A Golden Ruling: UK High Court refuses Venezuelan attempt to withdraw BoE gold reserves

July 23, 2020

2 min read

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What's going on here?

The UK High Court has denied the (contested) Venezuelan president Nicolas Maduro’s access to $1.8bn worth of assets in gold held by the Bank of England (BoE), which had been sought by the Venezuelan Central Bank (VCB) due to dire economic circumstances.

What does this mean?

In a controversial decision that will have dramatic geopolitical consequences, Justice Nigel Teare agreed with the British government’s recognition of Juan Guaido (Venezuela’s opposition leader) as the “constitutional interim president of Venezuela”. Guaido self-proclaimed himself interim president in January 2019 and is formally recognised as such by the United States and Canada, alongside nearly 60 other nations.

The High Court’s decision has been criticised as being heavily politicised by Maduro’s lawyers, who contend that it “ignores the reality of the situation on the ground”, where Maduro’s government controls the country’s social and economic institutions.

What's the big picture effect?

Venezuela’s links to the UK are complex: Guaido was recognised as president, but the UK maintains diplomatic relations with Maduro’s government and has an ambassador in Venezuela accredited by Maduro. Nonetheless, Teare J affirmed that the VCB was not entitled to the money held in London due to the VCB being controlled by Maduro. He further ruled that to release the gold would be incompatible with the British government’s decision to recognise Guaido. Indeed, previous cases have shown that institutions of the state must speak with one voice on issues of foreign affairs. Such was the case in matters involving Somalia in 1993, as well as a Libyan lawsuit in 2016 on wealth funds. 

Section 3 of the Constitutional Reform Act 2005 guarantees judicial independence, meaning the judges in the UK are independent and apolitical, at least in theory. However, the present case proves that international judicial decisions may be influenced by the government’s foreign policy.

Maduro’s lawyers said they would appeal the decision, risking to further damage the already fraught relations with Venezuela, which has been ravaged by the economic fallout of the COVID-19 pandemic. If matters escalate, the UK is liable to find itself in the same position as the United States as of January 2019, with no formal diplomatic relations with Venezuela. 

The contested decision may set a precedent for future judicial decisions on foreign assets held at the Bank of England. For example, it remains unclear whether the UK judiciary would freeze assets owned by Hong Kong should the 1997 Sino-British Joint Declaration be breached due to the novel security law passed by the Chinese government. The UK’s move to suspend the extradition treaty it has with Hong Kong shows its preference to maintain positive diplomatic relations with China, and it remains to be seen just how far the UK dares go.

Report written by AnaĂŻs Itani

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