Deutsche Bank AG (London Branch) v Central Bank of Venezuela
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Cockerill |
| Judgment Date | 12 September 2022 |
| Neutral Citation | [2022] EWHC 2702 (Comm) |
| Docket Number | Case No: CL-2019-000303; CL-2020-000304 |
| Court | Queen's Bench Division (Commercial Court) |
and
[2022] EWHC 2702 (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
KING'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 KC and Mark Tushingham (instructed by Arnold & Porter Kaye Scholer (UK) LLP) for the GUAIDÓ BOARD
Richard Lissack KC, Vaughan Lowe KC, Brian Dye, Jonathan Miller, Daniel Edmonds and Jacob Turner (instructed by Zaiwalla & Co) for the MADURO BOARD
Hearing on documents
Approved Judgment
There are two issues to be decided on the documents: Permission to appeal and costs.
The Maduro Board has sought permission to appeal, both on the basis of “some other compelling reason” and the more conventional “real prospect of success” basis. This application has been opposed by the Guaidó Board.
The Guaidó Board has sought orders that the Maduro Board pay the Guaidó Board's costs of the Remitted Issue and the Preliminary Issues in CL-2019-000303 and CL-2020-000304, to be subject to detailed assessment, if not agreed; and that the Maduro Board make an interim payment on account of the Guaidó Board's costs in the total amount of £2.4 million.
The Maduro Board's response is that:
i) I have no jurisdiction in respect of the costs of the Preliminary Issues;
ii) The correct order in respect of the Remitted Issue is an issue based order;
iii) On that basis it is not appropriate to order any payment on account.
PERMISSION TO APPEAL
I can deal with this relatively briefly. While I am grateful for the Guaidó Board's careful and focussed submissions, the question of permission is really one which lies between the Court and the applicant. I had considered the question of permission at the time of completing the judgment and had formed the view that this was (unusually) a case for the grant of permission on the “some other compelling reason” basis.
I take first, however, the question of real prospect of success. This is because (i) a negative conclusion on this should give me pause for thought on the “some other compelling reason” question and (ii) it has the potential to impact interim payment.
I conclude that this is not a case where I would grant permission on the basis of real prospect of success. I do not consider there is a real prospect of success. The way the arguments work structurally is that the Maduro Board had to win all of Issues 2–4; loss of any one issue was fatal to its case. I have found that it lost all of Issues 2, 3 and 4A. Accordingly winning one issue on appeal would not suffice.
The issues are all ones on which I reached clear conclusions, and the result was reached by a fairly clear margin. Specifically:
i) Issue 2: the Maduro Board's case involved a considerable expansion of the existing common law position. Even taking a more cautious approach on the authorities (in particular Air Foyle) than was urged by the Guaidó Board, the Maduro Board argument fell considerably short of justifying such a step. The approach of the other authorities compels the conclusion that even in the Court of Appeal the prospect of achieving such a significant expansion is fanciful;
ii) Issue 3: This is the argument which comes closest to establishing real prospect of success because of the nuance in the Supreme Court's judgment. While the second part of the appeal on this point is an appeal on fact it is the type of factual appeal which the Court of Appeal will be more inclined to consider, as being as well placed as the first instance judge. Had this ground stood alone I might well have concluded that it was just the right side of the line.
iii) In the case of Issue 4A, the margin was particularly large and the permission submissions are not compelling. The main plank of the argument is an appeal on fact relating to available remedy which concerns the type of finding (evaluation of live evidence) which the Court of Appeal will rarely disturb; and a proper basis for such an appeal is not really attempted. Even were the Court of Appeal prepared to go some way on this point another outcome is unlikely given the very clear (uncontested) breach of the rules of natural justice.
I would therefore consider the “real prospect of success” hurdle not to be surmounted in two cases, and to be marginal in the remaining case. Accordingly the chances of any appeal affecting outcome are, in my assessment, highly fanciful.
In normal circumstances this would conclude the argument on permission. It is unusual for a first instance court to grant permission on the “some other compelling reason” basis; normally such considerations are best left with the Court of Appeal. But this case is the exception which proves the rule. I am entirely confident that if I did not grant permission, the Court of Appeal would do so on this basis.
This is a case which can rightly be called unique. It concerns a claim with a very significant value, even in the context of the Commercial Court. It concerns a significant proportion of the gold reserves of a large foreign state. The first round of issues raised by that dispute have already engaged the Supreme Court. The consideration of the case thus far has been expedited because the consequences of the decision have the potential to affect all the citizens of Venezuela. The issues which I have had to decide are, in their consideration of the operation of a foreign apex court, effectively unprecedented. The public-international backdrop is not static. While I have taken a very clear view on the issues which I have found dispositive, the issues are ones where the law is either novel or little ventilated and the case plainly falls within the category of raising points of importance in the development of the substantive law.
Thus, while I have given careful thought to the slightly anomalous situation of giving permission on an appeal which I consider to be well below the merits hurdle, particularly given the delay which any appeal would involve, I consider that permission to appeal should be given in this case.
COSTS
Costs of the Preliminary Issues
On this first issue, the Maduro Board's submissions have a superficial attraction. They point out the history of the costs orders, which is this:
i) Teare J awarded the Guaidó Board the whole of its costs of the Preliminary Issues, including the trial before him;
ii) The Court of Appeal overturned Teare J on both Recognition and Justiciability and ordered the Guaidó Board to pay the whole of the Maduro Board's costs in the Court of Appeal. The Court of Appeal ordered that the Guaidó Board and the Maduro Board should each bear their own costs of the hearing of the Preliminary Issues below and of the Consequentials Hearing on 24 July 2020.
iii) In their costs submissions to the Supreme Court dated 17 January 2022, the Guaidó Board requested that: “The costs order made in favour of the Guaidó Board at first instance by Teare J at paragraph 2 of his Order dated 24 July 2020 should be restored.”
iv) The Supreme Court did not order that the costs orders made by Mr Justice Teare be restored; and did not order (as the Guaidó Board had sought in its draft) that “the Court of Appeal's order dated 6 October 2020…is set aside”.
v) The issue of the costs before Mr Justice Teare was not explicitly remitted to the Commercial Court by the Supreme Court. It does not form any part of the Remitted Issue as defined at paragraph 6 of the Order of Mr Justice Foxton dated 4 February 2022 (the “Foxton Order”).
. However this ignores some critical background. In the Supreme Court the Maduro Board responded to the Guaidó Board's submission by itself submitting that: “[t]he eventual winner of the case still remains to be determined: the Guaidó Board's preliminary issues have not been determinative. The Supreme Court should make no order as to costs or, alternatively, make an order of costs in the case.”
The outcome appears to follow from that submission. There was no express provision in respect of costs – but that in a sense flows from the Maduro Board's own submission. It was its case that costs should not be dealt with by the Supreme Court because the result would depend on the outcome of this phase of the process.
That outcome – that costs of the Preliminary Issues as well as the Remitted – Issues are for this Court (subject to appeal on the Remitted Issues) is entirely logical:
i) The consequence of the remittal pursuant to the Supreme Court's prior (and separate) Order was that the Commercial Court was again seised of “the proceedings”;
ii) The reason for that was that the answer to the Remitted Issues was necessary to reach an outcome on the Preliminary Issues;
iii) The Supreme Court Judgment was a complete vindication for the Guaidó Board on Recognition and a partial victory on Justiciability, which victories one would expect to see reflected in costs at some point; and
iv) It would be illogical for a costs order imposed by the Court of Appeal, which (i) was predicated on its decision being determinative (ii) was predicated on a view of the law which has been both overtaken and criticised, to stand.
Costs of the Remitted Issue
. On this issue the Maduro Board submits that this is the relatively unusual case where an issue based costs order is appropriate. That is because although the Guaidó Board successfully resisted recognition of the STJ Judgments, the Guaidó Board...
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