John G. Roberts, Jr.: We'll hear argument first this morning in Case 06-1204, Republic of the Philippines v. Pimentel, et al.. Mr. Rothfeld.
Charles A. Rothfeld: Thank you, Mr. Chief Justice, and may it please the Court: This case concerns a dispute over the ownership of the property, the Arelma assets, that the Republic of the Philippines believes were stolen by Ferdinand Marcos while he served as the Republic's president. The ownership of this property should be settled by the courts of the Republic. The Arelma assets were stolen in the Philippines, from the Philippine people, by their former president. The current dispute is between the Republic and certain of its citizens. There is--
Anthony M. Kennedy: I just didn't hear you. You said that this dispute should be settled by--
Charles A. Rothfeld: --By the courts of the Republic. The question of ownership of these assets we believe is a matter as certainty of as the first impression should be decided in the Republic. As I say, the assets here were stolen in the Republic, from the Republic's citizens, by their president. There is currently a proceeding pending before the Sandiganbayan, the special Philippine anti-corruption court that has jurisdiction over matters of this sort, dealing specifically with the assets that are at issue here.
Ruth Bader Ginsburg: That's been pending how long?
Charles A. Rothfeld: It's been pending... well, the Republic initially filed a forfeiture petition in 1991 directed at a range of assets related to former president Marcos. Ultimately, after the assets were transferred from Switzerland to be held in escrow in the Philippines, the Philippine Supreme Court in 2003 issued a judgment relating to those assets because there was some doubt as to whether that judgment, some question about whether that judgment specifically addressed the Arelma assets that are at issue here, the Republic filed a motion before the Sandiganbayan in 2004 directed specifically at the assets. The motion has been pending since that time.
Ruth Bader Ginsburg: So it's from 2004 to 2008?
Charles A. Rothfeld: It has been, Your Honor. The Republic... that delay cannot be attributed to the Republic. The Republic has filed five motions with the Sandiganbayan urging it to expedite its decision. I can tell you that it has a... it is a court with a very substantial docket. The division of the Sandiganbayan that's considered this, these assets, considered among many other cases the corruption trial of former President Joseph Estrada. So I don't think that the delay can at this point be deemed--
Anthony M. Kennedy: --Well, it gets way ahead of the analysis and probably way ahead of your argument. At some point I'd like you to address whether or not one of the equities the Court can consider is the likelihood of an earlier decision. Let's assume we project out another 10 years. Does that make a difference? That may come toward the end of your argument rather than now, but I'd like it addressed at some point.
Charles A. Rothfeld: --Well, I certainly will, Your Honor. I think it would make sense logically to consider the issues that we think... there really are two related sets of considerations that should go into the Court's decision as to whether this suit should be dismissed, which is our submission. One relates to the Republic's sovereign immunity. The second relates to kind of a broader set of considerations and I think that your question goes to those. So I'll turn first to the sovereign immunity question. The Republic asserts ownership of these assets. Its, its submission is that President Marcos misappropriated them while he served as the president of the Republic. If that is true, then under Philippine law these assets at all times were the property of the Republic.
Ruth Bader Ginsburg: Mr. Rothfeld, will you explain then how it was that the Philippine Government supported the litigation against Marcos that led to the, what was it, the $2 billion judgment?
Charles A. Rothfeld: That's right.
Ruth Bader Ginsburg: Said that it had no objection to that suit. In fact, he thought it was a good thing for the Philippines that that litigation go forward. But if the government's position is the judgment would be uncollectible because all of those assets belonged to the Philippine Government and not to Marcos's estate, so the... that whole litigation would have been an exercise in futility.
Charles A. Rothfeld: Well, I think not, Justice Ginsburg, and I think that there is in fact no inconsistency at all. The Republic's position at that time was that it had no objection to plaintiffs who were victims of the Marcos regime bringing suit in the United States and they had no... the Republic had no objection to the suit proceeding in this country. Specifically the issue that was before the court that the Republic weighed in on was whether the act of state doctrine would preclude adjudication in the United States. The Republic's interest was in making clear that the acts of Marcos were not the acts of the Republic, they were not official acts that the Republic was prepared to defend. The Republic did not then and does not now have any objection to citizens of the Republic proceeding in the courts of the United States against the estate of Marcos. The question here is whether or not these assets are in the estate of Marcos. The Republic's submission is that these assets belong to the Republic, that they have never been part of the Marcos estate, and that therefore these are sort of ships passing in the night, that there can be proceedings against the estate in this country or elsewhere.
Antonin Scalia: Is there anything else in the estate?
Charles A. Rothfeld: There is litigation going on in the Philippines now before the Sandiganbayan as to what is in the estate, and I think that one of the problems, of course, is that, as is true of many corrupt regimes that have misappropriated state assets, unraveling it is enormously complicated. There were dummy corporations, there were smell corporations, which is one of the reasons that it has taken so long.
David H. Souter: Well, let me ask a slightly different question from Justice Scalia's. Is it the position of the Philippine Government that there are any assets in the estate that the Philippine Government does not claim?
Charles A. Rothfeld: I think that there are some assets. I will not say that they are very substantial number of assets. Now, I should say--
David H. Souter: Enough assets to satisfy the claims of the individuals who... who brought suit in the United States?
Charles A. Rothfeld: --No, there are not and there may never have been.
David H. Souter: So the position of the Philippines, going back to Justice Ginsburg's question, was we have no objection and in fact I think it was we support the litigation in the United States, but when it comes time to collect a judgment we're claiming they don't get a penny because everything belongs to us. Is that a fair summary of the Philippines' position?
Charles A. Rothfeld: I think that is not an entirely fair summary, Your Honor. I think... and again let me say that there are two separate questions: One is whether or not, as a matter of principle, the Philippines objected to its citizens proceeding in the courts of the United States to condemn the regime of former President Marcos.
David H. Souter: Well, they weren't just suing to condemn the regime. They weren't asking for a declaratory judgment. They were asking for a judgment in money.
Charles A. Rothfeld: That is true, Your Honor. But the submission... and the question is whether there is some inconsistency between what the Republic said then and what it says now. The submission then was not that the claimants were entitled to recover assets that belonged to the Republic. The submission was that whatever ended up in the Marcos estate--
David H. Souter: No, but we live in a practical world and if in fact there were no apparent assets that might satisfy that judgment that the Philippine Government did not claim, then their... then their support of the... of the earlier litigation was at the very least in tension with their... with their overall position.
Charles A. Rothfeld: --Well, I think that that... again, I would respectfully disagree with that. I think that there was real meaning to the judgment that was returned here even if there is a dispute as to whether there are assets in the Marcos estate. There were two settlements worked out between the Marcos estate and the claimants, with the blessing of the Republic, that would have paid a very substantial amount out of assets recovered from the Marcos... that were associated with Marcos, recovered by the Republic, and the Republic sort of blessed payment of those to the claimants here. Ultimately that was vetoed by the Sandiganbayan as inconsistent with Philippine law. But I think that the executive branch--
David H. Souter: Then why doesn't the Republic take the position that, because that was vetoed for reasons apart from the Republic's discretion, that the current assets would be an appropriate source of payment?
Charles A. Rothfeld: --There have been a number of efforts in the Philippine Congress, and there is now pending bills in the Philippine Congress, to compensate the claimants in amounts equivalent to those settlements. So I think that that is something that could happen, but I think it's important to step back and say, what is the issue before this Court here? And I think all of these considerations are simply divorced from the Rule 19 issues.
Ruth Bader Ginsburg: There's one other point of Philippine law that's unclear from the briefs. The Respondents say they have no right to intervene in the proceeding that's going on before the corruption court and your brief suggests that there is a right to intervene. What is it? Can they become part of that litigation or will they not be heard by the corruption court?
Charles A. Rothfeld: Well, we quoted the relevant portion of Philippine law, which is equivalent to our permissive intervention, which would have permitted the claimants to seek to intervene in the proceeding of the Sandiganbayan. In fact--
Ruth Bader Ginsburg: Seek to intervene, but no right to intervene?
Charles A. Rothfeld: --It is not a matter of right; it is permissive intervention. I think it's important to bear in mind the status of the claimants, though, because they're... their rights are entirely derivative of the Marcos estate. They don't claim the Arelma assets, which are the subject of this here before this Court. If the Marcos estate is held to have no right to those assets, they have no right at all and they have no rights to be protected. So I think it's... it is important to retreat to the questions that are actually before this Court now about the meaning of Rule 19 and its application in a situation in which there is an absent sovereign that has asserted its sovereign immunity. And--
Anthony M. Kennedy: Could you address that? That is the issue. Sovereign immunity, is this a question of where a party is just entitled to plead inconsistent theories? Was this a special appearance? Why is it that the Philippines can come into court and say, "we have sovereign immunity, and therefore the suit must be dismissed? " Would you just address that basic point?
Charles A. Rothfeld: --Well, I think that that's... sovereign immunity and dismissal under Rule 19 are two different but closely related and essential aspects of the relief of the Republic. As a matter of the sovereign immunity, all agree at this point that it cannot be forced to appear in this proceeding. But that relief is of little good to the Republic if the assets are then going to be awarded by a U.S. court to someone else and they are dissipated and they're gone forever. And so it's necessary to protect its interest, its sovereign immunity, to make it... to effectuate it... that the action be dismissed under Rule 19. And I think that it is something which this Court has recognized that when there is a sovereign that cannot be brought into the litigation and the sovereign's interests are going to be substantially undermined, the sovereign is an indispensable party and dismissal is essentially automatic. That's what should have happened here. That's the first mistake that the district court made. And I--
John G. Roberts, Jr.: Why couldn't... why couldn't the Philippines, not having been a party in this action, pursued whoever did get the assets from this action--
Charles A. Rothfeld: --Well--
John G. Roberts, Jr.: --in normal litigation, if they objected to the resolution.
Charles A. Rothfeld: --Well, let me amend your question in one respect. They were a party and of course as in their... in their capacity as a party, they sought dismissal under Rule 19 as well as dismissal of themselves on sovereign immunity grounds. But to answer specifically--
John G. Roberts, Jr.: I guess they weren't there for the adjudication on the merits.
Charles A. Rothfeld: --They were not there for the adjudication of the merits, that's right, because they had asserted their sovereign immunity. I think that there... everyone agrees, the Ninth Circuit itself acknowledged, that once the assets here are disbursed to Respondent and to the plaintiff class, as a practical matter they will be beyond recapture. There is a class of almost 10,000 people. And when the assets are gone, to reclaim them, even if the Sandiganbayan rules next week that Arelma is now and always has been the property of the Republic, it will be as a practical matter impossible to get them back. One suggestion which is made by Respondent and by some of its amici is that, because the Republic is not bound here, it could bring an action against the former stakeholder of these assets, Merrill Lynch. That, I think, is also clearly an inadequate remedy for the Republic. There is no guarantee that it would be able to proceed in such a proceeding sort of unencumbered by the judgment here. And if what we are looking for under Rule 19... again, there are sort of two components to this: There is the sovereign immunity component, which we think is essentially a per se rule requiring dismissal in circumstances here. If we get beyond that and we say, under Rule 19 what are the interests that we want to advance, the principal interest of Rule 19 is that everything gets accommodated in a single proceeding, that this gets resolved by the whole, as the Court has described it, and the only way to accomplish that is dismissal of this suit. If this action is dismissed, the court's judgment that the Republic is an indispensable party in litigation relating to Arelma will be binding on all the participants to this litigation. That will mean that if anybody sues the former stakeholder Merrill Lynch in the future, that action will be dismissed unless or until the Republic chooses.
Samuel A. Alito, Jr.: Would you agree that the Republic is ultimately not going to be able to collect these funds unless it sues in the United States and waives its immunity in that suit? And is that... is that relevant to the question of whether it should have been forced to proceed in this action?
Charles A. Rothfeld: Well, I don't think it's directly relevant, but I think that if one looks at the bigger picture, it is true... if the Republic... if this action is dismissed, the Sandiganbayan rules, and let's say that it rules for the Republic, the Republic becomes the owner of Arelma. It is then in a position to go to Merrill Lynch and say: This is our account; give it to us. If Merrill Lynch declines to do that, it is true the Republic will have to seek judicial action in the United States, but at that point it will be seeking to enforce a judgment of the Sandiganbayan. It... the proceeding there will be an enforcement action. And having... it being armed with that judgment and having the Philippine courts, which should be the ones that resolve this as a matter of first instance, it will be an entirely different kind of proceeding. And in that proceeding, unlike this one... as I said, the other side says: Well, you know, not to worry here, because you could sue Merrill Lynch. But that's inconsistent with the purpose of Rule 19, which is to say--
John G. Roberts, Jr.: Well, is it... is it fair to the private claimants here in the United States to say, wait until the Philippine court renders a judgment in favor of the Philippines, and then they can come in and enforce the judgment against Merrill Lynch or whomever is holding the assets?
Charles A. Rothfeld: --Well, I think if the Sandiganbayan rules for the Republic, the assets are the Republic's assets. The Republic can seek--
John G. Roberts, Jr.: Well, under the determination of the Philippine court. But the court here could determine that they're the private claimants' assets, as it did.
Charles A. Rothfeld: --Well, it did without the participation of the Philippines.
John G. Roberts, Jr.: Well, you just told me that the Philippines court may judge the opposite without the participation of the private claimants.
Charles A. Rothfeld: Well, but the... but again, Your Honor, it's important to remember the private claimants have no claim to the Arelma assets. Their interest is entirely derivative of the Marcos estate. The estate--
John G. Roberts, Jr.: That seems to me to be an argument on the merits, rather than with respect to which case should proceed first.
Charles A. Rothfeld: --Well, it goes, I think, to the question of whether their claim is one which is entitled to be heard in the United States. The question is, when the Sandiganbayan decides this case as between the two claimants that actually claim ownership of Arelma, as opposed to derivative rights as to one or the other of the claimants, that is the way in which it makes sense to proceed: Have the Sandiganbayan decide as between these two claimants, the Republic and the estate. Once that's done, all else follows from that.
John G. Roberts, Jr.: Would the private claimants be able to undermine the added force of the judgment in the Philippines, assuming a proceeding is brought here, on the ground that they were not allowed to participate in the proceeding in the Philippines?
Charles A. Rothfeld: Well, I think... I would say probably not, Your Honor, because again their interests are entirely derivative of the Marcos estate. And so I think they may be thought to be in privity with the estate, and therefore, they would not have a sort of separate right to challenge that. But I think that we should not anticipate what the future litigation will look like in the United States.
Ruth Bader Ginsburg: In privity with the estate? You're suggesting that the plaintiffs would be connected to the Marcos family that wants to get these assets?
Charles A. Rothfeld: No, I do not suggest any connection between them. My only suggestion is that, because their interest is entirely derivative of the estate, the estate has an interest in defending its interest there, and therefore somebody is there litigating the question.
Antonin Scalia: How much of an interest does the estate have if it is all going to be claimed by... by these private plaintiffs?
Charles A. Rothfeld: Well, the estate has a... as I say, these assets have been moved around or hidden. I think the estate may well have an interest in keeping them intact and saying that it does have rights. But if I may reserve the remainder of my time, Your Honor.
John G. Roberts, Jr.: Thank you, Mr. Rothfeld. Mr. Kneedler.
Edwin S. Kneedler: Mr. Chief Justice, and may it please the Court: When a sovereign government cannot be made a party to a case because of its immunity from suit, that fact must be given great weight in determining whether the suit nonetheless may proceed. That is true whether the absent sovereign is the United States, one of the 50 States, an Indian tribe or, as here, a foreign state.
Ruth Bader Ginsburg: When you say Mr. Kneedler, then you are not agreeing with Mr. Rothfeld, who says it's automatic?
Edwin S. Kneedler: We believe it would be dispositive in most cases, we think, only if the sovereign's interests would be adequately protected by the judgment or in the rare case that we've identified in our brief where the sovereign's interests are adequately protected by another sovereign, in the case of an Indian tribe being protected by the United States. But other than that, or where the United States is in a case against a state, the United States being the national sovereign, there could be special circumstances, but we think as a whole, the... as a general rule, sovereign immunity controls. And that's because sovereign immunity represents a fundamental policy judgment either rooted in the Constitution for the United States or the States, or judgments of the legislative branches that the sovereign should not be required to appear in court. A contrary rule allowing the suit to proceed would effectively undermine that rule of immunity and allow the sovereign's interest to be tried behind its back.
Anthony M. Kennedy: But suppose a case... and you have to do a lot of supposing. Suppose that the Philippine Government was simply not amenable to the process of the court, not because of foreign immunity, but just because it was outside the geographic area where process ran. It just can't be made a party. Exactly the same analysis as here?
Edwin S. Kneedler: I think that's probably correct if the Foreign Sovereign Immunities Act governs the service of process under the Act, and if the--
Anthony M. Kennedy: I understand, but in my hypothetical case it's just as if somebody is at the North Pole and you can't serve them.
Edwin S. Kneedler: --Right. But if the sovereign... if the foreign sovereign can't be sued, I think it's all the more... I mean it can't even be reached... it may be all the more reason why that interest should be given weight. We think the sovereign interest in this case is particularly compelling for reasons that have already been stated. The Government of the Philippines claims that it owns these assets. By contrast, the Respondents are unsecured judgment creditors. The Government of the Philippines claims it owns these, these assets, under a special Philippine statute dating to 1955 that declares ill-gotten gains gained toward... during time in office, forfeit to the government, and it has a strong interest in having that dispute resolved in its own courts. As we explain in our brief, the United States strongly supports that position and that interest of the United States is strongly supported by the fact that it is a party to a mutual legal assistance treaty with the Philippines. Such treaties are common in this country. There is a comparable treaty between the Philippines and the Swiss Government which led to the repatriation from Switzerland to the Philippines of a large--
John G. Roberts, Jr.: Mr. Kneedler, getting back to your previous point, why isn't the Philippine National... why don't... why doesn't the Philippine National Bank adequately represent the interest of the Republic? Under Philippine law, as I understand, any recovery by the bank in this case would be the property of the Philippines.
Edwin S. Kneedler: --Because the Philippines... excuse me. The Philippine National Bank is an escrow agent. It would have a conflict of interest in representing the interests of the Government of the Philippines with respect to its prior claim to the assets as against the Marcos estate. PNB is holding these assets in escrow pending the outcome of the very litigation we are talking about in the Philippines.
John G. Roberts, Jr.: Well, they are... they're certainly subject to Philippine law, and I understand that there's no dispute that under Philippine law the assets would be taken from the Philippine National Bank for the benefit of the government.
Edwin S. Kneedler: That's true, but the interests of the Philippine Government in obtaining... in having its interest confirmed that it owns these assets as of the time of the wrongdoing going back to 1972, that interest would not be advanced by PNB because PNB is holding them in escrow depending... pending the outcome of that very dispute between the Marcoses and the Philippine Government and couldn't be expected to advance in this case the Government of the Philippines' interest or claim of ownership to those assets. One other international agreement I wanted to mention was the Convention Against Corruption, to which the United States is a party. And also there is a statute passed by Congress, 2467, that provides for forfeiture in the United States of assets that are deemed to be forfeited pursuant to a foreign proceeding. So international agreements--
Ruth Bader Ginsburg: Doesn't that depend on there being a foreign judgment, which we don't have in this case?
Edwin S. Kneedler: --We... we don't have it yet, but that... that reflects the important interest of having our courts stay their hands pending the outcome of the proceedings in the Philippines in which that would be determined.
Ruth Bader Ginsburg: Isn't it also a requirement that in that proceeding in the foreign nation that all claimants would have an opportunity to be heard, which is not true here?
Edwin S. Kneedler: Well, what... what the statute requires is that the foreign proceedings be in accordance with due process and that parties claiming an... an interest in the property be entitled to be present. Again, the claimants here do not claim an interest in the property as an owner. They are unsecured judgment creditors of the... of the Marcos estate, and it... it might be useful to think about what is true in the reverse situation, in the forfeiture proceeding brought by the United States in U.S. courts against a criminal defendant, for example. An unsecured creditor of the... of the defendant claiming the assets is typically found not even to have standing to intervene. But if it does intervene, it would not have a claim superior to that of the United States because it wouldn't be a bona fide purchaser of the assets, and it wouldn't be without knowledge of the illegal conduct.
John Paul Stevens: Mr. Kneedler, may I ask you this question: Would the case be different if there were secured creditors rather than judgment creditors?
Edwin S. Kneedler: In... in U.S. courts a secured creditor would get past the standing stage, but would not... would not get past the bona fide purchaser for value without knowledge of the wrongdoing. In this case it has been clear since 1986, for example, that the Government of the Philippines has... has been seeking the repatriation of Arelma and its assets.
David H. Souter: Well, it's been doing it on a fairly sporadic basis. If I remember the facts correctly, first it got a stay with respect to the disposition of assets, and then the stay expired and the government didn't do anything about it, and then the government didn't come into action again until this particular claim was raised.
Edwin S. Kneedler: Well, I think it--
David H. Souter: Maybe... let me put the... sort of my response in the form of a question. In drawing or refusing to draw the conclusion of "indispensable party", do you claim that a court may or may not consider the equitable or inequitable behavior of the government?
Edwin S. Kneedler: --Well, I... perhaps in an extreme case, but I... first of all, I think the courts of the United States should be very reluctant to deem a foreign government's conduct inequitable in the sense that you're describing it. And I think, for the reasons Mr. Rothfeld said, repatriating these assets is an extremely complicated thing. But the Philippines Government sought these assets in... beginning in 1986, obtained a freeze order in 1986, again in 1990. It got a final determination by the district attorney in Switzerland in 1995, confirmed by the federal court of Switzerland in 1997, that the assets could be returned. These assets, the shares, the Arelma shares, however, were not actually returned until 2000 by the Swiss Government.
Ruth Bader Ginsburg: Is there any explanation why the freeze that was imposed by a U.S. court in 1987 was simply allowed to lapse?
Edwin S. Kneedler: That was the preliminary injunction and I'm not sure what happened after that. But I did want... the proceedings in Switzerland, I did want to make clear, because there was a suggestion that the Philippine Government was duplicitous by encouraging this suit and at the same time seeking the assets. But as I just pointed out. It has been clear since 1986 and through a whole series of proceedings in Switzerland and in the Philippines that the Government of the Philippines has been claiming all of the Marcos assets, specifically including the Arelma assets--
David H. Souter: Well, maybe--
Edwin S. Kneedler: --from the very beginning.
David H. Souter: --Well, maybe they have been have been candid about their claims, but they... in real-world practical terms, the claim to these assets and the representation at the same time that it's appropriate for these people to proceed in the United States for a money judgment, are at least in some tension with each other, aren't they?
Edwin S. Kneedler: I do not believe so. If we thought about an analogy at the United States, if the United States filed a brief in this Court saying that a former Government official could be sued, did not have qualified immunity and could be sued in his personal capacity, or didn't... or could be sued individually and the Westfall Act did not protect him, that would in no way make... be a representation by the United States that a judgment against that officer could be satisfied out of assets of the United States, including assets that the United States might be seeking to recover from... from the defendant. And we think the Philippine Government is in essentially the same position. And a finding of liability in this case... the judgment does constitute a finding of liability so that with respect to... it would give these Respondents here the ability to go to Philippine court, to file a claim in the probate proceedings in the Philippines as these Respondents have done. So the judgment, even without being satisfied, serves the Respondents' interests to a great extent.
John G. Roberts, Jr.: Thank you, Mr. Kneedler. Mr. Swift.
Robert A. Swift: Mr. Chief Justice, and may it please the Court: I would like to address as a first point the issue you raise, which is perhaps seminal to you, and that is whether there is an adequate alternative remedy to the human rights victims, either in the United States or in the Philippines. Our answer is, unequivocally, there is no remedy. Let me talk about the Philippines first. Any forfeiture proceeding in the Philippines is in rem. Its supreme court has so declared. These assets are in the United States. There cannot be two jurisdictions that share in rem assets.
David H. Souter: Well, doesn't the... maybe this makes no difference, but doesn't the Philippine National Bank have the... whatever they call them, the share certificates or stock certificates that represent the Arelma assets at this point?
Robert A. Swift: That's right. Switzerland confiscated those certificates from a Swiss financier and transferred them to the Philippines.
David H. Souter: Okay. Couldn't they... couldn't they bring an in rem in the Philippines based on the presence in the Philippines of those two certificates?
Robert A. Swift: They can, and that's in fact what is occurring.
David H. Souter: Okay.
Robert A. Swift: However, it's also apparent from the facts in this case that those certificates were never the property of the Philippine Government, never, ever. There is absolute clear evidence in this record, in the joint appendix on that, which makes the whole issue--
Stephen G. Breyer: I thought the issue in the Philippines is the question of whether the money that went into the stock certificates eventually belonged to the people of the Philippines from the beginning or belonged to Marcos personally?
Robert A. Swift: --Well, that's--
Stephen G. Breyer: And you're saying that there's no possibility whatsoever that a Philippine court could say that this money initially belonged to the people of the Philippines?
Robert A. Swift: --They could not say that in a forfeiture proceeding because--
Stephen G. Breyer: I'm saying whether they... I don't care what the name of the proceeding is. I'm saying could they decide that?
Robert A. Swift: --Yes, sir, absolutely.
Stephen G. Breyer: All right. Now, if they decide that, why should your clients, terribly treated as they were, get the money ahead of the victims in the Philippines, who also were terribly treated?
Robert A. Swift: Because the judgment in the Philippines would not be in rem, Mr. Justice Breyer.
Stephen G. Breyer: I thought Justice Souter just answered that. He said that the stock certificates might be held to belong to the people of the Philippines, in which case the stock certificates represent stock in a company that has a claim against Merrill Lynch, and so they will say, this certificate belongs to the people of the Philippines; the people of the Philippines would like you, Merrill Lynch, to pay back the money that the company gave them initially. And Merrill Lynch I imagine would pay it. Now that I think is as I understand it. Is there something wrong with my understanding?
Robert A. Swift: I think your understanding is correct in that regard; however, the law both in the Philippines and in the United States draws a clear distinction between the ownership of stock and a corporation's ownership of assets. Certainly Dole v. Patrickson stands for that proposition. The... a judgment rendered as to the certificates in the Philippines or even as to the assets would not be in rem. So if that judgment came over to the United States to be enforced, they would stand in the same position as any other judgment creditor, not a judgment creditor with a claim to specific assets, but a judgment creditor as to a specific amount of money. Let me answer another question which was asked--
Ruth Bader Ginsburg: I would like you to address... you seem to put heavy weight on this in rem characterization. That is a judgment there's a thing. But our law over the years has come to appreciate that things do not have rights; people have rights in things. So we have modified the once rigid notion that the suit is against a thing, to recognize that it's people's rights in the thing that count. And your use of that label seems to forget about all the more recent understanding.
Robert A. Swift: --Justice Ginsburg, I believe interpleader is, statutory interpleader, is an in rem nature of a proceeding. In fact, it was the best and most appropriate and the only proceeding in which all claimants could be... their claims could be heard. It's a shame that the Philippine Government didn't come in, as it did in twelve other cases it brought in the United States, including two interpleaders, to say: Yes and this is our evidence. What it suggests is that they had no evidence to support it, and they want to be in their own court. Why do they want to be in their own court? Because it won't be defended by the Marcoses. And the very rule that they cited in their reply brief... and by the way, the reply brief was the first time in all this litigation they have ever asserted that the human rights victims have a remedy by intervening in the Sandiganbayan in the Philippines. We don't. The rule that they quote says as to assets in the court.
Ruth Bader Ginsburg: Did... did the district court in Hawaii or the Ninth Circuit ever decide what the Petitioners tell us is the basic question, that is do these assets belong to the Philippine Government under that 1955 statute, or do they belong to the Marcos estate? It seemed to me that our courts were just assuming that the assets belonged to the Marcos estate and that the plaintiffs in the lawsuit were creditors of the Marcos estate.
Robert A. Swift: Your Honor is correct that there was an underlying belief by the court, that the court accepted as valid the Republic's claim that it owned the assets, the assets were stolen. But the evidence in the case, and the two lower courts specifically found on the basis of that evidence, that these were Marcos assets; and this finding was made after the completion of discovery, after a deposition in... in France.
Ruth Bader Ginsburg: But it didn't say, find, that: And they belong to the Marcos estate and not the Philippine Government.
Robert A. Swift: Not the latter part of your equation. They did not say that they did not belong to the Philippine Government. By saying they belonged to Ferdinand Marcos it was sufficient, it was sufficient evidence.
Stephen G. Breyer: I didn't see that finding in the court of appeals decision. I thought the court of appeals thought that they belonged... they couldn't possibly belong to the Philippine Government or the people there, because there is no way that the Philippine Government could win in a suit in New York in trying to recover them. But the Solicitor General has provided about two or three ways, in which and so... and so have the Petitioners... and that seems to me the heart of the issue. They have said: No, no, there are two or three ways in which the Philippine Government might well... it might well ask a court for the money and the court would say, yes, you're entitled to it. So that it seems to me, that's the heart of it. What is your response to that?
Robert A. Swift: I'd like to go through each way in which they say they can and convince you that they can't. First, they could proceed in a forfeiture proceeding in the Philippines. But of course that wouldn't be in rem, so they couldn't get to first base as to the assets. As to the share certificates, yes, but of course that in effect is a nullity because they never belonged to the Philippine Government. That aside, we put aside that factual--
David H. Souter: Wait a minute. I missed your last step. If it's an in rem proceeding against the share certificates what... what difference does it make whether they ever belonged to the Philippines?
Robert A. Swift: --Because ownership of the share certificates is not a right to the assets, a per se right. There would have to be some additional rights. The assets are ones--
David H. Souter: So you're saying an in rem proceeding against the certificates simply will not resolve the issue; that's the... that's the guts of the answer.
Robert A. Swift: --That's correct. The other two, two types of proceedings, one could be a conversion and one breach of contract, both of which would be barred by statute of limitations.
Stephen G. Breyer: Yes, well, that isn't what they say. I think, if I understand it, that they say that were the share certificates in the hands of the Philippine Government on the ground, that the money used to create those had been taken from the Philippine people unlawfully, if that's what they decide, at that point the owner of the certificates, the government, would say to Merrill Lynch: We own the company, the company has the assets; please send us the money. And Merrill Lynch would do it. But if Merrill Lynch didn't do it, then they would file the judgment saying, these are our share certificates, in the New York court and say, will you please enforce the judgment. Now, there is something there that I'm not quite getting and that's why I want you to respond to the line of happenings that I just suggested.
Robert A. Swift: Well, an important fact that you left out was that in the year 2000, when the Philippine Government through PNB controlled the Arelma certificates, a request to Merrill Lynch was made. The request was refused. So if there was a breach it occurred in the year 2000. Remember, after the certificates were transferred from Switzerland to the Philippines the PNB then created a new board of directors and they went directly to Merrill Lynch. The whole point of this exercise was, of course, to circumvent the courts of the United States. I only learned about the assets in the year 2000 and then proceeded to try to recover them.
David H. Souter: But may I ask you this question, though. Merrill Lynch refused in the year 2000, but if the proceeding that Justice Breyer has just been describing takes place and there is a judgment to the effect that the share certificates are properly held or the property of the Philippine Government, and the Philippine Government now makes, or then, makes a new request to Merrill Lynch, the fact that they made a request that was refused in 2000, which may be too late to sue on, isn't going to prevent them from suing on their present adjudication that they are the true owners of the share certificates and want the money.
Robert A. Swift: But I believe there is an important part of the equation that's left out of that question, and that is the rights of the Philippine government as the new shareholder will not be any greater than those of the prior shareholder. The prior shareholder made a demand and did not receive the money.
David H. Souter: Okay. You're saying... I think you're saying that the demand would be ineffectual this time for the same reason it was ineffectual the last time.
Robert A. Swift: Yes, Your Honor.
David H. Souter: And the suggestion I thought that Justice Breyer had made and that I made was this time they can do something further. They can take the judgment and go into a United States court and say: We've got this judgment, there's no question that these shares and what they represent are ours; so make Merrill Lynch give us the money. What prevents them from doing that?
Robert A. Swift: Nothing prevents them from making the demand. But when they go into court and ask for that, first of all, Merrill Lynch can do what it did here, which is to file an interpleader and say: We want all the claimants to come forth and make the claim. Then we have a redo. What we have below is a judgment, a judgment that we're seeking to enforce and we contend that--
Anthony M. Kennedy: Well, the difference in the redo is that in the second case that's just been hypothesized, the Philippine government is represented. We are making these assumptions, and the Philippines government says: You can make these assumptions, but they may very well be wrong; we want to be represented before you make those assumptions.
Robert A. Swift: --Well, they had that right in the year 2000 when they chose to exercise their sovereign immunity. So, what has changed? They would have to waive their sovereign immunity to go--
Anthony M. Kennedy: Any party that's beyond the process of the court has a right to come in. The question is what happens if they are not there.
Robert A. Swift: --Well, they were brought in. They chose to exit. They then paid for the prosecution of claims by PNB and Arelma, in effect acting as surrogate, reflective of a question that was asked earlier. Then when they were dissatisfied with the result, they then want to use PNB and Arelma to upset that pursuant to a Rule 19(b) motion.
Stephen G. Breyer: There is a huge change. The change would be that they'd a judgment of that special court over there that this company and the assets understandably belong to us, not to the Marcoses. And so this time, they go with that judgment to Merrill Lynch and say: Give us the money. And if they... if they don't... if Merrill Lynch says no... Merrill Lynch might say yes, but you'll say, no, it belongs to us, so they might not. And if they don't, then the Philippines are never going to get the money, unless they bring the lawsuit. And once they bring the lawsuit, then you have them, because then you go right into the court in that lawsuit and intervene and they have waived all their sovereign immunity, et cetera, they can't get the money.
Robert A. Swift: Then you have a redo of what they started out this proceeding doing--
Stephen G. Breyer: With a difference.
Robert A. Swift: --which was judge shopping and forum shopping. They were... they were--
Ruth Bader Ginsburg: But isn't that what... that's what sovereign immunity means. I mean, they do have the right to pick their forum. You say I can only be sued when I consent, so I can consent where I will. The problem with what you're presenting is it sounds like, yes, you have sovereign immunity, you don't have to be part of this lawsuit and it can't affect your rights, but then when it seems to be eventual judgment, it's a default judgment effectively against the Philippines, because they can never get those assets once they're disbursed. So, it's a... it's kind of a deceptive immunity, because by asserting the immunity they are going to lose their opportunity to claim these assets.
Robert A. Swift: --Well, what Your Honor is suggesting is that there should be a per se rule under Rule 19(b). I don't believe it's the role of this Court to change Rule 19(b).
Ruth Bader Ginsburg: Not necessarily. I'm focusing on this situation. There could be others.
Robert A. Swift: Well, then we have two lower courts that have balanced and weighed all appropriate factors. There is no suggesting that there are other factors. They... I believe that the standard of review for this Court is whether or not the lower courts considered the factors and engaged in an appropriate balancing and weighing--
Anthony M. Kennedy: In making that balancing, what weight did they give to the sovereign immunity of the Philippines?
Robert A. Swift: --Significant weight. The Ninth Circuit said it was a powerful factor. And then it went into other factors, some of which Justice Ginsburg mentioned: The 22-year delay. They have known about this for a long time.
Ruth Bader Ginsburg: I thought that the Ninth Circuit went on a statute of limitations in New York. It didn't give the sovereign immunity claim, it seems, in the end of the day any weight, because it says we don't have to worry about the Philippines being out of this case because they would have no claim on the merits.
Robert A. Swift: Let me pose a different example to you, Justice Ginsburg, and that is, what if this were a bankruptcy proceeding and the foreign sovereign said: Oh, those assets really belong to us, they were stolen, and we'll decide that in our country. Now, it could be any country of the world. Would the U.S. court stand for that? Are U.S. courts supposed to give away and surrender and be ousted of their own jurisdiction in in rem actions and farm out decisions to foreign countries? And in our case we're not even going to be represented, nor will the Marcoses?
John G. Roberts, Jr.: So there might be a different situation in your hypothetical with respect to bankruptcy. In effect, there's an administrator against whom the Philippines could proceed, unlike the situation here, where you have a class and which the prospect of the Philippines proceeding later is not realistic.
Robert A. Swift: Well, I submit that the underlying principle is a solid one, and that is U.S. courts do have in rem jurisdiction. We have 28 U.S.C. 1655. It's one of the oldest forms of jurisdiction we have in this country. And we should not be surrendering that to a foreign sovereign and farming out per decision decisions about assets. These assets are not transitory. They have been here 35 years.
John Paul Stevens: Yes, but may I ask a sort of... maybe it's too elementary a question, but has any court ever decided the merits of the question whether the Marcos estate or the Philippine Government owns these assets?
Robert A. Swift: The lower court... well, not as--
John Paul Stevens: It decided there was no remedy, I understand that. But has it decided the merits of the basic dispute?
Robert A. Swift: --It has, based on evidence, based on depositions, that these assets belonged to Marcos.
Ruth Bader Ginsburg: Where is that? Then why were they bothering with the statute of limitations? Both courts said that the action would be time barred in New York. But if they made a definitive ruling that the assets belonged to the Marcos estate and not the Philippine Government, then that would be preclusive.
Robert A. Swift: I... are you saying that--
Ruth Bader Ginsburg: I just did not find in either the district court or the court of appeals an answer to that basic question: Whose assets are they? It seemed to me they were assuming the assets belonged to the estate and not to the Philippine Government, but they made no specific finding on that issue.
Robert A. Swift: --There are a number of findings, but obviously, because the Philippine Government was not a party in the case, there was no finding specific to the Philippine Government. But the finding that they were... belonged to Ferdinand Marcos is sufficient. You do not need the counter-finding that they did not belong to the Republic.
Ruth Bader Ginsburg: But then you're ignoring a 1955 law that says anything that belongs to Marcos that he didn't get legitimately belongs to the government.
Robert A. Swift: Well, again, that's a forfeiture issue. The assets have to be in the Philippines, and there have been many forfeiture proceedings in the Philippines as to Marcos assets. To answer a question Justice Kennedy raised earlier, aren't there other assets, they've have already recovered over a billion dollars of assets. There is still hundreds of millions, if not a billion, in the Philippines. You know, from the record and what I've submitted, that we're not able to transfer our American judgment to the Philippines. The United Nations Human Rights Committee has even found a violation of international law by the Republic in preventing us from doing that. We've had to go to that body. Do we think that we are going to get justice in a Philippine court that's never adjudicated human rights violation, much less our right to the assets? Think how easy it would be for the Marcoses and the Philippine Government to simply make a deal as to these assets.
John G. Roberts, Jr.: Because aren't those issues that could be addressed when the Philippines attempt to enforce a judgment they would get in the Philippines if they do in fact get such a judgment?
Robert A. Swift: Well, then we run into such issues like the act of state doctrine. And we have... then we will... our defense will be undermined because they will say a U.S. court cannot re-examine those... that determination. So it's a catch-22 for us. We proceeded as we were--
Stephen G. Breyer: Do you have... I mean I don't see you have a claim there as opposed to the... the worst that would happen, not necessarily good for your clients, but the worst that would happen would be that the assets would be devoted to victims and their families in the Philippines. I mean, namely to the Philippine people. So I don't see some kind of fundamental unfairness here, unless you can point one out.
Robert A. Swift: --Well, I--
Stephen G. Breyer: I mean they'll treat you like another creditor and you have... but is there some terrible unfairness going on?
Robert A. Swift: --What Your Honor is suggesting is that a useful approach to this case is to say, well, if the Philippine Government gets the money, then won't that benefit everybody? Well, then you have to look at the characteristic of the country, something I'm very familiar with but which I don't want to... I think it would be inappropriate in this proceeding to talk about.
Stephen G. Breyer: Is there... is there something special going on, specially unfair, in respect to the delays where you are treated differently than other litigants in the Philippines?
Robert A. Swift: Yes. There was purposeful delay in us being able to transfer our judgment. We are just in the pleadings stage after 11 years there.
Antonin Scalia: Counsel, what does unfairness have to do with it? I mean the whole doctrine of sovereign immunity rests upon unfairness. It says you can't sue the sovereign even if you have a valid claim. And when we say we will apply the same doctrine as to foreign sovereigns, it means the same thing. I'm just not terribly persuaded by the fact that it has unfair consequences. The doctrine of sovereign immunity always has unfair consequences. So, unless you're asking us to abandon the doctrine, the fairness argument does not persuade me.
Robert A. Swift: Well, I think the issue was resolved pursuant to 19(b). Unless this Court determines that there is a per se rule under 19(b), we weigh factors, and it's the role of this Court to determine whether or not there was... the lower courts did not make a decision based on equity and good conscience, one of the broadest parameters of decisionmaking provided by a lower court.
David H. Souter: May I go back on exactly that point on the equity to Justice Breyer's last question? I thought you had given or anticipated his question in something you said a moment ago, and then you didn't repeat it, and I may have misunderstood you. I thought you had told us that the courts of the Philippines did not recognize, for enforcement purposes there, the judgment that your clients had obtained in the United States, and that in effect they, therefore, if they were going to make a claim on assets in the Philippines, they would have to start from scratch again. Is that correct? Did I misunderstand you?
Robert A. Swift: Well, our judgment has not been enforced. They asked... initially asked for a filing fee of $8.4 million. We appealed that, after eight years and some months. They finally said, yes, the filing fee is $10. So, it was sent back down where there was still more delay. I mean, I'm a realist. I mean, how many years is it going to take?
Samuel A. Alito, Jr.: So they just... they in fact are obstructing the process--
Robert A. Swift: That's right.
Samuel A. Alito, Jr.: --trying to recognize it?
Robert A. Swift: And the U.N.... the United Nations Human Rights Committee has so found.
David H. Souter: Let me ask you this: Did the Philippine Government formally take a position in raising these obstructive barriers, the $8 million filing fee, for example?
Robert A. Swift: It did not.
David H. Souter: Okay. That was sua sponte with the court?
Robert A. Swift: It was sua sponte with the... actually raised with the Marcoses initially, and the court simply said yes, it's $8.4 million.
Ruth Bader Ginsburg: Isn't that... I mean it sounds shocking, but I thought that in the Philippines, as in many countries, the filing fee is determined by what you're asking for. So it would be a percentage of $2 billion. And if they just did that automatically, then you say, oh, but, but this... the filing fee of that size would mean that the Plaintiffs can't sue. But that's... but it wasn't they picked whatever figure, filing fee, out of a hat; it was a percentage of what was sought in the litigation right?
Robert A. Swift: That's... you're correct in your analysis. The... except there was another provision of the fee statute which we went under and which they ultimately... the Philippine Supreme Court said that we were correct.
John G. Roberts, Jr.: Counsel, before you sit down, you haven't mentioned anything about your argument that the Philippines don't have the right to raise this. Are you throwing in the towel on that one?
Robert A. Swift: Absolutely not. We think that argument is definitive. First, on one hand, with regard to the Philippine Government and its PCGG: They were not parties to the judgment. Therefore under Karcher, Marino, Devlin--
John G. Roberts, Jr.: Well, the Philippines National Bank and Arelma were, and of course they've appealed. And I understand the law to be they can raise these arguments. We don't have need to have an independent basis for the Philippines.
Robert A. Swift: --That's true, but we've also pointed out that Arelma and PNB have thrown in the towel as to the merits. Remember, they're parties that are separate parties. They had claims on the merits. Their claims were resolved against them inter se, and so they no longer have a dog in the fight.
Ruth Bader Ginsburg: Yes, they do because if they are able to successfully knock out the judgment, then they are back to square one. Then they... they lost on the merits, but that judgment would be wiped out.
Robert A. Swift: Well, perhaps under Rule 19(b) the lower court may still rule that there is a... a definitive judgment as to them against other creditors. And in fact that... there has been--
Ruth Bader Ginsburg: If there was no authority of the court to proceed, then the judgment is... is as though it were never made.
Robert A. Swift: --Well, that's perhaps one way of looking at it, Justice Ginsburg. I submit to you that the... the decision I would respectfully request you look at is Horizon Bank and Trust Company versus Massachusetts, where the same facts occurred. The First Circuit... Massachusetts did the same thing the Republic of the Philippines did here. It did the two-step dance: We're sovereign, we're indispensable. It was denied by the lower court. The lower court then, since the United States was a party and the State didn't have immunity as to that, it went into the merits determination. Massachusetts appealed only appealed only the 19(b) decision. And the Court of Appeals held that because they had not appealed the merits decision, the same as here, therefore, there was no longer a live controversy, and live controversy is a requirement of standing in this Court, or power to appeal in this Court. So, in addition, although there isn't a lot of case law in this Court on this particular point, I would refer you to the Ashcroft v. Mattis decision because the same principle was applied there where there was no appeal permitted to this Court. Finally, the one thing that I have not really addressed is Merrill Lynch's interest. The whole nature of "interpleader" is that the stakeholder should have an adequate remedy. Merrill Lynch has significant business interests, as do many banks, many insurance companies, in getting a resolution. This matter, in itself, has gone on for eight years. There have been over a dozen appeals in this particular piece of litigation. Doesn't... isn't there a significant business interest that has to be weighed in that equation so that Merrill Lynch... only a stakeholder will continue to have to defend, defend, defend, interplead and so forth? I submit to you that there is a policy judgment that has to be made by this Court as to the rules with regard to interpleader and in rem proceedings and whether this Court is prepared to surrender jurisdiction to foreign courts to make--
Ruth Bader Ginsburg: If... if the proceeding can't go forward because of sovereign immunity, that judgment would shield Merrill Lynch from any other claim. It could say to any other claimant: Sorry, a binding judgment has been issued saying this matter can't be settled without the Philippines being in it. So I don't really get your: Merrill Lynch is going to be subject to repeated proceedings. They will be armed with a judgment that says, suit can't go on without the Philippines being there.
Robert A. Swift: --Well, let me... let me take you on, on that point. We have one other remedy, and that is execution. Execution doesn't require joinder of all parties. It's a singular proceeding that people can join in, but we would have the right to execute, and you can bet that that is exactly what we will do. So, to some extent, what is being argued here is somewhat besides the point because if that money goes back to Merrill Lynch, we can, and will, execute on that.
John G. Roberts, Jr.: Thank you, counsel. Mr. Rothfeld, you have three minutes remaining.
Charles A. Rothfeld: Thank you, Your Honor. A couple of points. First of all, there is no doubt that the Republic has a substantial interest in the assets that are at stake here. And, therefore, its sovereign immunity, at least in the context of this case, should be dispositive and should have led to dismissal under Rule 19. There... this Court in the Provident case noted that there are certain compelling, substantive considerations that are dispositive under Rule 19 that make it unnecessary to consider any other balancing consideration. Sovereign immunity is one such consideration. And because the Republic has immunity, has asserted immunity--
John Paul Stevens: You agree that the Ninth Circuit gave sovereign immunity great weight in the balancing?
Charles A. Rothfeld: --I think it gave it no weight at all. I think it said that, yes, in theory, sovereign immunity is entitled to weight. But in this case we are going to ignore it completely because we believe that if the Republic appears in New York and asserts its interests, it will lose under statute of limitation grounds. That is a completely inappropriate way of treating it. Once the sovereign immunity was asserted and there was a substantial interest in the asset here, as there undoubtedly was, that should have been the end of the matter. The second point is there is no question that, ultimately, this is a dispute between the Marcos estate and the Republic. There is no question that the claims of the Respondents here are entirely derivative of the Marcos estate; and, therefore, that is something that has to be decided first: Whether this belongs to the estate, the Respondents, or the Republic. And that is a determination that should be made in the courts of the Philippines. It is not a question of surrendering the jurisdiction of U.S. courts. There is a general consensus that stolen assets, assets stolen by corrupt leaders, should be returned to the nation of origin, and determination as to ownership should be made by the courts of that nation. That's stated on the U.N. Convention on Corruption to which the U.S. and the Philippines are a party. All of the nations that have an interest in the relevant assets, not only the Republic but the United States and Switzerland, all agreed that it is appropriate for the Sandiganbayan to make that determination as between the Republic and the estate. If it's ruled for the estate, the Respondent can attempt to collect as a judgment creditor. If it goes to the Republic, the Republic can assert its interest directly with Merrill Lynch as the owner of Arelma. If Merrill Lynch declines to pay, it can in a number of ways try to enforce its... either with the assistance of the United States according to U.S. statute, in which case the Sandiganbayan's factual determinations would be dispositive, or it can bring an action under... under New York law. That is the only way in which there could be a single proceeding that resolves everybody's interests. In this proceeding, as all agree, the Republic is free, for whatever it is actually worth, to sue Merrill Lynch. That is precisely what Rule 19 is designed to avoid, duplicative litigation, the possibility of duplicative liability. If the Sandiganbayan rules, the Republic comes here and initiates an action, everybody who has a claim can be brought into that action. As Justice Ginsburg noted, there is no possibility that Merrill Lynch could be subjected to duplicative liability because this Court's judgment would determine that the Republic is an indispensable party.
John G. Roberts, Jr.: Thank you, Mr. Rothfeld. The case is submitted. But counsel are not excused. Mr. Kneedler if you could return to the lecturn for a moment. Mr. Kneedler, our records reflect that you have now presented oral argument before this court in 100 cases, beginning with your first argument in October, 1979. You are the first to reach this rare milestone this century. On behalf of this court, I extend to you our appreciation for the many years of advocacy and service to the court during your tenure in the office of solicitor general. We look forward to hearing from you many times in the future. Thank you.
Edwin S. Kneedler: Thank you, Mr. Chief Justice; it's been a great honor.
John G. Roberts, Jr.: Now counsel are excused.