Deutsche Bank AG London Branch v Receivers Appointed By the Court & Ors

Her Majesty’s Government’s unequivocal recognition of a person as the constitutional president of a foreign state engages the one voice doctrine. The English court must give effect to that recognition and must not investigate other governmental conduct to reach a contrary conclusion. The doctrine does not, however, determine recognition of the foreign government or head of government unless the statement addresses that issue.

The foreign act of state doctrine prevents the court from adjudicating on the validity under foreign law of legislative or executive sovereign acts taking effect within the foreign state. The doctrine applies to legislation conferring appointment powers and to appointments made by the foreign head of state, even where their practical effects are felt abroad or the acts may be unlawful under foreign law.

The proceedings concerned conflicting instructions given to the Bank of England and Deutsche Bank concerning Venezuelan gold reserves and the proceeds of a gold swap. The competing instructions came from boards and office-holders appointed respectively by Nicolás Maduro and Juan Guaidó.

The court determined two preliminary issues: whether HMG recognised Mr Guaidó or Mr Maduro, and whether the English court could examine the validity under Venezuelan law of the Transition Statute, related decrees, appointments and a National Assembly resolution.

The issues arose in related proceedings involving the Bank of England and court-appointed receivers holding the relevant assets.

1. Recognition. HMG’s statement of 4 February 2019 was clear and unequivocal. It formally recognised Mr Guaidó as the constitutional interim President of Venezuela from that date. The recognition was as Head of State, not as Head of Government. HMG’s later letter confirmed that position.
2. Under the one voice doctrine, the court had to accept the recognition as conclusive. It was not open to the court to examine HMG’s diplomatic relations or other conduct in an attempt to contradict the formal recognition. HMG’s recognition of Mr Guaidó necessarily meant that it no longer recognised Mr Maduro as President. The court therefore did not need to determine whether there had been a change of government.
3. Legislative acts. Applying the first rule identified in Belhaj v Straw [2017] UKSC 3, the court could not adjudicate on the validity or effectiveness under Venezuelan law of the Transition Statute. Credible evidence that it was an act of the Venezuelan legislature was sufficient. Investigating whether it had been constitutionally enacted or promulgated would itself involve adjudicating on Venezuela’s internal affairs.
4. The territorial requirement was satisfied because the relevant appointment powers took effect in Venezuela, even though the appointed persons might deal with assets or proceedings abroad.
5. Executive acts. Applying the second rule in Belhaj v Straw [2017] UKSC 3, the court could not question the validity or effect of Mr Guaidó’s appointments, including if they were unlawful or ineffective under Venezuelan law. The appointments were made in Venezuela and concerned the internal governance of a Venezuelan entity. The court followed the reasoning of Lord Sumption on this point.
6. The question whether the BCV was a decentralised entity was itself inseparable from the validity of the executive act and was therefore non-justiciable. The court did not decide whether the third rule of the foreign act of state doctrine also applied.
7. The answers to the preliminary issues were that the relevant Venezuelan acts had to be treated as valid and effective without inquiry. The court held that the court lacked jurisdiction by reason of subject-matter immunity and invited the parties to agree an order.