Deutsche Bank AG, London Branch v Central Bank of Venezuela

A state which agrees to LCIA arbitration engages the supervisory and ancillary jurisdiction conferred on the English court by the Arbitration Act 1996. A contractual waiver of state immunity is construed by the ordinary principles of commercial contractual interpretation. Where the wording covers enforcement or other relief arising from or relating to the arbitration, it may extend to orders made before an arbitral award, including orders under section 44 and orders permitting payment from receivership funds. A parenthetical restriction referring to enforcement after judgment or award may be confined to the specific remedies it grammatically and commercially qualifies. A letter opposing the relief sought is not written consent under section 13(3) of the State Immunity Act 1978. The court may also determine whether property held by receivers belongs to the receivers under the receivership order rather than to the state.

Deutsche Bank sought variation of a 2019 receivership order made in support of an LCIA arbitration concerning gold bullion swaps with the Central Bank of Venezuela. It sought reimbursement from the receivership funds for past receivers’ expenses and remuneration, and a revised mechanism for future payments, subject to any necessary United States licences.

The Maduro Board objected on state-immunity grounds. The issues were whether the contractual waiver covered the proposed orders, whether the orders were permissible under the State Immunity Act 1978, whether a letter from the Maduro Board’s solicitors constituted written consent, and whether the receivership funds were property of the Central Bank.

1. Application granted. The court would make the order sought by Deutsche Bank, subject to final agreement of its precise terms.
2. By agreeing to LCIA arbitration, the Central Bank engaged section 44 of the Arbitration Act 1996 and section 9 of the State Immunity Act 1978. Section 44 included power to appoint receivers and to make provision for payment of their proper expenses and remuneration from the receivership funds. Statutory receivers were to be treated as their common-law counterparts, who have a lien over assets under their control for those sums (paras [18]-[27]).
3. The contractual waiver was to be construed as a whole under ordinary principles of commercial contractual interpretation. No special restrictive rule applied merely because the provision concerned state immunity (paras [35]-[37]).
4. The waiver covered execution or enforcement, and other orders, judgments or relief arising from or relating to the LCIA arbitration. The words extended beyond enforcement of an award and covered orders under section 44 made before an award. The words “but only after and not before judgment or arbitral award” qualified only the immediately associated in rem remedies, arrest, detention, sale and attachment. They did not qualify service of process or enforcement against property generally (paras [38]-[52]).
5. The alternative argument based on a judgment under section 13(2) was unnecessary. If it had arisen, a judgment determining past quantified expenses could have satisfied the requirement, but a judgment stating principles without itself quantifying future payments would not necessarily do so (paras [59]-[63]).
6. The solicitors’ letter did not constitute written consent under section 13(3). Its substance was opposition to the proposed relief and an insistence that the status quo continue (paras [64]-[71]).
7. The receivership order expressly provided that the receivership property was the property of the receivers during the receivership. Unless that provision were challenged or varied, the funds were not property of the Central Bank for the purposes of state immunity. This point was not necessary to the decision on the contractual waiver (paras [74]-[83]).

The judgment records that the receivership order was made by Robin Knowles J on 13 May 2019 and that a return date occurred on 19 July 2019. No appeal from the present decision is stated in the judgment.