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 (FCDO), 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 relevant question for the purposes of UK financial institutions arising out of this dispute, is the identity of the persons entitled to give instructions on behalf of the BCV. This question remains outstanding, and 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. If those decisions are recognised in the UK, the Maduro Board will prevail and will have authority to give instructions on behalf of the BCV; if the STJ decisions are not recognised in the UK, the Guaidó Board will prevail and have such authority. However, 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.

The key issues and findings of the Supreme Court which are likely to be of broader interest to financial institutions, are summarised below.


The background is summarised in our previous blog post.

In short, two boards of the BCV, one appointed by Mr Maduro (the Maduro Board) and another appointed by Mr Guaidó (the Guaidó Board), disputed which Board was entitled to give instructions to UK financial institutions on behalf of the BCV. They had given conflicting instructions regarding the following assets:

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

In response to a claim from the Maduro Board in April 2020 to compel the BoE to act on its instructions, the BoE applied in May 2020: (a) for court guidance (under CPR Part 86) as to whether it could act on the instructions of the Maduro Board; and (b) for a stay while the wider political and legal battle between the two Boards was determined. That claim against the BoE is currently stayed pending resolution of these proceedings between the two Boards and pending the Commercial Court determination as to whether to give effect to acts of the Venezuelan executive or rulings of the Venezuelan judiciary.

First Instance Commercial Court decision

The Commercial Court held in July 2020 that HMG had recognised Mr Guaidó as the current Venezuelan head of state and held that any associated legislative and executive acts by Mr Guaidó as the recognised Venezuelan head of state would be non-justiciable before the UK courts. The Commercial Court’s reasoning is summarised in our previous blog post.

The Maduro Board appealed.

Court of Appeal decision

In October 2020, the Court of Appeal allowed the appeal and set aside the first instance ruling. The Court of Appeal held that it was not possible to give a definitive answer and remitted the case back to the Commercial Court for further consideration.

In particular, the Court of Appeal disagreed with the Commercial Court that HMG had clearly and unequivocally recognised Mr Guaidó as the Venezuelan head of state in a statement dated 4 February 2019 (the HMG Statement), and accordingly disagreed that any associated legislative or executive act by Mr Guaidó would be non-justiciable. The Court of Appeal held that the HMG Statement left open the possibility that HMG had simultaneously recognised Mr Maduro as de facto head of state. The Court of Appeal made no ruling regarding whether it could consider questions as to the validity of certain Venezuelan legislative and executive acts, but underlined that if HMG confirmed “de facto” recognition of Mr Maduro, the appointments made to the Guaidó Board by Mr Guaidó would be considered null and void and the Guaidó Board’s claim to the disputed assets would effectively be extinguished.

Appeal to the Supreme Court

Following the Court of Appeal’s decision, there were a number of political developments. In early December 2020, the Venezuelan National Assembly held a new set of elections and a day after the election results were announced proclaiming Mr Maduro as the winner and therefore as the President of Venezuela, HMG (via the FCDO) issued a statement that it did not recognise the result of the election on the basis that it was neither free nor fair.

The Supreme Court granted the Guaidó Board permission to appeal the Court of Appeal’s decision and the issues which had been remitted by the Court of Appeal back to the Commercial Court were stayed pending the outcome of the Guaidó Board appeal.

Issues for the Supreme Court to determine

The key issues were, following the decisions of the lower courts, in summary:

  • Who does HMG recognise as the President of Venezuela and in what capacity, on what basis and from when? (the Recognition Issue)
  • If Mr Guaidó is the President of Venezuela, can the Supreme Court consider the validity and/or constitutionality under Venezuelan law of various acts taken by him, including his appointment of the Guaidó Board, or must it regard those acts as being valid and effective without further enquiry? (the Act of State Issue)

Supreme Court decision

Issue 1: the Recognition Issue

The Supreme Court disagreed with the Court of Appeal’s finding that it was not possible to give a definitive answer to all aspects of the Recognition issue.

In the leading judgment of Lord Lloyd Jones (with whom Lord Reed, Lord Hodge, Lord Hamblen and Lord Leggatt all agreed), the Supreme Court stated that the “one voice” principle is today not open to question; it is for the executive (i.e. HMG) to decide with which entities or persons it will have relations on the international plane and UK courts must “accept as conclusive statements made by the executive relating to certain questions of fact in the field of international affairs. These questions include the sovereign status of a state or government and whether an individual is to be regarded as a head of state“.

In this particular instance, the Supreme Court said that HMG had made an express statement via Jeremy Hunt on 4 February 2019 and via the Hugo Shorter letter on 19 March 2020 (together, the Certificate) in relation to “the status of a person claiming to be head of state of Venezuela“. The Supreme Court said that the Court of Appeal erred in construing the Certificate as ambiguous – it held that it was an unequivocal and clear recognition of Mr Guaidó as President. It said the Court of Appeal should not have interpreted the Certificate by reference to extrinsic evidence when there was no ambiguity, and it was not appropriate for the Court of Appeal to look beyond the terms of the Certificate in this way. The Supreme Court stated that although the Certificate must be interpreted and applied by the courts, “[if] the FCDO has departed from its usual practice by issuing an express statement of recognition, any ambiguity in the statement should be resolved by a further request to the FCDO for clarification“.

Finally, the Supreme Court criticised the Court of Appeal for “introducing the concept of implied de facto recognition and in addressing the possibility that HMG might recognise Mr Guaidó as President de jure, while also impliedly recognising Mr Maduro as President de facto“. It held that the de jure versus de facto distinction when determining the President of Venezuela complicated the present proceedings and held that no question of implied recognition arose. The Supreme Court urged great caution in employing these concepts, stating that they are not precise terms of art and their meaning may vary according to context. The Supreme Court then proceeded to doubt whether the distinction between de facto and de jure recognition, in any of its forms, has a useful role to play any longer before the English courts.

Issue 2: The “Act of State Issue”

This aspect of the Supreme Court’s judgment is perhaps a little more complex. In summary, the Supreme Court considered that President Guaidó’s appointments of public officials are “sovereign acts” of the Venezuelan state to which the “Act of State doctrine” applies.

The Supreme Court opined that the effect of the “Act of State doctrine” is that English courts will not question the effect of a foreign state’s: (1) legislation or other laws; or (2) executive, in relation to any acts which take place or take effect within the territory of that state (referred to as Rules 1 and 2 respectively).

The Supreme Court noted that existence of Rule 2 should now be acknowledged because “there is now a substantial body of authority, not all of which is obiter, which lends powerful support for the existence of a rule that English courts 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“. It proceeded to make the following interesting observations on Rule 2:

  • The concept of Rule 2 has a sound basis in principle as a matter of international comity, but is different to state immunity.
  • To allow a UK court to interfere in the internal affairs of another state (for example, by questioning or adjudicating upon the lawfulness or the validity of certain executive acts of a foreign state) would constitute an objectionable interference with the internal affairs of that state, and would imperil amicable relations between governments and vex the peace of nations.
  • Although UK courts must not interfere with the internal affairs of another state, within most modern states sovereign power is shared among the legislative, executive and judicial branches of government. As such, UK courts cannot assume that the acts or conduct of the overseas executive is the sole manifestation of sovereign power and cannot assume that such acts or conduct should necessarily prevail over the position taken by the overseas legislature or judiciary.
  • In seeking to respect the sovereignty of a foreign state, it will not always be appropriate for UK courts to focus exclusively on acts of the overseas executive; UK courts are not always required to accept the lawfulness and validity of the executive act in preference to recognising a foreign court judgment where the two conflict (save in cases where to do so would conflict with UK public policy).

In the present case, this raises the question of whether the UK court should favour acts of the overseas executive (i.e. President Guaidó’s appointments of public officials) or the overseas judiciary (i.e. the STJ’s decisions that the acts of Mr Guaidó are unlawful and nullities).

The Supreme Court stated that UK courts “are more willing to investigate whether a foreign court is acting in a way that meets the standards expected of a court and whether there has occurred or is likely to a occur a failure of substantial justice“.

Foreign judgments therefore fall to be assessed under different rules from those applicable to legislative and executive acts and are less impervious to review. The Supreme Court endorsed the following view expressed by Rix LJ in Yukos [2014] QB 458, para 87: “… whereas in a proper case comity would seem to require… that the validity or lawfulness of the legislative or executive acts of a foreign friendly state acting within its territory should not be the subject of adjudication in our courts, comity only cautions that the judicial acts of a foreign state acting within its territory should not be challenged without cogent evidence.”

Further, the Supreme Court noted that “[if] and to the extent that the reasoning of the STJ leading to its decisions that acts of Mr Guaidó are unlawful and nullities depends on the view that he is not the President of Venezuela, those judicial decisions cannot be recognised or given effect by courts in this jurisdiction because to do so would conflict with the view of the UK executive.”

The Supreme Court commented that the Guaidó Board’s pleaded case is that the STJ’s judgments were issued in violation of principles of due process and that the members of the STJ are not impartial and independent but were acting corruptly to support Mr Maduro.

However, the Supreme Court pointed out that these issues were not addressed in argument and it was not taken to the STJ judgments in question. Given this, it held that whether, and if so, to what extent, the STJ decisions should be recognised or given effect by the English court was a matter which fell outside the preliminary issues and held that it was therefore appropriate for this aspect to be remitted to the Commercial Court.

Herbert Smith Freehills LLP acts for the BoE in the proceedings brought against it by the Maduro Board of the BCV.

Damien Byrne Hill
Damien Byrne Hill
Managing Partner, Disputes
+44 20 7466 2114
Ceri Morgan
Ceri Morgan
Professional Support Consultant
+44 20 7466 2948