Supreme Court to Hear Arguments Over Sovereign Immunity in Holocaust Lawsuit

The U.S. Supreme Court is seen in Washington on Feb. 21, 2024. Kevin Dietsch/Getty Images

The U.S. Supreme Court is scheduled to hear oral arguments on Dec. 3 over whether a group of Holocaust survivors have enough proof to sue Hungary over property seized during the Nazi’s occupation of the country.

The case, which has been ongoing for over a decade, raises questions about the level of immunity foreign countries receive from prosecution within the United States.

Under the Foreign Sovereign Immunities Act of 1976, foreign nations are generally immune with some exceptions—including the one purportedly in this case, which is whether the property involved is connected to commercial activity carried out in the United States. In other words, the exception requires some kind of commercial nexus between the property in question and activity in the United States.

Survivors brought their complaint in 2010 as a class action lawsuit seeking compensation for seizure and expropriation of their property.

Two judicial circuits have offered conflicting interpretations of the exception—each placing the burden of evidence on either the foreign country or the individuals suing.

Hungary’s case arises from the D.C. circuit, where an appeals court rejected the idea that in order for survivors to bring their claims, they had to trace the seized property to property in the United States or property possessed by the Hungarian railway that transported Jews during the Holocaust.

“Given the fungibility of money, once a foreign sovereign sells stolen property and mixes the proceeds with other funds in its possession, those proceeds ordinarily become untraceable to any specific future property or transaction,” the appeals court said.

The court also criticized the idea that a foreign country could avoid liability by commingling proceeds of expropriated property with its general accounts. “We decline to ascribe to Congress an intent to create a safe harbor for foreign sovereigns who choose to commingle rather than segregate or separately account for the proceeds from unlawful takings,” the court said.

Instead, the U.S. Court of Appeals for the D.C. Circuit held that Hungary bore the burden for proving that the FSIA’s exception didn’t apply to them.

By contrast, the U.S. Court of Appeals for the Second Circuit dismissed claims in a separate case from plaintiffs suing Germany because, the court said, they failed to “trace the proceeds from property expropriated more than a century ago to present‐day property owned by Germany in New York.”

The legal saga previously reached the Supreme Court in 2020 but was remanded or sent back to the lower court.

The Federal Republic of Germany, members of Congress, and President Joe Biden’s administration have each recently weighed in with amicus briefs submitted to the Supreme Court.

The members said that commingling was enough for the survivors to show their case fell under the FSIA commercial nexus exception.

“Unless a foreign sovereign were to carefully segregate its ill gotten gains from the rest of its expansive coffers, no sovereign defendant would ever be subject to the expropriation exception in any case involving liquidation,” the members, which included three senators and four House members, said.

Both Germany and the United States disagree with the D.C. circuit’s attempt to place the burden on Hungry. In an amicus brief, the Biden administration warned that a broader reading of FSIA’s exception “would undermine the exception’s conformity with customary international law ... risk offending the dignity of foreign states; and would invite reciprocal actions against the United States in foreign courts.”

Germany, meanwhile, warned about “a legal and economic climate that would make it more difficult for corporations to engage in international business.”