The Singapore Court of Appeals has rejected an attempt by the Philippine government to assert that an act of state gave it control of funds embezzled by President Ferdinand Marcos and currently held in escrow in Singapore.

The money in question is a small portion—$23.7 million—of $567 million recovered from a number of Swiss bank accounts controlled by five foundations that were linked to Marcos. Following an agreement between the Philippine and Swiss governments in the late 1990s, the funds were released to the privately held Philippine National Bank, which was to hold the funds in escrow pending a decision on its disposition by a competent court. PNB deposited a portion of the funds in the Singapore branch of German bank WestLB.

A 2003 decision by the Supreme Court of the Philippines stated that those funds should be forfeited to the Philippine government. But West LB subsequently refused, citing a 1995 decision by a U.S. federal court in Hawaii that awarded the Swiss deposits as part of a $1.96 billion judgment in a 10,000-member class action filed by victims of human rights abuses under the Marcos regime.

WestLB then sought and was granted interpleader relief in Singapore, with PNB, the Philippine government, the class action members and the foundations which originally held the funds all filing claims to them.

A Singapore High Court judge ruled against the Philippine government and the human rights class-action members in the case, saying that PNB as trustee of the money, and as the original account holder with WestLB, had a legal right to the funds as escrow agent.

In its appeal, the Philippine government claimed that the ruling by its Supreme Court was an act of state, and therefore the Singapore court was bound to honor it. However, the Court of Appeal rejected the notion. Justice Chao Hick Tin, writing the decision for the three-judge panel, said that judicial decisions do not qualify as acts of state, which are the purview of the legislative or executive branches of government.

At the same time, the Court of Appeal noted that acts of state traditionally apply to actions within the state’s existing territory and do not hold extraterritorial jurisdiction.

Chao said PNB held legal title to the funds at the time the funds were deposited with WestLB. He noted that the human rights claimants only disputed PNB’s position after the bank put the funds in escrow with its Singapore lawyers pending the outcome of the interpleader proceedings. Chao said that did not divest PNB of its legal title to the funds as the named account holder with WestLB.

The Philippines was represented by Harry Elias SC, while Kenneth Tan SC acted for the human rights class-action members. Rajah & Tann partner Chandra Mogan was counsel to the foundations.