Zaiwalla acting in a USD 1.8 billion gold reserves matter in relation to the Central Bank of Venezuela

February 01 2023

The dispute is between two rival boards claiming to have authority to give instructions on behalf of the Central Bank of Venezuela (the “BCV”) in relation to Venezuela’s assets in England which include gold reserves worth USD 1.8 billion held in the Bank of England.  

In May 2020, the  Zaiwalla team,  acting on behalf of Maduro’s board of the BCV ,  issued a claim against the Bank of England when it refused to act on the BCV’s instructions to transfer €1bn of gold to the United Nations Development Programme to assist in securing humanitarian aid, medicine and equipment necessary to support Venezuela’s response  to the Covid-19 pandemic. The BOE claimed that it could not accept instructions from Maduro’s board as President Maduro was not formally recognised by the United Kingdom as the legitimate President of Venezuela,  despite  the United Kingdom’s ongoing diplomatic relations with Venezuela.

The dispute eventually made its way to the UK Supreme Court, where an appeal was lodged by a Board (Ad-Hoc Board) constituted by Venezuelan Opposition leader Juan Guaidó  under measures ruled illegal by Venezuela’s highest court, the Supreme Tribunal of Justice. The Ad Hoc Board challenged the authority of the BCV  to deal with BCV’s overseas assets, which were due to be frozen under UK sanctions. After a loss in the Court of Appeal, the Ad Hoc Board sought to overturn a judgment that found that both the incumbent President Maduro and Mr Guaidó could be recognised by the UK Government in different capacities.

The Foreign Secretary was invited to intervene in the proceedings when the Supreme Court agreed to hear the case, and permission has been granted for legal representatives of the Foreign, Commonwealth and Development Office to present legal arguments regarding the case at the hearing. They sought to argue that the Foreign Secretary's statement recognised Mr Guaidó as the Head of State of Venezuela for all purposes for which a head of state can act, irrespective of whether or not Mr Guaidó in fact exercises any power or control within Venezuela. The Foreign Secretary also claimed that the considerable continued diplomatic engagement between the United Kingdom’s embassy and various agencies of President Maduro’s Government does not mean that the UK Government recognises President Maduro. The BCV argues that the appointment of ambassadors to other states is a key part of the role of a head of state, and it is significant that the UK Government declined to accredit Mr Guaidó’s purported diplomatic appointee to the UK, instead maintaining the accreditation of President Maduro’s ambassador in London.

Following the three-day Supreme Court hearing in July 2021, a judgment was handed down in December 2021 which remanded the case back to the Commercial Court for it to decide if Mr Guaidó’s attempt to take control of BCV’s assets overseas will be effective in England, given that Venezuela's highest court, the Supreme Tribunal of Justice (STJ) has already ruled it to be unlawful.

The Commercial Court trial concluded in July 2022, rejecting the BCV’s attempt to obtain recognition of the STJ judgments, though Mrs Justice Cockerill granted the BCV permission to appeal, declaring that the issues at stake were “effectively unprecedented”, and that “the consequences of the decision have the potential to affect all the citizens of Venezuela”. She also refused to grant the declarations sought by the Ad Hoc Board.

BCV’s appeal is due to be heard in the Court of Appeal in May 2023.

The Ad Hoc Board are represented by Arnold & Porter. The Bank of England is represented by Herbert Smith Freehills.  Deutsche Bank is represented by Allen & Overy. The Receivers are represented by Quinn Emanuel.

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