Supreme Court wrestles with Hungary’s effort to end Holocaust survivor lawsuit

The Supreme Court on Tuesday probed the international consequences of allowing a group of Holocaust survivors and their heirs to leverage U.S. courts to seek compensation from Hungary for confiscating their property.

For 14 years, the parties have battled over whether the survivors can overcome Hungary’s presumptive legal immunity as a foreign sovereign and haul the country into American courts under an exception known as an “expropriation” of property.

That long-running legal dispute has reached the high court a second time as Hungary pushes back that the exception doesn't apply.

At issue now is whether the survivors’ lawsuit can move forward under their “comingling theory,” which states the survivors are entitled to funds from the Hungarian treasury decades after the government and national railway confiscated their assets and liquidated them. They argue the proceeds were blended in general government accounts and are now in the United States in connection with Hungary’s issuance of bonds and interest payments.

Joshua Glasgow, who represented Hungary, asked the court to reject “commingling without more.”

He told the justices to imagine a European capital declaring authority to adjudicate claims for the internment of Japanese Americans during World War II under the survivors’ theory, suggesting it could lead to a multibillion-dollar judgment against the federal government.

“The United States would be outraged and affronted by such a decision,” Glasgow said.

Shay Dvoretzky, the survivors’ attorney, stressed the theory still leaves “significant guardrails” as several justices questioned how it could significantly broaden foreign nations’ liability.

“Once you say commingling counts, well, then everything's pretty much fair game,” cautioned Chief Justice John Roberts.

Justice Brett Kavanaugh noted the expropriation exception — which involves cases that are allowed to move forward under federal law if they involve property taken in violation of international law — is unique and doesn’t exist in any other country.

“One of the important things, I think, with making sure we don't read it too expansively is friction with other countries and, if other countries adopted a similar expropriation and commingling theory, the effects it would have on the United States,” Kavanaugh said.

Justice Elena Kagan, however, raised concerns that a narrower interpretation would give “precious little meaning” to the exception Congress explicitly wrote into federal law.
“Doesn't this provide a roadmap to any country that wants to expropriate property? In other words, just sell the property, put it into your national treasury, insulate yourself from all claims for all time,” Kagan said.

The Hungarian Holocaust led to the deaths of more than 500,000 Jews as the government in 1944 raced to carry out mass extermination with Nazi Germany nearing defeat in World War II. More than a half-century later, a group of Hungarian Holocaust survivors and their heirs sued Hungary and its national railway in 2010, seeking compensation for property the government stole from them.

Foreign nations are presumptively immune from being hauled into American courts. The Foreign Sovereign Immunities Act provides an exception for suits over the expropriation of property taken in violation of international law.

To apply, the confiscated assets or “any property exchanged” for them must either be present in the United States in connection with the foreign nation’s commercial activity, or it must be owned by an instrumentality of the foreign nation that is “engaged in commercial activity in the United States.”

The Justice Department as well as the German government backed Hungary before the court. The survivors, meanwhile, were backed by a group of seven lawmakers, including Sen. Ben Cardin (D-Md.) and Sen. James E. Risch (R-Idaho), the chair and ranking member of the Senate Foreign Relations Committee, respectively.

A decision in the case, Republic of Hungary v. Simon, is expected by summer.

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