The Republic of the Philippines v Maler Foundation

Judgment Date30 December 2013
Date30 December 2013
Docket NumberCivil Appeals Nos 109, 110 and 111 of 2012 (Originating Summons No 134 of 2004)
CourtCourt of Appeal (Singapore)
The Republic of the Philippines
Maler Foundation and others and other appeals

Chao Hick Tin JA


Belinda Ang Saw Ean J


Woo Bih Li J

Civil Appeals Nos 109, 110 and 111 of 2012 (Originating Summons No 134 of 2004)

Court of Appeal

Conflict of Laws—Choice of law—Foreign court executing judicial assignment of property located in another foreign country—Characterisation of issue before court—Appropriate connecting factor applying to question of whether judicial assignment had passed title to property—Whether judicial assignment had validly passed title to property

Conflict of Laws—Foreign judgments—Recognition—Bank holding legal title to property—Bank declaring intention to release property in compliance with foreign judgment made pursuant to penal law—Whether determination that bank held legal title to property amounting to enforcement of penal law

Conflict of Laws—Foreign judgments—Recognition—Foreign court issuing judgment in rem purporting to forfeit property of public official pursuant to statute governing forfeiture of unlawfully acquired property—Property located outside territory of foreign state at time of judgment—Whether judgment could be recognised as affecting title to property—Whether recognition of judgment amounting to enforcement of penal law

International Law—Act of state doctrine—Whether act of state doctrine applying to acts of foreign courts—Whether act of state doctrine limited to acts within territory of foreign state

The Singapore branch of WestLB AG (‘WestLB’) filed an application for interpleader relief in respect of the sums of US$16.8 m and £4.2 m (‘the Funds’) held in accounts in the name of the Philippine National Bank (‘PNB’). Four parties claimed entitlement to the Funds: PNB, the Republic of the Philippines (‘the Republic’), the plaintiffs in a human rights class action suit (‘the Human Rights Victims’) brought against the deposed President of the Philippines, Ferdinand EMarcos (‘Mr Marcos’), in the United States District Court for the District of Hawaii (‘the District Court of Hawaii’), and the Maler Foundation, Avertina Foundation, Palmy Foundation, Vibur Foundation and Aguamina Corporation (‘the Foundations’).

The Funds were derived from sums held in various Swiss bank accounts (‘the Swiss Deposits’) in the names of the Foundations. After Mr Marcos was deposed in 1986, the Republic sought assistance from the Swiss government under the Switzerland Federal Act on International Mutual Assistance in Criminal Matters (‘IMAC’) to recover assets belonging to Mr Marcos and his family. In 1995, pursuant to various IMAC measures taken by the Swiss and Philippine governments, the Presidential Commission on Good Government, acting on behalf of the Philippine government, entered into escrow agreements with the Foundations (‘the Escrow Agreements’), with PNB acting as the escrow agent. The Escrow Agreements provided, inter alia, that PNB would not dispose of the funds held in escrow other than in accordance with a final and enforceable judgment of a competent court determining entitlement to the Swiss Deposits. The Swiss Deposits were released to PNB in 1998, and PNB placed part of the Swiss Deposits into fixed deposit accounts with the Singapore branch of WestLB.

In the meantime, the Human Rights Victims obtained judgment against Mr Marcos and his estate (‘the Marcos Estate’) for the sum of US$1,964,005,859.90. On 14 July 1995, a deed of assignment was executed by a clerk of the District Court of Hawaii on behalf of the legal representatives of the Marcos Estate (‘the Chinn Assignment’). The Chinn Assignment purported to transfer the proprietary interest in the Swiss Deposits to the Human Rights Victims.

In July 2003, the Supreme Court of the Philippines issued a judgment ordering the forfeiture of the Swiss Deposits in favour of the Republic (‘the Forfeiture Judgment’). The Republic took out a writ of execution (‘the Writ of Execution’) to cause the transfer of the Swiss Deposits held in escrow to the Republic. PNB attempted to procure the release of the Funds from WestLB, but WestLB declined to do so after receiving notice of the Chinn Assignment.

WestLB was subsequently granted interpleader relief. At the substantive hearing, the High Court judge (‘the Judge’) held that PNB had legal title of the Funds as trustees of the Funds pursuant to the Escrow Agreements. The Judge dismissed the Republic's claim to legal and beneficial title pursuant to a recognition of the transfer of title effected by the Forfeiture Judgment under the act of state doctrine, and also dismissed the Human Rights Victims' claim on the basis that the Chinn Assignment had not validly vested in the Human Rights Victims any proprietary right or interest in the Funds. The Foundations' claim to the Funds as original legal owners was also dismissed. The Republic, the Human Rights Victims and the Foundations filed appeals against the Judge's decision.

Held, dismissing the appeals and holding that PNB held legal title to the Funds:

(1) The procedural objection that the Republic had named the wrong party as respondent to its appeal by failing to name PNB - the only successful party below - was too technical. The Human Rights Victims and Foundations had likewise named only PNB as the respondent in their appeals, and these procedural anomalies meant that not all of the ten original parties to the proceedings would be bound by an order made in each of the appeals. These were interpleader proceedings to enable all the contesting parties to show who had a better claim to the Funds, and as all parties had made full substantive arguments vis-à-vis every party's competing claim to the Funds, the most practical course of action was to consider the merits of all the appeals together: at [39] and [40] .

(2) There was no coherent or unified principle underlying the English act of state doctrine, which was best characterised as a combination of judicial restraint, comity and a territorial choice of law rule in relation to acts of a foreign sovereign affecting property within its jurisdiction. This could be contrasted with the United States jurisprudence, which had shifted towards viewing the act of state doctrine as a principle based on the constitutional separation of powers: at [48] .

(3) The Republic's reliance on the act of state doctrine was undermined by the fact that the only act which purported to have a legal effect on title to the Funds was the issuance of the Forfeiture Judgment by the Philippine Supreme Court pursuant to measures adopted by the Swiss and Philippine governments. The act of state doctrine under the traditional English common law did not mandate a positive approach, viz,requiring courts to recognise the legal effect of a foreign judgment that flowed from governmental or legislative acts so as to give effect to the intended consequences of the latter acts of state. Further, the act of state doctrine applied only to acts of foreign legislatures or governments and could not be conceptually extended to judicial acts, which were covered by the common law conflict of laws rules on the recognition of foreign judgments: at [50] , [52] , [53] and [55] .

(4) The Funds were located in Singapore at the time of the Forfeiture Judgment, and this precluded the application of the act of state doctrine, which was limited to acts within the territorial jurisdiction of the foreign state. There was no principled basis to displace the rule of territoriality on the ground that the act was based on an underlying foreign governmental interest: at [50] , [56] and [59] .

(5) The Forfeiture Judgment was an in rem judgment - the Philippine Supreme Court had framed its orders in the Forfeiture Judgment as a forfeiture of title to the Swiss Deposits instead of a personal judgment. It was essential to the recognition of a foreign in rem judgment that the res had been situated in the foreign country at the time of judgment, and as the situs of the Funds was Singapore at the time the Forfeiture Judgment was rendered, the judgment could not be recognised by the Singapore courts for the purpose of determining entitlement to the Funds. In any event, the legal effect of the Forfeiture Judgment also could not be recognised as it would be tantamount to the indirect enforcement of a foreign penal law; the judgment was made pursuant to a penal law which was a means of punishing and deterring public officials to advance a State interest: at [64] to [69] .

(6) It was not open to the Republic to advance a belated claim that PNB held the beneficial interest in the Swiss Deposits on trust for the Republic. Although the parties had not filed strict formal pleadings, the evidence adduced at the hearing below had been shaped by the legal characterisation of the claims as framed by the parties in their Statements of Case. The requirements for raising a new argument on appeal therefore applied, viz, that this court had to be in as advantageous a position as the court below to consider the issue and no new evidence was required. It would have been prejudicial to the Human Rights Victims and the Foundations to allow the Republic to now assert the additional claim as the determination of whether an express trust had been created would have involved questions relating to the application and interpretation of foreign law, which had to be proven as a matter of fact. There was no satisfactory evidence of these matters before the court: at [73] and [75] to [77] .

(7) The Human Rights Victims' claim hinged on the question of whether the Chinn Assignment had validly passed title to the Swiss Deposits to the Human Rights Victims. This involved a three-stage process: (a) characterisation; (b) identification of a connecting factor; and (c) identification of a system of law by the application of the connecting factor: at [80] and [81] .

(8) In the context of interpleader...

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