SUPREMELY PRAGMATIC:
THE UK SUPREME COURT’S JUDGMENT IN “MADURO BOARD” OF THE CENTRAL BANK OF VENEZUELA V “GUAIDÓ BOARD” OF THE CENTRAL BANK OF VENEZUELA
MASSIMO LANDO
Assistant Professor, School of Law, City University of Hong Kong
Global Fellow, Centre for International Law, National University of Singapore
THE LEGAL ISSUES: RECOGNITION AND ACT OF STATE
Sometimes, national courts decide international law cases of great practical importance. Such cases can have considerable relevance also for the clarification and development of international law, as well as for rules of domestic law which govern the relationship between States. One such a case is “Maduro Board” of the Central Bank of Venezuela v “Guaidó Board” of the Central Bank of Venezuela, decided by the Supreme Court of the United Kingdom on 20 December 2021 (here). The case concerned which of the two contending claimants to the Presidency of Venezuela, Mr. Nicolás Maduro and Mr. Juan Guaidó, could give instructions to financial institutions within England and Wales on behalf of the Central Bank of Venezuela (CBV). The CBV Board appointed by Mr. Maduro (“Maduro Board”) requested the English courts to decide that Mr. Guaidó’s appointments to the CBV Board (“Guaidó Board”) were invalid under English Law, and, as a result, that the “Guaidó Board” could not touch CBV’s assets located within the jurisdiction. The success of the “Maduro Board” turned on two preliminary issues: first, which man is recognised as President of Venezuela under English Law; second, and if that man were Mr. Guaidó, whether his appointments to the CBV Board are valid in English Law under the Act of State doctrine. In the Commercial Court, Teare J found for the “Guaidó Board” (here), but the Court of Appeal reversed the first instance judgment (here). The “Guaidó Board” appealed to the Supreme Court. Lord Lloyd-Jones, with whom Lord Reed, Lord Hodge, Lord Hamblen and Lord Leggatt agreed, gave the judgment.
VENEZUELA’S PRESIDENTIAL CRISIS AND THE UNITED KINGDOM’S POSITION
The case originated from the state of social and political unrest in which Venezuela has found itself since the May 2018 Presidential elections. Mr. Maduro, President from 2013 to 2018, won the 2018 elections, but several international observers alleged electoral irregularities (here and here). On 10 January 2019, Mr. Maduro was inaugurated as President of Venezuela. On 15 January 2019, the Venezuelan National Assembly proclaimed its own President, Mr. Guaidó, as the lawful President pursuant to Article 233 of the Venezuelan Constitution. Foreign States and international organisations have been making statements in support of either claimant to the Presidency (here). So far, approximately 60 State entities have expressed support for the Guaidó Presidency, while approximately 35 State entities have voiced support for Maduro’s claim to the Presidency. For the Supreme Court case, the position of the United Kingdom’s (UK) in respect of the 2018 elections was of capital importance. The UK position was set out on 4 February 2019 by the then Foreign Secretary, Mr. Jeremy Hunt, who stated that “the [UK] now recognises Juan Guaidó as the constitutional interim President of Venezuela, until credible presidential elections can be held”.
RECOGNITION
The first question concerned whether Her Majesty’s Government (HMG) recognised Mr. Guaidó as President of Venezuela. Lord Lloyd-Jones began by recalling that recognition of foreign States and governments is the province of the executive, performed by exercising the royal prerogative (para. 64). In this case, only recognition of governments was at issue, as Venezuela’s recognition as a State was not in question. Lord Lloyd-Jones recalled that HMG had changed its practice on recognition of governments in 1980: while under the old practiceHMG would expressly recognise governments, under the new practice HMG “shall no longer accord recognition to governments” (para. 66). Yet, when HMG issues a formal statement recognising a government, that statement would be conclusive before English courts (para. 68). The conclusiveness of that statement results from the “one voice principle”, under which the UK’s courts defer to the executive in matters of foreign policy (see Arantzazu Mendi [1939] AC 256, at 264).
Lord Lloyd-Jones rejected that there was a distinction, in English Law, between express and implied recognition: absent a formal statement by HMG, English courts could inquire not into whether a government is recognised, by only into whether that government exists as a government of a State (paras. 80–82, citing Republic of Somalia v Woodhouse [1993] QB 54). Lord Lloyd-Jones also considered the distinction between de jure and de facto recognition, on which the Court of Appeal had based its findings (see para. 123 of the Court of Appeal’s judgment). According to him, neither distinction had a place in English Law: to infer implied recognition would be trespassing on the exclusive competence of the executive (para. 98); moreover, HMG’s practice is not to distinguish between de jure and de facto recognition, which courts must follow (para. 99). Lord Lloyd Jones found that the Court of Appeal had erred in relying on material external to Hunt’s statement to decide whether HMG had impliedly de facto recognised Mr. Maduro as President (paras. 92–96). HMG had recognised, and courts thus must recognise, Mr. Guaidó as President (para. 110).
The decision is striking for its pragmatism. The Supreme Court rejected academic distinctions of different kinds of recognition, despite making a polite nod to the works of certain scholars who had elaborated on such distinctions (see para. 82). One wonders whether the Supreme Court was guided by considerations of simplicity and clarity. Recognition ranks as one of the most debated questions in international law, but the Supreme Court, after all, was not endeavouring to participate in that debate. From the point of view of UK constitutional law, Lord Lloyd-Jones’ decision on recognition accords great deference to HMG in matters of foreign policy, which should not be surprising. The decision does leave one question open, however: what would English courts do where there were no HMG formal statement on recognition of a foreign government, given that it would not be open for them to rely on the concept of implied recognition? Lord Lloyd-Jones stated that, in such cases, “recognition ceases to be the determinative criterion and the court must identify who may be the government or head of state by making its own findings of fact” (para. 98). This solution appears to raise the same question of trespass on the executive’s power identified as the reason to reject the notion of implied recognition in English Law. It would seem more practical, in such cases, for courts to request HMG to issue a statement on recognition, although it would not be guaranteed that HMG would do so, its decision issues a statement or not being made on political grounds.
ACT OF STATE
The “Guaidó Board” argued that, as the acts of appointing to the CBV Board had taken place in Venezuela, the Act of State doctrine prevented English courts from questioning their validity. The content of the Act of State doctrine as a common law rule has been subject of judicial elaboration since the House of Lords’ judgment in Buttes Gas & Oil v Hammer ([1982] AC 888; for recent academic commentary, see Teo, Sanger and Ruys). The Supreme Court had last pronounced on the doctrine in Belhaj v Straw; Rahmatullah v Ministry of Defence ([2017] UKSC 3). Lord Lloyd-Jones drew heavily from Lord Neuberger’s judgment in Belhaj, by adopting Lord Neuberger’s distinction of the Act of State doctrine into three rules: under the first rule, English courts will not review the effect of a foreign State’s legislation; under the second rule, English courts will not review the effect of a foreign State’s executive acts; under the third rule, English courts will not review certain specific transactions between foreign States, such as the making of treaties (para. 113). The first and second rule were at issue before the Supreme Court.
Lord Lloyd-Jones held that there were limitation to the Act of State doctrine, the most important of which was that the relevant acts must take place in the territory of the foreign State concerned (para. 136). Lord Lloyd-Jones also found that Mr. Guaidó’s acts of appointment to the CBV Board qualified as “acts of State” for the purposes of the doctrine (paras. 137–146). However, a question arose in respect of the impact of the judgments of the Supreme Tribunal of Justice of Venezuela which had declared Mr. Guaidó’s appointments to be invalid under Venezuelan Law. Lord Lloyd-Jones held that judicial decisions of foreign States were not entitled to the deference which the Act of State doctrine accords legislative and executive acts (para. 157). English courts can inquire into whether foreign judicial bodies act in manners that meet “the standards expected of a court” (para. 159), the question being that of giving effect to a foreign judgment within the jurisdiction (para. 161). This question was beyond the scope of the preliminary issues referred to the Supreme Court. For that reason, Lord Lloyd-Jones found it necessary to remit the question for decision by the Commercial Court, allowing the appeal of the “Guaidó Board” only in part (para. 170).
The Supreme Court’s decision concerning the Act of State doctrine seems to follow in a line of authorities that sought to clarify the scope and content of that doctrine under English Law. Lord Lloyd-Jones built on the majority judgment in Belhaj, although the Supreme Court Justices had endeavoured to clarify the content of the Act of State doctrine based on various rationales, from the separation of powers to comity (see Teo’s analysis at pages 509–513). It seems, however, that Lord Lloyd-Jones’s decision not only took stock of the Belhaj judgment, but also broadened the scope of the Act of State doctrine: Lord Lloyd-Jones found that acts of appointment by a foreign government fell within the scope of the doctrine, which had classically being limited to acts of governments operating on property. As a result of this broadening of the scope of the Act of State doctrine, HMG would be able to decide whether it approves of appointments made by a certain foreign government by expressly recognising that government. One wonders whether this ability could amount to excessive interference into the affairs of foreign States, and whether HMG has been given an additional means for its use of recognition as an instrument of diplomacy. It does not seem wholly unrealistic that HMG could use recognition, which Lord Lloyd-Jones found to be a gateway to “validating” appointments made by foreign governments, as a bargaining chip to obtain advantages from the foreign governments that have made those appointments.
NO END IN SIGHT – YET
The Supreme Court’s decision, although important from the point of view of international law and the common law Act of State doctrine, is far from being the last word on the “Maduro Board” claims before English courts. One aspect that should give pause for reflection are the stakes of this case. The Maduro and Guaidó governments are disputing access to considerable resources that the CBV holds with the Bank of England, in the sum of US$ 1.95 billion. It might not be a stretch to suggest that access to such funds can prove important, if not even decisive, in the race to secure the Presidency of Venezuela once and for all. Although there it no end in sight for the Venezuelan crisis, a potentially substantial help to bring that end nearer lies in the hands of a few judges in the courts of England and Wales.