INTERNATIONAL LAW - Expropriation Exception Allows Jewish Family to Bring Action to Recover Ari Stolen During the Holocaust - De Csepel v. Republic of Hung.

Author:Perrino, Nicholas
 
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INTERNATIONAL LAW--Expropriation Exception Allows Jewish Family to Bring Action to Recover Ari Stolen During the Holocaust--De Csepel v. Republic of Hung., 859 F.3d 1094 (D.C. Cir. 2017).

The Foreign Sovereign Immunities Act (FSIA) protects a foreign state from the jurisdiction of the state and federal courts of the United States; however, some exceptions do exist. (1) The FSIA expropriation exception provides that a foreign state will not be immune from jurisdiction where a plaintiffs "rights in property were taken in violation of international law are in issue" and a commercial relationship exists between the United States and the foreign state. (2) In De Csepel v. Republic of Hung., (3) the Court considered whether the defendant's actions fit within the requirements of the FSIA expropriation exception. (4) The Court held that the family's claims satisfied the expropriation exception because the art stolen from the family during the Holocaust violated international law and that a commercial relationship between the United States and the foreign state defendant exists. (5)

Prior to World War II, Baron Mor Lipot Herzog, a "passionate Jewish art collector," amassed an art collection (Collection) that included over two thousand sculptures, various artworks, and, most notably, many paintings. (6) Later, when World War II consumed Europe, Hungary became a member of the Axis Powers. (7) As a result, Jewish Hungarians were subject to a variety of anti-Jewish laws; particularly, one such law required Jewish people to turn over all of their "art objects," which were then seized by the Hungarian government. (8) As anti Jewish sentiment progressed in Hungary, the Herzog family art collection eventually fell into the hands of the Hungarian government. (9) After the war, the Herzog family began a seventy-year long fight to reclaim their art collection; their efforts proved unsuccessful for many years. (10)

Later, the Herzog family brought an action against the Republic of Hungary, several Hungarian art museums, and a Hungarian university in a United States District Court. (11) The Herzog family alleged that the seizure of the Collection constituted a breach of a bailment, the Court went on to reason that the Herzog family's claim fell within the FSIA expropriation exception and that jurisdiction over the foreign state exists. (12) The defendants appealed the decision, arguing that because of an international treaty between the United States and Hungary, the expropriation exception does not apply. (13) After considering the arguments from both parties, the Court struck down the defendants treaty exception argument and held the Herzog family satisfied the expropriation exception requirements because Hungary's seizure of the Collection during the Holocaust violated international law. (14)

The Foreign Sovereign Immunities Act of 1976 upended the historical view, in the United States, that foreign governments enjoy immunity from the jurisdiction of federal and state courts. (15) Once the FSIA was established, it provided United States citizens with the opportunity to subject a foreign government to the jurisdiction of the United States courts. (16) Importantly, the FSIA defined a foreign state to include political subdivisions or "an agency or instrumentality" of the foreign state. (17) Moreover, the FSIA established certain requirements that must be met to successfully bring an action against a foreign state; one such example is the expropriation exception. (18)

The expropriation exception of the FSIA dictates that jurisdiction over a foreign state can be established if a claimant satisfies the following requirements: (1) the foreign state took "rights in property" in violation of international law and (2) that a commercial nexus between the United States and the foreign state exists. (19) For example, the "rights in property" requirement can be met if the claimant's property was subject to "war-time taking." (20) Moreover, litigation involving "war-time taking" of art in World War II has seen an increase in American courts, thereby providing victims justice. (21) In regards to the commercial nexus requirement, it is met by the claimant showing that the foreign state "engaged in sufficient commercial activity in the United States." (22) However, any claim against a foreign state is subject to any existing international agreements or treaties that the United States was involved in with the foreign state at the time the FSIA was established. (23)

The treaty exception allows a foreign state to maintain its immunity if an international agreement between the United States and a foreign state defendant creates an express conflict with the FSIA. (24) The treaty or internacional agreement being cited as a defense must be an enforceable agreement passed into law. (25) When asserting such a defense, the foreign state bears the burden of proof. (26) As a result, when FSIA provisions and an international agreement dispute each other, foreign state immunity is retained and the international agreement prevails so as to avoid invalidating an existing treaty between the foreign state and the United States. (27)

In De Csepel v. Republic of Hung. (28), the Court had to analyze and resolve a number of issues relating to the FSIA's expropriation exception. (29) The Court concluded that the two requirements of the expropriation exception were met and that there was no conflicting international agreement between the United States and the defendants. (30) The Court reasoned the first requirement of the expropriation exception was met because the property at issue in the case was seized in pursuit of genocide, and therefore violated international law. (31) The second requirement that a commercial nexus exists between the defendants and the United States was met because the issue was undisputed at trial and resolved in the cases' earlier appellate history. (32)

The Court then considered the government of Hungary's defense, which argued Hungary retained immunity because The 1947 Treaty of Peace (1947 Peace Treaty) between the United States and Hungary conflicted with the plaintiffs' claims. (33) Hungary stated that the 1947 Peace Treaty already provided Holocaust victims with means to gain restitution; the Court struck down this assertion and reasoned that while the treaty does provide victims a way to seek recovery, the treaty is not the only way to do so. (34) The Court concluded that the Herzog family satisfied the two requirements of the FSIA expropriation exception and that there was no conflicting international agreement to preclude their claim to recover the art taken from them during the Holocaust. (35)

In De Csepel v. Republic of Hung. (36) the Court correctly resolved the FSIA issues before it. (37) In the Court's consideration of the Herzog family's expropriation exception, its reasoning properly determined that Hungary's seizure of the Collection in pursuit of the destruction of the Jewish people satisfied the first requirement of the expropriation exception. (38) Here, the "rights in property" requirement was met because the Court equated the Hungarian governments' seizure of Jewish property to genocide, which is a clear and abhorrent violation of international law. (39) Although the commercial nexus requirement was previously resolved and undisputed at trial, the three Hungarian museums and the university fit well within the FSIA definition of an instrumentality of a foreign state and each of the instrumentalities were engaged in commercial activity with the United States. (40)

When the Republic of Hungary asserted that the 1947 Peace Treaty with the United States precluded the Herzog family's claim, the Court properly rejected it. (41) Specifically, Hungary focused on a provision in the treaty that gave Holocaust victims a means of recourse. (42) After evaluating the language in the treaty, the Court concluded that while the treaty did provide victims with a way to obtain legal compensation, the treaty did not contain any "language of exclusivity," which would establish the treaty as the one and only possible way for recovery. (43) As a result, because the Herzog family's FSIA expropriation claim did not conflict in a such a way as to undermine the pervious international agreement between the United States and Hungary, their claim properly survived Hungary's treaty exception defense. (44)

Importantly, however, the Courts' determination that the Herzog family satisfied the FSIA requirements to allow their claim to recover their stolen art represents a new chapter in the rising litigation of Holocaust victims seeking to recover their stolen art. (45) Although, while the Herzog's claims were allowed to move forward, many victims in similar situations remain without justice. (46) The Holocaust was an attempt to destroy the Jewish culture, the Jewish religion, and the Jewish people; rectifying the wrongs of the Holocaust, specifically returning the stolen art, must be done to nurture the wounds caused by "one of humanity's darkest hours." (47) In addition, much like how the Court here relied on the reasonings and holdings of previous cases like Simon v. Republic of Hung., (48) courts in the future will rely on De Csepel as an example of the atrocities Holocaust victims suffered and how justice should be afforded. (49)

In De Csepel v. Republic of Hung., (50) the United States Court of Appeals for the District of Columbia had to determine whether the requirements of the Herzog family's FSIA expropriation claim were satisfied. In addition, the Court also had to determine whether Hungary's treaty defense precluded the family's claims. The Court, relying on precedent from a similar case, correctly concluded that the two requirements of the FSIA expropriation exception, rights in property were taken in violation of international law and a commercial nexus between the United States and the foreign state exists, were met and that...

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