Deutsche Bank AG (London Branch) v Central Bank of Venezuela
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Cockerill |
| Judgment Date | 29 July 2022 |
| Neutral Citation | [2022] EWHC 2040 (Comm) |
| Docket Number | Case No: CL-2019-000303; CL-2020-000304 |
| Court | Queen's Bench Division (Commercial Court) |
and
and
[2022] EWHC 2040 (Comm)
Mrs Justice Cockerill
Case No: CL-2019-000303; CL-2020-000304
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
IN THE MATTER OF SECTION 44 OF THE ARBITRATION ACT 1996
AND IN THE MATTER OF SECTION 37 OF THE SENIOR COURTS ACT 1981
Rolls Building
Fetter Lane
London,
EC4A 1NL
Andrew Fulton QC and Mark Tushingham (instructed by Arnold & Porter Kaye Scholer (UK) LLP) for the GUAIDÓ BOARD
Richard Lissack QC, Vaughan Lowe QC, Brian Dye, Jonathan Miller and Daniel Edmonds (instructed by Zaiwalla & Co) for the MADURO BOARD
Hearing dates: 13, 14, 15, 18 July 2022
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This judgment was handed down by the judge in Court 17 today and by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Friday 29 July 2022 at 09:30am.
INTRODUCTION
The essence of this case concerns control of approximately half of the Republic of Venezuela's substantial gold reserves, worth about US$1.95 billion, which are held by the Bank of England and the sum of approximately US$120 million held by receivers appointed by the Court.
However the route to that essential question is somewhat convoluted and I deal in this judgment with one step in a long and complex legal chain. That step may (subject to appeals) be the final step, or it may not. The parties to this dispute hold very different views on this topic – as on most others.
The question as to the ownership and right to control the gold and the sum held by the receivers arises because:
i) In the first claim, by an arbitration claim form dated 14 May 2019, the claimant (“Deutsche Bank”) sought, pursuant to section 44 of the Arbitration Act 1996, the appointment of receivers to hold and manage the proceeds of a gold swap contract concluded between it and the Central Bank of Venezuela (“BCV”) in 2015–2017. The court appointed the receivers and the claimant transferred the proceeds of the gold swap contract to them.
ii) In the second claim, by a claim form dated 14 May 2020, the claimant (“the BCV”), upon the instructions of the Maduro Board, issued proceedings against the defendants (“The Bank of England”), claiming that the Bank of England was in breach of its obligation to accept instructions from the Maduro Board with regard to payment of gold reserves held for the BCV. In response, the Bank of England filed a stakeholder application under CPR Part 86 and sought an order for the Court to determine upon whose instructions (as between the Guaidó Board and the Maduro Board) the Bank of England was authorised to act.
There are two contenders for the role of Head of State of the Bolivarian Republic of Venezuela, Mr Maduro and Mr Guaidó.. They would not in the ordinary course of events control the gold or the sum held by the receivers directly, because the deposit was originally made by the Central Bank of Venezuela (BCV). Each of Mr Maduro and Mr Guaidó have appointed Boards, which they say have the right to make those decisions. Correspondingly each Board claims to be entitled to represent the BCV in relation to the assets of the BCV in this jurisdiction.
And so began a dispute which has already been to the Supreme Court: [2021] UKSC 57 [2022] 2 WLR 167. The starting point for this judgment is that by its decision the Supreme Court has established that:
i) Courts in this jurisdiction are bound by the “one voice principle” to accept statements of the executive which establish that Mr Guaidó is recognised by Her Majesty's Government as the constitutional interim President of Venezuela and that Mr Maduro is not recognised by HMG as President of Venezuela for any purpose; and
ii) There exist rules of domestic law in relation to Foreign Acts of State (“FAOS”) such that, subject to important limitations and exceptions, courts in this jurisdiction:
a) will recognise and will not question the effect of a foreign state's legislation or other laws in relation to any acts which take place or take effect within the territory of that state (“Rule 1”); and
b) 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 (“Rule 2”).
It follows that, pursuant to Rule 2, the English courts will not question the lawfulness or validity of certain executive acts of Mr Guaidó performed or taking effect within the territory of Venezuela — essentially because they are sovereign acts of the Venezuelan state. In practical terms for the dispute this means that the courts will generally question the validity of Mr Guaidó's purported appointments of individuals to the positions of:
i) a “Special Attorney” (also referred to as the “Special Attorney General”); and
ii) the ad-hoc administrative board of the BCV (the “Guaidó Board”).
(together “the Executive Acts”).
The Maduro Board says that the general rule does not apply however, because there is a further and fundamental limitation to FAOS Rule 2 (“the Limitation”). It raises the question: What happens if Venezuela's Supreme Tribunal of Justice (“the STJ”) has given judgments which deny the validity of those appointments? That question matters because in general terms this Court will give recognition or effect to such judgments in accordance with domestic rules of private international law and the public policy of England & Wales.
The Maduro Board contends that Mr Guaidó's acts of appointment are null and void under Venezuelan law, and notes that they have been held as null and void by the Venezuelan courts. The Maduro Board has identified 10 STJ Judgments to which it says recognition should be given. Those decisions are listed in Part 1 of the Maduro Board's RASOC (the “Part 1 Judgments”). As Lord Lloyd-Jones has put it at [156]:
“Mr Guaidó, recognised by HMG as the President of Venezuela, has made appointments to the board of the BCV which the STJ, as a part of the judicial branch of government, has declared to be unlawful and of no effect. As a result, this court is confronted with conflicting positions adopted by the executive and the judiciary of Venezuela.”
If the Maduro Board is right and the Part 1 Judgments fall to be recognised, the declarations sought by the Guaidó Board would not be granted, and instead a finding made that the Maduro Board BCV President and Directors alone have the requisite authority to represent and act on behalf of the BCV.
If the Maduro Board is wrong about this, there are disputes as to whether it does or does not follow that I should grant the declarations which the Guaidó Board seeks. In particular, the Maduro Board also contends that even if the appointment of a Special Attorney were valid, that appointment did not confer authority on the Special Attorney to represent the BCV, which is a sui generis autonomous entity under the Constitution and not a decentralised entity. The judgments sought to be recognised include decisions by the STJ as to the nature of the BCV.
I should note near the outset of this judgment (and it will be apparent throughout) that although the underlying parties are plainly on extremely hostile terms, the trial has been prepared and conducted with exceptional levels of co-operation and courtesy between the legal teams. The co-operation has enabled this very expedited trial of very complex issues to be heard effectively — and has much lightened the burden which falls on me.
The judgment is arranged as follows:
THE FACTS
| Introduction | 3 |
| The Facts | 6 |
| Backdrop | 6 |
| Legislative Power | 6 |
| Executive Power | 7 |
| Judicial Power | 7 |
| The Organic Law Of The STJ (LOTSJ) | 8 |
| The Composition Of The STJ | 9 |
| 2013 – 2016 | 9 |
| Retirement And Appointment Of New STJ Judges In 2015 | 9 |
| The Special Commission and the 2016 Judgments | 10 |
| The STJ and the 2017 Budget | 12 |
| Venezuela's Universal Periodic Review In 2016 | 13 |
| STJ Judgments 155–158 In March And April 2017 | 15 |
| Judgment 155 | 15 |
| Judgment 156 | 17 |
| National Defence Council Meeting on 31 March 2017 | 18 |
| Judgments 157–158 | 19 |
| Events Relating To The NA's Appointment Of STJ Judges In 2017 | 19 |
| 2018 Presidential Election And HMG's Recognition Of Interim President Guaidó | 20 |
| The Transition Statute, the Executive Acts and the 2019 Judgments | 22 |
| 2020—Mr Guaidó's re-election and the 2020 Judgments | 26 |
| The Trial | 27 |
| The Issues | 29 |
| The Part 1 Judgments | 29 |
| Issue 1: “Quashing decisions” | 33 |
| Issue 2: Recognition | 38 |
| Issue 3: One Voice | 46 |
| Issue 4A: Natural Justice | 52 |
| The Other Issues: Impartiality/Independence and Public Policy | 57 |
| Issue 5: Public Policy | 57 |
| Issue 4B: Impartiality and Independence | 58 |
The parties helpfully prepared for me a very detailed and almost entirely agreed factual narrative, for which I am extremely grateful. I am particularly indebted to junior counsel (Mr Edmonds, Mr Miller and Mr Tushingham) on whom the bulk of this work devolved. This section is taken entirely from that narrative. The key judgments whose recognition is in issue are highlighted in bold in the narrative.
Backdrop
In 1999, Hugo Chávez was elected President of Venezuela. Until his death in 2013, President Chávez led a “Bolivarian Revolution” which involved an...
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