Argument recap: Republic of the Philippines v. Pimentel

Charles Rothfeld, arguing on behalf of the Republic, began by arguing that this case concerns a dispute over the ownership of the Arelma assets, but that the ownership of this property should be decided in the first instance by the courts of the Republic. He went on to describe the pending proceedings in the Sandiganbayan, a special Philippine anti-corruption court. Justice Ginsburg asked about how long those proceedings had been pending, and Justice Kennedy wanted to know if the likelihood of an earlier decision would be a consideration for the Court.

Deferring answering Justice Kennedy’s question to what he considered to be the second part of his argument (a “broader set of considerations”), Mr. Rothfeld turned instead to the question of sovereign immunity. He asserted that, if the Republic’s claims to the assets are valid, then under Philippine law the Arelma assets were at all times the property of the Republic. Justice Ginsburg wanted to know how, if that were the case, the Republic had earlier supported the U.S. litigation against Marcos that resulted in the original $2 billion judgment against the Marcos estate. Mr. Rothfeld said that there was not any inconsistency in the Republic’s position, since in the earlier litigation, and even now, the Republic has no objection to citizens of the Republic proceeding against the Marcos estate. Rather, the question here is whether these assets belong to the Marcos estate of Marcos or instead to the Republic.

Justice Scalia wanted to know if there was anything else in the Marcos estate, to which Mr. Rothfeld replied that litigation was ongoing in the Sandiganbayan as to what is properly in the estate. Justice Souter modified Justice Scalia’s question slightly, asking if there was anything in the Marcos estate that the Republic does not claim. Mr. Rothfeld replied that he believed that there were some such assets, and Justice Souter wanted to know if they amounted to enough to satisfy the individuals’ claims. Mr. Rothfeld replied that there are not (and have never been) enough to satisfy all of the claims. Justice Souter continued to push on this point, since it seemed like the Republic’s position was that the Republic “support[ed] the litigation in the United States” by the class of plaintiffs, “but when it comes time to collect a judgment we’re claiming they don’t get a penny because everything belongs to us.”

After being pressed by Justice Souter for a few more questions, Mr. Rothfeld said that those issues were not relevant to the Rule 19 issue that was before the Court – namely, the application of Rule 19 “in a situation in which there is an absent sovereign that has asserted its sovereign immunity.” Responding to a question by Justice Kennedy, Mr. Rothfeld argued that while sovereign immunity and dismissal under Rule 19 are different, they are closely related and essential aspects of the relief sought by the Republic. Chief Justice Roberts wanted to know why the Republic, should it be awarded the Arelma assets, could not simply pursue whoever did get the assets in this suit. Mr. Rothfeld said that everyone, including the Ninth Circuit, is in agreement that once the assets are awarded to the class of almost 10,000 individuals, they will effectively be beyond recapture. Furthermore, the suggestion that the Republic could pursue Merrill Lynch is not certain because it may be prohibited from doing so by the judgment below.

Justice Alito asked if the Republic was ultimately going to have to sue someone in the United States and waive its immunity in order to claim the assets (assuming that the assets are awarded to the Republic by the Philippine court). Although agreeing that may be the case, Mr. Rothfeld argued that that would be an entirely different type of proceeding. Chief Justice Roberts wanted to know if it were fair to make the private claimants in the United States wait until a Philippine court renders a judgment, especially if those claimants are not entitled to participate in the Philippine proceedings. Mr. Rothfeld reminded the Chief Justice that the private claimants had no claim to the assets that was not derivative of the Marcos estate’s claims.

Edwin Kneedler argued next for the United States in support of the petitioner. He asserted that sovereign immunity must be given “great weight” in determining whether a suit must proceed, to which Justice Ginsburg inquired if the government’s position was that sovereign immunity does not result in automatic dismissal, as asserted by the Republic. Mr. Kneedler said that the sovereign immunity issue would be dispositive in most cases, but perhaps not in rare cases where the sovereign’s interests are protected by another sovereign in the suit. Mr. Kneedler argued that the sovereign interest in this case is particularly compelling. The Chief Justice wanted to know why the Philippine National Bank (PNB), which was a party to this suit, could not adequately protect the interests of the Republic. Mr. Kneedler responded that, as an escrow agent, the PNB cannot assert an interest on behalf of either of the two claimants (the Republic or the Marcos estate).

Mr. Kneedler also argued that the Convention Against Corruption and a federal statute required forfeiture of assets that are deemed to be forfeited by a foreign proceeding. Justice Ginsburg pressed on this point, saying that this would be the case if there were a foreign judgment (which there is not in this case), and that this would also require that all claimants would have the opportunity to be heard in the foreign proceeding, which respondents here do not have. Mr. Kneedler said that the statute actually requires the presence of parties claiming interest as an owner, whereas here the claimants are unsecured judgment creditors.

Robert A. Swift appeared next on behalf of the respondents. He immediately raised the issue of whether there is any adequate alternative remedy for the human rights victims in this case, and asserted that there unequivocally is no other remedy, either in the U.S. or in the Philippines. After some discussion of in rem jurisdiction and whether the stock certificates had ever been owned by the Republic, Mr. Swift said that the two lower courts had specifically found that the Arelma assets were assets of the Marcos estate. Justice Ginsburg asked if they had found that the assets belonged to the estate and not to the Republic, and Mr. Swift said that they had found only the former. Justice Breyer objected to this characterization, saying that he didn’t see such a finding in the court of appeals decision. Rather, he said, the court of appeals concluded that the assets couldn’t possibly belong to the Republic because there is no way that the Republic could win a suit in New York to recover the assets. That conclusion, Justice Breyer said, was being contested by the Solicitor General, who had provided explanations of how the Republic could claim the assets in the U.S. Mr. Swift said that an in rem proceeding against the stock certificates would not resolve the issue of the rights to the assets, and any conversion or breach of contract action in the U.S. would be barred by the statute of limitations.

Mr. Swift also argued that the Republic here was engaging in forum shopping insofar as it was invoking sovereign immunity here but it would have to waive that immunity later to make any claim to the assets. Justice Ginsburg said that that was exactly what sovereign immunity contemplated, but Mr. Swift said that nothing in Rule 19(b) requires it to be a per se rule. Justice Kennedy wanted to know, in the balancing done by the lower courts, what weight was given to the Republic’s sovereign immunity. Mr. Swift responded that it was given significant weight, but Justice Ginsburg disagreed, saying that since the Ninth Circuit had decided that the Republic would be barred by the statute of limitations from ever claiming the assets, that its decision did not give any weight to the sovereign immunity claim. Justice Stevens wanted to know if any court had ever decided the merits of the question of whether the Marcos estate or the Republic owns the Arelma assets. Mr. Swift said that the decision below declared that the assets belonged to Marcos. Justice Ginsburg, however, again disagreed.

Justice Breyer wanted to know what terrible unfairness was going on, especially if the Arelma assets were awarded to the Philippine government, where they would inure to the benefit of the Philippine people. Mr. Swift asserted that the purposeful delay of the proceedings in the Philippines has resulted in substantial unfairness to the Pimentel claimants. Justice Scalia was not persuaded, saying that the entire doctrine of sovereign immunity “rests upon unfairness.”

Before the end of his argument, Chief Justice Roberts asked if respondents had given up on the argument that the Republic lacked standing to bring this claim in the Supreme Court. Mr. Swift responded that they had not done so, and that the lack of an appeal on the merits by Arelma and PNB meant that the Republic could not bring the current claim.

Mr. Rothfeld returned to the podium for three minutes of rebuttal. He asserted that there is no doubt that the Republic has substantial interest in the assets at stake in this suit, and that its exercise of sovereign immunity should be dispositive as to the question of dismissal under Rule 19(b). When Justice Stevens asked about the weighing by the Ninth Circuit below, Mr. Rothfeld said that the Ninth Circuit gave the sovereign immunity of the Republic no weight, ignoring it because the court had already decided that the Republic would not have a claim to recover the assets.