SW Legal studies in Business

U.S. Courts Must Defer to Sovereign Nationís Interests
Description

Supreme Court reversed lower court holdings in favor of parties that sought to seize assets in the U.S. that belonged to the former head of the Philippines. The Court held that since the Republic of the Philippines was investigating what should happen to such assets, U.S. courts must defer to such sovereign interests.

Topic International Law
Key Words

Sovereign Immunity; Comity

C A S E   S U M M A R Y
Facts

When Ferdinand Marcos was president of the Republic of the Philippines he formed a company, Arelma, and stashed assets in it. The holdings of Arelma are held by Merrill Lynch in New York. Pimentel and others joined in a class action in U.S. district court for human rights violations by Marcos. They won a judgment of $2 billion and sought to attach the assets of Arelma to help pay the judgment. At the same time, the Republic of the Philippines had established a Commission to recover property wrongfully taken by Marcos. It sought to recover assets held in Arelma by Merrill Lynch. A court in the Philippines was determining whether Marcos’ property should be forfeited to the Republic or to other parties. All parties, in opposition to the Pimentel class action judgment, moved to dismiss the U.S. court proceedings based on sovereign immunity and argued that, at a minimum, proceedings should be stayed pending the outcome of litigation in the Philippines. The district court refused and the Ninth Circuit Court of Appeals agreed that Pimentel should take the assets. The Republic of the Philippines and other parties appealed.

Decision

Reversed and remanded. The lower courts gave insufficient weight to the sovereign status of the Republic and its Commission in considering whether the interests of those parties would be prejudiced if the case proceeded. Giving full effect to sovereign immunity promotes the comity and dignity interest that contributed to the development of the immunity doctrine. The claims here arise from historically and politically significant events for the Republic and its people. They have a unique interest in resolving matters related to Arelma’s assets. A foreign state has a comity interest in using its courts for a dispute if it has a right to do so. Other nations should not bypass the courts of the Philippines without good cause. To seize assets of the Philippines would be a specific affront. The lower courts erred in ruling on the merits of the case. The Pimentel class has interests, but the courts did not accord proper weight to the compelling sovereign immunity claim.

Citation Republic of the Philippines v. Pimentel, 128 S.Ct. 2180 (Sup. Ct., 2008)

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