“Maduro Board” of the Central Bank of Venezuela v “Guaidó Board” of the Central Bank of Venezuela

An unequivocal executive statement recognising a foreign head of state conclusively binds the courts under the one voice principle. Its meaning cannot be contradicted by diplomatic dealings or a judicial inference of implied recognition.

Subject to established exceptions, an English court will not adjudicate upon the validity under foreign law of a sovereign executive act performed within the foreign state. This rule can protect appointments to a public body and is not confined to dealings with property.

The rule does not apply where the foreign state’s own court has already declared the executive act invalid. Whether that judgment should be recognised is governed by private international law and domestic public policy, including the one voice principle.

Two rival boards claimed authority to represent the Central Bank of Venezuela in relation to gold and other assets held in England and an LCIA arbitration. One board derived its authority from appointments made by Mr Maduro. The other relied on appointments made by Mr Guaidó, whom Her Majesty’s Government had recognised as Venezuela’s constitutional interim President.

Teare J decided the recognition and foreign act of state preliminary issues in favour of the Guaidó Board: [2020] EWHC 1721 (Comm). The Court of Appeal allowed the Maduro Board’s appeal and remitted the case for clarification of whether the Government also recognised Mr Maduro de facto: [2020] EWCA Civ 1249.

The Supreme Court considered whether the executive statements conclusively resolved recognition; whether the foreign act of state doctrine protected Mr Guaidó’s appointments and their enabling legislation; and how that doctrine interacted with Venezuelan Supreme Tribunal of Justice judgments declaring the relevant acts invalid.

1. Disposition. The appeal was allowed in part and the cross-appeal dismissed. Declaratory relief was appropriate on recognition. The proceedings were remitted to the Commercial Court to decide whether the judgments of the Venezuelan Supreme Tribunal of Justice should be recognised or given effect.

2. The executive statements unequivocally established that, from 4 February 2019, Her Majesty’s Government recognised Mr Guaidó as Venezuela’s constitutional interim President and did not recognise Mr Maduro as President for any purpose. Under the one voice principle, the courts were bound by that position. The Court of Appeal had erred by using diplomatic dealings and other extrinsic conduct to create ambiguity and by contemplating implied de facto recognition. Where an express statement is ambiguous, clarification should be sought from the executive. Where no express recognition exists, the court determines as a factual matter who performs the functions of government.

3. English law contains an exclusionary foreign act of state rule under which, subject to important exceptions, a court will not adjudicate upon the validity under its own law of a sovereign executive act performed within the foreign state. The rule rests on respect for sovereignty and non-interference in internal affairs. It is distinct from state immunity and ordinary choice-of-law rules, and does not depend on the executive act being lawful under foreign law.

4. The rule is not confined to expropriation or property. It applied in principle to presidential appointments to the board of a Venezuelan public body and to a Special Attorney General. The territorial requirement was satisfied because the appointments were made in Venezuela and concerned the internal governance of Venezuelan entities. Consequences for assets or representation abroad did not make those acts extraterritorial. The challenges were direct because the appointments’ validity lay at the heart of the dispute.

5. Judicial decisions are not protected by the foreign act of state doctrine. Where a competent foreign court has already declared an executive act unlawful, an English court giving effect to that judgment does not itself adjudicate upon the executive act. Recognition of such a judgment instead depends on domestic private international law and public policy.

6. The corresponding rule protecting foreign legislation would ordinarily preclude a direct challenge to the Transition Statute. It likewise yields, however, to any foreign judgment which should be recognised. No effect could be given to a Venezuelan judgment insofar as its reasoning conflicted with the United Kingdom executive’s recognition of Mr Guaidó.

1. United Kingdom Supreme Court: The Guaidó Board’s appeal was allowed in part, the Maduro Board’s cross-appeal was dismissed, and the proceedings were remitted to the Commercial Court.
2. Court of Appeal: In [2020] EWCA Civ 1249, the court allowed the Maduro Board’s appeal. It held that further clarification was needed concerning possible de facto recognition of Mr Maduro and remitted the matter.
3. Commercial Court: In [2020] EWHC 1721 (Comm), Teare J resolved both preliminary issues for the Guaidó Board. He held that recognition was conclusive and that the relevant appointments could not be questioned under the foreign act of state doctrine.