Venezuela central bank wins appeal over gold reserves stored in UK

A legal fight of the central bank of Venezuela seeking the right to sell its gold reserves held with the Bank of England took another turn on Monday, when the Court of Appeal in London granted the bank's appeal for the UK courts to determine the dispersal of the bullion worth around 1.8 billion euros.

The case has now been remitted back to the Commercial Court in England to determine who is recognised as exercising the de facto powers of head of state and head of government in Venezuela, in the face of the UK and other Western countries' recognition of Opposition leader Juan Guaid as the leader of the South American country.

While Nicolas Maduro claims to be the President of Venezuela on the grounds that he won the 2018 presidential election, Guaido staked claim to the presidency last year and has opposed the sale of the bullion reserves.

The case is an effective face-off over whether it is Guaid or Maduro who should have control over Venezuela's foreign gold reserves, for which the Bank of England acts as custodian as a service it provides for numerous foreign states.

Maduro wants access to it to be able to sell it for funds he claims are required to meet the country's humanitarian needs in the face of the COVID-19 pandemic but Guaid's camp wants to retain it at the Bank of England.

The Banco Central de Venezuela's (BCV) appeal, being represented by Indian-origin law firm Zaiwalla & Co in London, set aside a High Court judgment from July which had found that the UK government's recognition of Guaid as constitutional interim President of Venezuela was conclusive and therefore prevented the English courts from assessing the validity of his actions.

The BCV maintains that it wishes to dispose of the reserves so the proceeds can be transferred directly to the United Nations Development Programme (UNDP) to procure humanitarian aid, medicine and equipment needed to fight the COVID-19 pandemic in Venezuela.

The lower court judgment had led to a completely unrealistic situation in which the president of the BCV and its board, who are in full control of the BCV's offices, mint and day-to-day operations of the central bank in Caracas, were being told that they could no longer deal with very substantial central bank deposits in London, said Sarosh Zaiwalla, Senior Partner at Zaiwalla & Co, which represents BCV in the court proceedings in London.

The COVID-19 pandemic remains a serious threat, and very valuable assets which are being needlessly tied up in this litigation are desperately required by the people of Venezuela, who are already suffering as a result of continuing international sanctions on the country, he said.

In May, the High Court in London had ordered an expedited trial to determine two preliminary issues of English law whether the UK formally recognised Guaid as the Interim President and whether any challenge to the validity of Guaid's appointments in relation to the Venezuela's Central Bank was justiciable in an English Court.

In July, the question of recognition was answered in the affirmative. However, that has now been overturned on appeal.

While the court has made no ruling on the question of whether it is Maduro or Guaid who is recognised as de facto President, the judgment directs the Commercial Court to undertake to establish this before any decision on the gold reserves can be taken.

Arnold & Porter, the law firm which represented Guaid's interests in the English courts, are yet to comment on the appeal.