Deutsche Bank AG (London Branch) v Central Bank of Venezuela
| Jurisdiction | England & Wales |
| Judge | Lady Justice Falk,Lord Justice Phillips,Lord Justice Males |
| Judgment Date | 30 June 2023 |
| Neutral Citation | [2023] EWCA Civ 742 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA-2022-001852 |
and
and
[2023] EWCA Civ 742
Lord Justice Males
Lord Justice Phillips
and
Lady Justice Falk
Case No: CA-2022-001852
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
COMMERCIAL COURT (QBD)
MRS JUSTICE COCKERILL DBE
Royal Courts of Justice
Strand, London, WC2A 2LL
Richard Lissack KC, Brian Dye, Jonathan Miller, Daniel Edmonds and Jacob Turner (instructed by Zaiwalla & Co) for the Maduro Board
Andrew Fulton KC, Mark Tushingham and Manuel Casas (instructed by Arnold & Porter Kaye Scholer (UK) LLP) for the Guaidó Board
Hearing dates: 23 and 24 May 2023
Approved Judgment
This judgment was handed down remotely at 10.00am on 30 June 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Introduction
This is an appeal against a decision of Cockerill J that certain decisions of the Supreme Tribunal of Justice of Venezuela (the “STJ”) should not be recognised or given effect in this jurisdiction (the “Judgment”). The central issue in dispute between the parties is which of two claimants, referred to for convenience in the proceedings as the “Maduro Board” and the “Guaidó Board” respectively, are entitled to give instructions to financial institutions in this jurisdiction on behalf of the Central Bank of Venezuela (the “BCV”) and to represent the BCV in a London Court of International Arbitration (“LCIA”) arbitration. The subject matter of the dispute comprises gold reserves worth around US$1.95 billion held by the Bank of England and a further sum of around US$120 million representing the proceeds of a gold swap contract. That further amount has been paid by Deutsche Bank AG to court-appointed receivers to hold for the BCV pending resolution of the LCIA arbitration.
The judge's decision was made further to a remittal ordered by the Supreme Court following a decision in an appeal relating to two preliminary issues. These were, first, the “recognition issue”, namely whether Mr Nicolás Maduro Moros (“Mr Maduro”) or Mr Juan Gerardo Guaidó Márquez (“Mr Guaidó”) had been formally recognised by Her Majesty's Government (“HMG”) (and if so in what capacity, on what basis and when) and, secondly, the “act of state” issue, namely whether the court could consider the validity and/or constitutionality under Venezuelan law of certain legislative and executive acts, or must regard them as effective without enquiry.
In a judgment given by Lord Lloyd-Jones ( [2021] UKSC 57; [2023] AC 156) the Supreme Court concluded as follows at [181]:
“(1) 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.
(2) (a) 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.
(b) There exists a rule of domestic law that, subject to important exceptions, courts in this jurisdiction 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. 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).
(3) 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.”
On the remittal, the judge decided that the Maduro Board could not rely on the five STJ decisions that she determined were relevant (the “STJ Decisions”) on the basis that they were not, and should not be considered by extension as being, decisions in rem. That was sufficient to dispose of the remitted issue, but the judge went on to conclude that recognition should in any event not be accorded to the STJ Decisions on the basis that to do so would conflict with the “one voice” doctrine, and it would also be inappropriate to recognise them due to breaches of natural justice. The judge declined an invitation on the part of the Guaidó Board to conclude that there was systemic impartiality and a lack of independence on the part of the STJ.
On 28 April 2023, relatively shortly before the appeal against the Judgment was due to be heard, the Maduro Board made an application to vacate the hearing, stay the appeal and remit certain questions to the Commercial Court for a trial (the “stay application”). We heard the stay application at the start of the hearing of the appeal and dismissed it. Our reasons for doing so are set out below.
The facts before the judge
The relevant factual narrative, which the parties almost entirely agreed, is set out in detail in the Judgment. I will not lengthen this judgment by repeating it. The most salient points for the purposes of this appeal are as follows.
Under its Constitution, legislative power in Venezuela is exercisable by its National Assembly (“NA”), comprised of deputies elected for five-year terms. Executive power is exercised by the President, Vice President, Cabinet ministers and officials. The President is the Head of State and directs the action of the government.
The STJ is Venezuela's highest court. It has a role as the highest and ultimate guarantor of the Constitution. There are 32 Magistrates (judges) of the STJ, divided between six Chambers, of which the most relevant is the CC-STJ. The CC-STJ deals with Constitutional matters and is the foremost Chamber in rank, having seven judges as opposed to the usual five. It was common ground that the CC-STJ is able to make erga omnes decisions (literally, “towards all”), although the Guaidó Board's position is that this really means no more than that, unlike most courts in Venezuela, decisions of the CC-STJ can produce binding precedent.
Mr Maduro was elected President in 2013, following the death of President Hugo Chávez. In elections for the NA in 2015 a coalition of opposition parties claimed to have won a two thirds majority. However, the outgoing NA held an extraordinary session before the newly appointed deputies took office at which it appointed a substantial number of new STJ judges, including three judges and four alternates to the CC-STJ. The incoming NA subsequently approved a report to the effect that there were irregularities in that process and the appointments should be revoked, but the STJ in turn issued a judgment confirming their validity.
A dispute arose as to the validity of the election of four deputies for the State of Amazonas, of which three represented the opposition to Mr Maduro. The STJ granted provisional relief suspending the implementation of their election, but the opposition coalition decided to swear them in anyway. On 1 August 2016 the STJ issued a judgment in which it declared that all decisions taken by the NA would be null and void for so long as it was constituted in breach of the judgments and orders of the STJ. Subsequently, other judgments were issued to the same or similar effect. The subject matter of these judgments included, among other things, steps taken by the NA to appoint new STJ judges.
A Presidential election was held in May 2018 for the 2019–2025 term. Mr Maduro claimed to have won, although the UK government considered the election to be deeply flawed. The following month Mr Maduro appointed Mr Calixto José Ortega Sanchez (“Mr Ortega”) as President of the BCV, an appointment which the NA declared to be unconstitutional. That declaration was in turn declared unconstitutional by the STJ.
Mr Maduro was sworn in for a second term before the STJ on 10 January 2019, the court having ruled that Mr Maduro could not be sworn in before the NA because it was in contempt. On 15 January 2019 the NA and its President, Mr Guaidó, announced that Mr Maduro had usurped the office of President of Venezuela and that Mr Guaidó was the interim President by virtue of his position as President of the NA.
On 4 February 2019 the then Foreign Secretary, the Rt Hon Jeremy Hunt MP, issued the following statement:
“The United Kingdom now recognises Juan Guaidó 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 start, with free and fair elections in accordance with international democratic standards.
The oppression of the illegitimate, kleptocratic Maduro regime must end. Those who continue to violate the human rights of ordinary Venezuelans under an illegitimate regime will be called to account. The Venezuelan people deserve a better...
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