46 No. 76 JUSTICE Most property owned by Jews was nationalized and liquidated. The railroad even took the personal items that its “passengers” had managed to bring with them. It sold the goods and shamelessly accounted for the proceeds as their “fare” for being involuntarily shipped to their deaths or enslavement. Winston Churchill described the brutal mass deportation of Hungarian Jews for extermination in Nazi death camps as “probably the greatest and most horrible crime ever committed in the history of the world.”10 In 2010, fourteen Hungarian Holocaust survivors sued Hungary for damages and restitution. They brought a class action in the United States District Court for the District of Columbia on behalf of all similarly-situated victims. Over the ensuing fourteen years, the parties primarily litigated a single preliminary question: namely, whether Hungary could be sued in an American court under the FSIA and other principles. The trial court rendered four major written opinions, the D.C. Circuit Court of Appeals issued three lengthy decisions, and ultimately, in early 2025, the Supreme Court decided a pivotal issue. By that point, it was clear that the only claims the plaintiffs could pursue concerned the property Hungary had confiscated in violation of international law.11 The Court held that under the expropriation exception, the plaintiffs were required to trace the Hungarian treasury money used in the United States when the suit was brought, back to the proceeds of the liquidations of the plaintiffs’ property 66 years earlier. The Court ruled that the plaintiffs’ showing that the proceeds had been commingled in Hungary’s treasury was insufficient. This terminated any future litigation. The Expropriation Exception to Foreign Sovereign Immunity The expropriation exception applies “in any case” where “rights in property taken in violation of international law are in issue” if “that property or any property exchanged for such property” is (1) “present in the United States in connection with a commercial activity carried on in the United States by the foreign state” or (2) “owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States.”12 The exception thus has two elements, one substantive and the other procedural. Substantively, the exception applies when property rights have been “taken in violation of international law.” Procedurally, the exception is limited to claims where the expropriated property (or property exchanged for it) 10. Id., at 132. 11. While U.S. courts may hear claims regarding property taken in violation of international law, regrettably the FSIA provides no exception to a foreign state’s immunity when it kills or inflicts injury in violation of international law. Congress has, however, more recently permitted claims in American courts against foreign states for personal injury or death resulting from acts of terrorism. See 28 U.S.C. §§ 1605A, 1605B. 12. 28 U.S.C. § 1605(a)(3). has a connection to commercial activity in the United States. This second component, the “nexus” requirement, was the core issue before the Supreme Court. The Supreme Court Unduly Constricted the Expropriation Exception’s Required Nexus by Ignoring the Unique Qualities of Intangible Money On its surface, the issue Hungary presented in the Supreme Court appeared to be almost mundane. Between 1944 and 1945, Hungary had confiscated Jewish property, sold it, deposited the financial proceeds into its treasury, and commingled that money with the rest of the treasury. Once commingled, was the money present in the United States decades later when Hungary used its treasury in conducting commercial transactions in the U.S.? The Jewish plaintiffs showed that when they brought suit in 2010, Hungary was purchasing military equipment in the U.S., paying for it from the state’s treasury (into which Hungary had deposited the proceeds of the unlawfully taken property in the 1940s). In 2010 Hungary also paid interest to holders of its bonds in the U.S., using state treasury money. Hungary did not claim it had already paid restitution to the Jews — either from that account or from any other account or that it had segregated funds from the treasury equal to the expropriated property’s value. The Supreme Court held that these facts failed to establish the required nexus of the expropriated property, or the liquidation proceeds, to the United States. The Court concluded that the FSIA requires that the property in the U.S. (Hungary’s treasury money used to buy the military equipment and to pay bond interest) be traced back to the money received when the Jews’ property was sold. According to Justice Sotomayor, writing for the Court, commingling the money proceeds in the state’s treasury did not satisfy the nexus requirement, and accordingly Hungary remained immune to the Jewish plaintiffs’ suit.
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