Supreme Court Rules in Foreign Sovereign Immunity Case
The Court holds that commingling funds, “without more, cannot satisfy the commercial nexus requirement of the FSIA’s expropriation exception.”
Published by The Lawfare Institute
in Cooperation With
On Feb. 21, in a unanimous decision, the Supreme Court held that historical commingling of assets does not suffice to “establish that proceeds of seized property have a commercial nexus with the United States under the expropriation exception to the Foreign Sovereign Immunities Act” (FSIA).
According to the Court, FSIA provides foreign states with “presumptive immunity” from suit in United States courts, barring certain exceptions. The case, Republic of Hungary et al. v. Simon et al., concerned the scope of FSIA’s expropriation exception, which “permits claims when ‘rights in property taken in violation of international law are in issue’ and either the property itself or any property ‘exchanged for’ the expropriated property has a commercial nexus to the United States.”
In Republic of Hungary et al. v. Simon et al., Jewish survivors of the Hungarian Holocaust and their family members sued Hungary and its national railway (MÁV) for damages related to property allegedly seized from them during World War II. The survivors and their families, according to the decision, alleged that Hungary and MÁV “liquidated the expropriated property, commingled the proceeds with other government funds, and later used funds from those commingled accounts in connection with commercial activities in the United States.”
Justice Sonia Sotomayor, writing for the Court, asserted that the allegation of commingling funds, “without more, cannot satisfy the commercial nexus requirement of the FSIA’s expropriation exception.” The Court vacated the previous judgment of the Court of Appeals for the D.C. Circuit and remanded the case for “further proceedings consistent with this opinion.”
Sotomayor does note, however, that the Court’s decision “does not categorically reject claims premised on a commingling theory” but does hold that “commingling theory cannot satisfy [the FSIA’s expropriation exception’s] commercial nexus on its own.” The Court acknowledges that it will be more difficult for plaintiffs to satisfy this commercial nexus element “when a foreign sovereign expropriates property in violation of international law and liquidates it if they cannot rely on a commingling theory alone.”
Read the Court’s decision here or below:
