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Article United States: Appeals Court Holds Czechoslovakian Nationals Can Bring Suit under Foreign Sovereign Immunities Act

On August 8, 2023, the U.S. Court of Appeals for the District of Columbia Circuit largely affirmed lower court decisions that Czechoslovakian survivors of the Hungarian Holocaust during World War II could bring a lawsuit under the Foreign Sovereign Immunities Act (FSIA) against the Hungarian government for illegal confiscation of property during World War II. (Simon v. Republic of Hungary, No. 22-7010 (D.C. Cir. 2023) (Decision).)

This decision consolidates two cases, Simon (the namesake of the consolidated case) and Heller v. Republic of Hungary. In Simon, most of the plaintiffs claim Czechoslovakian citizenship at the time of the underlying seizure of property. In Heller, the plaintiffs claim they were stateless at the time of the seizure of property. In the decision at hand, the Circuit Court determined that the plaintiffs in Simon could bring their suit, though several must amend their initial complaints to assert Czechoslovakian citizenship. The court also determined that the plaintiffs claiming statelessness in Heller did not satisfy the FSIA requirements.

While the decision addressed several legal theories, this article focuses on the Circuit Court’s holdings regarding the plaintiffs’ claims of citizenship at the time the property was confiscated. (Decision at 3.) The FSIA is a largely jurisdictional statute that allows lawsuits against foreign states to be brought in U.S. courts. (Decision at 8.) Generally, foreign governments are immune from lawsuits filed against them in the U.S., but the FSIA allows for certain exceptions, giving rise to jurisdiction in U.S. federal courts. The plaintiffs in this case invoke the expropriation exception: (1) the claim must involve “rights in property taken in violation of international law,” and (2) there must be an adequate connection between the defendant and both the expropriated property and some form of commercial activity in the United States. (Decision at 8–9.) In 2021, the Supreme Court held, in Federal Republic of Germany et al. v. Philipp et al., that “a country’s alleged taking of property from its own nationals generally falls outside the scope of [the FSIA’s] expropriation exception.” (Decision at 3.) Thus, the issue of the plaintiffs’ citizenship is critical to whether Hungary is subject to the U.S. suit.

Facts of the Case

The opinion delves into the history of Hungary from the post-World War I breakup of the Austro-Hungarian Empire through its actions during World War II, and the Hungarian government’s involvement in the Holocaust during the final days of World War II. Important to the analysis (both historically and for the outcome of this case) are the post-World War I treaties that divided the Austro-Hungarian Empire into different countries, including Czechoslovakia and Hungary. First, the Treaty of Trianon required post-imperial Hungary to recognize Czechoslovakia as an independent state and established rights of citizenship to Czechoslovakian nationals living in Hungary. Second, the Treaty of St. Germain required the newly formed Czechoslovakia to extend Czechoslovakian citizenship to Hungarian nationals already residing within the new borders. (Decision at 6.)

On the eve of World War II, Hungary annexed parts of Czechoslovakia, but it did not offer citizenship to Jews living in the area. (Decision at 7.) As it became clear that the Axis powers were losing the war in Europe, Hungary confiscated the property of all the Jews and, in what the justices called a “genocidal campaign,” subsequently deported them to the Auschwitz concentration and extermination camp. (Decision at 7.) After the war was over, the 1947 Treaty of Peace with Hungary returned the annexed land to Czechoslovakia. (Decision at 8.)

Analysis and Holding

The primary question before the Circuit Court was whether the plaintiffs’ claims to Czechoslovakian citizenship (or statelessness) allowed the lawsuit to continue under the FSIA. The court divided the two categories of plaintiffs into “the Czechoslovakian Territory Survivors,” who had claimed Czechoslovakian citizenship, and “the Trianon Survivors,” who had claimed statelessness. (Decision at 13–14, 24.) The court first affirmed the dismissal of the Trianon Survivors’ claim on the grounds that statelessness did not trigger the expropriation clause of the FSIA because it did not amount to a taking of property “in violation of international law” as the statute required. (Decision at 15.) The court relied on various sources, including the Restatement of Foreign Relations Law in effect when the FSIA was passed. Of particular importance was section 175 of the Restatement, which stated there was no remedy under international law for this kind of takings for a stateless person, unless an explicit law or agreement existed. (Decision at 21–22.)

Next, the court focused on the Czechoslovakian Survivors. The defendants argued that the plaintiffs’ suits were barred under the theory of judicial estoppel, which means that a party cannot take a new position in a subsequent lawsuit inconsistent with their first position. In this case, the plaintiffs in prior litigation in this series of cases had argued they were Hungarian citizens. (Decision at 26.) Application of judicial estoppel requires satisfaction of a three-part test to determine whether the positions are indeed inconsistent, whether the inconsistent position misled the court, and whether the inconsistency was unfair. (Decision at 26–27.) The three parts are weighed equitably to determine if the doctrine should be invoked. (Decision at 27.) The Circuit Court agreed with the lower court that judicial estoppel did not apply because the underlying argument related to the inconsistency was not at issue in the lower court’s decision; instead, the same decision would have been reached regardless. (Decision at 27–29.) This initial holding was a threshold matter that set up the analysis of the treaty issues.

The court next reviewed the plaintiffs’ citizenship claims in the context of international law. The court explained that the treaties breaking up the Austrian-Hungary Empire after World War I were the controlling law in this case. (Decision at 38.) Each of these treaties provided different provisions establishing citizenship in Czechoslovakia. Article 6 of The Treaty of St. Germain states that all persons born in Czechoslovakia who are not nationals of another country are Czechoslovakian nationals. (Decision at 39–40.) Article 61 of the Trianon Treaty also established similar citizenship rights. (Decision at 40–41.) The court noted here that the St. Germain treaty was not addressed by the district court, but that the appellate court had discretion to rely on both treaties for its decision on the basis of judicial discretion case law. (Decision at 42–43.)

The court then addressed the “treaty exception” of the FSIA, which states that in any conflict between the FSIA and a treaty, the treaty overrides the statute. (Decision at 50–51.) In this case, the 1947 peace treaty with Hungary, which in part defined actions the Hungarian government had to take after World War II to ensure that Czechoslovakian interests were protected, provides avenues for restoration of property under articles 26 and 27. The court held that those avenues for restoration are not exclusive, and other methods are available, such as a suit through the FSIA. (Decision at 54–55.) Of note, the court explained that other World War II peace treaties contained exclusivity provisions that would have satisfied the treaty exception, but in this case, the absence of any waiver of exclusivity was clear, and determined to be intentional. (Decision at 53–54.)

Conclusion

This case addressed a significant number of issues arising out of the FSIA and its interaction with international law. This decision affirmed the citizenship issue, allowing the FSIA claim to move forward, but the court also remanded the case to the district court on the basis of the FSIA’s commercial-nexus requirement, which is not summarized in this article. The court explained at the end of the decision that “[t]he atrocities committed by the Hungarian government during the Holocaust are unspeakable. And there is no denying that the survivors of Hungary’s genocidal campaign deserve justice.” (Decision at 73.) At the same time, the court explained that the power of U.S. courts is limited and, in many cases, inadequate to remedy past harms as grave as these.

Louis Myers, Law Library of Congress
August 24, 2023

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Chicago citation style:

Myers, Louis. United States: Appeals Court Holds Czechoslovakian Nationals Can Bring Suit under Foreign Sovereign Immunities Act. 2023. Web Page. https://www.loc.gov/item/global-legal-monitor/2023-08-23/united-states-appeals-court-holds-czechoslovakian-nationals-can-bring-suit-under-foreign-sovereign-immunities-act/.

APA citation style:

Myers, L. (2023) United States: Appeals Court Holds Czechoslovakian Nationals Can Bring Suit under Foreign Sovereign Immunities Act. [Web Page] Retrieved from the Library of Congress, https://www.loc.gov/item/global-legal-monitor/2023-08-23/united-states-appeals-court-holds-czechoslovakian-nationals-can-bring-suit-under-foreign-sovereign-immunities-act/.

MLA citation style:

Myers, Louis. United States: Appeals Court Holds Czechoslovakian Nationals Can Bring Suit under Foreign Sovereign Immunities Act. 2023. Web Page. Retrieved from the Library of Congress, <www.loc.gov/item/global-legal-monitor/2023-08-23/united-states-appeals-court-holds-czechoslovakian-nationals-can-bring-suit-under-foreign-sovereign-immunities-act/>.