Inside the US Supreme Court’s Restrictive Turn in Holocaust-Related Cases – Conflict of Laws

By Livia Solaro, PhD candidate at Maastricht College, engaged on the transnational restitution of Nazi-looted artwork

On 21 February 2025, the US Supreme Courtroom issued a ruling in Republic of Hungary v. Simon,[1] a Holocaust restitution case with a prolonged procedural historical past. Delivering this unanimous resolution, Justice Sotomayor confirmed the restrictive method to circumstances involving overseas states inaugurated in 2021 by Federal Republic of Germany v. Philipp.[2] In gentle of the significance of US apply for the event of customary regulation round sovereign immunity,[3] and its affect on questions of historic justice and transnational accountability, the Simon improvement deserves  explicit consideration.

The Jurisdictional Therapy of Overseas States as an “American Anomaly”[4]

In 2010, a gaggle of Holocaust survivors filed a swimsuit earlier than the US District Courtroom for the District of Columbia in opposition to the Republic of Hungary, the Hungarian State-owned nationwide railway (Magyar Államvasutak Zrt., or MÁV) and its successor-in-interest Rail Cargo Hungaria Zrt. (RCH), in search of compensation for the Hungarian authorities’s therapy of its Jewish inhabitants throughout World Conflict II.[5] The survivors claimed that, in connection to their deportation, their properties had been expropriated and subsequently liquidated by defendants.

Because the case repeatedly moved by way of federal courts (in reality, this was not the primary time it reached the Supreme Courtroom),[6] the likelihood for the US decide to increase its adjudicative jurisdiction over the Hungarian State remained controversial. Claimants primarily based their motion on the so-called “expropriation exception” to sovereign immunity, codified by §1605(a)(3) of the 1976 Overseas Sovereign Immunities Act (FSIA).[7] This provision  excludes immunity in all circumstances revolving round rights in property taken in violation of worldwide regulation, on the situation that  that property, or any property exchanged for such property: 1) is current within the US in reference to a business exercise carried on within the US by the overseas state, or 2) is owned or operated by an company or instrumentality of the overseas state and that company or instrumentality is engaged in a business exercise within the US.

This exception represents an unicum throughout the regulation of sovereign immunity, because it permits courts to increase their jurisdiction over a state’s acta iure imperii (expropriations are certainly quintessential sovereign acts).[8] In recent times, this provision has usually been invoked in claims of restitution of Nazi-looted artwork owned by European states (see, for instance, Altmann v. Republic of Austria,[9] Toren v. Federal Republic of Germany,[10] Berg v. Kingdom of Netherlands,[11] Cassirer v. Kingdom of Spain).[12] Crucially, this exception additionally requires a business nexus between the preliminary expropriation and the US. In its Simon resolution, the US Supreme Courtroom addressed the usual that plaintiffs want to fulfill to determine this business nexus in circumstances the place the expropriated property was subsequently liquidated. The Courtroom learn a “tracing requirement” within the textual content of the supply, thus establishing a really excessive threshold.

Property Taken in Violation of Worldwide Regulation

The Courtroom had lately addressed the interpretation of §1605(a)(3 in Federal Republic of Germany v. Philipp, the place the heirs of German Jewish artwork sellers sought the restitution of a set of medieval reliquaries often known as the Guelph Treasure (Welfenschatz), In that case, the Supreme Courtroom targeted on the opening line of the expropriation exception, which requires that the rights in property at problem have been “taken in violation of worldwide regulation”. By explicitly recognizing that this language incorporates the home takings rule,[13] the Courtroom set in movement a pattern of more and more restrictive interpretations of the expropriation exception that’s nonetheless growing in the present day.

To achieve this end result, the Supreme Courtroom interpreted the expropriation exception as referring particularly to the worldwide regulation of expropriation. This slim studying of §1605(a)(3) allowed the Courtroom to claim that the home takings rule had “survived the arrival of contemporary human rights regulation”, as the 2 remained insulated from each other. Accordingly, even when the Nazi plunder have been thought of as an act of genocide, in violation of human rights regulation and the Genocide Conference,[14] it could not fall underneath §1605(a)(3), as this provision solely applies to property takings in opposition to aliens (reflecting the normal opinion that worldwide regulation is anxious solely with the relations between states). From this angle, the Philipp resolution adhered to the Worldwide Courtroom of Justice’s extremely criticized conclusion in Jurisdictional Immunities of the State (Germany v.  Italy) that immunity will not be excluded by severe violations of ius cogens.[15]

The affect of this restrictive flip has already emerged in a few circumstances adjudicated after Philipp. With the intention to circumvent the home takings rule, claimants have tried to argue that the persecutory therapy of Jewish people by a number of states through the Holocaust disadvantaged them of their nationality, rendering them both de iure or de facto stateless. Within the wake of Philipp, courts have been sceptical of this statelessness concept – though they seem to have left the door ajar for stronger arguments in its assist.[16] A latest resolution by the District Courtroom for the District of Columbia  has gone as far as to exclude the expropriation exception in circumstances involving a states’ taking of property from nationals of an enemy state in occasions of conflict.[17] The District Courtroom adopted the identical reasoning as in Philipp: if §1605(a)(3) refers back to the worldwide regulation of expropriation, not solely human rights regulation but additionally worldwide humanitarian regulation are excluded by its scope of utility. As I famous elsewhere,[18] post-Philipp court docket apply now excludes the expropriation exception within the overwhelming majority of takings by sovereign actors, no matter whether or not they focused their very own nationals, the nationals of an enemy state or stateless people.

The Industrial Nexus and the Commingling Concept

The latest Simon resolution adopts the identical restrictive method as Philipp, however shifts focus to the expropriation exception’s second requirement: the business nexus with the US. Below §1605(a)(3), the property that was taken in violation of worldwide regulation, or any property exchanged for such property (emphasis added), must have a reference to a business exercise carried by the overseas state, or certainly one of its companies or instrumentalities, within the US. Crucially, the Hungarian authorities liquidated the property allegedly expropriated from defendants. The Supreme Courtroom was requested to determine whether or not the claimants’ allegation that Hungary used the proceedings to problem bonds within the US met the business nexus requirement. Complicating issues additional, the proceeds have been absorbed into the nationwide treasury the place, through the years, they’d mingled with billions in different revenues.

The Simon query issues an vital portion of expropriation circumstances, since property is usually taken for its financial quite than intrinsic worth. Subsequently, with some particular exceptions (akin to takings of artworks or land), expropriated properties are doubtless going to be liquidated, and the proceeds are sure to be commingled with different funds. Years after the preliminary liquidation, proving the situation of the cash initially exchanged for these properties is extraordinarily difficult, if not unimaginable. In 2023, the Circuit Courtroom had certainly concluded that “[r]equiring plaintiffs whose property was liquidated to allege and show that they’ve traced funds within the overseas state’s or instrumentality’s possession to proceeds of the sale of their property would render the FSIA’s expropriation exception a nullity for just about all claims involving liquidation”.[19]

The Simon claimants thus proposed a “commingling concept”, arguing that as an alternative of tracing the preliminary proceeds, it is sufficient to present that they ultimately combined with funds later utilized in business exercise within the US. Delivering the opinion of the Courtroom, Justice Sotomayor rejected this concept, studying a selected tracing requirement into the wording of the expropriation exception. With the intention to meet this requirement, claimants can determine a US account holding proceeds from expropriated property, or allege {that a} overseas sovereign spent all funds from a commingled account in the USA. As clarified by the Justice, these are however some examples of how a claimant would possibly selected to proceed. Relatively than analyzing numerous widespread regulation tracing ideas, nevertheless, the Courtroom right here merely dominated that alleging {that a} overseas sovereign liquidated the expropriated property, commingled the proceeds with common funds, and later used some portion of these funds for business actions within the US doesn’t set up a believable business nexus. Though this ruling imposes a excessive bar for claimants in search of to invoke the expropriation exception, the Courtroom discovered this consequence much less detrimental to the FSIA’s rationale than accepting the “attenuated fiction” that commingled accounts nonetheless include funds from the unique property’s liquidation. In Simon, for instance, whereas the preliminary commingling of funds occurred within the Nineteen Forties, the swimsuit was solely introduced within the 2010s, after “a number of institutional collapses and regime adjustments”.

A Restrictive Parable

The Supreme Courtroom primarily based its Simon resolution on a textual interpretation of the expropriation exception, which identifies “that property or any property exchanged for such property”, with out offering a selected different criterion for property exchanged for cash. The Courtroom additionally regarded on the legislative historical past of the FSIA, rooted within the 1964 Banco Nacional de Cuba v. Sabbatino resolution.[20] The Sabbatino case prompted US Congress to cross the FSIA’s predecessor, the Second Hickenlooper Modification to the Overseas Help Act of 1964,  “to allow adjudication of claims the Sabbatino resolution had prevented”.[21] In Simon, the Courtroom learn its Sabbatino precedent as a part of the FSIA’s historical past, and as such related to its interpretation – particularly contemplating that Sabbatino additionally revolved round property that had been liquidated. Crucially in Sabbatino “the proceeds . . . in controversy” might be clearly traced to a New York account, aligning the case with the tracing requirement recognized in Simon.

The Simon Courtroom additionally echoed the overseas relations issues that it already mentioned in Philipp, justifying its restrictive interpretation of the FSIA on the Act’s potential to trigger worldwide friction, and set off reciprocity amongst different states’ courts. On this regard, the Philipp and Simon choices appear notably eager to do some “harm management” on the consequences of the expropriation exception, decreasing its scope from a “radical” to a “restricted” departure from the restrictive concept of overseas sovereign immunity.

This restrictive flip mirrors the trajectory of human rights litigation underneath the Alien Tort Statute (ATS).[22] Beginning with the Second Circuit’s resolution in Filártiga v. Peña-Irala,[23] the 1789 ATS was utilized by US courts to increase their jurisdiction on human rights claims introduced by aliens. In 2004 (the identical yr because the seminal Altmann resolution on the FSIA’s retroactive utility),[24] the Supreme Courtroom rejected the interpretation of the ATS as a gateway for “foreign-cubed” human rights circumstances.[25] Warning in opposition to the chance of “hostile overseas coverage penalties”, the Courtroom supplied a slim interpretation of the ATS. This conservative method has been framed as a part of the shift in attitudes that marked the passage from the Third to the Fourth Restatement of the Overseas Relations Regulation of the USA.[26] The choice to limit the attain of the ATS was in reality rooted in political issues, as testified by the strain exercised by the Bush administration to listen to the case.[27] The brand new geopolitical panorama had diminished the strategic significance of vindicating worldwide human rights regulation, and the usage of home courts to advance public rights agendas had confronted extreme criticism, with US courts being accused of appearing as judges of world historical past.[28] The Philipp and Simon interpretations of the FSIA reproduce this passage from an offensive to a defensive method throughout the regulation of overseas sovereign immunity.

Conclusion

Since Philipp, the expropriation exception has been restricted to property takings by overseas sovereigns in opposition to aliens throughout peacetime. This improvement has arguably returned the FSIA to its authentic intent: to guard the property of US residents overseas, as an expression of “America’s free enterprise system”. With Simon, this provision’s utility has been additional restricted the place the expropriated property was liquidated. This method explicitly goals at aligning US regulation with worldwide regulation. On this course of, nevertheless, the US judiciary’s controversial but proactive contribution to human rights litigation, with its potential to affect the event of customary regulation, is taking a extra conservative and isolationist stance.

[1] Republic of Hungary v. Simon, 604 U. S. ___ (2025).

[2] Federal Republic of Germany v. Philipp, 592 U. S. 169 (2021).

[3] Thomas Giegerich, ‘The Holy See, a Former Somalian Prime Minister, and a Confiscated Pissarro Portray: Latest Us Case Regulation on Overseas Sovereign Immunity’ in Anne Peters and others (eds), Immunities within the Age of International Constitutionalism (Brill | Nijhoff 2014) 52. <https://brill.com/view/ebook/edcoll/9789004251632/B9789004251632_006.xml> accessed 11 December 2024. An vital convention on the cutting-edge on the worldwide regulation of overseas sovereign immunity lately came about at Villa Vigoni (Italy), underneath the auspices of the Max Planck Institute for Comparative Public Regulation and Worldwide Regulation. The complete program of the occasion might be discovered right here: https://www.mpil.de/en/pub/information/conferences-workshops/the-future-of-remedies-against.cfm.

[4] As described by Riccardo Pavoni, ‘An American Anomaly? On the ICJ’s Selective Studying of United States Observe in Jurisdictional Immunities of the State’ (2011) 21 The Italian Yearbook of Worldwide Regulation On-line 143.

[5] For an historic contextualization, see Szabolcs Szita, ‘It Occurred Seventy Years In the past, in Hungary’ [2014] Témoigner. Entre histoire et mémoire. Revue pluridisciplinaire de la Fondation Auschwitz 146.

[6] See Republic of Hungary v. Simon, 592 U. S. 207 (2021) (per curiam) (Supreme Courtroom of the USA).

[7] The FSIA, enacted by way of Public Regulation 94-583 on October 21 on 1976, is codified in Title 28 of the U.S. Code, Chapter 97, Half IV – Jurisdictional Immunities of Overseas States.

[8] Charlene Solar and Aloysius Llamzon, ‘Acta Iure Gestionis and Acta Iure Imperii’ (Oxford Constitutions – Max Planck Encyclopedia of Comparative Constitutional Regulation [MPECCoL]) <https://oxcon.ouplaw.com/show/10.1093/law-mpeccol/law-mpeccol-e188> accessed 30 April 2025.

[9] Altmann v Republic of Austria [2001] 142 F. Supp. second 1187 (United States District Courtroom, CD California).

[10] Toren v Federal Republic of Germany 2023 WL 7103263 (United States Courtroom of Appeals, District of Columbia Circuit) (unreported).

[11] Berg v Kingdom of the Netherlands 2020 WL 2829757 (United States District Courtroom, D. South Carolina, Charleston Division) (unreported).

[12] Cassirer v Kingdom of Spain [2006] 461 F.Supp.second 1157 (United States District Courtroom, CD California).

[13] Mayer Brown, ‘“Home Takings” Rule Bars Go well with Towards Overseas Nations in U.S. Courtroom’ (Lexology, 3 February 2021) <https://www.lexology.com/library/element.aspx?g=1d4af991-a497-47be-80f2-dd78c184baa1> accessed 30 April 2025.

[14] UN Basic Meeting, Conference on the Prevention and Punishment of the Crime of Genocide, United Nations, Treaty Collection, vol. 78, p. 277, 9 December 1948, https://www.refworld.org/authorized/agreements/unga/1948/en/13495 [accessed 29 April 2025].

[15] Jurisdictional Immunities of the State (Germany v Italy: Greece intervening), Judgment,  I.C.J. Experiences 2012. For a crucial dialogue of this judgment, see Benedetto Conforti, ‘The Judgment of the Worldwide Courtroom of Justice on the Immunity of Overseas States: A Missed Alternative’ (2011) 21 The Italian Yearbook of Worldwide Regulation On-line 133.

[16] See Simon v Republic of Hungary [2023] 77 F4th 1077 (United States Courtroom of Appeals, District of Columbia Circuit). The court docket right here clarified that its resolution didn’t “foreclose the likelihood that such assist exists in sources of worldwide regulation not earlier than us on this case or primarily based on arguments not superior right here”> Ibid,  para 1098.

[17] de Csepel v Republic of Hungary 2024 WL 4345811 (United States District Courtroom, District of Columbia).

[18] Livia Solaro, ‘US Case Additional Restricts Holocaust-Associated Artwork Claims’ (The Institute of Artwork & Regulation, 11 November 2024) <https://ial.uk.com/writer/livia-solaro/> accessed 30 April 2025.

[19] Simon v Republic of Hungary (n 16) para 1118.

[20]  Banco Nacional de Cuba v. Sabbatino, 376 U. S. 398 (1964) (Supreme Courtroom of the USA).This case revolved across the expropriation of sugar by Cuba in opposition to a non-public firm in protest for the discount of the US sugar quota for this nation. After the sugar in query was delivered to a buyer in Morocco, each the Cuban state and the personal firm claimed the cost of the worth, which within the meantime had been transferred to a New York commodity dealer. The case ultimately was adjudicated in favour of the Nationwide Financial institution of Cuba, primarily based on the Act of State doctrine.

[21] As famous by the Courtroom in  Republic of Hungary v. Simon, 604 U. S. ___ (2025) (Supreme Courtroom of the USA) 15–16.

[22] 28 U.S. Code § 1350.

[23] Filartiga v Pena-Irala [1980] 630 F.second 876 (United States Courtroom of Appeals, Second Circuit).

[24]  Republic of Austria v. Altmann, 541 U. S. 677 (2004) (Supreme Courtroom of the USA).

[25]  Sosa v. Alvarez-Machain, 542 U. S. 692 (2004) (Supreme Courtroom of the USA); for a definition of ‘foreign-cubed’ claims, see Robert S Wiener, ‘Overseas Jurisdictional Algebra and Kiobel v. Royal Dutch Petroleum: Overseas Cubed And Overseas Squared Instances’ (2014) 32 North East Journal of Authorized Research 156, 157.

[26] See Thomas H Lee, ‘Customary Worldwide Regulation and U.S. Judicial Energy: From the Third to the Fourth Restatements’, SSRN Digital Journal (2020) <https://www.ssrn.com/summary=3629791> accessed 14 March 2025.

[27] Naomi Norberg, ‘The US Supreme Courtroom Affirms the Filartiga Paradigm’ (2006) 4 Journal of Worldwide Prison Justice 387, 390.

[28] Ugo Mattei, ‘A Concept of Imperial Regulation: A Research on U.S. Hegemony and the Latin Resistance’ (2003) 10 Indiana Journal of International Authorized Indiana Journal of International Authorized Research 67, 420.