Supreme Court sides with Germany: Immunity against Lawsuit for Taking Domestic Property

by Dennis Crouch

The Supreme Court has issued a unanimous decision in the stolen-art case of Federal Republic of Germany v. Philipp.

The claimants in the case are heirs to German Jewish art dealers who purchased a set of medieval Christian relics known as the Guelph Treasure (Welfenschatz) from the Duke of Brunswick in 1929 (although by then the Duke had already abdicated).

As the Nazi government rose to power, the dealers were coerced to sell the collection back to the State (Prussia), allegedly for for 1/3 of their value.  After WWII, the US took possession of the collection but then later handed the collection back to Germany and the art is on display in a Berlin museum.

The heirs perused claims in Germany, but the special German Advisory Commission for the Return of Cultural Property Seized as a Result of Nazi Persecution, Especially Jewish Property found that the sale had not been taken under duress.

Later, the heirs sued Germany in the US, asserting a set of common law replevin, conversion, declaration of ownership, unjust enrichment, fraud, breach of good faith, etc.

Normally a Sovereign Nation such as Germany is granted sovereign immunity in U.S. Federal Court. Although the core of Sovereign Immunity stems from international tradition, US also has a statute on point — the Foreign Sovereign Immunities Act (“FSIA”).  FSIA has a number of express exclusions from the general rule of immunity.  The salient exception here allows US courts to hear lawsuits against foreign states where the claim is for “property taken in violation of international law.”

The D.C. Circuit court found no immunity-holding that the plaintiffs had properly alleged that the coerced sale was “an act of genocide because the confiscation of property was one of the conditions the Third Reich inflicted on the Jewish population to bring about their destruction.”

In its unanimous opinion, the Supreme Court has vacated and remanded — holding that the FSIA exceptions do not extend to protect human rights. And, in particular, the law does not open the door to allowing US courts decide whether a particular country violated the human rights of its own citizens.  Further, when a country unlawfully takes the property of its citizens, that taking is a purely domestic matter that does not implicate international law.

We need not decide whether the sale of the consortium’s property was an act of genocide, because the expropriation exception is best read as referencing the international law of expropriation rather than of human rights. We do not look to the law of genocide to determine if we have jurisdiction over the heirs’ common law property claims. We look to the law of property.

And in 1976 [the year FSIA was passed], the state of that body of law was clear: A “taking of property” could be “wrongful under international law” only where a state deprived “an alien” of property.

Slip Op.  This outcome follows the international norm that gives countries a free-pass under international law for violations of the human rights of its citizens.

As the International Court of Justice recently ruled when considering claims brought by descendants of citizens of Nazi-occupied countries, “a State is not deprived of immunity by reason of the fact that it is accused of serious violations of international human rights law.”

Slip Op. quoting Jurisdictional Immunities of the State (Germany v.
Italy), 2012 I. C. J. 99, 139 (Judgt. of Feb. 3).

On remand, there will likely be more arguments. In particular, the plaintiffs will likely argue that their ancestors were not German nationals at the time of the sale – thus prompting an international taking.  Germany will also respond with a comity argument — even if it lacks sovereign immunity, the court should use its discretion to not hear the case.

4 thoughts on “Supreme Court sides with Germany: Immunity against Lawsuit for Taking Domestic Property

  1. 2

    Found this passage interesting given our current political climate:

    As a Nation, we would be surprised—and might even initiate reciprocal action—if a court in Germany adjudicated claims by Americans that they were entitled to hundreds of millions of dollars because of human rights violations committed by the United States Government years ago. There is no reason to anticipate that Germany’s reaction would be any different were American courts to exercise the jurisdiction claimed in this case.

    1. 2.1

      … China and FRAND…?

      (Attempting a patent parallel)

  2. 1

    The same reasoning was applied to Republic of Hungary v. Simon today as well, where the Hungarian state-owned railroad was sued by Holocaust survivors for property taken during their deportation to concentration camps.

    I think SCOTUS got this one right, taking of a foreign national’s property in their foreign state should not be decided by a US court. I was a little surprised that they did not decide on the comity issue, it seemed like that was one of Germany’s and Hungary’s main arguments.

    1. 1.1

      I think the reason that comity would not work here is that you have a statute passed by Congress that regulates when foreign sovereigns can or cannot be sued in U.S. courts. If the statutory analysis came out the other way, that means that Congress wants to subject the foreign sovereign to suit in the U.S. There would be no room for “comity” to override the express will of Congress.

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