The Supreme Court stated on June 24 that it would take another look at claims by Hungarian Holocaust survivors and their heirs to property taken from them when victims were forced to board trains to concentration camps during World War II.
The dispute, which has lasted more than a decade, raises questions about how much jurisdiction U.S. courts have over foreign entities.
A federal law known as the Foreign Sovereign Immunities Act (FSIA) generally grants foreign governments immunity from prosecution in U.S. courts. But it contains an “expropriation exception” for property taken in violation of international law.
The survivors have alleged that property taken during the Nazi occupation of Hungary was transferred to the country’s treasury and co-mingled with government revenues. Because Hungary engages in commercial activity in the United States, the survivors and heirs argued that they could sue under the FSIA.
The D.C. Circuit held that courts could hear challenges such as that of the Hungarian survivors as long as the foreign government doesn’t show by a preponderance of evidence that the country’s resources do not trace back to the taken property.
Hungary told the Supreme Court the opposite was true and that the survivors bore the burden of establishing a connection between the expropriated property and the government’s funds that were used in commercial activity.
Circuit Split
The U.S. Court of Appeals for the Second Circuit held that allegations of co-mingling funds were “insufficient to trace the proceeds from property expropriated more than a century ago to present-day property owned by Germany in New York.”Hungary, which is the petitioner before the Supreme Court, argued that the decision was correct.
The Holocaust survivors, who are the respondents in the current case before the Supreme Court, noted that the case had already dragged on.
“The Court should not make them wait any longer to learn definitively whether they can invoke U.S. courts’ jurisdiction to seek recognition of and justice for the Holocaust crimes Petitioners committed against them and so many others.”
The survivors and heirs agreed that the Supreme Court should take up the case, but they favor the D.C. Circuit’s opinion over the Second Circuit’s. They argued that money is fungible and therefore untraceable. Requiring traceability would thwart most claims, they said.
Concerns About Foreign Relations
Hungary warned the Supreme Court that taking an “overly expansive” view of the expropriations clause could create tension in foreign relations and would bode poorly for the United States.“The D.C. Circuit’s approach permits plaintiffs to evade foreign sovereign immunity merely by alleging that funds were historically commingled,” Hungary stated in its petition to the court.
“Thus, in the absence of any supporting evidence, foreign nations can be hauled into domestic courts to face trial for decades-old conduct that occurred in their own jurisdictions.”
It noted that the D.C. circuit’s opinion would serve as a “beacon for plaintiffs around the world to litigate all manner of historical grievances in domestic courts, and needlessly entangle the United States in disputes in which it has no legitimate connection.”
In 2020, the Supreme Court heard another appeal in the ongoing legal dispute between Hungary and the plaintiffs.
However, several justices suggested that the situation for U.S. courts could be problematic.
“I mean, there are almost 700 district judges,“ Justice Samuel Alito said. ”You want every one of them to assess whether a particular lawsuit raises foreign relations concerns?”
Justice Neil Gorsuch suggested that the approach could cause “bedlam.”
