Key Facts
- •Deutsche Bank AG (DB) and the Central Bank of Venezuela (BCV) engaged in gold bullion swaps from 2015.
- •US sanctions were imposed on BCV in April 2019, creating difficulties in payment of substantial sums owed by DB to BCV.
- •The swap transactions contained an LCIA arbitration clause and a waiver of immunity clause.
- •DB applied for and received a receivership order in May 2019, with receivers holding BCV's contractual rights.
- •DB sought reimbursement for past receivership costs and a change in future cost arrangements.
- •The Maduro Board, representing BCV, objected on sovereign immunity grounds.
Legal Principles
Sovereign immunity generally protects states and their property from legal proceedings and enforcement.
State Immunity Act 1978
Agreement to arbitration can waive sovereign immunity concerning court proceedings related to arbitration.
State Immunity Act 1978, s. 9(1); Svenska Petroleum Exploration AB v Government of the Republic of Lithuania (No 2) [2006] EWCA Civ 1529; NML Capital v Argentina [2011] UKSC 31
Arbitration Act 1996 grants English courts supervisory and ancillary powers to support arbitration proceedings, including the power to appoint receivers.
Arbitration Act 1996
Contractual interpretation principles apply to waivers of sovereign immunity in commercial contracts.
Sabah Shipyard (Pakistan) Ltd v Islamic Republic of Pakistan [2002] EWCA 1643
Receivers have a common law right to payment of expenses and remuneration from assets under their control.
Capewell v Revenue & Customs Comrs [2007] UKHL 2; Barnes v Eastenders Cash & Carry plc [2014] UKSC 26
Outcomes
The court granted DB's application.
The court found that BCV waived its immunity from execution or enforcement of any order arising from the LCIA arbitration, including the requested reimbursement for receivership costs and the proposed future cost arrangement. The court rejected the Maduro Board's sovereign immunity arguments based on interpretation of the contractual waiver of immunity clause.