Court Says Judge Can’t Seek Freeze on Marcos Funds

A federal appeals court in San Francisco on Wednesday ordered the dismissal of a lawsuit filed in Los Angeles last year that sought to freeze nearly $500 million in assets of the late Philippine dictator Ferdinand Marcos in two Swiss banks. The decision reversed an order issued last year by U.S. District Judge Manuel L. Real in a case brought by 9,539 Philippine human rights abuse victims around the world.

The money is still frozen in the Swiss banks, at the request of the current Philippine government, and is the subject of several conflicting claims.

The 3-0 decision by the U.S. 9th Circuit Court of Appeals further complicates the efforts of the victims of human rights abuses to collect on a $1.9-billion judgment from a federal jury in Hawaii three years ago. Thus far, they have only received $1 million.

Also on Wednesday, attorney Robert A. Swift of Philadelphia, who represents the Filipinos, said he has dropped a companion case he filed in September against two other Swiss banks that he believed held up to $13 billion in Marcos-linked assets because information provided to him by an informant about that money “was not holding up.”

In Wednesday’s appeals court ruling, the order Swift won in the case last year was ruled to directly conflict with a freeze that was previously ordered on the bank accounts by the Swiss government, acting at the request of the Philippine government. The Southeast Asian country is seeking $1.55 billion from Marcos’ estate as reimbursement for funds he, his family and associates allegedly looted from the government during his reign from 1972 to 1986. Marcos died in 1989.

Wednesday’s decision follows a 1996 9th Circuit decision overturning a 1995 ruling by Real ordering Credit Suisse and Swiss Bank to turn over to his court $475 million of Marcos-linked assets. The latest decision, written by Appellate Judge T. G. Nelson of Boise, Idaho, reversed Real’s decision not to dismiss a 1996 suit against the banks.

Nelson’s opinion said the orders sought against the two Swiss banks would violate the “act of state” doctrine, which prohibits U.S. courts from passing judgment on the validity of a foreign country’s sovereign actions. The Swiss government’s 1990 freeze on the bank accounts--upheld by the Swiss Supreme Court--constituted such an act, Nelson wrote.

Nelson also wrote that Real’s orders to the banks to disclose information about the accounts “would violate Swiss banking secrecy and other [Swiss] laws.”

The judge said that if the human rights victims want to challenge the Swiss order “they should do so via the Swiss judicial system.”

Janis Meyer, a New York attorney who represents Swiss Bank, said “we’re very pleased with the decision.”

Swift said he was disappointed. “It makes what has been a difficult struggle for human rights victims a much longer and harder struggle,” he said. “The evidence shows a concerted pattern of the Swiss banks and the Marcoses concealing assets over decades.”

In recent years, there have been several attempts by the Philippine government, the Marcos family, Swift and other claimants to the Marcos money to negotiate a settlement, but they all have fallen apart.

Sources close to the case said Wednesday that new negotiations have begun. However, Wednesday’s decision could complicate the matter because the 9th Circuit directed Real “to refrain from taking any further action” in the case it dismissed “or any other case” involving Marcos assets held or claimed to be held by the Swiss banks. Read literally, that would make it impossible for Real to approve any settlement.