A battle for the control of more than $1.8bn worth of Venezuelan gold stored at the Bank of England has swung in favour of the government of Nicolás Maduro after an appeals court in London overturned an earlier high court ruling concerning whom the UK recognised as Venezuela’s president.

The court of appeal granted an appeal by the Banco Central de Venezuela (BCV) and set aside July’s high court judgment, which had found that Britain’s recognition of the opposition leader Juan Guaidó as the “constitutional interim president of Venezuela” meant the gold could not be released for the Maduro-backing bank.

The BCV sued the Bank of England in May to recover control of the gold, which it has guaranteed it will sell purely to finance Venezuela’s response to the coronavirus pandemic.

The Bank of England, claiming to act independently of the Foreign Office, had refused to release the gold. It cited a British government decision in early 2019 to join dozens of nations in backing Guaidó on the basis that Maduro’s election victory the previous year was rigged.

A British commercial court will now be required to re-examine the issue.

Monday’s judgment said it was necessary to determine whether “(1) the UK government recognises Mr Guaidó as president of Venezuela for all purposes and therefore does not recognise Mr Maduro as president for any purpose. Or (2) HMG [the UK government] recognises Mr Guaidó as entitled to be the president of Venezuela and thus entitled to exercise all the powers of the president but also recognises Mr Maduro as the person who does in fact exercise some or all of the powers of the president of Venezuela.”

The appeal court suggested the Foreign Office now provide clarification on the issue, but added it was up to the Foreign Office to decide whether to do so.

If the Foreign Office refuses to provide clarification, the appeal court said, it would be a matter for the commercial court on its own to decide if the British government recognises Maduro as de facto president.

The UK maintains full consular and diplomatic relations with the Venezuela government, suggesting the British position is at best ambivalent.

The Venezuelan central bank has said the proceeds from the sale of the gold would be transferred directly to the United Nations development programme to procure humanitarian aid, medicine and equipment to fight the Covid-19 pandemic.

Venezuela’s opposition has alleged that Maduro wants to use the money to pay off his foreign allies, a claim his lawyers deny.

Over the past two years Maduro’s government has taken 30 tonnes of gold from its local reserves to sell abroad for much-needed hard currency, according to people familiar with the operations and the bank’s own data.

A memoir by Donald Trump’s former national security adviser John Bolton revealed that the UK Foreign Office agreed to block the release of the gold at the request of the US.

Sarosh Zaiwalla, a senior partner at Zaiwalla & Co, representing BCV, said the ruling was an important point of international law since Guaidó was in reality a virtual prime minister with no real power inside the country.

He had warned that if his client lost the case it would “present a further threat to the international perception of English institutions as being free from political interference, as well as the Bank of England’s reputation abroad as a safe repository for sovereign assets.”