June 12, 2008
U.S. Supreme Court Rules in Republic of Philippines v. Pimentel
The case involved an attempt to collect on a $2 billion dollar class action judgment won by 9,539 victims of human rights abuses committed when Ferdinand Marcos was president of the Philippines. The issue that came before the U.S. Supreme Court was an interpleader action to determine the ownership of property allegedly stolen by President Marcos.
The specific property described in the opinion was money deposited in the United States by a Panamanian corporation that Marcos incorporated in 1972. At the time, the corporation deposited two million dollars in a brokerage account. As of 2000, the amount in that account had grown to $35 million.
The entities named in the interpleader suit were the Republic of the Philippines and the Philippine Presidential Commission on Good Governance. They were both dismissed from the action, leaving two other parties. Over the objection of the Philippine Government and the Philippine Presidential Commission, the action proceeded to judgment. The government and commission argued that under Rule 19 of the Federal Rules of Civil Procedure (the Rule on Required Joinder of Parties), the case should have been dismissed entirely once it was clear that the Philippine government and presidential commission could not be made parties to the litigation without their consent.
The district court and the Ninth Circuit held that the action could proceed without the Philippine government and presidential commission. The Ninth Circuit reasoned that the absent sovereign entities would not prevail on their claims.
The U.S. Supreme Court ruled that the district court and the Ninth Circuit gave insufficient weight to the sovereign status of the Republic of the Philippines and the Philippine Presidential Commission on Good Governance, and that this status protected them under the Foreign Sovereign Immunities Act. The Supreme Court said that the lower courts "failed to give full effect to sovereign immunity when they held the action could proceed without the Republic and Commission."
The Supreme Court recognized that the class of victims of the human rights abuses was left without a remedy as the result of its ruling, but it remanded to the lower courts to dismiss the action instead of allowing it to proceed.
Justice Stevens would not have ordered the lower courts to dismiss the action, but would have instead remanded it so that the Philippine government and commission could assert their defenses of sovereign immunity. He said that at some point they have to collect this money in the United States, and that ordering a remand rather than a dismissal of the action would be a better course here.
Justice Souter would have vacated the judgment and remanded for a stay of the action for a reasonable time to await a pending court decision from the Philippines.
June 12, 2008 | Permalink
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