WestLB AG v Philippine National Bank: Sovereign Immunity & Commercial Transactions

WestLB AG filed interpleader proceedings against Philippine National Bank (PNB), several foundations, and others, concerning funds held in escrow. The Republic of the Philippines applied to stay the proceedings based on sovereign immunity under the State Immunity Act. The High Court of Singapore, presided over by Kan Ting Chiu J, dismissed the Republic's application, finding that the Republic had submitted to the court's jurisdiction through its agent, PNB, and by seeking the release of funds to itself. The court also held that the escrow contracts were not commercial transactions that would exclude the Republic from sovereign immunity.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Application to stay the interpleader proceedings is dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Interpleader proceedings involving WestLB, Philippine National Bank, and others. The Republic of the Philippines' claim of sovereign immunity was rejected.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Republic of the PhilippinesDefendantGovernment AgencyLostLost
Maler FoundationDefendantCorporationWonWon
Avertina FoundationDefendantCorporationWonWon
Palmy FoundationDefendantCorporationWonWon
Vibur FoundationDefendantCorporationWonWon
Aguamina CorporationDefendantCorporationWonWon
WestLB AGPlaintiffCorporationNeutralNeutral
Philippine National BankDefendantCorporationLostLost
Plaintiffs in the Estate of Ferdinand E Marcos Human Rights LitigationDefendantAssociationWonWon

3. Judges

Judge NameTitleDelivered Judgment
Kan Ting ChiuJudgeYes

4. Counsels

Counsel NameOrganization
S SuresshHarry Elias Partnership
Sharmini SelvaratnamHarry Elias Partnership
Harry EliasHarry Elias Partnership
Jerome RobertRajah & Tann
Alan ThioRajah & Tann
Kenneth TanKenneth Tan Partnership
Soh Wei ChiKenneth Tan Partnership

4. Facts

  1. The Republic of the Philippines sought to recover ill-gotten wealth of former President Marcos.
  2. The Republic requested Swiss authorities to freeze assets in Swiss bank accounts.
  3. The Swiss Federal Supreme Court confirmed the freezing of assets.
  4. The assets were released to PNB as escrow agent, to be placed in 'AA' rated banks.
  5. The Philippines Supreme Court forfeited the assets in favor of the Republic.
  6. WestLB held some of the funds in escrow.
  7. Competing claims were made on the funds held by WestLB, leading to interpleader proceedings.

5. Formal Citations

  1. WestLB AG v Philippine National Bank & Others, OS 134/2004, SUM 3874/2006, [2006] SGHC 234

6. Timeline

DateEvent
President Ferdinand Marcos overthrown in the Philippines
Republic of the Philippines requested assistance from Swiss authorities to freeze assets
Swiss Federal Supreme Court confirmed decisions to freeze assets in Swiss bank accounts
Assets released by Swiss banks to PNB and placed with 'AA' rated banks including WestLB
Philippines Supreme Court forfeited the assets in favour of the Republic
WestLB received a claim from the Plaintiffs in the Estate of Ferdinand E Marcos Human Rights Litigation
WestLB commenced interpleader proceedings
WestLB transferred assets into an escrow account held by Drew & Napier LLC
PNB applied for the interpleader proceedings to be stayed on the ground of forum non conveniens
PNB's application to stay the interpleader proceedings was dismissed
Drew & Napier LLC transferred the assets into an escrow account established by Harry Elias Partnership
Republic of the Philippines filed an application to be added as a defendant
Orders obtained to add the Republic of the Philippines as a defendant
Republic of the Philippines applied for orders to stay the claims and release the funds
Judgment reserved

7. Legal Issues

  1. Sovereign Immunity
    • Outcome: The court held that the Republic had submitted to the jurisdiction of the court through its agent, PNB, and by seeking the release of funds, thus waiving its sovereign immunity.
    • Category: Substantive
    • Sub-Issues:
      • Submission to jurisdiction
      • Commercial transaction exception
  2. Agency
    • Outcome: The court found that PNB acted as an agent of the Republic when claiming the funds, thus the Republic submitted to the court's jurisdiction through PNB's actions.
    • Category: Substantive
    • Sub-Issues:
      • Authority of agent to submit to jurisdiction
  3. Commercial Transaction Exception to Sovereign Immunity
    • Outcome: The court held that placing the funds into the escrow account was an integral part of the exercise of sovereign powers to recover ill-gotten wealth, and not a commercial transaction.
    • Category: Substantive

8. Remedies Sought

  1. Stay of Proceedings
  2. Release of Funds to the Republic of the Philippines

9. Cause of Actions

  • Interpleader
  • Claim for Funds

10. Practice Areas

  • Commercial Litigation
  • International Law
  • Dispute Resolution

11. Industries

  • Banking
  • Finance

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Juan Ysmael & Co Inc v Government of the Republic of IndonesiaPrivy CouncilYes[1955] AC 72United KingdomCited for the test to establish a state's right to assert state immunity in a dispute, requiring evidence that the claim is not merely illusory or manifestly defective.
The JupiterN/ANo[1924] P 236N/ACited as an earlier decision where a bare assertion of ownership was considered sufficient for state immunity, which the current judgment disagrees with.
Chong Long Hak Kee Construction Trading Co v IEC Global Pte LtdN/AYes[2003] 4 SLR 499SingaporeCited for the principle that taking a step in proceedings can affect an application to stay proceedings pending arbitration.
Australian Timber Products Pte Ltd v Koh Brothers Building & Civil Engineering Contractor (Pte) LtdHigh CourtYes[2005] 1 SLR 168SingaporeCited for the principle that an act, which would otherwise be regarded as a step in the proceedings, will not be treated as such if the party has specifically stated that he intends to seek a stay or expressly reserves his right to do so.
I Congreso del PartidoHouse of LordsYes[1983] 1 AC 244United KingdomCited for explaining the distinction between acts of a private nature (acta jure gestionis) and sovereign acts (acta jure imperii) in the context of state immunity.
Malaysian Industrial Development Authority v JeyasinghamEmployment Appeal TribunalNo[1998] I.C.R. 307United KingdomCited for the argument that only the head of the diplomatic mission could waive sovereign immunity, but the current judgment disagrees with this interpretation.
Republic of Yemen v AzizEnglish Court of AppealYes[2005] EWCA Civ 745United KingdomCited for the interpretation of Section 2(7) of the State Immunity Act 1978, similar to Section 4(7) of Singapore's SIA, stating that it is not exhaustive or conclusive regarding who can submit on behalf of a state.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
State Immunity Act (Cap 313, 1985 Rev Ed)Singapore
State Immunity Act (Cap 313, 1985 Rev Ed)Singapore
State Immunity Act (Cap 313, 1985 Rev Ed)Singapore
State Immunity Act (Cap 313, 1985 Rev Ed)Singapore
State Immunity Act (Cap 313, 1985 Rev Ed)Singapore
State Immunity Act (Cap 313, 1985 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Sovereign Immunity
  • Interpleader
  • Escrow
  • State Immunity Act
  • Commercial Transaction
  • Agency
  • Presidential Commission on Good Government
  • PCGG
  • International Mutual Assistance in Criminal Proceedings
  • IMAC

15.2 Keywords

  • Sovereign Immunity
  • Interpleader
  • State Immunity Act
  • Commercial Transaction
  • Republic of the Philippines
  • Philippine National Bank
  • WestLB

17. Areas of Law

Area NameRelevance Score
Sovereign Immunity95
International Law90
Interpleader70
Civil Procedure40
Administrative Law30
Garnishee Proceedings20
Contract Law10
Arbitration10

16. Subjects

  • International Law
  • Civil Procedure
  • Sovereign Immunity