In a recent decision, in relation to an ongoing dispute as to which Venezuelan person or body has the authority to deal with certain Venezuelan assets (currently worth in excess of USD 2 billion) held in London by certain UK financial institutions, the High Court held that it would uphold the UK’s Government’s recognition of Mr Guaidó as the current Venezuelan head of state and that any associated legislative and executive acts by Mr Guaidó as the recognised Venezuelan head of state would be non-justiciable: Deutsche Bank AG London Branch v Central Bank of Venezuela & Ors, Central Bank of Venezuela v the Governor and Company of the Bank of England & Ors [2020] EWHC 1721 (Comm).

The court reinforced the principles underlying two established international law doctrines: first, the “one voice” doctrine, according to which the UK courts must recognise without further inquiry whomever the UK Government chooses to recognise as a foreign state or leader or government of a foreign state (considered in Mohamed v Breish [2020] EWCA Civ 637); and second, the “act of state” doctrine, according to which the UK courts must accept as valid without further inquiry any sovereign acts of a foreign state (considered in Belhaj v Straw [2017] UKSC 3 [2017]).

This decision is a noteworthy one for UK financial institutions who count amongst their clientele foreign states and foreign central banks, particularly where there is or could occur a degree of domestic political upheaval in those states which might result in conflicting instructions. This decision provides a degree of certainty that the UK courts will follow the UK Government’s recognition of a foreign state or leader or government of a foreign state, and will not investigate the validity of any legislative or executive acts of any foreign state. The decision is subject to an appeal to be heard in September 2020, so the degree of certainty for UK financial institutions to act on conflicting instructions remains to be confirmed.


There is an ongoing Venezuelan political battle between two individuals both claiming to be the President of Venezuela. The UK Government has recognised one of the individuals as the interim President of Venezuela pending fresh democratic presidential elections. However, this uncertain situation has made it unclear who has authority to act on behalf of the Central Bank of Venezuela (BCV) and to give instructions to certain UK financial institutions with custody of some of the BCV’s assets. The assets include:

  • the USD 2 billion gold reserves held by the Bank of England (BoE); and
  • the USD 120 million proceeds from a gold swap transaction concluded between Deutsche Bank and the BCV in 2015-2017 and currently held by court-appointed receivers.

Conflicting instructions in relation to the assets have been received by the BoE, Deutsche Bank and the receivers from two different boards of the BCV (who each claim to have the sole authority to act on its behalf), which are now the subject of two different High Court proceedings.

Venezuelan politics

Following the May 2018 Venezuelan presidential elections, Mr Nicolas Maduro claimed to be the victor, and swore himself in as such in January 2019. Mr Maduro also appointed new members to the board of the BCV (the Maduro Board). However, Mr Maduro’s appointment was contested by the National Assembly and Mr Juan Guaidó (then the leader of the National Assembly), who claimed that: (a) the elections were flawed as corrupt; and that (b) accordingly, under the Venezuelan Constitution, Mr Guaidó (as the leader of the National Assembly) automatically became the interim President (in January 2019) until fresh presidential elections could be held. Mr Guaidó also appointed his own “ad hoc” board of the BCV (the Guaidó Board).

The UK Government’s position

The UK Government was concerned that the presidency of Mr Maduro was not legitimate or democratic and following a warning to Mr Maduro to call fresh elections (which he failed to do), the UK Government issued a statement on 4 February 2019: “The United Kingdom now recognises Juan Guaidó as the constitutional interim President of Venezuela, until credible presidential elections can be held” (the HMG Statement).

The High Court proceedings

In 2020, the BCV, acting through the Maduro Board, sought to instruct the BoE to deal with the gold reserves (now valued at USD 2 billion) held in its vaults, and emphasised the urgency of its release as a result of a need for resources to fight the COVID-19 pandemic in Venezuela. The BoE stated that it was unable to act on those instructions, referring to prior correspondence in 2019 where the BoE had requested further evidence of the authority of the relevant individuals purporting to give instructions and noting that it had also received conflicting instructions from the Guaidó Board. The Maduro Board refused to provide the further evidence requested and subsequently brought proceedings against the BoE in May 2020 (the BoE Proceedings) alleging that the BoE was in breach of its obligations to accept instructions from the Maduro Board in relation to the gold reserves.

Related proceedings arising out of an arbitration had been brought by Deutsche Bank a year earlier, in connection with dealing with the proceeds of a gold swap transaction due to the BCV (the Arbitration Proceedings). Deutsche Bank and the court-appointed receivers had also received conflicting instructions from the Maduro Board and Guaidó Board.

Upon issue of the BoE Proceedings, the BoE issued a stakeholder application under CPR Part 86, asking the court to determine whether it should accept instructions from the Maduro Board or the Guaidó Board. Following a case management hearing in late May 2020, the court ordered a stay in the BoE Proceedings, and ordered a preliminary issues trial in late June 2020 in both the BOE Proceedings and the Arbitration Proceedings.

Both the BoE and Deutsche Bank are neutral as between the Maduro Board and the Guaidó Board in the respective proceedings.


The court held that Mr Guaidó had been unequivocally recognised by the UK Government as the interim President of Venezuela. The court also held that the validity and effect of certain legislative and executive acts of Mr Guaidó were non-justiciable.

The key issues – which are likely to be of broader interest to financial institutions – are summarised below.

Issue 1: Recognition of leader or government of foreign sovereign state (the Recognition Issue)

The Maduro Board argued that the UK Government unequivocally recognised the Maduro Government both pre and post 4 February 2019. The HMG Statement was nothing more than a political statement, a “Delphic utterance, which did not come close to unequivocal recognition of another government, nor to a de-recognition of the Maduro Government. Also the UK Government had maintained full diplomatic relations with only the Maduro Government before and after 4 February 2019, notwithstanding the HMG Statement. Accordingly, the court should follow the “one voice doctrine and confirm recognition of the Maduro Government.

The Guaidó Board argued that the HMG Statement was clear, unequivocal and binding.

The court dismissed the Maduro Board’s arguments making the following important findings of fact and law:

  • The HMG Statement was clear and unequivocal in its recognition of the legal status of Mr Guaidó as constitutional interim President of Venezuela; it was more than a mere expression of political support and was far from being Delphic.
  • In the court’s view there could not be two Presidents of Venezuela and so it was necessarily implicit in the HMG Statement that the UK Government no longer recognised Mr Maduro as the President of Venezuela.
  • Recognition was limited in scope to the identity of the President. There was no recognition of a new Venezuelan Government. Further, there was no room for the court to recognise Mr Guaidó as “de jure President, and Mr Maduro as “de facto President. To do so would be to contradict the UK Government.
  • Pursuant to Mohamed v Breish, the UK courts and the executive must speak with “one voice. This means that whomever the UK Government recognises, as is its prerogative to do, as either “de jure or “de facto President, the UK courts must adopt that recognition. In this case, the UK Government had unequivocally recognised Mr Guaidó as the President of Venezuela.

Issue 2: Justiciability of foreign legislative or executive acts (the Justiciability Issue)

The Maduro Board argued that certain legislative and executive acts of Mr Guaidó had not been lawful under Venezuelan law, thus invalidating the appointment of the Guaidó Board. The Maduro Board also submitted various arguments why the court’s consideration of the disputed Venezuelan legislative and executive acts were justiciable, including that the relevant acts had taken effect outside of Venezuela.

The court dismissed the Maduro Board’s arguments, holding as follows:

  • Certain legislative and executive acts of Mr Guaidó were non-justiciable, i.e. it did not have the jurisdiction to inquire into the validity of the Venezuelan acts of state put before it. Any challenges based on the view that Mr Guaidó was not the interim President of Venezuela would contravene the “one voice” doctrine.
  • The law under which Mr Guaidó had become President, and under which he had appointed the Guaidó Board was a foreign act of state into which the UK courts could not inquire pursuant to the “act of state” doctrine in Belhaj v Straw, which requires the UK courts:
    1. to recognise and not to question the effect of the laws and legislative acts of a foreign state which take place within the territory of that state;
    2. to recognise and not to question the effect of an act of a foreign state’s executive that take effect within the territory of that state; and
    3. not to consider issues which involve a challenge to the lawfulness of the act of a foreign state of such a nature that a municipal judge cannot, or should not, rule on it.
  • The relevant acts by Mr Guaidó had taken place in Venezuela though their effect may be felt elsewhere, and there was no reason why the “act of state doctrine should not also apply to the powers of a head of state to make certain appointments.

Permission to Appeal

The Court of Appeal has granted the Maduro Board permission to appeal on both the Recognition and Justiciability Issues. The former concerns the distinction between “de jure” and “de facto” recognition. The latter concerns limitations to the “act of state” doctrine. The High Court judge had previously only granted permission to appeal on a narrow justiciability issue, as to whether the “act of state” doctrine applies when the act of state in question has been deemed unlawful under its own domestic law (a point left open by the Supreme Court in Belhaj v Straw). The appeal has been expedited and is due to be heard in September 2020.