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Venezuela chooses Indian Origin Law Firm in Fight Against The Bank of England to release USD 1 Billion of Venezuelan Gold to help in fight against COVID

The Government of Venezuela has appointed Indian origin law firm Zaiwalla & Co, London to represent Banco Central de Venezuela's (BCV) in litigation against the Bank of England (BoE) to enforce the BoE to transfer $1 billion of Venezuela’s Gold to BCV's account.

BCV had deposited the gold with the BoE for safekeeping, with the funds to be sold and transferred to the United Nations Development Programme (UNDP). BCV has agreed with the UNDP that the funds will be transferred directly to the UNDP and used solely to combat the COVID-19 pandemic in Venezuela.

The BoE refused to act on BCV's instructions to transfer the gold to its account, citing concerns as to the authority of the BCV's current officials who act under the current Venezuelan President Maduro. Venezuelan opposition politician Juan Guaido has claimed that he is the interim President of Venezuela and claims to have appointed an Ad Hoc Administrative Board of BCV, most of whose members live not in Venezuela but in the United States.

The hearing, which began on 22nd June and completes on 25th June, will witness the High Court in London hear arguments as to who the Court should formally recognise as the President of Venezuela.

A recent book by President Trump former advisor John Norton released on 23 June 2020claims former British Foreign Secretary Jeremy  Hunt was “delighted to co-operate” with the US on “freezing Venezuelan gold deposits in the Bank of England, so the regime could not sell the gold to keep itself going”.

At the BoE's request, the Court has allowed representatives of Mr. Guaido to be joined in the proceedings to make preliminary submissions about who (the Board currently in charge or the Guaido-appointed Ad Hoc Board) should be authorised to give instructions to the BoE concerning the Venezuelan gold in the BoE. This will require the court to decide who is the recognised government in Venezuela.

 Zaiwalla & Co. has a history of managing complex and landmark cases including a USD 4 billion lawsuit against the United Kingdom’s Treasury on behalf of Iran’s Bank Mellat for wrongful sanctions to the Hong Kong handover on behalf of the People’s Republic of China. The case on behalf of Banco Central de Venezuela is the latest high-profile litigation by the law firm, whose outcome will define the chances of Venezuela’s fight against COVID-19.

Indian origin firm Zaiwalla & Co, representing BCV interests in this case on behalf of its President and Board commented: "This is a humanitarian emergency. During this critical time, the Central Bank of Venezuela has negotiated with the UNDP to ensure all funds raised by the sale of Venezuelan gold will be used in the fight against COVID-19,  and the  Bank of England's continued intransigence is putting lives at risk.

Recent news reports suggest agreement between President Maduro's government and Mr. Guaido's representatives to collaborate in combatting COVID-19. This is a highly positive step, and we call on his representatives to work with our client BCV to ensure that Venezuela's gold is put towards protecting the country from the serious risks posed by the virus, instead of sitting, useless, in vaults in England.

"Venezuela has been denied access to its resources during an international crisis. In effect, the nation's gold reserves in the BoE are being held hostage to political factors dictated by the foreign policy of the United States and certain of its allies. In the meantime, there is a very real risk that the people of Venezuela will suffer.”

In a statement ahead of the hearing, the BCV’s Indian born solicitor Kartik Mittal also accused the BoE of “holding Venezuela’s gold in a politically motivated move” to support US President Donald Trump’s “foreign policy objectives in Venezuela.” He referred to the recent book by former US national security adviser John Bolton which claims Mr. Hunt was “delighted to co-operate” with the US on “freezing Venezuelan gold deposits in the Bank of England, so the regime could not sell the gold to keep itself going”. Mr. Bolton’s book – which was published on 23rd June after a US federal judge dismissed the White House’s attempt to block its release – also claims Mr. Trump said it would be “cool” to invade Venezuela and that the country was “really part of the United States”.

In separate proceedings where a similar issue has arisen over the authority of those currently in control of the BCV's day to day operations, the Foreign and Commonwealth Office (FCO) was requested to provide a certificate confirming who the UK Government recognises as the President of Venezuela. Instead of providing such a certificate, the FCO in response simply restated an earlier speech by then Foreign Secretary Jeremy Hunt in which Mr. Guaido was recognised as "constitutional interim President of Venezuela until credible elections could be held".

At the hearing beginning on 22 June, Mr. Guaido's representatives are expected to argue that this FCO response must be treated as conclusive of Mr. Guaido being the recognised president and that the Court is precluded from examining the legality of acts and appointments made by Mr. Guaido, including the Ad Hoc Administrative Board of the BCV, despite decisions of Venezuela's highest court that have ruled those acts and appointments to be illegal and invalid. This raises the possibility that the English Court could be invited to give legal effect, without factual inquiry, to what are in effect matters of a political nature that have no legal basis within the constitutional or legal framework of Venezuela.

The Venezuelan Constitution acknowledges the BCV as an autonomous public law legal person, and BCV, therefore, does not consider that these issues affect its ability to carry out its legal functions. However, the BCV's representatives will argue that the UK Government has not formally recognised Mr. Guaido as either Head of State or Head of Government in Venezuela and that, in practice, the UK continues to maintain clear diplomatic relations with Mr. Maduro 's administration. When the United Kingdom has recognised governments in the past, it has usually done so on the basis of who is determined to exercise effective control over the territory of the state. Based on legal precedent, BCV's representatives will argue that the Court should consider which government is effectively exercising the functions of the State in Venezuela and whose ambassadors are recognised by the UK Government.


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