Supreme Court confirms UK government’s recognition of President of Venezuela, leaving Commercial Court to determine who is authorised to give instructions on behalf of Venezuelan Central Bank

Following an ongoing dispute between two competing Boards of the Central Bank of Venezuela (BCV), both claiming to be appointed by the recognised President of Venezuela, the Supreme Court determined unanimously that: (a) Mr Guaidó is recognised by Her Majesty’s Government (HMG) as the constitutional interim President of Venezuela; and (b) Mr Maduro is not recognised by HMG as President of Venezuela for any purpose.

Central to the Supreme Court’s decision was its recognition of the “one voice” principle, namely that it is for the executive (i.e. HMG) to decide with which entities or persons it will have relations on the international stage, and statements made by the executive to this effect must be accepted by UK courts as conclusive. This approach was perhaps not surprising, in light of intervention in the appeal by the Foreign, Commonwealth & Development Office, confirming that HMG recognised Mr Guaidó. However, in holding that UK courts should make their own findings of fact and look at extrinsic evidence only in the absence of such an express statement of recognition by HMG, the Supreme Court may have limited the scope for future judicial interpretation in relation to matters of this nature and the “one voice” principle.

The matter will now be remitted to the Commercial Court to determine whether certain of Mr Guaidó’s acts, including his appointments to the Board of the BCV, are lawful. In this context, although HMG has recognised Mr Guaidó’s government, the Supreme Tribunal of Venezuela (STJ) has nullified, or at least purported to nullify, Mr Guaidó’s appointments to the BCV. Accordingly, the authority of either Board to give instructions to UK financial institutions with custody of BCV assets now rests on whether the STJ decisions should be recognised in the UK.

As the Supreme Court explained, judicial rulings by a foreign state, while manifestations of state sovereignty, do not fall within the scope of any rule of act of state under English law. They are therefore not entitled to the same level of deference which may be shown to the legislative and executive acts of a foreign state. Accordingly, the Commercial Court may be more willing to challenge the legitimacy of the STJ rulings than to challenge Mr Guaidó’s executive acts. Further, the Supreme Court noted that if the STJ’s reasoning for its rulings was because Mr Guaidó is not the President of Venezuela, such STJ decisions cannot be recognised or given effect by the UK courts, because to do so would conflict with the view of the UK executive.

For more information see this post on our Banking Litigation Notes blog.

(Herbert Smith Freehills LLP acts for the Bank of England in the proceedings brought against it by the Maduro Board of the BCV.)