Introduction: A Dispute Rooted in Political Turmoil

In a landmark ruling, the UK Supreme Court (UKSC) in December 2021 decided a complex case concerning Venezuela’s disputed leadership and control over the country’s gold reserves held at the Bank of England (BoE). The case, formally titled “Maduro Board” of the Central Bank of Venezuela v “Guaidó Board” of the Central Bank of Venezuela, involved competing claims from two rival boards of the Central Bank of Venezuela (BCV)—one appointed by Nicolás Maduro, Venezuela’s de facto ruler, and another by Juan Guaidó, the opposition leader recognized as interim president by the UK government.

At stake was nearly $2 billion in Venezuelan gold reserves, and the case raised fundamental questions about sovereign recognition, the separation of powers, and the foreign act of state doctrine.

Background: The Power Struggle Between Maduro and Guaidó

Since 2019, Venezuela has been in a constitutional crisis, with two parallel claims to the presidency:

1. Nicolás Maduro, who has been in power since 2013, claims victory in the 2018 presidential elections, widely regarded as fraudulent.
2. Juan Guaidó, then President of Venezuela’s National Assembly, declared himself interim president in January 2019, citing constitutional provisions.

The UK government, along with the US and several European nations, formally recognized Guaidó as Venezuela’s legitimate leader in February 2019. However, Maduro retained effective control within Venezuela, including over its military and institutions.

The Legal Battle Over Venezuela’s Gold in London

The dispute reached English courts because Venezuela’s gold reserves—approximately $2 billion—were held at the Bank of England (BoE). The Maduro-controlled BCV sought to access the reserves, arguing they were needed to combat Venezuela’s economic crisis and COVID-19 pandemic. However, the Guaidó-appointed BCV board objected, claiming that only it had the authority to control Venezuela’s overseas assets, given the UK’s recognition of Guaidó.

The case revolved around two key legal issues:

1. Recognition Issue – Who does the UK legally recognize as Venezuela’s leader?
2. Act of State Doctrine – Can English courts examine the validity of decisions made by Venezuela’s government?

The UK Supreme Court’s Ruling

1. The “One Voice” Doctrine and Recognition of Government

The Court upheld the “one voice” doctrine, which mandates that UK courts must accept the UK Government’s official position on foreign state recognition. The Foreign, Commonwealth & Development Office (FCDO) had explicitly recognized Juan Guaidó as Venezuela’s interim president in 2019. Consequently, the Court ruled that UK courts were bound by this recognition and could not recognize Maduro’s government for any legal purposes.

2. The Act of State Doctrine and Justiciability

The Court examined whether UK courts could question the validity of acts undertaken by a foreign government recognized by the UK executive:

• The Court reaffirmed the traditional rule that courts generally do not question the validity of foreign executive acts performed within that state’s territory (foreign act of state doctrine).
• However, an exception exists when foreign judicial decisions contradict UK public policy. Since Venezuela’s Supreme Tribunal of Justice (STJ) had ruled against Guaidó’s appointments, the UK Supreme Court remitted the case to the Commercial Court to assess whether the STJ’s rulings should be recognized under UK law.

Legal Implications

1. Government Recognition in International Law
   • The ruling confirms that UK courts will defer to the UK Government’s recognition of foreign leaders and institutions.
   • This has implications for states experiencing political crises, as UK recognition determines legal standing within UK courts.
2. Limitations of the Act of State Doctrine
   • While the doctrine limits judicial review of foreign executive acts, it does not automatically apply to judicial decisions made by foreign courts.
   • The judgment underscores the role of public policy exceptions in determining whether UK courts will recognize foreign rulings.
3. Practical Effects on Venezuela’s Assets
   • The Supreme Court did not grant immediate control of Venezuela’s gold to the Guaidó Board but set the stage for further proceedings in the Commercial Court.
   • The outcome will determine whether UK courts recognize the Venezuelan judiciary’s rulings nullifying Guaidó’s appointments.

Conclusion

The Maduro Board v Guaidó Board case is a landmark decision in the realm of international law and diplomatic recognition. The Supreme Court’s ruling affirms the central role of the executive in foreign affairs while leaving room for judicial scrutiny where public policy conflicts arise.

Case: Maduro v Guaido [2021] UKSC 57 “Maduro Board” of the Central Bank of Venezuela (Respondent/Cross-Appellant) v “Guaido Board” of the Central Bank of Venezuela (Appellant/Cross-Respondent)