Maduro Board of the Central Bank of Venezuela v Guaido Board of the Central Bank of Venezuela [2021] UKSC 57 (20 December 2021)

Citation: [2021] UKSC 57 (20 December 2021)

Rule of thumb: Where a new political party comes into power via an election which had voting irregularities, then their subsequent President is deemed to be an 'Interim President', not a full President, and they are not allowed to sell the country's gold bars being held in the Central Bank of England. It is only fully legitimate Governments with full Presidents who can operate this part of a country's central bank.

Background facts:

The facts of this case were that Mr Maduro was President of Venezuela.  A new election was called by President Maduro for May 2018, and Maduro was going to be challenged by a new candidate for President, Mr Guaido. Guaido was well known to be an ally of USA President Donald Trump. After the voting process, Guaido claimed to have won this election in May 2018, claiming that he was the new full President of Venezuela. There were however allegations of voting irregularities in this election.

Once Guaido was officially in office after the election he nonetheless passed an Act called, 'The 2019 Transition Statute', with the official internationally recognised stamp of Venezuelan Parliament & Government on it. This Act affirmed that as Guaido was the new President of Venezuela, he was entitled to access the Venezuela Central Bank. President Guaido passed a further Presidential Decree/Regulation dismissing the former central bank board and appointing his own new one.

Guaido passed this Act and Regulation with his newly appointed central bank board to sell some of Venezuela's gold reserves of $1.95 billion, which the Venezuela Central Bank held in the Bank of England. Before everything was all through, Guaido agreed a contract to sell a large batch of these gold bars to Deutsche Bank for $120 million, which Deutsche Bank had agreed to pay and had sitting in an independent 'receiver'/escrow bank account ready to be transferred to Guaido's Venezuelan Government bank account.

The existing Central bank of Venezuela refused to provide all the clearance details to allow the new Guaido Government access to these gold bars and claimed their dismissal as a board by Guaido was invalid. They claimed their appointment by President Maduro, the last legitimate President of Venezuela, was valid. President Guaido took the Central Bank’s board to Court to try to force this to happen. However, the Venezuelan Supreme Court affirmed that there were voting irregularities that allowed President Guaido to become president after examining the evidence closely. President Guaido therefore took the matter to Court in the UK to try to get his hands on Venezuela’s gold bars so that he could raise finance for this Government, but again the Maduro Board of the Venezuela Central Bank opposed Guaido trying to do this.

Judgment:

The Court in this case upheld the arguments of the Venezuel Central Bank board appointed by President Maduro. The Court affirmed the Judgment of the Venezuela Supreme Court holding that the election process for President Maduro’s appointment as President was questionable and had voting irregularities. The Court however still recognised President Guaido as the official ‘Interim President of Venezuela’, and stated that he had Presidential authority, and further stated the principle of ‘Act of State’ applied for him generally.

However, the Court affirmed that in these circumstances of an ‘Interim President’ coming to power by a questionable election with voting irregularities, ‘recognition’/'non-recognition' will apply in some exceptional circumstances to trump some ‘Acts of State’ by this new President. ‘Acts of State’ for a President in those circumstances are not absolute like they are when there has been an unquestionable election. The Court in this case stated that where a country's Supreme Court has ruled an election to be invalid, and it is widely recognised in the international community as invalid, there is the exception that ‘non-recognition’ for the interim President will apply to the central bank to prevent the 'Interim Presiden' from accessing this central bank part of the state. This will prevent an ‘Interim President’ getting access to the country's gold reserves.

Ratio-decidendi:

'Courts in this jurisdiction are bound by the one voice principle to accept the statements of the executive which establish that Mr Guaidó is recognised by HMG as the constitutional interim President of Venezuela and that Mr Maduro is not recognised by HMG as President of Venezuela for any purpose. It is appropriate to grant declaratory relief to that effect. There exists a rule of domestic law that, subject to important exceptions, courts in this jurisdiction will not adjudicate or sit in judgment on the lawfulness or validity under its own law of an executive act of a foreign state, performed within the territory of that state. Accordingly, subject to (3) below, courts in this jurisdiction will not question the lawfulness or validity of: (i) Decrees Nos 8 and 10 issued by Mr Guaidó; (ii) the appointment of the Special Attorney General; or (iii) the appointment of the Ad Hoc Administrative Board of the BCV (ie the Guaidó Board). However, in agreement with the Court of Appeal, I consider that, to the extent that the Maduro Board may rely on judgments of the STJ to which recognition or effect should be given by courts in this jurisdiction in accordance with domestic rules of private international law and the public policy of the forum, the rules identified in para 2(a) and (b) above would not be engaged. It is therefore necessary for the proceedings to be remitted to the Commercial Court for it to consider whether the judgments of the STJ should be recognised or given effect in this jurisdiction’, Lord Lloyd Jones at 181

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Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.