Case preview: Foreign sovereign immunity, comity and the Holocaust

The Holocaust (in Hebrew Shoah, or “destruction”) comes to the Supreme Court on Monday. Republic of Hungary v. Simon and Federal Republic of Germany v. Philipp require the justices to decide whether classes of survivors can pursue claims in federal court seeking compensation from the European countries and related entities that took property from their Jewish citizens in the course of the genocide of six million Jews.

Both cases ask whether federal courts can abstain from resolving such claims on the grounds of “international comity” – the principle that courts owe due regard for international duty and convenience and must respect the legislative, executive and judicial acts of a foreign sovereign – when jurisdiction is based on the expropriations exception to the Foreign Sovereign Immunities Act. Germany presents the additional question of whether that exception establishes jurisdiction over a claim against a foreign state that expropriated property from its own nationals within its own borders. This article covers the comity question in both cases; a separate article discusses the expropriation exception in Germany.

Background

Germany v. Philipp. Germany involves the Nazi art-looting campaign and international efforts to return stolen cultural property to its owners or their descendants. The dispute involves the Welfenschatz (known in English as the Guelph Treasure), a collection of medieval religious and devotional art. It was purchased in 1929 by a consortium of German-Jewish art dealers. With the rise to power of Adolf Hitler and the Nazis in 1933 amid a worldwide depression, the consortium was unable to sell many pieces on the market. Beginning in 1934, a group of leading Nazis — including Joseph Goebbels, Hermann Goering, the mayor of Frankfurt and others — initiated efforts to purchase the collection, ultimately to present as a gift to Hitler; this was part of the broader Nazi effort to steal, coerce or otherwise obtain art from its Jewish population and from all of Europe once World War II began. The sale was completed in 1935. The briefs paint divergent pictures of the fairness, openness and coerciveness of the negotiations and deal. Germany says the final price of 4.25 million Reichsmarks – about $1.7 million in 1935 dollars – was “about halfway between the two sides’ opening positions.” The plaintiffs say the sale was coerced, with the price representing “barely a third” of the art’s true value. They also say much of the purchase price was never paid to the consortium.

Heirs of consortium members sought restitution through German governmental mediation processes, which found that the consortium was not pressured during negotiations and recommended against returning the art or providing restitution. The heirs (who are citizens of the United States) then filed suit in U.S. district court in 2015 against Germany and the Prussian Cultural Heritage Foundation, which has held the collection since after World War II. The district court denied motions to dismiss; the U.S. Court of Appeals for the District of Columbia Circuit affirmed. The Supreme Court agreed to review whether the claims against the foundation should be dismissed on the basis of international comity.

Hungary v. Simon. Hungary arises from the nation that executed the Holocaust with a “speed and ferocity” unique among European nations. More than two-thirds of the more than 800,000 Jews who lived in Hungary at the beginning of World War II were killed, with more than 430,000 rounded up and deported to death camps during the summer of 1944. Preceding the deportations and murders was a “wholesale plunder,” confiscation and expropriation of Jewish property.

Fourteen Jewish survivors of the Hungarian Holocaust filed a federal class action in 2010 against Hungary and the successor-in-interest to its state-owned railroad, seeking compensation for the property taken from them. The 14 named survivor plaintiffs were Hungarian nationals or resided in Hungary-annexed countries prior to the war; all became citizens of the United States, Canada, Israel or Australia following the war. The district court dismissed the claims against Hungary for lack of subject-matter jurisdiction and against the railroad for lack of personal jurisdiction, but the D.C. Circuit reversed. When the case was sent back to the district court, the district court again dismissed, this time relying on international-comity abstention and forum non conveniens (a doctrine under which a U.S. court declines to hear a case in favor of a more convenient and interested foreign forum). A divided panel of the D.C. Circuit reversed, and the Supreme Court agreed to review the comity issue.

Jurisdiction in both cases was based on the FSIA. While foreign states (including wholly owned entities of foreign states) are immune from jurisdiction in federal court, a series of exceptions grant jurisdiction, including for claims asserting “rights in property taken in violation of international law,” known as the “expropriation exception.”

Arguments of Germany and Hungary

A court abstains from hearing a case when it has statutory jurisdiction but declines to exercise it based on policy concerns. Hungary argues that the source of jurisdiction does not affect the availability of abstention; courts may abstain on international-comity grounds in actions based on the FSIA to the same extent they can abstain under any jurisdiction-conferring statute. Nothing in the text of the FSIA shows that Congress removed comity as a basis for abstention, especially because it left in place analogous comity-based doctrines as a basis for a court to decline to hear an action over which it otherwise has jurisdiction. These include forum non conveniens and the presumption against extra-territorial application of federal law.

Germany adds that, in holding that abstention was unavailable under the FSIA, the D.C. Circuit conflated international comity and sovereign immunity. While related, they serve different purposes and address different concerns. Immunity applies only to sovereigns to protect independent sovereign entities that should not have to defend themselves in the courts of another sovereign. Abstention turns not on the identity of the parties, but on the nature of the suit, such as the subject of the action being of great concern to a foreign sovereign.

Hungary and Germany both point to a provision of the FSIA that states that, when a foreign state lacks sovereign immunity, it “shall be liable in the same manner and to the same extent as a private individual under like circumstances.” Because private litigants can obtain dismissals based on international comity in cases implicating foreign relations, states that have lost sovereign immunity must be able to obtain dismissal on the same comity grounds, the nations argue.

In determining whether comity shows that litigation is more appropriate in a foreign tribunal, courts balance the relative strength of U.S. and foreign interests and the adequacy of the alternative forum. Hungary argues that comity considerations “are of surpassing importance, and they point inexorably to one conclusion: This case does not belong in a U.S. court.” It offers the following reasons:

• Hungary’s interests predominate because the relevant conduct occurred in Hungary against people who were Hungarian nationals at the time. Hungary’s responsibility in the Holocaust and attempt to compensate its Jewish victims is of “profound historical and political importance” to the nation, implicating budgetary, taxation and policy priorities that rest within Hungary’s sovereign power.
• The United States has little or no interest in hosting this action or in applying U.S. law to regulate conduct that occurred more than 75 years ago within Hungary’s sovereign borders. The United States generally has not supported litigation to resolve Holocaust-era issues; instead, it has favored dialogue and negotiation.
• Hungary provides an adequate forum to address these compensation claims.

Germany identifies similar reasons that comity favors abstention:

• The case will determine ownership of historical German artifacts, created centuries ago, occupying a unique position in German history and culture. The collection has been on display in German state museums for more than 70 years.
• The claims implicate Germany’s efforts to address the “most reprehensible period of its history and to provide redress to victims of that time.” These efforts include locating and returning Nazi-looted art.
• Remedies were available in Germany through civil claims for restitution.
• The United States has limited factual ties to the dispute. Some consortium members or their heirs moved to the United States years after the 1935 sale, and the foundation engages in minimal commercial activities in the U.S. The United States encourages foreign states to implement procedures for addressing looted-art claims and providing restitution; its foreign-policy interests favor allowing those proceedings to work and respecting their outcomes.

Arguments of the United States

The United States appears as amicus curiae in support of both countries and was granted argument time in both cases. It agrees that international-comity abstention is available in FSIA cases and that the D.C. Circuit erred in concluding that the FSIA leaves “no room” for discretionary comity abstention. The U.S. takes no position on whether abstention is warranted in Hungary. It argues in Germany that, if the court finds that there is jurisdiction under the FSIA, the case should be send back to the district court for that court to consider comity factors, including the fact that the German mediation process rejected the heirs’ claims.

The United States identifies several serious harms to foreign-relations interests if international-comity abstention is categorically unavailable in FSIA cases. First, foreign sovereigns will be upset if, having lost immunity under FSIA, they lack resort to comity abstention available to similarly situated private parties. Second, the United States seeks to persuade foreign partners to establish redress and compensation mechanisms for human-rights violations; those efforts would be undermined if U.S. courts were powerless to abstain in deference to the very compensation schemes the U.S. had encouraged those sovereigns to establish. Third, abstention allows courts to recognize when a lawsuit implicates foreign-policy concerns and to weigh whether adjudication in a foreign forum mitigates those concerns.

Arguments of the survivors and their heirs

Both sets of plaintiffs argue that Congress codified pre-existing principles of international comity in enacting the FSIA in 1976, granting or withholding immunity as principles of comity dictated. This leaves no standalone comity doctrine as a basis for not hearing a case. As the Hungary plaintiffs sum it up:

When the FSIA provides immunity to a foreign sovereign, it is because Congress determined that principles of international comity called for immunity in those circumstances. When the Act provides jurisdiction over a foreign sovereign, it is because Congress determined that international comity does not call for immunity in those circumstances. Congress left no room for application of a discretionary and atextual doctrine of international-comity-based abstention when the FSIA provides jurisdiction.

The Germany plaintiffs argue that the FSIA solves the puzzle of comity. Comity, grounded in respect of one nation for another, is “uncertain”; the FSIA is Congress’ response to that uncertainty through clear statutory rules for when comity extends to a foreign sovereign. When those clear statutory rules do not warrant immunity, comity has been exhausted.

Allowing a court to dismiss based on international comity when the FSIA grants jurisdiction enables what the Hungary plaintiffs call an “end-run around the FSIA’s careful and comprehensive scheme.” It conflicts with the FSIA’s purposes of standardizing sovereign-immunity determinations and ensuring that courts apply proper standards in determining whether immunity applies. Abstention would allow courts to replace clear text with vague, standardless judicial assessments of international comity — a return to the pre-FSIA regime that Congress sought to displace in 1976.

The Germany plaintiffs go further, arguing that these comity arguments — based on a balancing of interests and conveniences such as where the events occurred — are forum non conveniens arguments by another name. Any standalone international-comity abstention is “unusual, unwieldy and rarely appropriate even in the private context,” and it should not be imported into the context of litigation against foreign sovereigns.

Both sets of plaintiffs emphasize courts’ “virtually unflagging obligation” to exercise jurisdiction granted to them, abstaining only in the “narrowest of circumstances,” none of which exist in this case. No parallel litigation is pending or completed in Hungary or Germany, ordinarily a precursor to adjudicative abstention. The Hungary plaintiffs primarily seek monetary damages, while abstention is generally available in equitable or other discretionary actions.

The Hungary plaintiffs further emphasize the control the United States can, but has chosen not to, wield over foreign-sovereign cases such as this one. When a sovereign loses immunity and is subject to FSIA jurisdiction, the United States can settle claims through state-to-state agreements. But the United States has not settled this category of Holocaust-era claims. Nor has the United States cooperated with Hungary to establish fair and effective mechanisms for resolving these claims. Alternatively, the plaintiffs argue that any international-comity abstention should be allowed only in cases in which the executive branch seeks dismissal based on good-faith assertions of specific foreign-policy concerns particular to the case. The executive has not done so in this case, expressly declining to argue whether abstention is appropriate.

The Hungary plaintiffs continue that abstention, even if it is within the court’s discretion, is not appropriate in this case. The United States’ asserted foreign-policy interest in the moral imperative of providing justice and compensation to survivors weighs against abstention, because Hungary has failed to establish a mechanism for resolving such claims. Hungary’s interest in resolving cases in its own courts is outweighed by the survivors’ interests in obtaining real relief without having to return to the scene of Hungary’s crimes. And Hungary’s alternative remedies, the plaintiffs argue, are inadequate.

The Germany plaintiffs insist that the remand suggested by the United States would be pointless. The lower courts considered and rejected the argument that the claims should be dismissed because they were rejected in the German mediation process. Moreover, they argue, the United States has stronger interests in providing a forum for the case than does Germany. The United States welcomed Germany’s victims, including consortium members and their families, to start life over. It enacted numerous pieces of legislation to “unscramble the chaos” of German art looting; Nazi art theft was discussed when Congress enacted FSIA. Moreover, German restitution claims have become untimely, meaning a German forum is unavailable.

[Disclosure: Goldstein & Russell, P.C., whose attorneys contribute to SCOTUSblog in various capacities, is among counsel for Rosalie Simon and the other plaintiffs in Hungary v. Simon. The author of this article is not affiliated with the firm.]