Sovereign, Stateless, and Survivors: SCOTUS, FSIA, and The Expropriation Exception

While Italian fascism and World War II-era totalitarian governments were oppressive, it was famously noted in Italy how "at least Mussolini made the trains run on time." In reality, this did not occur. Italian railways were upheld by railways to force workers to continue. The trains did not grow more punctual, however, this does not discount the use of trains in upholding and carrying out the whims of fascist states. [1] Chief among these was Hungary, a state controlled by Nazi Germany and whose railways were used to accelerate the goals of Hitler. [2] During World War II, the Hungarian state undoubtedly helped to propagate the goals of the Holocaust and physically manifest it under German Occupation. As the Holocaust and survivors grow older, there have been increased calls for justice and organizations striving to repatriate those who suffered at the hands of genocide. According to the Associated Press, roughly 245,000 Holocaust survivors are still alive today and seeking justice. As part of this, the Republic of Hungary v. Simon case has been brought about.

This case expands upon the details of the 2021 ruling of the Federal Republic of Germany v. Philipp and the 1978 Foreign Sovereign Immunities Act. The goal of the Foreign Sovereign Immunities Act or FSIA, according to the Department of Justice, was to “limit the Executive branch in civil suits against foreign States, including their agencies and instrumentalities”. [4] As part of this goal, FSIA has been taken on a case-by-case basis as a set of common law is developing over how courts should deal with international bodies. In recent years, cases such as these have frequently dealt with situations like the Holocaust and seeking property seized from oppressed groups by the Central European powers such as Austria, Hungary, and Germany during the war. Just prior to Justice Roberts joining the Court, SCOTUS dealt with a similar issue regarding their power within the law. In Republic of Austria v. Altmann, Maria Altmann learned that Austria had six Gustav Klimt paintings stolen from her uncle during the Holocaust causing her to sue under FSIA, which allows for suits based on "rights to property taken in violation of international law”. [5] The issue was that Austria did this in the 1940s, while the act itself was passed in the mid-1970s. Yet, SCOTUS decided that the act applies to events that took place earlier to the passage of FSIA. Justice Stephen Breyer, in concurrence with Justice Stevens and Scalia, wrote that “the legal concept of sovereign immunity, as traditionally applied, is about a defendant’s status at the time of suit, not about a defendant’s conduct before the suit”. [6] For the case today, it is essential that FSIA can prosecute events before 1976, a precedent upheld by SCOTUS today under the Roberts Court. 

In 2021, the Supreme Court expanded FSIA in Federal Republic of Germany v. Philip. Federal Republic dealt with the “expropriation exception” of the Foreign Sovereign Immunities Act, which states that “any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state”. [7] Philip argued that the taking of property within a genocidal period was a violation of international law. Notably, Germany contended that international comity or goodwill between nations was being violated by the U.S. by deciding to hear this case. In the end, the Supreme Court ruled with Germany arguing that this “refers to violations of the international law of expropriation and thereby incorporates the domestic takings rule.” [8]. The domestic takings rule holds “that only governmental takings of foreigners’ property could satisfy the exception and thereby abrogate the foreign state’s sovereign immunity in U.S. courts” [9]. A year later, the Supreme Court ruling of Cassirer v. Thyssen-Bornemisza Collection Foundation similarly established the Roberts Court general interpretation of the act. In this case, David Cassiser sued the Thyssen-Bornemisza go to a museum in Spain to retrieve a painting (Camille Pissarro’s Rue Saint-Honoré in the Afternoon. Effect of Rain), which was taken from his family by the Nazis. The Kingdom of Spain argued that under FSIA, they should be following federal common choice-of-law while Cassiser argued that California law should be used. In a unanimous and majority opinion by Justice Elena Kagan, “only the same choice-of-law rule can guarantee use of the same substantive law — and thus … guarantee the same liability.” [10] Although a choice of law is established, the Supreme Court more broadly has tried to distance itself from international affairs as they may dictate more than just U.S. law. But with Republic of Hungary v. Simon, how is property between nations to be viewed when dealing with the stateless?

For Hungary, much of this comes down to the authority that a jurisdiction holds. Hungary highlights Altmann as part of this reasoning, since “the Executive Branch followed a policy of requesting immunity in all actions against friendly sovereigns.” [11] It comes back to an idea of restrictive theory, which alleges that “a state is immune from the jurisdiction of the courts of another state, except concerning claims arising out of activities of the kind that may be carried on by private persons,” according to the Department of State’s explanation of FISA. [12] With private citizenship, it overrides the precedent set in Federal Republic. Holocaust survivors contend that since the Hungarian Railway system MÁV Zrt. (Magyar Államvasutak Zártkörűen Működő Részvénytársaság) was used to facilitate the Holocaust and the seizing of property from them. However, the ruling in Federal Republic does not apply to them since they were stateless or Czechoslovakian nationals during the war. Without an international bond to a state, Federal Republic cannot apply. This is the central question of the case, “Whether historical commingling of assets suffices to establish that proceeds of seized property have a commercial nexus with the United States under the expropriation exception to the Foreign Sovereign Immunities Act”. [13] The Supreme Court was asked to grant a writ of certiorari, since the D.C. Courts and Second Circuit were not in agreement on whether commingling was warranted. The U.S. government would also not share any opinion on the meaning that the Courts were the only source to find an answer.  

Two other questions are raised by the case, the first is “whether a plaintiff must make out a valid claim that an exception to the FSIA applies at the pleading stage, rather than merely raising a plausible inference”. This would decide whether these claims must be made earlier in the process and if exceptions to FSIA could be made as the case continued or if the burden of proof was reliant upon the opening. Moreso, Republic of Hungary v. Simon also will determine whether the “burden of producing evidence to affirmatively disprove that the proceeds of property taken in violation of international law have a commercial nexus with the United States under the expropriation exception to the FSIA” lies on the sovereign defendant. [14] These will determine the extent to which the FSIA and the clause will be adapted for non-state actors.

In these cases, it has been rare for SCOTUS to be decidedly split. Federal Republic was a unanimous decision, Altmann was 6-3, and Cassirer was similarly unanimous. The only person still on the court who dissented in Altmann is Justice Clarence Thomas, as both Justice Souter and Kennedy have retired. However, this case is not just about international law. It defines who is dealt compensation when someone is not a citizen. The Supreme Court is likely to rule as a collective and not on partisan lines from history, as it cannot be assured which side they will vote for. For what it is worth, advocacy groups such as the 1939 Society and an amicus brief have been presented in favor of Simon and other Holocaust survivors.[15] The case will begin oral arguments in December.

Sources:

1. Edward Gibbin, Mussolini, Railways & Myth, Vol. 35 Part 10, Journal of the Railway & Canal Historical Society, 805-806 (2007)
2. Dᴇʙᴏʀᴀʜ s. Cᴏʀɴᴇʟɪᴜs, Hᴜɴɢᴀʀʏ ɪɴ Wᴏʀʟᴅ Wᴀʀ II: Cᴀᴜɢʜᴛ ɪɴ ᴛʜᴇ Cᴀᴜʟᴅʀᴏɴ 350-353 (2011)
3. Kirsten Grieshaber, Almost 80 years after the Holocaust, 245,000 Jewish survivors are still alive, ASSOCIATED PRESS 2024
4. Foreign Sovereign Immunities Act, 28 U.S. Code § 1605 (1976) 
5. Republic of Austria v. Altmann, 541 U.S. 677 (2004)
6. Id. 
7. Foreign Sovereign Immunities Act, 28 U.S. Code § 1605 (1976) 
8. Federal Republic of Germany v. Philipp, 592 U.S.___ (2021)
9. Foreign Sovereign Immunities Act, U.S. Department of State (2023)
10. Cassirer v. Thyssen-Bornemisza Collection Foundation, 596 U.S. 107 (2022)
11. Supra, see [5]
12. Supra, see [9]
13. Republic of Hungary v. Simon 23-867 (2024)
14. Id. 
15. ScotusBlog, Republic of Hungary v. Simon, 2024, https://www.scotusblog.com/case-files/cases/republic-of-hungary-v-simon-2/