Victims battle over Marcos' money

The Supreme Court on Monday expressed sympathy for Filipino victims of the Ferdinand Marcos regime while raising the possibility it may have no choice but to rule against them in a dispute over who owns $35 million once held by the late dictator.

A lawyer for a group of more than 9,500 human rights victims from the Philippines and their heirs argued they should get the money as part of a $2 billion judgment in U.S. courts against the estate of Ferdinand Marcos. The dictator, who died in 1989 in Hawaii, allegedly stole vast amounts of money from his own government before his overthrow in 1986.

The Philippine government says the dispute over the tiny fraction of allegedly stolen assets should be settled in Philippine courts, not in the United States, where it has been pending for eight years.

"Is it fair to say" to the victims, "wait for a ruling in the Philippines?" asked Chief Justice John Roberts.

The victims, all opponents of Marcos' rule, were tortured or executed during the imposition of martial law in the Philippines from 1972 to 1986.

The fight stems from Marcos' transfer of $2 million in 1972 to Arelma S.A., a Panamanian shell corporation that invested the money with Merrill Lynch, Pierce, Fenner & Smith Inc., in New York. By 2000, it had grown to $35 million. A Philippine bank is holding Arelma share certificates in escrow until the courts there rule on ownership.

When Merrill Lynch asked U.S. courts to sort out the disagreement, the Philippine government invoked sovereign immunity, the doctrine that bars a legal proceeding against a government without its consent.

Ordinarily, that would have shut down the case in U.S. courts, based on the absent Philippine government being an indispensable party to the case.

But a federal judge in Hawaii decided the matter could proceed and ruled in the victims' favor, as did the 9th U.S. Circuit Court of Appeals in San Francisco, despite the fact that the Philippine government was not a participant.

"We think" that invoking sovereign immunity is an automatic rule for dismissing a case, Charles Rothfeld, representing the Philippine government, told the justices.

Rothfeld said that if Philippine courts rule in the government's favor, it can come into a U.S. court armed with a judgment and all those claiming a stake in the money can present their case.

Arguing for the victims, attorney Robert Swift said the Philippine government is "judge shopping" and "forum shopping" in an effort to get the dispute to come out the way it wants.

The Philippine government does have the right to pick the forum, Justice Ruth Bader Ginsburg replied.

"We should not be farming out decisions about assets ... that have been here for 35 years," said Swift.

Justice Antonin Scalia suggested the court's hands may be tied by the sovereign immunity doctrine.

"I am just not terribly persuaded" by arguments that there is "terrible unfairness" in what the victims have had to face, said Scalia. "The whole doctrine of sovereign immunity is unfair; the doctrine always has unfairness."