinary Venezuelans under an illegitimate regime will be held accountable. The Venezuelan people deserve a better future.”
Fourth, from the act of clear recognition without doubts or ambiguities, of Guaidó as Interim President of Venezuela, which HMG has made in the aforementioned Certificate, it follows that said interim government can dictate acts of State, which should not be examined nor questioned by the British courts. From there it follows that it is irrelevant that the Supreme Court of Justice of Venezuela has declared the nullity of the act of designation of Guaidó as interim president, and that the act of Guaidó by which he appoints the Special Prosecutor of the Republic, nor the act by which it appoints the members of the Ad Hoc Administrative Board of the BCV. All are based on the Statute that governs the Transition to Democracy to reestablish the validity of the Constitution, which is considered in force as it emanates from the National Assembly, which in turn is the organ of the Venezuelan Public Powers competent to dictate it, without an English court being able to question its validity. From there it follows that the acts of appointing lawyers for this trial and of ‘Guaidó’s BCV’ authorities, are legitimate to dispose of the funds that Venezuela has deposited in banks in the United Kingdom.
6. Final Consideration
As we noted above, the final judgment in the present case could be handed down by the Supreme Court of Justice of the United Kingdom in the coming months. As long as that act is not issued, no statement about its content can be made with justification. However, the foregoing observations, and especially the documents emanating from the appellants’ team of lawyers and the United Kingdom’s government, in which the legal framework of the issues under discussion is examined in depth, allow those of us who fight for the restoration of democratic order in Venezuela to harbor reasonable optimism.