The Dismissal of the Class Suit Claims in the West Landesbank,
Singapore Branch case (filed 2003-decided 2012)
Litigation began in 2003 when West Landesbank (LB), Singapore branch, was confronted with competing claims for monies amounting to USD 16.8 million and £6.8 million. The PNB sought to withdraw the deposits at maturity and the human rights victims sought to enforce the Hawaii judgement. The dummy corporations under whose name the Swiss Accounts were deposited sought to recover the deposits. Faced with these competing claims, the West LB resorted to depositing the said amounts with the Singapore High Court for the latter to resolve the competing claims.
The Singaporean Court defines the ultimate issue: who has the proprietary entitlement to the funds
Previously and in 1998, the Swiss authorities released the Swiss Deposits to PNB, to hold as escrow agent. The Escrow Agreements empowered PNB to invest the Swiss Deposits in the money market or in securities, provided the relevant debtor or company had a Standard and Poor’s rating of at least “AA.” The Swiss Deposits were accordingly deposited in various banks, including funds deposited in WestLB, Singapore.
In a decision on 10 August 2012, the Singaporean High Court dismissed the human rights victims’ claim “since the Chinn Assignment, which they seek to rely on, failed to transfer title in the Fund to them under Swiss law.” On the other hand, “the PNB claim that acquired legal title to the Fund via the Escrow Agreements, is allowed.”
The Singaporean Court was of the opinion that the assets were located in Switzerland at the time it was turned over to PNB via Escrow Agreements, thus Swiss Courts had valid jurisdiction over said assets as well as over the depositary Swiss banks whereas the Hawaii Court, in ordering the execution of the Chinn Assignment, exercised no such jurisdiction over the assets and banks at the time of execution. At the same time, the Singaporean Court observed that none of the party litigants assailed the validity of the transfer of funds in the Swiss deposits to escrow agent PNB. The party litigants instead assailed the validity of the Philippine Supreme Court decision on the forfeiture case as basis for the Republic’s claim to the West LB funds.
The Singapore Court, in considering the PCGG and the Republic of the Philippines’ invocation of sovereign immunity, ruled that the Republic had legally submitted to its jurisdiction when it asked for positive relief, that is, the award to it of the funds PNB invested to the West LB branch.
The Singapore Court also found that the July 2003 Supreme Court decision declaring the Swiss deposits forfeit was penal and confiscatory in nature and the Republic cannot use it to assert title to the funds that are deposited in Singapore. Under the principle, foreign courts cannot be used to enforce penal laws of another country. (Note: This is contrary to the Philippine Supreme Court’s decision that the forfeiture proceedings were civil and not penal in nature.)
The Singaporean Court also did not find merit in the Chinn Assignment as a basis for asserting title over the West LB funds.
It will be recalled that the Hawaii District Court held the Marcoses in contempt for entering into a 75/25 percent deal over valuable artwork in violation of the “global freeze order” that the Court issued. In an Order Granting Additional Relief for Contempt dated 13 July 1995, the Hawaii Court ordered the Marcoses to execute an Assignment of all relevant Swiss accounts to Atty. Swift on behalf of the members of the class suit, failing which the Clerk of Court was directed to execute the same on behalf of the Marcoses. Walter Chinn was the Clerk of Court of the Hawaii District Court. Since the heirs of Marcos refused to execute an assignment, the Court directed the Clerk to execute said assignment.
The issue that arose is whether the Chinn Assignment operated to confer title over the Swiss deposits. The Singaporean Court ruled that the Chinn Assignment was a form of involuntary garnishment of funds in satisfaction of judgment. But the funds and the Swiss bank depositaries were located elsewhere and beyond the jurisdiction of the Hawaii district court. The Swiss Courts, however, had jurisdiction over Swiss banks and the Swiss deposits empowering it to freeze the accounts and execute Escrow Agreements transferring title to the PNB pending final decision of the Philippine courts.
Thus, the Republic’s claim over the funds by virtue of the Philippine Supreme Court’s forfeiture case was dismissed as the Singapore Court cannot be the enforcer of penal judgments under international law. The Human Rights Victims’ claim was also dismissed as the Chinn Agreement was found as not having effectively transferred title to the Swiss Accounts. The dummy Foundations’ claims were also dismissed. The Court found that the Swiss Escrow Agreements effectively transferred title to the PNB and awarded the funds to it. (See: Decision, WestLB AG v Philippine National Bank and others http://www.scribd.com/doc/103019716/Singapore-High-Court-decision-WestLB-AG-vs-Philippine-National-Bank-and-others)