HILAO v MARCOS IN RE ESTATE OF FERDINAND: MARCOS HUMAN RIGHTS LITIGATION Opinion by Judge Fletcher These appeals concern whether

a United States court properly enjoined the Republic of the Philippines from entering into agreements with the Estate of former Philippine President Ferdinand Marcos to transfer to the Philippines assets of the Estate that the Republic asserts were looted from the Philippines treasury . The plaintiff class ( !ilao "# a group of $%#%%% people who allege that they or their relati&es were tortured or e'ecuted by (arcos# was awarded al)ost *+ billion in da)ages fro) the ,state in federal district court in !awai-i. Hilao sought the injunction to protect the Estate's assets in order to enforce its judgment. On appeal# the Republic claims sovereign immunity# asserts an .ct of State defense# and contends that the district court erred in designating it an aider and abettor of the ,state. BACKGROUND FACTS (Basic Phil histo ! la"#$ %& MARCOS FLED TO THE STATES BUT HIS ASSETS 'ERE SEI(ED Shortly after being deposed as president of the Philippines in February $/01# Ferdinand (arcos ( (arcos " and his wife 2)elda fled to !awai-i# ta3ing with the) do4ens of crates filled with gold# jewelry# and cash. President 5ora4on .6uino# who replaced (arcos as president# created the Presidential 5o))ission on 7ood 7o&ern)ent# an official agency charged with reco&ering the assets of the Republic fro) the (arcos fa)ily and its associates. These assets# which ha&e ne&er been co)prehensi&ely identified in any litigation# originally included U.S. and Philippine real estate holdings# &aluable art wor3s# cash and other property sei4ed by U.S. 5usto)s officials in !awai-i# and funds in ban3 accounts in 5alifornia and Swit4erland. he Republic contends that the Marcoses and their associates obtained these assets through misuse of Marcos' official position! and Philippine law provides for the forfeiture to the national treasury of property unlawfully obtained by public officials. )& LA'SUITS AGAINST THE MARCOS (R*+,-lic *v*" s,*.$ . nu)ber of lawsuits were filed against the (arcos fa)ily in .)erican courts. .)ong the) were fi&e suits filed in the 8orthern 9istrict of 5alifornia and the 9istrict of !awai-i by indi&iduals alleging that they or their relati&es had been arrested# tortured# or e'ecuted by )ilitary intelligence personnel acting pursuant to )artial law declared by (arcos in $/:$. The district courts dis)issed all fi&e suits on the ground that the .ct of State doctrine precluded liability. 2d. 2n an appeal of those decisions to this court# the Republic filed an a)icus curiae brief urging the U.S. courts to e'ercise jurisdiction o&er the hu)an rights clai)s. This court re&ersed in two unpublished decisions. The hu)an rights cases were subse6uently consolidated in the district court in !awai-i and certified as a class action suit against the ,state.

(eanwhile# in a separate action filed in the 5entral 9istrict of 5alifornia# the Republic sued the ,state and 2)elda (arcos# asserting R25O and pendent state law clai)s# and see3ing the reco&ery of *$.;; billion allegedly plundered fro) the Philippines treasury. On +; June $/01# the district court *"/oi"*. th* Ma cos*s a". th*i associat*s 0 o1 .is+osi"# o0 a"! ass*ts a"!2h* * i" th* 2o l.. 3& RP SETTLES 'ITH IMELDA The R*+,-lic4s s,it a#ai"st th* Estat* was s*ttl*. in October $//$ and dis)issed on < 8o&e)ber $//$. .s part of the settle)ent# the ,state and 2)elda (arcos agreed to transfer the ,state assets i)pounded by U.S. 5usto)s officials in !awai-i# e'cept for so)e personal ite)s and the cash in three accounts at a =os .ngeles ban3# to the Republic. The assets in Swiss ban3s were not transferred under the ter)s of the settle)ent# perhaps because the Swiss courts had fro4en all (arcos assets in Swit4erland in $/01 at the re6uest of the Republic and had agreed that the assets would be returned to the Philippines if cri)inal prosecutions against the (arcos fa)ily in the Philippines succeeded. Th* i"/,"ctio" 0 **5i"# th* Estat*4s ass*ts 2as .issolv*. as +a t o0 th* s*ttl*1*"t. 6& HILAO DISAGREED 'ITH RP SETTLEMENT 8ote> the district court in Hawai'i granted Hilao's re"uest to have the injunction reinstated on #$ %ovember #$$#. !ilao had won a fa&orable liability &erdict on +< Septe)ber $//+. On +? February $//<# the jury awarded !ilao *$.+ billion in puniti&e da)ages. On +% July $//<# !ilao filed a )otion to )odify the injunction to identify the Republic as an agent# representati&e# aider or abettor of the ,state subject to the injunction. !ilao contended that the R*+,-lic ha. s*i5*. ass*ts o0 th* Estat* i" th* Phili++i"*s worth *1:+ )illion# as well as *+ )illion of the *<%/ )illion in cash that the ,state had deposited in Swiss ban3s. 2t clai)ed that the Republic had sold *<0$ )illion worth of stoc3# held in the (eralco Foundation for the benefit of the ,state# and had appropriated the proceeds to itself. 2t also asserted that the Republic and the ,state entered into two agree)ents on +1 June $//+# to transfer wor3s of art 1 fro) the United States to the 8ational (useu) of the Philippines# and to di&ide the ,state-s other assets between the ,state and the Republic. On $+ Septe)ber $//<# the district court heard argu)ent on the )otion@ the R*+,-lic a++*a *. s+*ciall! a". ass* t*. its sov* *i#" i11,"it!& The district court the following day issued an order identifying the Republic as a representati&e# agent# aider or abettor of the ,state# and subjecting it to the injunction. On $0 January $//;# a jury in !awai-i awarded !ilao *:11 )illion in co)pensatory da)ages. On ? February $//;# the district court entered a 0i"al /,.#1*"t# which included a per)anent injunction against the ,state and its aiders and abettors and a 0i".i"# that th* R*+,-lic is a" ai.* a". a-*tto o0 th* Estat*& DISCUSSION OF THE CASE I& Sta".i"#

!ilao asserts that the Republic lac3s standing to appeal the injunction because it is neither a party nor an intervenor! and there has been no enforcement action against it. !ilao see)s to want to ha&e it both ways. On the one hand# it asserts that the Republic has no standing to appeal because it has not been har)ed by the injunction. On the other hand# it contended at oral argu)ent that the Republic could be cited for conte)pt if it were to &iolate the injunction. REPUBLIC HAS STANDING Th* +* 1a"*"t i"/,"ctio"7 ho2*v* 7 0i".s as a 1att* o0 0act that th* R*+,-lic is 8a" a#*"t7 *+ *s*"tativ*7 ai.* o a-*tto o0 th* Estat*8 a". *9+ *ssl! *"/oi"s "ot o"l! th* Estat* -,t also 8its a#*"ts7 *+ *s*"tativ*s7 ai.* s a". a-*tto s8& Th,s7 th* co, t cl*a l! *9+ *ss*. its vi*2 that th* i"/,"ctio" -i".s th* R*+,-lic& The injunction clearly confronts the Republic with the choice of either confor)ing its conduct to the dictates of the injunction or ignoring the injunction and ris3ing conte)pt proceedings. This constitutes s,00ici*"t i"/, !:i":0act to gi&e the Republic standing to challenge the injunction e&en in the absence of an actual finding of conte)pt against it. II& Sov* *i#" I11,"it! (the i)portant part of the case" PHIL CLAIMS SO;EREIGN IMMUNIT< The Republic clai)s that the district court lac3ed authority to subject it to the injunction because it enjoys sov* *i#" i11,"it! under the Fo *i#" Sov* *i#" I11,"iti*s Act (FSIA$. HILAO ARGUES THAT DISTRICT COURT NEED NOT E;EN ASSUME =URISDICTION O;ER THE RP !ilao argues that the FS2. does not go&ern because Rule 1;(d" of the Federal Rules of 5i&il Procedure )a3es an injunction binding upon those persons in acti&e concert or participation with an enjoined party to the action where those persons ha&e actual notice . Therefore# !ilao argues that the district court did not need to establish personal jurisdiction o&er the Republic in order to find that the Republic is an aider and abettor of the ,state and therefore bound by the injunction. 5OURT S.AS> 2n order to enforce injunction on the RP# it )ust ha&e personal jurisdiction o&er RP. 2n order to enforce this injunction against the Republic# through# for e'a)ple# conte)pt proceedings# the district court would ha&e to ha&e personal jurisdiction o&er the Republic. &n injunction against the Republic in the absence of personal jurisdiction over it would be futile! as the court would be powerless to enforce its injunction. A co, t sho,l. "ot iss,* a" ,"*"0o c*a-l* i"/,"ctio" > The rule that a court of e6uity will not issue an unenforceable decree of injunction co)prehends as a reason for denying injuncti&e relief that the court . . . does not ha&e the )eans to punish disobedience once disco&ered.-

MAIN ISSUE: COULD THE DISTRICT COURT ASSUME =URISDICTION O;ER THE RP> APPLICABLE LA': THE FSIA The FS2. is the sole basis for jurisdiction o&er a foreign state. P* so"al /, is.ictio" ov* a 0o *i#" stat* .*+*".s o" s,-/*ct:1att* /, is.ictio" ov* th* actio" a#ai"st th* 0o *i#" stat* ,".* th* FSIA& 2t states that Personal jurisdiction# li3e subjectB)atter jurisdiction# e'ists only when one of the e'ceptions to foreign so&ereign i))unity in Cthe FS2.D applies. GENERAL RULE Foreign states are i))une fro) the jurisdiction of courts in the United States unless a clai) against the) falls within an e'ception to i))unity under the .ct Thus# the .ist ict co, t lac?*. /, is.ictio" o&er the Republic absent the e'istence of an applicable e'ception under the FS2.. ARGUMENT OF HILAO: 5o))ercial acti&ity and wai&er e'ceptions apply 8OT,> !ilao clai)s that -oth the co))ercial acti&ity and wai&er e'ceptions of the FS2. apply. Once a plaintiff offers e&idence that one of the FS2.-s e'ceptions to i))unity applies# the party clai)ing i))unity bears the burden of pro&ing by a preponderance of the e&idence that the e'ception does not apply. A& Co11* cial:Activit! E9c*+tio" The FS2. directs that a foreign state is not i))une fro) suit in U.S. courts if> the action is based upon a co))ercial acti&ity carried on in the United States by the foreign state@ or upon an act perfor)ed in the United States in connection with a co))ercial acti&ity of the foreign state elsewhere@ or upon an act outside the territory of the United States in connection with a co))ercial acti&ity of the foreign state elsewhere and that act causes a direct effect in the United States. HO' TO DETERMINE @Co11* cial Cha act* A The co))ercial character of an acti&ity shall be deter)ined by reference to the nature of the course of conduct or particular transaction or act# rather than by reference to its purpose. EThe issue is whether the particular actions that the foreign state perfor)s (whate&er the )oti&e behind the)" are the type of actions by which a pri&ate party engages in Ftrade and traffic or co))erce.G The 6uestion is not whether the foreign go&ern)ent is acting with a profit )oti&e or instead with the ai) of fulfilling uni6uely so&ereign objecti&es. Th* c*"t al B,*stio" is 82h*th* th* activit! is o0 a ?i". i" 2hich a + ivat* +a t! 1i#ht *"#a#*&8 RP IS ACTING TO RECO;ER STOLEN PROPERT<C not a Eco))ercial acti&ityG at all !ilao argues that the Republic is atte)pting to reco&er indebtedness# while the Republic describes itself as pursuing )isappropriated public assets. Th* R*+,-lic4s .*sc i+tio" is 1o * acc, at*7 i" that a #ov* "1*"tal a#*"c! o0 th* Phili++i"*s is acti"# ,".* a

stat,to ! 1a".at* to *cov* + o+* t! all*#*.l! stol*" 0 o1 th* t *as, ! . This e'ercise of police power is a #ov* "1*"tal ath* tha" co11* cial activit! # and# thus# the co))ercialBacti&ity e'ception .o*s "ot a++l!. B& 'aiv* E9c*+tio" . foreign state is not i))une fro) suit if it has wai&ed its i))unity either e'plicitly or by i)plication . . . . and such wai&er is 8.RROH=A 5O8STRU,9. 5ourts ha&e found such wai&ers in cases where a foreign state has agreed to arbitration in another country or where a foreign state has agreed that the law of a particular country should go&ern a contract. .n i)plicit wai&er would also include a situation where a foreign state has filed a responsi&e pleading in an action without raising the defense of so&ereign i))unity. There is no e'clusi&e list of the circu)stances gi&ing rise to i)plied wai&er. !owe&er# to support a finding of i)plied wai&er# there )ust e'ist a direct connection between the so&ereign-s acti&ities in U.S. courts and the plaintiff-s clai)s for relief. 8OT,> !ilao argues that the Republic wai&ed i))unity by ($" sub)itting the a)icus curiae brief in Trajano and !ilao cases (+" using the U.S. courts to pursue assets held by the ,state. (?" Republic-s signing of the 5on&ention .gainst Torture and Other 5ruel# 2nhu)an or 9egrading Treat)ent or Punish)ent %& A1ic,s C, ia* B i*0 !2=.O asserts that the a)icus brief represents the Republic-s agree)ent that the law of a particular country should go&ern. 2n the a)icus brief# the Republic argued that the .ct of State defense did not apply to !ilao-s clai)s against (arcos because the clai)s concerned allegedly illegal acts. 2t urged this 5ourt to per)it the suit to proceed in .)erican courts# stating# The 7o&ern)ent of the Philippines can state without hesitation or reser&ation that its foreign relations with the United States will not be ad&ersely affected if these hu)an rights clai)s against Ferdinand (arcos are heard in U.S. courts@ and# in fact# relations )ay well be i)pro&ed if Filipino citi4ens see that justice is a&ailable in U.S. courts. COURT: SUBMISSION OF BRIEF DID NOT CONSTITUTE AN IMPLIED 'AI;ER& Sub)ission of the brief does not constitute an i)plied wai&er of i))unity. Th* - i*0 *lat*. to .a1a#*s clai1s a#ai"st th* Estat* ath* tha" to +ot*"tial *li*0 0 o1 th* R*+,-lic. Regardless of the Republic-s wisdo) in encouraging a lawsuit that )ay e&entually lead to little or no reco&ery for the plaintiffs in large part because of the Republic-s own subse6uent actions# it nonetheless can legiti)ately clai) that its position in the amicus brief was consistent with and unrelated to the actions it has ta'en to recover assets held by the Estate. 2n pursuing the assets# the Republic sought property to which it felt it was legally entitled. 2n lending support to the !ilao litigation# it )erely stated that !ilao should be per)itted to see3 da)ages fro) whate&er assets the ,state could establish as its own.

)& La2s,its ov* th* Estat*4s Ass*ts R,PUI=25 contends that the suits see3ing reco&ery fro) the ,state of assets belonging to the Republic are unrelated to the hu)an rights litigation because one is about ownership of assets while the other is about torture. !2=.O responds that one of the central issues in its hu)an rights litigation is entitle)ent to the ,state-s assets. !ilao cites Si.* 1a" .* Bla?* case# which in&ol&ed a fa)ily-s suit against the go&ern)ent of .rgentina for torture and persecution. 2n that case# 5ourt re)anded for a deter)ination as to whether there was a direct lin3 between the conduct alleged and .rgentina-s letter rogatory as3ing a 5alifornia court for help in ser&ing Jose Sider)an.@ 5ourt there held> E(f &rgentina has engaged our courts in the very course of activity for which the )idermans see' redress! it has waived its immunity as to that redress.* COURT: NO DIRECT CONNECTION !ilao has failed to de)onstrate a direct connection between its action for hu)an rights abuses and the Republic-s pursuit of its assets. Cl*a l!7 th* R*+,-lic has "ot *"#a#*. U&S& co, ts i" h*l+i"# th* Ma cos*s o th* R*+,-lic to co11it s,ch violatio"s . (oreo&er# th* R*+,-lic has "ot ta?*" l*#al actio" o0 a"! ?i". a#ai"st Hilao i" th* U&S& co, ts& 3& Co"v*"tio" A#ai"st To t, * !2=.O argues that there was a wai&er based upon the Republic-s signing of the 5on&ention .gainst Torture and Other 5ruel# 2nhu)an or 9egrading Treat)ent or Punish)ent. .rticle $< states in part that CeDach State Party shall ensure in its legal syste) that the &icti) of an act of torture obtains redress and has an enforceable right to fair and ade6uate co)pensation. !ilao contends that the Republic )ust ha&e conte)plated adjudication of torture clai)s in the U.S. when it ratified the treaty. COURT: CON;ENTION DOES NOT MANDATE THAT SUCH REDRESS OCCUR IN THE US COURTS ,&en if the Philippines does ha&e a duty under the 5on&ention to help in the redress of torture and other abuses co))itted by the (arcoses against citi4ens of the Republic# th* Co"v*"tio" .o*s "ot 1a".at* that s,ch *. *ss occ, i" th* U"it*. Stat*s co, ts . 5ourt concluded that the wai&er e'ception does not apply. CONCLUSION Iecause "o *9c*+tio" to th* FSIA a++li*s to th* R*+,-lic in this case# the .ist ict co, t lac?*. /, is.ictio" ov* th* R*+,-lic. Thus# the district court would be without the power to enforce the injunction against the Republic in the capacity of an aider or abettor. The district court therefore abused its discretion by issuing a futile injunction. The injunction is J.5.T,9 to the e'tent it purports directly to enjoin the Republic.