Osqugama Swezey v. Merrill Lynch, et al., No. 88 (NY 2012), is a decision of New York’s highest court on the issue of how to balance the claims of deserving litigants before the court and those of the absent non-U.S. sovereign.  The issue is one we have posted on previously (e.g., here)

Merrilly Lynch brought an interpleader action when assets it was holding were at risk of being seized or paid to satisfy a judgment when there were other creditors who claimed rights to the assets.  The underlying case arose out of the litigation that was spawned after President Ferdinand Marcos was deposed from power in 1986.  The plaintiffs, “10,000 Philippine victims of his human rights abuses or their survivors”, sued in Hawaii federal court and obtained a judgment of almost $2 billion.  After Marcos left the Philippines, however, a governmental inquiry was begun, made findings, and insisted that it too — among others — was entitled to any and all of Marcos’s assets located anywhere in the world to satisfy claims. 

Given the competing claims on the property, Merrill brought an interpleader action.  Other parties moved to intervene and requested dismissal under CPLR 1001, “asserting that the Republic [and another party] were necessary parties but could not be subject to joinder in light of the assertion of sovereign immunity”.

In analyzing the issue, the Court of Appeals set out and applied five factors that must be considered in reaching a determination:

“1. whether the plaintiff has another effective remedy in case the action is dismissed on account of the nonjoinder;

“2. the prejudice which may accrue from the nonjoinder to the defendant or to the person not joined;

“3. whether and by whom prejudice might have been avoided or may in the future be avoided;

“4. the feasibility of a protective provision by order of the court or in the judgment; and

“5. whether an effective judgment may be rendered in the absence of the person who is not joined” (id.).

Of significance to the Court was the view that the “immunity principle is part of the natural law of nations and is ‘premised upon the “perfect equality and absolute independence of sovereigns, and th[e] common interest impelling them to mutual intercourse”.  The high court therefore required dismissal.

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