Two Supreme Court Cases to Test Limits on Foreign Sovereign Immunity for Holocaust Harms

Two Supreme Court Cases to Test Limits on Foreign Sovereign Immunity for Holocaust Harms

Legal Sidebari

Two Supreme Court Cases to Test Limits on
Foreign Sovereign Immunity for Holocaust
Harms
Updated February 5, 2021
UPDATE: On February 3, 2021, the Supreme Court issued unanimous opinions in Germany and
Hungary, holding that the Foreign Sovereign Immunities Act (FSIA) does not permit claims against
foreign governments for “taking” property from their own citizens, even if the taking occurred as part of
a genocide or other human rights violation. The Court agreed with Germany that the FSIA’s
expropriation exception incorporated the international law of property—which excludes purely domestic
takings. The Court reasoned that the domestic takings rule does not implicate the law of genocide or
human rights, and, as such, the expropriation exception does not apply. The Court did not address the
comity question, nor did it address the factual dispute over whether an act of genocide took place.
Instead, the Court remanded this case, as well as the Hungary case, for further proceedings consistent
with its FSIA holding.
The original post from December 16, 2020, is below.
In two cases this term, Republic of Hungary v. Simon (Hungary) and Federal Republic of Germany v.
Philipp (Germany), the Supreme Court is set to address intersecting issues about foreign sovereign
immunity and the Holocaust. The plaintiffs in both cases seek to make foreign governments liable for
Nazi-era injuries. But the defendants, which include Hungary and Germany, argue the suits should be
dismissed based on international comity—a legal doctrine that allows courts to abstain from jurisdiction
out of respect for foreign sovereignty. Germany also argues that it is immune from suit because it believes
the U.S. Foreign Sovereign Immunities Act (FSIA) does not permit claims in U.S. courts against foreign
governments for “taking” property from their own citizens within its own territory.
The legal questions in both cases may have longstanding implications for when foreign countries can be
sued in U.S. courts. The cases also have attracted attention because of the way in which the legal defenses
intersect with the tragic events of the Holocaust. Some observers, including some Members of Congress,
contend that the defendants’ legal arguments contradict the historical timeline of the Holocaust. The
United States, on the other hand, supports the defendants’ legal theories in its role as amicus curiae.
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Factual Background
The atrocities of the Holocaust form the factual backdrop for Hungary and Germany. In Hungary, a group
of 14 Holocaust survivors filed a putative class action against Hungary and a state-owned railway
company, Magyar Államvasutak Zrt (MÁV). From 1941 to 1945, Hungary deported more than 440,000
Hungarian Jews to Nazi-run concentration camps, chiefly Auschwitz. According to the survivors,
Hungarian officials facilitated the mass deportation using MÁV’s rail system, and MÁV employees
robbed Jewish citizens of their last remaining possessions as they were loaded onto trains. The survivors
seek compensation from Hungary and MÁV for taking their property during the genocidal campaign.
In Germany, the heirs of a group of Jewish art dealers working during the rise of the Nazi regime sued to
recover a collection of medieval relics and art known as the Welfenshatz (Guelph Treasure in English).
The art dealers purchased the collection in 1929 before the stock market crash that year, but soon faced
persecution when the Nazi party came to power in 1933. In 1935, the dealers sold most of the
Welfenshatz to government officials in Prussia (then part of Nazi Germany) for what the plaintiffs allege
to be 35% of its actual value. The Prime Minister of Prussia at the time, Hermann Goering, later presented
the collection as a gift to Adolph Hitler. Goering was one of the era’s most notorious collectors of Jewish-
owned art and was eventually convicted as a Nazi war criminal. After World War II, American troops
turned over the Welfenshatz to Stiftung Preussischer Kulturbesitz (SPK), a German state agency formed
to preserve Prussian cultural heritage and property. SPK continues to hold the collection, which is on
display in Berlin’s Bode Museum.
The heirs of the art dealers contend that the Nazi government forced their predecessors to sell the
Welfenshatz below fair market value by making it effectively impossible for Jewish owners to sell
artwork on the open market. In 2014, the heirs and SPK submitted the dispute to a non-binding German
claims commission, which makes recommendations on how to resolve claims concerning Nazi-
confiscated art. The commission did not recommend that the SPK return the collection, concluding
instead “that the sale of the Welfenschatz was not a compulsory sale due to persecution.” The next year,
the heirs sued in U.S. federal court seeking return of the collection and monetary damages.
Legal Background
Because the plaintiffs in Hungary and Germany sued foreign states, both cases raise issues arising from
the FSIA—a federal statute governing when foreign sovereign immunity bars suits in U.S. courts against
foreign government entities. The FSIA provides a presumptive rule that foreign countries and their
agencies and instrumentalities are immune from suit in both state and federal courts. The “sole basis” by
which U.S. courts can obtain jurisdiction over those defendants is through one of the FSIA’s exceptions
to that general rule.
The first question presented in Hungary and Germany concerns how FSIA interacts with the international
comity doctrine. As discussed below, international comity permits courts to abstain jurisdiction based on
deference to foreign nations’ sovereignty. The defendants in Hungary and Germany asked lower courts to
dismiss the suits on comity grounds, but the U.S. Court of Appeals for the District of Columbia Circuit
(D.C. Circuit) concluded that the comity doctrine is not available in cases against foreign sovereigns that
fall under the FSIA’s framework. The Supreme Court is set to address whether the D.C. Circuit was
correct in concluding that the FSIA displaces international comity.
In Germany, the Supreme Court granted certiorari on the separate question of whether the FSIA’s
expropriation (i.e., government seizure) exception to foreign sovereign immunity applies to claims that a
country took the property of its own citizens as part of an act of genocide. The Germany defendants
contend that the expropriation exception does not apply when a government takes property from its own
citizens within its own territory because such “domestic takings” do not violate international law. The
heirs to the art dealers assert—and the D.C. Circuit agreed—that, while the FSIA’s expropriation

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exception typically does not apply to domestic takings, because the takings in question was part of a
genocide, it violated international law and, consequently, falls within the exception.
The Comity Question
The first question presented in Hungary and Germany is whether courts can conduct a comity analysis in
cases falling under the FSIA’s rubric. Courts and commentators describe international comity as a loosely
defined doctrine that permits courts to abstain from exercising jurisdiction based on deference to foreign
nations’ sovereignty. The doctrine’s classic description comes from Hilton v. Guyot, an 1895 decision in
which the Supreme Court stated:
“Comity,” in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere
courtesy and good will, upon the other. But it is the recognition which one nation allows within its
territory to the legislative, executive or judicial acts of another nation, having due regard both to
international duty and convenience, and to the rights of its own citizens, or of other persons who are
under the protection of its laws.
The defendants in Hungary and Germany argue that, under principles of comity, U.S. courts should
decline jurisdiction until the plaintiffs attempt to obtain relief through the judicial system in Europe.
However, the D.C. Circuit disagreed, instead concluding that the FSIA prohibits U.S. courts from
conducting a comity analysis in the first place.
The Supreme Court has described the FSIA as providing a “comprehensive” set of standards governing
when “foreign nations should be amenable to suit in the United States.” Because the FSIA is
comprehensive, the D.C. Circuit reasoned, it displaced the court’s authority to conduct a case-by-case
comity analysis. The defendants in Hungary and Germany agree that FSIA governs when U.S. courts
cannot exercise jurisdiction because of foreign sovereign immunity. But they argue that FSIA does not
eliminate courts’ discretionary authority to use prudential abstention doctrines, such as comity, to
examine whether courts should not assume jurisdiction. The defendants contend that U.S. courts should
decline jurisdiction on comity grounds because these Nazi persecution cases have “little connection to the
United States” and invade the German and Hungarian governments’ ability to make sensitive decisions
about how to remedy historical injustices. By way of analogy, the Hungary defendants argue that it is no
more appropriate for U.S. courts to resolve disputes about Holocaust atrocities than it would be for
Hungarian courts to hear Americans’ claims for reparations for slavery or racial discrimination.
Foreign Sovereign Immunity and “Domestic Takings”
In the second question presented, the Germany defendants argue that the case should be dismissed
regardless of comity because the FSIA bestows them with foreign sovereign immunity. Under the FSIA’s
expropriation exception, foreign sovereign immunity is unavailable in cases “in which rights in property
taken in violation of international law are in issue” and the property meets statutory requirements for a
commercial nexus to the United States. The heirs to art dealers in Germany contend that the Welfenschatz
sale was involuntary and amounted to a “tak[ing] in violation of international law” that falls within the
exception. A government that takes property of an alien may violate international law if the taking “is not
for a public purpose, is discriminatory, or is [done] without provision for prompt, adequate, and effective
compensation.” But the expropriation exception is limited by what has become known as the “domestic
takings” rule. Under this rule, it is U.S. courts’ “consensus view” that foreign governments that take the
property of their own nationals within their own territory typically do not breach international law and are
outside the scope of the expropriation exception. Because the art dealers were German citizens and
companies, and Germany allegedly forced the sale within its own borders, the defendants argue that this is
a “domestic takings” case to which sovereign immunity still applies.

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While the D.C. Circuit agrees that domestic takings ordinarily do not violate international law, it held that
the standard rule does not apply when the taking constitutes an act of genocide. Unlike typical domestic
expropriations, perpetrating genocide against a country’s own nationals may still violate international law.
Citing the Convention on the Prevention of the Crime of Genocide and federal statutes that recognize
Nazi art confiscations were part of a genocidal strategy, the D.C. Circuit concluded that the plaintiffs
made sufficient allegations that the sale of the Welfenschatz was a genocidal taking to which foreign
sovereign immunity does not apply.
On appeal to the Supreme Court, the Germany defendants contend that the D.C. Circuit’s decision
expands the expropriation exception beyond Congress’s original intent. They argue the decision violates
the United States’ international legal obligations to give foreign states immunity for sovereign acts and
that it opens up U.S. courts to cases that have a limited connection to the United States.
The United States Position as Amicus Curiae
In its role as amicus curiae, United States supports the defendants on both questions presented. The
United States emphasizes that it “deplores the atrocities committed by the Nazi regime and its allies, and
supports efforts to provide” remedies to Holocaust victims. But it argues that comity-based abstention
serves the United States’ interests by allowing courts to consider potential foreign policy problems when
foreign sovereigns are sued in U.S. courts. In Germany, the United States agrees with the defendants that
the FSIA’s expropriation exception does not apply to domestic takings, even when the taking is part of a
genocide or other human rights violation. Allowing an exception for genocidal takings, the United States
contends, would compel courts to make sensitive foreign-policy judgments about whether a genocide has
taken place. Those judgments, the United States argues, would “give courts a role in foreign affairs far
beyond what Congress (or the Constitution) intended” and “place the United States at odds with
consistent intentional practice” on when to grant foreign sovereign immunity.
Treatment of the Holocaust
The relationship between the legal arguments in Hungary and Germany and the history of the Holocaust
has garnered interest from members of the Jewish community, as well as Holocaust survivors, historians,
and preservation organizations. Some groups have filed amicus curie briefs contesting, among things, the
Germany defendants’ position that the Welfenschatz sale does not rise to the level of an act of genocide.
The Germany defendants argue—and the nonbinding German claims commission agreed—that the
reduced sale of the Welfenshatz in 1935 did not result from Nazi persecution, but occurred because of
poor economic conditions after the 1929 stock market crash and the Great Depression. Amici groups
respond that economic discrimination against the Jewish population made a fair market value transaction
impossible at the time, and that this discrimination was an “integral aspect” of the Nazi’s early genocidal
efforts. Other amici contend that the defendants’ arguments in both cases amount to “Holocaust
revisionism” that undermines the historical record by suggesting property loss was not part of the Nazi’s
genocidal aims.
While Hungary and Germany implicate sensitive factual questions about the Holocaust, the Supreme
Court only granted certiorari on the two threshold legal questions concerning comity and domestic
takings. Given the discrete questions presented, the Court may be able to decide the case without delving
into factual issues about the timeline of the Holocaust or proof of the defendants’ genocidal intent.
Congressional Interest
Hungary and Germany have also attracted attention from some Members of Congress. A bipartisan group
of 18 Members of the House of Representatives wrote to the German Ambassador to the United States
expressing concern about Germany’s characterization of the Holocaust in the litigation. The Members

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state that, by denying that the Welfenshatz sale violated international law, Germany “seems to be arguing
that . . . the definition of genocide does not include what happened with respect to the full elimination of
Jews from German economic life starting in 1933 when Adolph Hitler and the Nazi regime took complete
control.”
Five signatories to the letter to the German Ambassador also jointly filed amicus curiae briefs in Hungary
and Germany. The five Members argue, among other things, that Congress enacted legislation that shows
congressional intent to allow victims of Nazi art theft to sue in U.S. courts. In the Holocaust Victims
Redress Act of 1998, for example, Congress describes Nazi art looting as a “critical element” of the
Holocaust. The 2016 Holocaust Expropriated Art Recovery Act (HEAR Act) includes a Congressional
finding that “the Nazis confiscated . . . hundreds of thousands of works of art and other property
throughout Europe as part of their genocidal campaign . . . .” The HEAR Act extended the statute of
limitations for claims for cultural property “lost” between 1933 and 1945 because of Nazi persecution.
And in the Foreign Cultural Exchange Jurisdictional Immunity Clarification Act, which clarifies limits on
when foreign sovereigns lose immunity for suits over art on exhibition in the United States, Congress
created a carve-out for property that is the subject of “Nazi-era” expropriation claims.
In addition, three Democratic Members of the House sent a letter to the U.S. Acting Solicitor General
raising issues with the United States amicus curiae brief in Germany. Citing the statutes noted above, the
Members assert that, by supporting the Germany defendants, the U.S. brief promotes arguments that are
“at odds with facts and decades of Congressional action” related to the Holocaust and are “antithetical to
American policy and values.”
Ultimately, foreign governments’ immunity from suit in U.S. courts has been a product of statute since
Congress enacted the FSIA in 1976. Congress maintains authority to amend the statute or enact new
legislation that dictates whether the FSIA displaces comity and whether sovereign immunity is available
for genocidal takings.

Author Information

Stephen P. Mulligan

Legislative Attorney

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