Simon v. Republic of Hungary

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

ROSALIE SIMON, et al.,

Individually, for themselves and for all others

similarly situated

Civil Action No. 10-1770 (BAH)

Plaintiffs,

Judge Beryl A. Howell

v.

REPUBLIC OF HUNGARY, et al.,

Defendants.

MEMORANDUM OPINION

In the dark chapter of history that is World War II, Winston Churchill called the shipment

of hundreds of thousands of Hungarian Jews to the Nazi death camps in Poland and Germany

“probably the greatest and most horrible crime ever committed in the history of the world.” First

Am. Compl. (“FAC”) ¶ 4, ECF No. 21. The fourteen named plaintiffs in this proposed class

action, Rosalie Simon, Helen Herman, Charlotte Weiss, Helena Weksberg, Rose Miller, Tzvi

Zelikovitch, Magda Kopolovich Bar-Or, Zehava (Olga) Friedman, Yitzhak Pressburger,

Alexander Speiser, Ze-ev Tibi Ram, Vera Deutsch Danos, Ella Feuerstein Schlanger, and Moshe

Perel (collectively, “the plaintiffs”), survived this vicious aspect of the greater Holocaust. FAC

¶¶ 5–81. The plaintiffs no longer reside in Hungary. See FAC ¶¶ 5–9, 14, 26, 27, 38, 40, 48, 64,

72, 80. Four of the named plaintiffs, Simon, Weiss, Miller, and Schlanger, are now U.S.

nationals; two plaintiffs, Herman and Weksberg, are nationals of Canada; one plaintiff, Danos, is

a national of Australia; and the remaining seven plaintiffs are nationals of Israel. Id. They seek

recompense for alleged atrocities committed against and property allegedly stolen from them

during the Holocaust by the three defendants, the Republic of Hungary (“Hungary”) and the

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state-owned Magyar Államvasutak Zrt. (“MÁV”), which is the Hungarian national railway

(collectively, “the Hungary Defendants”); and Rail Cargo Hungaria Zrt. (“RCH”), which is a

freight rail company that is the successor-in-interest to MÁV Cargo Árufuvarozási Zrt., f/k/a

MÁV Cargo Zrt., a former division of MÁV. Pending before the Court are two Motions to

Dismiss filed by the Hungary Defendants, ECF No. 22, and Defendant RCH, ECF No. 70. 1 For

the reasons explained below, though the plaintiffs may indeed be deserving of greater restitution

than any amounts they have been provided, the defendants’ motions are granted.

I. BACKGROUND

The plaintiffs observe that “[n]owhere was the Holocaust,” which involved the systematic

murder of more than six million people, “executed with such speed and ferocity as it was in

Hungary, where in 1944 over a half a million souls were dispatched to their deaths within a

period of less than three months.” FAC ¶ 1. The gratuitous nature of this slaughter is apparent

in the fact that “[m]ost, but not all, of the Hungarian atrocities occurred near the end of the war

in 1944, when the Nazis and Hungary, knowing they had lost, raced to complete their eradication

of the Jews before the Axis surrendered.” Id. ¶ 3. It was only through the complicity and

efficiency of Defendants MÁV and RCH’s predecessor, the cargo unit of MÁV, that Hungary’s

Jewish population was “transport[ed] by train to the killing fields and death camps of Nazi

Germany-occupied Poland and the Ukraine, where the Jews were tortured and the vast majority

died” in such a short period of time. Id. “In less than two months, over 430,000 Hungarian Jews

were deported, mostly to Auschwitz, in 147 trains.” Id. ¶ 108; see also FAC ¶ 121 (“During the

German occupation, over 500,000 Hungarian Jews died from maltreatment or were murdered.

The overwhelming majority of these were among the close to 440,000 Jews who were deported

1

The Hungary Defendants’ request for oral argument on their motion to dismiss, see Hungary Defs.’ Mot. Dismiss

at 1, ECF No. 22, is denied, in light of the ample briefing of the issues provided by the parties. See LCvR. 7(f)

(allowance of oral hearing “shall be within the discretion of the Court”).

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to Auschwitz between May 15 and July 8, 1944.”); id. Exs. A–B (data related to Hungarian

Jewish ghettoes during World War II and deportation trains). Indeed, all but two of the named

plaintiffs in this matter were transported, with the concurrent expropriation of their property, in

the spring of 1944. See id. ¶¶ 11–81. These plaintiffs, unlike hundreds of thousands of others,

including the plaintiffs’ friends and family, survived the Hungarian atrocities. See id. ¶¶ 11–81.

The defendants recognize that “the wrongs inflicted upon Plaintiffs and millions of others

were wrongful – they clearly were,” and note that “[n]othing said in the defense of this lawsuit

can, or should, diminish the world’s condemnation of Nazi wrongdoing during World War II.”

Hungary Defs.’ Mem. Supp. Mot. Dismiss (“Hungary Defs.’ Mem.”) at 1 and n.1, ECF No. 22-1.

The FAC describes in vivid detail the horrific experiences endured by the plaintiffs. See FAC

¶¶11–81. While the depredations suffered by the plaintiffs are undisputed and the insufficiency

of any direct restitution to them similarly patent, resolution of the instant motions rests on an

examination of the Foreign Sovereign Immunities Act (“FSIA”) and the Alien Tort Statute

(“ATS”), the combination of which statutes bars the plaintiffs’ suit. As background, the Court

first describes the historical events affecting the plaintiffs and underpinning this lawsuit before

turning to the characteristics of the defendants critical to assessing their amenability to suit in the

United States. Next, the Court reviews the efforts of the United States and other sovereign

nations, including Defendant Hungary, to provide compensation to the victims of the Hungarian

Holocaust and the progress of this litigation.

A. The Plaintiffs

Twelve of the named plaintiffs allege that they were transported in 1944 by Defendants

MÁV and/or RCH from their homes in Hungary to labor or death camps in various countries as

part of the Nazi-led assault on the Jewish people. See FAC ¶¶ 11, 22–24, 31, 43, 50–51, 66–68,

72–74, 80, 100. Plaintiff Zelikovitch was transported in 1941 by MÁV or RCH and again in

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1944. Id. ¶¶ 15, 19. All but two of the plaintiffs were, at some point, sent to the Nazi

concentration camp at Auschwitz on Defendants MÁV and/or RCH’s trains. Id. ¶ 100.

Thirteen plaintiffs allege that their possessions and those of their families “were taken

from them by MÁV and/or [RCH] as they boarded the trains for embarkation.” Id. The

plaintiffs complain that defendants MÁV and/or RCH “sold, liquidated or otherwise converted”

the plaintiffs’ property and “commingled those funds with other revenues.” Id. Eleven of the

plaintiffs also allege that Hungarian government officials participated or colluded in the

confiscation of their property when they arrived at MÁV train stations or during their transport

by MÁV officials. Id. ¶¶ 12, 16, 23, 30, 43, 65–66, 80. Specifically, the plaintiffs assert that

during the ghettoization of the Hungarian Jews, Hungarian officials inventoried the property left

behind in Jewish homes, which “was then expropriated by Defendant Hungary and converted to

cash through sales and other means[]” and that “[t]he proceeds were transferred to the Hungarian

government treasury and co-mingled with other Hungarian government revenues.” Id. ¶ 99.

Additionally, the plaintiffs allege, “[a]ll expenses associated with ghettoization were taxed on the

Jews, including the Plaintiffs herein.” Id. ¶ 98.

The fourteenth plaintiff, Pressburger, was not transported by Defendant Hungary or

Defendant MÁV or RCH, but alleges that his family’s property “was likewise stolen by MÁV

and/or [RCH], never to be returned[]” in the spring of 1944, when his father’s agricultural cargo

was confiscated by a MÁV stationmaster upon delivery to a train station for shipment. Id. ¶¶ 39,

100.

In addition to confiscating the personal possessions of those who were transported by the

defendants, the plaintiffs complain that the defendants “collaborat[ed] in murder and willful and

grotesque violations of international law[]” by delivering Hungarian Jews in inhumane

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conditions to hostile authorities in “Nazi Germany-occupied Poland and the Ukraine.” Id. ¶¶ 3–

4.

The plaintiffs’ Amended Complaint outlines the World War II experiences of each of the

named plaintiffs, and the Court will briefly recount below the chilling details of the defendants’

roles in persecuting these individuals, their families and communities because they were Jewish.

Plaintiffs Simon, Weiss, Miller, Herman, and Weksberg (collectively, under their maiden

names, “the Lebovics sisters”) “were raised in Tarackoz in Hungarian-annexed Ruthenia.” Id. ¶

10. Simon, Weiss, and Miller currently live in the United States, while Herman and Weksberg

live in Canada. Id. at ¶¶ 5–9. In the spring of 1944, the Lebovics sisters, along with their brother

and parents, were deported via Defendant “MÁV’s trains to the ghetto in Mateszalka, and then to

Auschwitz.” Id. ¶ 11. Some of their possessions were confiscated by Hungarian government

officials in Teresva, and some were confiscated by Defendants MÁV and/or RCH as they

boarded the train for Auschwitz. Id. ¶ 12. The plaintiffs allege that the Lebovics sisters’

property, after being confiscated by the Hungary Defendants and/or Defendant RCH, was

liquidated “to pay Defendants MÁV and/or [RCH] for the cost of transporting the family from

their home in Teresva and later from the ghetto in Mateszalka to Auschwitz.” Id. ¶ 13.

Plaintiff Zelikovitch is a citizen of Israel, but was born “in Uglya in Carpatorus, part of

Hungarian-annexed Ruthenia,” in 1928. Id. ¶ 14. In the summer of 1941, “the entire Jewish

population of Uglya, including . . . [Zelikovitch] and his family, were deported by” Defendant

MÁV or RCH across the border to Ukraine, which was under Nazi control. Id. ¶ 15. Before

arriving in the Ukraine, Zelikovitch’s family’s possessions “were confiscated by officials of the

Hungarian government” and MÁV or RCH personnel at train stations in Tecevo and Jatzin. Id. ¶

16. Zelikovitch eventually escaped and returned to Hungary to find that his family’s home and

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property had been confiscated. Id. ¶ 18. Zelikovitch was recaptured by Hungarian police in

1944 and handed over to MÁV or RCH. Id. ¶ 19. His remaining possessions were confiscated

and he was transported to Auschwitz by trains “owned and operated by MÁV or [RCH].” Id. ¶¶

19.

Plaintiff Bar-Or, a citizen of Israel, was born in Hungarian-annexed Ruthania in 1928.

Id. ¶ 21. In the spring of 1944, Hungarian police evicted Bar-Or and her family from their home.

Id. ¶ 22. Her parents “bribed a Hungarian policeman to allow the family to keep a large wooden

package containing the family’s valuables, including jewelry, gold and silver items, diamonds,

bedding, clothing, Judaica and other items,” then valued at more than $1,000. Id. ¶¶ 22–23.

While being transported to the Mateszalka Ghetto in Hungary, this package was “confiscated en

route by Defendants MÁV and/or [RCH] in collusion with Hungarian government officials.” Id.

¶ 23. The family was later transported by Defendant MÁV or RCH to Auschwitz. Id. ¶ 24. Bar-

Or and her sister, upon liberation, learned that their family’s home and property had been

confiscated. Id. ¶ 26.

Plaintiff Friedman, a citizen of Israel, was born in Satoraljaujhely, Hungary in 1932. Id.

¶ 27. Following the German occupation of Hungary, Friedman’s family was informed they

would have to move to the ghetto. Id. ¶ 29. They transferred title to their home to a non-Jewish

couple, but hid many of the family’s valuables in one room in the home to which the Friedman

family retained title. Id. ¶ 29. Upon removal from their home, however, Hungarian police

confiscated many of the valuables the family tried to carry with them. Id. ¶ 30. In June of 1944,

the Friedman family was “forcibly taken from [the ghetto] by Hungarian police and herded on

foot into the MÁV train station in Satoraljaujhely.” Id. ¶ 31. The family was transported to

Auschwitz by defendant MÁV or RCH. Id. ¶ 33. Friedman and her sister were later force-

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marched as part of the “infamous Death March” to camps at Ravensbruck and Bergen Belsen

before being liberated in April 1945. Id. ¶¶ 35–36.

Plaintiff Pressburger, a citizen of Israel, was born in Prague in 1933 and later immigrated

with his family to Budapest, Hungary, where his father worked as an agricultural products trader.

Id. ¶ 38. In 1944, Pressburger’s father was delivering “five wagons of dried prunes . . . [when]

the MÁV station-master and his staff-members confiscated all of [his] goods at the Ujvidek

railway station[.]” Id. ¶ 39. The loss “impoverished the family,” of which Pressburger is the

sole remaining member. Id.

Plaintiff Speiser, a citizen of Israel, was born in Ersekujvar, Czechoslovakia 2 in 1928. Id.

¶ 40. In May of 1944, Speiser and his family were forced to move into the Ghetto in Ereskujvar,

and later to a brick factory where they were “fenced in like animals for approximately three

weeks and continuously guarded by the Hungarian police.” Id. ¶ 42. On June 14, 1944, they

were transported to Auschwitz by Defendant MÁV. Id. ¶ 43. As they were forced onto the train,

they were surrounded by Hungarian police and their possessions were confiscated by MÁV or

RCH personnel, including “a two carat blue-white diamond ring that [Speiser’s] father purchased

for his mother.” Id. ¶¶ 41, 43. The family was put in a railway car with “eighty or ninety” other

Jews, where they traveled for three days “during which time the doors to the cattle car remained

sealed. There were no toilet facilities, and conditions were bestial.” Id. ¶¶ 44–45

Plaintiff Ram, a citizen of Israel, was born in Munkács, Hungary in 1930. Id. ¶ 48. In

mid-April of 1944, Ram and his family were taken to a brick factory “which served as a

collection point for deportation of the Jews by train” where “several Hungarian police and MÁV

employees” were waiting. Id. ¶¶ 50–51. MÁV employees told the family to “leave their

suitcases” and Ram “watched as a MÁV official took a pair of shoes from his father’s suitcase as

2

Ersekujvar was annexed by Hungary after the partition of Czechoslovakia in 1938. FAC ¶ 40.

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well as his mother’s suitcase, which contained all of the valuable jewelry that she was not

wearing.” Id. ¶ 54. The family was then transported to Auschwitz in a cattle car. Id. ¶ 55. The

plaintiffs state that “conditions in the cattle car were wretched. There was no water and . . . it

seemed as if there was no air. One bucket served as the bathroom. . . . Several people died

during the train trip due to the conditions in the cattle cars.” Id. ¶ 56.

Plaintiff Danos, a citizen of Australia, was born in Verpelet, Hungary in 1926. Id. ¶ 64.

Danos’ father was a “wealthy wine merchant” whose business was confiscated by Defendant

Hungary in 1943. Id. ¶ 65. In May 1944, the Hungarian police evicted the family from their

house, seized “all of their jewelry and valuables[,]” and marched them to the ghetto. Id. ¶ 66.

After a week of living in the ghetto, Danos and her family were forced to board a MÁV or RCH

train “destined for Auschwitz,” at which time MÁV officials forced them to abandon their

personal belongings, “includ[ing] clothes and valuables.” Id. ¶ 68. The train trip took several

days with approximately seventy people in each cattle car. Id. ¶ 69. After being liberated in

May 1945, Danos returned to Hungary before emigrating with her surviving family to Australia.

Id. ¶ 71.

Plaintiff Schlanger, a citizen of the United States, was born “to a Hungarian family

resident in Benedike, Czechoslovakia” in 1930, where her parents “had a large estate of several

thousand acres where they grew tobacco and owned a distillery.” Id. ¶ 72. In April 1944, when

the Hungarian police removed Schlanger and her family to a brick factory, they brought with

them “clothing, bed clothes, personal items and some jewelry[.]” Id. ¶ 73. When they were later

forced to board a MÁV or RCH train, railway personnel took their “personal items and jewelry

from them,” including “an engagement ring, a diamond, a seal coat and valuable watches.” Id. ¶

74.

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Plaintiff Perel, a citizen of Israel, was born in Ersekujvar, Hungary 3 in 1927. Id. ¶ 80. In

1944, Perel and his family were forced from their home into a ghetto and were later transported

to concentration camps via Defendant MÁV trains. Id. “The transport was orchestrated by

MÁV and the Hungarian Police, who took [Perel’s] watch and the family’s valuables and

luggage upon embarkation.” Id.

The plaintiffs allege that, following these events, none of the plaintiffs were compensated

for their losses, except for Plaintiff Schlanger, who received payment, totaling $5,000, from the

Hungarian government. Id. ¶ 79. 4 The plaintiffs seek damages on their own behalf and on

behalf of all Hungarian Holocaust survivors as well as immediate family members of Hungarian

Holocaust victims. Id. ¶¶ 143–44.

B. The Defendants

Defendant Hungary is a “sovereign nation” subject to the Foreign Sovereign Immunities

Act (“FSIA”), 28 U.S.C. §§ 1602 et seq. FAC ¶ 82. The plaintiffs’ claims are based on the

activities of Hungarian officials during World War II when the country was allied with Nazi

Germany. See id. Defendant MÁV has “operated continuously” as the Hungarian National

Railway since 1868, id. ¶ 84, and for the purposes of the FSIA, Defendant MÁV “is an agency or

instrumentality of the Republic of Hungary[,]” id. ¶ 85. MÁV’s trains and rail lines were used to

transport hundreds of thousands of Hungarian Jews from their homes to Nazi concentration

camps in Poland and the Ukraine. See id. ¶ 84. Defendant RCH is the successor-in-interest to

MÁV Cargo Árufuvarozási Zrt., f/k/a MÁV Cargo Zrt., a Division of Defendant MÁV. Id. ¶ 86.

Defendant RCH was, during World War II, the “freight hauling unit or division of MÁV” and

3

The plaintiffs state that “during the relevant time period [Ersekujvar was in] an annexed part of Hungary, and

today [is] part of Slovakia.” FAC ¶ 80.

4

The FAC does not specify when or under what law Plaintiff Schlanger received this “compensation.” See FAC ¶

79.

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worked with the Hungary Defendants to “confiscat[e] the possessions of Hungarian Jews and

transport[] them to their intended deaths at Auschwitz and other German concentration and

extermination camps.” Id. Defendant RCH is now a private company owned by Rail Cargo

Austria, “the freight forwarding subsidiary of the Austrian public railway company[.]” Decl. of

Liesel J. Schopler, Rifkin, Livingston, Levitan & Silver, LLC (Nov. 12, 2012) (“Schopler

Decl.”) ¶ 2(e), ECF No. 73-1 (quoting Defendant RCH’s website). Thus, Defendant Hungary

and Defendant MÁV are sovereigns for the purposes of the FSIA, FAC ¶¶ 82, 85, while

Defendant RCH is a private corporation with a principal place of business in Budapest, Hungary,

id. ¶ 86.

C. Post-War Efforts To Compensate Hungarian Holocaust Victims

At the end of World War II, “Jewish communal leaders submitted to [Hungarian] party

leaders and to the government their demands in support of the deportees and for a swift and

generous restitution and indemnification program.” FAC ¶ 126 (quoting Randolph L. Braham, 2

The Politics of Genocide: The Holocaust in Hungary (“Politics”) at 1307 (1994)). The

Hungarian government was not unsympathetic and “did implement an array of legislative

enactments and remedial statutes.” Id. ¶ 127 (citing Politics at 1308). These statutes fell short

on implementation, however, and the plaintiffs complain that “the Jews saw no tangible results

with respect to restitution and indemnification.” Id.

In 1947, the allied powers, including the United States, the Soviet Union, and the United

Kingdom (the “Allied Nations”), signed a peace treaty formally ending the war with Defendant

Hungary. See id.; Treaty of Peace with Hungary (the “1947 Treaty”), Feb. 10, 1947, 61 Stat.

2065. In this treaty, Defendant Hungary agreed to “restore[]” and, if restoration were

impossible, to pay “fair compensation,” to people “under Hungarian jurisdiction” whose property

was confiscated during the war “on account of the racial origin or religion of such persons.” Id.

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art. 27(1). Any “unclaimed” expropriated property would be transferred to refugee aid

organizations six months after the 1947 Treaty came into force. See id. art. 27(2). The 1947

Treaty provided a three-tiered procedure for resolution of disputes “concerning the interpretation

or execution of the [1947] Treaty,” excluding several limited exceptions that are inapplicable

here, starting with “direct diplomatic negotiations,” then referral to the “Heads of the Diplomatic

Missions in Budapest of the Soviet Union, the United Kingdom, and the United States,” id. art.

40(1) (referencing art. 39(1) to define “Heads of Mission”), and finally, additional dispute

resolution procedures if the three Heads of Mission were unable to agree on a resolution, id. The

plaintiffs do not state whether they ever attempted to invoke relief under the 1947 Treaty’s

dispute provisions outlined in Article 40. See generally FAC.

Following the ratification of the 1947 Treaty, the Communist Party took control in

Hungary and showed little interest in upholding the 1947 Treaty’s requirements vis a vis

Holocaust survivors. See FAC ¶ 130. The plaintiffs note that a “Jewish Restoration Fund” was

established “[i]n the 1950s,” apparently as required by the 1947 Treaty’s Article 27(2), but “the

funds were rarely used for their intended purpose and they were frequently raided by the

Communists for financing their own political projects.” Id. ¶ 131.

In 1973, the United States and Defendant Hungary entered into an Executive Agreement

“Regarding the Settlement of Claims” to settle all claims “of nationals and the Government of

the United States for . . . property, rights and interests affected by Hungarian measures of

nationalization, compulsory liquidation, expropriation, or other taking on or before the date of

[the] agreement,” including “obligations of the Hungarian People’s Republic under Articles 26

and 27 of the” 1947 Treaty. Agreement Regarding the Settlement of Claims (“1973

Agreement”), U.S.-Hung. arts. 1–2, March 6, 1973, 24 U.S.T. 522; see Decl. of Meghan A.

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McCaffrey, Weil, Gotshal & Manges LLP (“McCaffrey Decl.”) Ex. 2 (text of 1973 Agreement),

ECF No. 22-5. Under the terms of the 1973 Agreement, the Hungarian Government paid the

United States government $18,900,000 as “full and final settlement and in discharge of all

claims” held by United States nationals and the United States government. Id. art. 1. None of

the named plaintiffs, including the four plaintiffs, who are currently United States nationals,

claim to have sought or received compensation as a result of the 1973 Agreement. See generally

FAC.

Beginning in 1992, shortly after the fall of the Iron Curtain, “the Hungarian Parliament

adopted a law providing compensation for material losses incurred between May 1, 1939 and

June 8, 1949.” Id. ¶ 132. That law was followed shortly thereafter by another statute, “providing

compensation for those who, for political reasons, were illegally deprived of their lives or liberty

between March 11, 1939 and October 23, 1989.” Id. Although the FAC does not specify under

which law she received compensation, the plaintiffs note that Plaintiff Schlanger “received

compensation from Hungary, in the amount of $5,000, for the loss of her father ($2,000), her

mother ($2,000) and her brother ($1,000)[,]” and “has never been compensated . . . for the loss of

the family’s personal property[.]” Id. ¶ 79. The plaintiffs astutely observe that these remedies,

provided for by Hungarian law, “were paltry and wholly inadequate.” Id. ¶ 132.

D. Procedural History

Sixty-five years after the end of World War II, the named plaintiffs filed the instant

action, seeking relief from the defendants for their alleged losses suffered during the Holocaust.

See Compl., ECF No. 1. Soon after the case was filed, upon the plaintiffs’ motion, the Court

appointed the plaintiffs’ counsel as interim class counsel pursuant to Federal Rule of Civil

Procedure Rule 23(g)(3). See Order Granting Plaintiffs’ Motion for Appointment of Interim

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Class Counsel, ECF No. 9. 5 After all three defendants had appeared and filed motions to

dismiss, the United States filed a Notice of Statement of Interest, pursuant to 28 U.S.C. § 517, 6

to “express the United States’ foreign policy interests implicated by claims brought” against

Defendant RCH, which is now an Austrian company. See Statement of Interest of the United

States of America (“U.S. SOI”) at 1, ECF No. 42. 7 While taking “no position on the merits of

5

The plaintiffs requested and obtained Entry of Default against Defendant RCH, which had initially failed to appear,

plead, or otherwise defend itself against the plaintiffs’ complaint. See Clerk’s Entry of Default, ECF No. 19.

Eventually, Defendant RCH appeared and filed a motion to set aside the entry of default and dismiss the FAC. See

Def. RCH’s Mot. Set Aside Entry of Default and Dismiss Compl., ECF No. 34. The plaintiffs opposed Defendant

RCH’s motion but did not respond substantively to Defendant RCH’s motion to dismiss. Instead, the plaintiffs

“reserve[d] their right to oppose dismissal of RCH until such time as the Court permits, if it does, the submission of

such a motion.” Pls.’ Opp’n Def. RCH’s Mot. Vacate Default at 1, ECF No. 40. The plaintiffs also requested that,

if the Court were to consider the merits of Defendant RCH’s motion to dismiss, the Court grant the plaintiffs’

request for a period of sixty days to conduct jurisdictional discovery. See id. at 25. This Court granted Defendant

RCH’s Motion to Set Aside the Entry of Default, denied, without prejudice, Defendant RCH’s motion to dismiss,

and denied, without prejudice, the plaintiffs’ request to seek jurisdictional discovery. See Mem. and Order at 16,

ECF No. 67. Specifically, the plaintiffs’ request for jurisdictional discovery was denied because the plaintiffs had

“not yet responded to the substance of [RCH’s] Motion to Dismiss . . . [nor] offered a proposal for what type of

evidence [they] seek[] to obtain during discovery” that would tend to establish a basis for personal jurisdiction over

Defendant RCH. See id. at 15–16.

6

28 U.S.C. § 517 authorizes “[t]he Solicitor General, or any officer of the Department of Justice,” to “be sent by the

Attorney General to any State or district in the United States to attend to the interests of the United States in a suit

pending in a court of the United States, or in a court of a State, or to attend to any other interest of the United

States.”

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The United States expresses no views with respect to the plaintiffs’ claims against Hungary and MÁV, a point

highlighted by the plaintiffs. Pls.’ Resp. U.S. SOI at 2, ECF No. 44. The U.S. SOI. was submitted pursuant to the

terms of an agreement between the United States and Austria “to assist Austria and Austrian companies in achieving

‘legal peace’ in the United States with respect to all claims against Austria and/or Austrian companies arising out of

or relating to the National Socialist Era and World War II, excluding certain in rem” claims pertaining to “restitution

of works of art.” U.S. SOI Ex. 2 (Decl. of Stuart Eizenstat, then-Special Representative of the President and the

Secretary of State on Holocaust Issues) (“Eizenstat Decl.”) ¶ 14, ECF No. 42-1. At least one of these forms of

assistance was a pledge by the United States to “fil[e] a Statement of Interest indicating [the United States’] own

foreign policy interests in assisting Holocaust victims on an expedited basis, and in helping achieve legal peace for

Austria and Austrian companies . . . in U.S. courts.” Id. ¶ 10. Consequently, the fact that the United States filed a

Statement of Interest regarding Defendant RCH, an Austrian company, but not regarding the Hungary Defendants is

of limited probative value in evaluating United States’ foreign policy interests regarding the latter. Indeed, the U.S.

SOI indicates support for government-to-government negotiations to resolve Holocaust related claims, stating “[t]he

United States’ view is that its long-standing, and ongoing, pursuit of cooperative compensation agreements with

Austria and other governments has achieved justice for the greatest numbers of Holocaust victims, survivors, and

heirs. Going forward, the United States is focusing its efforts in this regard on the new democracies of Central and

Eastern Europe where the preponderance of Europe’s Jewish population once lived.” U.S. SOI at 15–16 (quoting

U.S. SOI Ex. 4 (Decl. of Douglas A. Davidson, Special Envoy for Holocaust Issues, U.S. Department of State)

(“Davidson Decl.”) ¶ 5, ECF No. 42-1). Although the Davidson Declaration does not explicitly identify the

countries falling into the category of “new democracies,” Hungary may be one of those countries where the United

States is “focusing its efforts.” See id. Moreover, although the U.S. SOI was filed only in relation to Defendant

RCH, the general statement of the United States’ policy toward obtaining “some measure of justice [for] the victims

of the Holocaust” was not limited to Austrian Holocaust claims. See U.S. SOI at 2.

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the underlying legal claims or arguments advanced by plaintiffs or by defendants,” the United

States, “because of [its] strong support for international agreements with Austria involving

Holocaust claims against Austrian companies – agreements that have provided nearly one billion

dollars to Nazi victims[]” recommended “dismissal of the claims against RCH on any valid legal

ground(s).” Id. at 1. The United States noted that its policy regarding “claims for restitution or

compensation by Holocaust survivors and other victims of the Nazi era has consistently been

motivated by the twin concerns of justice and urgency[]” and that the United States has thus

“advocated that concerned parties, foreign governments, and non-governmental organizations act

to resolve matters of Holocaust-era restitution and compensation through dialogue, negotiation,

and cooperation” rather than extensive litigation. Id. at 2.

With respect to Austria, the country in which Defendant RCH’s parent company is

domiciled, the United States explained that, “[s]ince 1945, the United States has sought to work

with Austria to address the consequences of the Nazi era and World War II through political and

governmental acts, beginning with the first compensation and restitution laws in post-war

Austria that were passed during the Allied occupation[]” and continuing with joint efforts to

develop funds to compensate victims of the Holocaust. Id. at 14.

The United States cites, as “[o]ne example of the successful implementation” of its

policy, the 2001 Austrian General Settlement Fund (“GSF”), which was “created to provide a

potential remedy for victims with Nazi-era claims against Austria and/or Austrian companies not

covered” by an earlier Austrian fund, the “Reconciliation, Peace and Cooperation” fund

(“Reconciliation Fund”). Id. at 2–3, 6. 8

8

The full text of the GSF Agreement was provided by the United States as Exhibit 5 to the U.S. SOI, ECF No. 42-1.

According to the United States, the GSF “was capitalized with $210 million, plus interest . . . for Nazi-era claims

against Austria and/or Austrian companies, including claims against defunct companies and companies not subject

to jurisdiction in U.S. courts.” U.S. SOI at 8 (citing Eizenstat Decl. ¶ 19).

14

Although the United States emphasizes that the GSF “is not a government-to-government

claims settlement agreement,” and did not “extinguish[] the claims of its nationals or anyone

else[,]” Eizenstat Decl. ¶ 15, “it is nonetheless aimed at achieving legal closure for Austrian

companies and the Republic of Austria with respect to claims arising out of World War II and

the Nazi era.” U.S. SOI at 12 (emphasis added); see also Ex. 1 (Decl. of William J. Burns, U.S.

Under Secretary of State for Political Affairs) ¶ 3, ECF No. 42-1 (“The United States’ efforts to

facilitate these cooperative compensation arrangements is part of a larger policy to ensure the

greatest compensation for the greatest number of Holocaust victims and their heirs, in their

lifetimes, as well as to support a broad ‘legal peace’ for countries and companies subject to

ongoing claims.”); Eizenstat Decl. ¶ 31 (“[A]s a result of the inclusion in the GSF not only of

Austrian companies that existed during the Nazi era, but also of the Austrian Federal

Government and Austrian companies that did not exist during the Nazi era, the GSF, will be able

to comprehensively cover all Nazi-era property/aryanization claims against Austria and/or

Austrian companies, and all other claims not covered by the Reconciliation Fund.”); id. U.S. SOI

Ex. 3 (Decl. of then-Secretary of State Madeline Albright) ¶ 3, ECF No. 42-1 (“The

establishment of the GSF will significantly reduce the tensions surrounding a number of very

sensitive issues.”).

In this case, the United States “has determined that Defendant RCH is an ‘Austrian

company’ as defined in Annex B to the GSF Agreement[,]” 9 because it is “primarily (nearly

9

Annex 2 defines “Austrian companies” in relevant part as follows:

1. Enterprises that, at any given time, had or have their headquarters within the borders of the

present-day Republic of Austria as well as their parent companies (past or present, direct or

indirect), even when the latter had or have their headquarters abroad.

2. Enterprises situated outside the borders of the present-day Republic of Austria in which

Austrian enterprises as described in Sentence (1), at any given time, had or have a direct or

indirect financial participation of at least 25 percent.

15

100%) owned by Rail Cargo Austria, an Austrian company that is owned by an Austrian holding

company that is in turn owned by the Republic of Austria.” U.S. SOI at 11. The United States

avers that “maintenance of this suit against RCH runs contrary to the GSF’s goal of ‘legal

closure’ and to enduring United States foreign policy interests.” Id.; see also Suppl. Statement of

Interest of the United States (“U.S. Suppl. SOI”), ECF No. 52, at 2 n.1 (emphasizing that the

definition of “Austrian companies” in the agreement between Austria and the United States “is

not tied to the [time of the] creation of the GSF” and that “[t]he United States has determined

that RCH is an Austrian company under this definition.”). 10

The plaintiffs assert that the U.S. SOI is “entitled to no weight in the Court’s

deliberations” because it does not address the merits of the underlying dispute and merely

recommends dismissal of this action “on any valid legal ground(s),” a recommendation the

plaintiffs call “wholly superfluous.” Pls.’ Resp. to U.S. SOI at 1–2, ECF No. 44 (internal

citation and quotation marks omitted). The plaintiffs also dispute the conclusion in the U.S. SOI

that Defendant RCH is “an Austrian company as defined in the Agreement and its accompanying

joint statement[,]” since it was not acquired by Rail Cargo Austria until 2008, seven years after

the GSF agreement. See id. at 2. 11

U.S. SOI Ex. 6 (United States-Austria: Joint Statement and Exchange of Notes Between the United States

and Austria Concerning the Establishment of the General Settlement Fund for Nazi-Era and World War II

Claims) at 14, ECF No. 42-1.

10

The Republic of Austria filed an amicus brief in support of Defendant RCH, echoing the United States’ contention

that this matter should be dismissed as it pertains to Defendant RCH based on the U.S.-Austria agreement. See Brief

of Amicus Curiae Republic of Austria In Support of Def. RCH at 2, ECF No. 72 (“The Republic of Austria is of the

firm view that the litigation against [Defendant RCH] should be dismissed, because the United States and Austria

entered into the Executive Agreements in 2000 and 2001 that created funds and other measures for Holocaust

victims in exchange for ‘all embracing and enduring legal peace’ for the benefit of Austria and/or Austrian

companies.” (emphasis in original, citation omitted in original)).

11

The dispute over whether Defendant RCH is properly classified an Austrian company is immaterial to deciding

the instant motions, since the Court is dismissing the claims against Defendant RCH for lack of personal

jurisdiction, to which the U.S.-Austria agreements are not relevant. Apart from this dispute, the plaintiffs seek

jurisdictional discovery pertaining to Defendant RCH if the Court grants Defendant RCH’s motion to dismiss. See

Pls.’ Opp’n Def. RCH’s Mot. Dismiss (“Pls.’ RCH Opp’n”) at 9–19, ECF No. 73. As discussed more fully in Part

16

With the defendants’ two motions to dismiss pending, the plaintiffs moved to take an

expedited oral deposition of Laszlo Csatary, a man in his late 90s living under house arrest in

Budapest, Hungary. See Pls.’ Mem. Supp. Pls.’ Mot. Lv. Take Expedited Oral Dep. at 1, ECF

No. 62-2. Although the parties had not yet convened a Rule 26(f) conference, the plaintiffs

requested leave, pursuant to Federal Rule of Civil Procedure 30(a)(2)(a)(iii), to proceed with

expedited discovery because of the advanced age and importance of the witness and the concern

that he “cannot be long for this earth.” See id. at 6. This motion was granted. See Mem. and

Order at 11–12, ECF No. 68. 12

II. STANDARD OF REVIEW

A. Federal Rule of Civil Procedure 12(b)(1)

“‘Federal courts are courts of limited jurisdiction,’ possessing ‘only that power

authorized by Constitution and statute.’” Gunn v. Minton, 133 S. Ct. 1059, 1064 (2013) (quoting

Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)). Indeed, Federal courts

are “forbidden . . . from acting beyond our authority,” NetworkIP, LLC v. FCC, 548 F.3d 116,

120 (D.C. Cir. 2008), and, therefore, have “an affirmative obligation ‘to consider whether the

constitutional and statutory authority exist for us to hear each dispute.’” James Madison Ltd. by

Hecht v. Ludwig, 82 F.3d 1085, 1092 (D.C. Cir. 1996) (quoting Herbert v. Nat’l Acad. of Scis.,

974 F.2d 192, 196 (D.C. Cir. 1992)). Absent subject matter jurisdiction over a case, the court

must dismiss it. McManus v. District of Columbia, 530 F. Supp. 2d 46, 62 (D.D.C. 2007).

III.C.3, infra, in light of recent Supreme Court precedent regarding the assertion of personal jurisdiction on a general

jurisdiction theory, the Court denies this request for jurisdictional discovery because it would be futile.

12

The parties subsequently attempted to take the deposition of Csatary in Budapest at a hearing held on June 4, 2013

in Budapest; however, Csatary did not attend the hearing due to poor health. See generally Hr’g Tr. of Laszlo

Csatary, June 4, 2013, ECF No. 95-1. At that time, the judge presiding over the Budapest hearing suggested that it

might be possible for the plaintiffs to obtain in discovery the record of criminal examinations of Csatary. See id. at

24:9-12. The judge stated, inter alia, “that the Court in the penal proceedings would make available . . . some parts

of the documentation of the case which we already have in writing.” Id.

17

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1), the

plaintiff must establish the court’s jurisdiction over the subject matter by a preponderance of the

evidence. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992); Bolden-Bey v. U.S.

Parole Comm’n, 731 F. Supp. 2d 11, 13 (D.D.C. 2010) (“On a motion to dismiss for lack of

subject matter jurisdiction pursuant to Rule 12(b)(1), the plaintiff bears the burden of

establishing by a preponderance of the evidence that the court has subject matter jurisdiction.”).

When considering a motion under Rule 12(b)(1), the court must accept as true all uncontroverted

material factual allegations contained in the complaint and “construe the complaint liberally,

granting plaintiff the benefit of all inferences that can be derived from the facts alleged and upon

such facts determine jurisdictional questions.” Am. Nat’l Ins. Co. v. FDIC, 642 F.3d 1137, 1139

(D.C. Cir. 2011) (internal citations and quotation marks omitted). The court need not accept

inferences drawn by the plaintiff, however, if those inferences are unsupported by facts alleged

in the complaint or amount merely to legal conclusions. See Browning v. Clinton, 292 F.3d 235,

242 (D.C. Cir. 2002). In evaluating subject-matter jurisdiction, the court, when necessary, may

look beyond the complaint to “undisputed facts evidenced in the record, or the complaint

supplemented by undisputed facts plus the court’s resolution of disputed facts.” Herbert, 974

F.2d at 197; see also Alliance for Democracy v. FEC, 362 F. Supp. 2d 138, 142 (D.D.C. 2005).

B. Federal Rule of Civil Procedure 12(b)(2)

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(2), the

plaintiff bears the burden of “establishing a factual basis for the [Court’s] exercise of personal

jurisdiction over the defendant.” Crane v. N.Y. Zoological Soc’y, 894 F.2d 454, 456 (D.C. Cir.

1990) (citing Reuber v. United States, 750 F.2d 1039, 1052 (D.C. Cir. 1984), overruled on other

grounds by Kauffman v. Anglo-Am. Sch. of Sofia, 28 F.3d 1223, 1226 (D.C. Cir. 1994)). When,

as here, the parties rely solely on “affidavits and other written evidence,” the plaintiff need only

18

make a prima facie showing that the court has personal jurisdiction. 5B Charles Alan Wright &

Arthur R. Miller, FEDERAL PRACTICE AND PROCEDURE § 1351 (3d ed. 2014); see Mwani v. bin

Laden, 417 F.3d 1, 6 (D.C. Cir. 2005) (“a court ordinarily demands only a prima facie showing

of jurisdiction by the plaintiffs”). Similarly to a motion to dismiss under Federal Rule of Civil

Procedure 12(b)(6), “the uncontroverted allegations of the complaint must be taken as true, and

the court will draw all reasonable inferences in plaintiff’s favor.” William W. Schwarzer et al.,

FEDERAL CIVIL PROCEDURE BEFORE TRIAL § 3:412 (2013); see Walden v. Fiore, 134 S. Ct. 1115,

1119 n.2 (2014) (accepting jurisdictional allegations in complaint as true at motion to dismiss

stage). “The plaintiff, however, cannot rest on bare allegations or conclusory statements and

must allege specific facts connecting each defendant with the forum.” GTE New Media Servs.,

Inc. v. Ameritech Corp. (GTE), 21 F. Supp. 2d. 27, 36 (D.D.C. 1998); see also Second

Amendment Found. v. U.S. Conf. of Mayors, 274 F.3d 521, 524 (D.C. Cir. 2001) (noting the

“general rule that a plaintiff must make a prima facie showing of the pertinent jurisdictional

facts”) (internal quotation marks and alterations omitted); First Chicago Int’l v. United Exchange

Co., 836 F.2d 1375, 1378 (D.C. Cir. 1988) (“Conclusory statements . . . do not constitute the

prima facie showing necessary to carry the burden of establishing personal jurisdiction”)

(internal quotation marks and citation omitted); Naartex Consulting Corp. v. Watt, 722 F.2d 779,

787 (D.C. Cir. 1983) (same); Atlantigas Corp. v. Nisource, Inc., 290 F. Supp. 2d 34, 42 (D.D.C.

2003) (stating plaintiff “cannot rely on conclusory allegations” to establish personal jurisdiction).

As is the case for a motion to dismiss under Rule 12(b)(1), the court “may consider

materials outside the pleadings in deciding whether to grant a motion to dismiss for lack of

jurisdiction.” Jerome Stevens Pharms., Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005). The

court “may receive and weigh affidavits and any other relevant matter to assist it in determining

19

the jurisdictional facts.” United States v. Philip Morris Inc., 116 F. Supp. 2d 116, 120 n.4

(D.D.C. 2000) (internal quotation marks and citation omitted); see also Mwani, 417 F.3d at 7

(holding that plaintiffs “may rest their [jurisdictional] argument on their pleadings, bolstered by

such affidavits and other written materials as they can otherwise obtain”). Any “factual

discrepancies appearing in the record must be resolved in favor of the plaintiff,” however.

Crane, 894 F.2d at 456 (citing Reuber, 750 F.2d at 1052); see also Barot v. Embassy of Republic

of Zam., No. 13-451, 2014 WL 1400849, at *3 (D.D.C. Apr. 11, 2014) (D.D.C. 2010).

III. DISCUSSION 13

The Hungary Defendants, as sovereign entities, argue that this Court lacks subject matter

jurisdiction over them pursuant to the FSIA. See Hungary Defs.’ Mem. at 6–12. Defendant

RCH challenges this Court’s exercise of personal jurisdiction over it, see Def. RCH’s Mem.

Supp. Mot. Dismiss (“Def. RCH Mem.”) at 1, ECF No. 70, and contends that the plaintiffs have

failed to state a claim upon which relief can be granted because their claims are time-barred, id.

at 28–41. All three defendants contend that venue is improper in this District under the doctrine

of forum non conviens, Hungary Defs.’ Mem. at 24–35; Def. RCH’s Mem. at 2, and that the

claims are non-justiciable under the political question doctrine, Hungary Defs.’ Mem. at 12–24;

Def. RCH’s Mem. at 13-28.

Even were this United States District Court an appropriate forum to adjudicate claims

arising overseas decades ago from the Holocaust and, in that context, to assess the sufficiency of

a foreign sovereign’s efforts to redress those horrors, this Court lacks subject matter jurisdiction

over the Hungary Defendants under the FSIA and personal jurisdiction over Defendant RCH due

13

The Court has reviewed all documents submitted by the parties in this matter, the exhibits, affidavits, and

declarations attached thereto, and all notices of supplemental authority. Some of these filings will not be referenced

in this Memorandum Opinion since, after review, the Court has determined that they are not sufficiently probative to

resolution of the instant motions so as to warrant citation here.

20

to the lack of minimum contacts between that defendant and the United States. Since the Court

finds that the Hungary Defendants are immune from suit under the treaty exception to the FSIA,

and no personal jurisdiction may be exercised over Defendant RCH, the defendants’ other

arguments need not be addressed to resolve the pending motions.

The Court begins with a discussion of the evolution of both the law regarding sovereign

immunity, which culminated in the FSIA, and the principles underlying the limits on the

extraterritorial reach of this Court’s jurisdiction, as applied under the ATS. Considerations of

international comity implicated by both of these laws bolster the Court’s conclusion that the

plaintiffs’ claims are not properly adjudicated here. The Court then analyzes the separate

jurisdictional concerns of the Hungary Defendants and Defendant RCH.

A. Evolving Limits on the Exercise of Jurisdiction Under the FSIA and ATS

The plaintiffs acknowledge that addressing the depredations suffered by Jewish victims,

such as the plaintiffs, during the Hungarian Holocaust has garnered much attention by multiple

governments. See FAC ¶¶ 124–132. Indeed, the plaintiffs are not complaining that their

complaints have gone unnoticed, but rather that the “remedies provided . . . were paltry and

wholly inadequate.” Id. ¶ 132. The plaintiffs may be correct about their entitlement to

additional restitution and compensation, but statutory requirements, compounded by precedent in

this Circuit and the Supreme Court, restrict the use of this Court as the mechanism to address the

plaintiffs’ concerns and obtain such relief. Among the first Holocaust-era claims filed in any

United States court was Princz v. Fed. Republic of Ger., 26 F.3d 1166 (D.C. Cir. 1995), which

was filed in this District. See Michael J. Bazyler, Nuremberg in America: Litigating the

Holocaust in United States Courts, 34 U. RICH. L. REV. 1, 23 (2000) (describing Princz litigation

as one of fewer than twelve cases filed by Holocaust victims in the United States prior to 1996).

In Princz, an American citizen imprisoned by the Nazis and forced into slave labor, sought

21

damages from the modern German state for the atrocities inflicted upon him. See Princz, 26

F.3d at 1168. Although “[t]he district court held that it had jurisdiction of the case on the ground

that the FSIA ‘has no role to play where the claims alleged involve undisputed acts of barbarism

committed by a one-time outlaw nation[,]’” the D.C. Circuit dismissed the case, commenting that

the district court’s conclusion was “not the law.” Id. at 1169.

The question before the Princz court is the same one with which the Court wrestles

today: the application of the FSIA where the acts alleged are so egregious and reprehensible that

members of civilized society feel propelled to rectify the wrongs. The D.C. Circuit retraced the

history of sovereign immunity in U.S. courts, where prior to 1952, “the United States, as a matter

of grace and comity, granted foreign sovereigns ‘virtual absolute immunity’ from suit in the

courts of this country.” Id. (citing Verlinden B.V. v. Cent. Bank of Nigeria (Verlinden), 461 U.S.

480, 486 (1983)). Courts “consistently . . . deferred to the decisions of the political branches—in

particular, those of the Executive Branch—on whether to take jurisdiction over actions against

foreign sovereigns and their instrumentalities.” Id. (quoting Verlinden 461 U.S. at 486)

(alteration in original). Prior to 1952, it was assumed that a U.S. court did not have jurisdiction

over foreign sovereigns unless the Executive Branch advised the court that it could exercise

jurisdiction. See id.

This “virtual absolute immunity” gave way in the “first half of the 20th century,” to the

modern “restrictive theory of sovereign immunity,” limiting the immunity conferred on a

sovereign to “public acts of the foreign state” and not extending such immunity “to its

commercial or private acts.” Id. (citation omitted). By 1976, Congress had codified the

restrictive theory in the FSIA. Id. The FSIA became the sole basis by which jurisdiction over a

foreign sovereign could be exercised by a United States court. See id. at 1170; see also Ye v.

22

Zemin, 383 F.3d 620, 625 (7th Cir. 2004) (noting that “the pre-1976 practice of courts reflexively

deferring to the Executive Branch’s immunity determinations has been eliminated” by the FSIA).

In Princz, the plaintiff argued that the activity of the sovereign defendant in that case fell

into three statutory exemptions permitting adjudication, including the so-called commercial

activity exception to the FSIA, 28 U.S.C. § 1605(a)(2); the waiver exception under 28 U.S.C. §

1605(a)(1); and the treaty exception under 28 U.S.C. § 1604. See id. at 1171, 1173, 1175. The

D.C. Circuit rejected all three bases for the exercise of jurisdiction, finding that the enslavement

of the plaintiff by the Nazis did not cause the requisite “direct effect” on the United States to

trigger the commercial activity exception, id. at 1173; the violation of jus cogens 14 did not imply

a waiver of sovereign immunity, id. at 1174; and no international agreement conflicted with the

FSIA’s grant of sovereign immunity so as to trigger the treaty exception, id. at 1175. Thus,

under the FSIA, Germany was immune from suit in United States courts even when that

country’s Nazi-era government committed atrocities against a person, who was a United States

citizen at the time that country was perpetrating the Holocaust. Id. at 1175.

The Princz court foreshadowed the further development of principles of international

comity under the FSIA, in the context of genocide allegations, in its response to a vigorous

dissent. See id. at 1174 n.1. The Princz dissent would have allowed the suit to go forward under

an implied waiver of foreign sovereign immunity based on the Nazi-era German state’s

“engaging in the barbaric conduct alleged in this case.” Id. at 1179 (Wald, J. dissenting). 15 The

majority cautioned, however, that without a clear expression of Congressional intent, United

14

Jus cogens are “norms so universally accepted that all states are deemed bound by them under international law . .

. .” Belhas v. Ya’alon, 515 F.3d 1279, 1291–92 (D.C. Cir. 2008) (Williams, J. concurring) (citing Comm. of U.S.

Citizens Living in Nicar. v. Reagan, 859 F.2d 929, 939–42 (D.C. Cir. 1988)).

15

The plaintiffs in this matter are not raising this waiver theory and are proceeding solely under the FSIA’s

expropriation exception. See Pls.’ Mem. Opp’n Hungary Defs.’ Mot. Dismiss FAC (“Pls.’ Hungary Opp’n”) at 7,

ECF No. 24 (arguing that this Court has jurisdiction over Hungary Defendants under 28 U.S.C. § 1605(a)(3) and not

relying on any other exceptions).

23

States courts could not “assume jurisdiction over the countless human rights cases that might

well be brought by the victims of all the ruthless military juntas, presidents-for-life, and

murderous dictators of the world, from Idi Amin to Mao Zedong.” Id. at 1174 n.1. Such a

reading “would likely place an enormous strain not only upon our courts but, more to the

immediate point, upon our country’s diplomatic relations with any number of foreign nations. In

many if not most cases the outlaw regime would no longer even be in power and our

Government could have normal relations with the government of the day—unless disrupted by

our courts, that is.” 16 Id. While acknowledging that a U.S. court might be the plaintiff’s “last

hope of reparation[,]” the court nonetheless held that it could not “responsibly make the

inferential leap that would be required in order to provide him with the federal forum he seeks.”

Id.

Eight years later, in Republic of Austria v. Altmann, 541 U.S. 677, 681, 690 (2004), the

Supreme Court took up a question left open in Princz: namely, whether the FSIA applied

retroactively to events that occurred before its enactment and before the State Department’s 1952

policy statement—the so-called “Tate letter” 17—confirmed the restrictive theory of sovereign

immunity as the policy of the United States. In Altmann, an art collector’s heir sued the

Republic of Austria and its National Gallery, an instrumentality of the Austrian state, for the

return of several paintings expropriated by the Nazis. Id. at 680–81. The Supreme Court

16

This policy consideration regarding successor regimes figured prominently in a later FSIA decision by the

Supreme Court. In Republic of Iraq v. Beaty, 556 U.S. 848, 864 (2009), the Supreme Court noted that it was not

“perplexing” for Congress to authorize the President to restore sovereign immunity to Iraq, despite the FSIA’s state

sponsors of terrorism exception, since Congress was “confronted [with] the prospect that a friendly successor

government would, in its infancy, be vulnerable under Section 1605(a)(7) to crushing liability for the actions of its

renounced predecessor.” (quoting Acree v. Republic of Iraq, 370 F.3d 41, 61 (D.C. Cir. 2004)). The Supreme Court

noted that “[t]he [U.S.] Government was at the time spending considerable sums of money to rebuild Iraq” and did

not want such a reconstruction plan to be converted “into a compensation scheme for a few of Saddam’s victims.”

Beaty, 556 U.S. at 864.

17

The Tate letter was a policy letter from Jack B. Tate, Acting Legal Adviser, Department of State, to Acting

Attorney General Philip B. Perlman, dated May 19, 1952, that served as the State Department’s announcement of

the official “adoption of the ‘restrictive’ theory of sovereign immunity.” See Samantar v. Yousef, 560 U.S. 305, 312

(2010) (citing Tate letter, reprinted in 26 Dept. State Bull. 984–985 (1952)).

24

concluded that the FSIA applied to acts occurring prior to its enactment. See id. at 700. In

reviewing the history of sovereign immunity, the Court noted that from nearly the beginning of

the Republic, it was clear that “the jurisdiction of the United States over persons and property

within its territory ‘is susceptible of no limitation not imposed by itself,’ and thus foreign

sovereigns have no right to immunity in our courts.” Id.at 688 (quoting Schooner Exchange v.

McFaddon, 7 Cranch 116, 136 (1812)). Nevertheless, concomitant with this principle was the

idea “that as a matter of comity, members of the international community had implicitly agreed

to waive the exercise of jurisdiction over other sovereigns in certain classes of cases, such as

those involving foreign ministers or the person of the sovereign.” Id.

The Altmann Court reviewed the history leading to enactment of the FSIA, just as the

D.C. Circuit had in Princz, noting that before the FSIA’s enactment, “the Executive Branch

followed a policy of requesting immunity in all actions against friendly sovereigns.” Id. at 689.

In 1952, this case-by-case policy changed in favor of the policy reflected in the Tate letter,

declaring a governing principle whereby the United States would follow the “restrictive theory”

of sovereign immunity, which requires immunity for sovereigns “with regard to sovereign or

public acts (jure imperii) . . . but not with respect to private acts (jure gestionis).” Id. at 690

(citation omitted). The FSIA, passed in 1976, “codifies, as a matter of federal law, the restrictive

theory of sovereign immunity, and transfers primary responsibility for immunity determinations

from the Executive to the Judicial Branch.” Id. at 691 (internal citations and quotation marks

omitted). In finding that the FSIA was the most recent statement of intent as to sovereign

immunity put forth by the United States government, the Supreme Court found that it applied to

acts taken by sovereigns that occurred both before and after the FSIA’s enactment. See id. at

696.

25

Nevertheless, the Supreme Court observed that “immunity reflects current political

realities and relationships, and aims to give foreign states and their instrumentalities some

present ‘protection from the inconvenience of a suit as a gesture of comity.’” Id. (quoting Dole

Food Co. v. Patrickson, 538 U.S. 468, 479 (2003)) (emphasis in original). Of particular

importance to the Supreme Court was the notion that suits against foreign sovereigns are “sui

generis,” requiring a different set of considerations—generally more deferential to the “political

branches”—than suits that do not involve the conduct of a foreign sovereign. Id. This notion

signaled a growing recognition of the circumscribed nature of United States courts’ jurisdiction

over foreign entities, particularly foreign sovereigns.

Just a few weeks after the decision in Altmann, the Supreme Court decided Sosa v.

Alvarez-Machain, 542 U.S. 692 (2004), which, in the context of the ATS, further elucidated the

limited scope of federal courts’ jurisdiction to adjudicate claims arising outside U.S. borders

between parties who were not U.S. nationals. At issue in Sosa was whether a foreign national

could sue another foreign national in U.S. courts based on an alleged abduction that occurred in

Mexico at the behest of the U.S. Drug Enforcement Administration. See Sosa, 542 U.S. at 697–

98. The Supreme Court found no private right of action for the violation of the law of nations

under the ATS except “in a very limited category [of claims] defined by the law of nations and

recognized at common law.” See id. at 712.

The Sosa court discussed three distinct elements of international law: (1) “the general

norms governing the behavior of national states with each other”; (2) “[t]he law merchant” that

arose out of “the customary practices of international traders and admiralty [that] required its

own transnational regulation[]”; and a third, highly circumscribed category of offenses, which

“overlapped with the norms of state relationships[]” and encompassed “violation of safe

26

conducts, infringement of the rights of ambassadors, and piracy.” See id. at 714–15 (citations

omitted). In discussing the historical context of the ATS, the Supreme Court concluded that the

ATS was applicable at the time of the Framers and that “Congress intended the ATS to furnish

jurisdiction for a relatively modest set of actions alleging violations of the law of nations[,]”

specifically the three aforementioned crimes. See id. at 719–20. In general, the Sosa court

concurred with Blackstone’s view that “‘offences [sic] against this law [of nations] are

principally incident to whole states or nations,’ and not individuals seeking relief in court.” Id. at

720 (quoting 4 WILLIAM BLACKSTONE, COMMENTARIES *68) (second brackets in original).

Moreover, the Sosa court cautioned against the overstepping of judicial boundaries in

recognizing causes of action, especially because “the potential implications for the foreign

relations of the United States of recognizing such causes should make courts particularly wary of

impinging on the discretion of the Legislative and Executive Branches in managing foreign

affairs.” Id. at 727. The Court elaborated on its warning, stating “[i]t is one thing for American

courts to enforce constitutional limits on our own State and Federal Governments’ power, but

quite another to consider suits under rules that would go so far as to claim a limit on the power of

foreign governments over their own citizens, and to hold that a foreign government or its agent

has transgressed those limits.” Id.

Sosa and Altmann interpret two statutes authorizing the exercise of jurisdiction over a

sovereign or foreign person —the FSIA and the ATS, respectively—but evince a common

directive: the power of the federal courts to vindicate private rights based on wrongs that

occurred overseas, particularly when those acts are perpetrated by foreign sovereigns, is highly

constrained. In 2008, in the context of an interpleader action, the Supreme Court again

highlighted the importance of comity in cases involving foreign sovereign defendants. See

27

Republic of Philippines v. Pimentel, 553 U.S. 851, 865–66 (2008). In Pimentel, the Supreme

Court held that where one party to an action is immune from suit under the FSIA, and the

immune party is a “necessary” party within the meaning of Federal Rule of Civil Procedure 19,

the entire case must be dismissed so as to avoid the “potential for injury to the interests of the

absent sovereign.” Id. at 867.

At issue in Pimentel was whether the Republic of the Philippines had a right to the

proceeds in a U.S. brokerage account that once belonged to deposed dictator Ferdinand Marcos.

See id. at 857–60. The Supreme Court reversed the holding of the district and appellate courts

that an interpleader action could go forward, even though the sovereign defendant—the Republic

of the Philippines—was immune from suit in the United States, for “fail[ing] to give full effect to

sovereign immunity.” Id. at 865. The Supreme Court noted that where “claims . . . arise from

events of historical and political significance. . . . [t]here is a comity interest in allowing a

foreign state to use its own courts for a dispute if it has a right to do so.” Id. at 866. Of

particular concern to the Pimentel court was the fact that the sovereign defendants in that case

had “a unique interest in resolving the ownership of or claims to the [challenged] assets and in

determining if, and how, the assets should be used to compensate those persons who suffered

grievous injury under Marcos.” Id.

Similarly to the D.C. Circuit in Princz, the Pimentel court saw grave problems in

subjecting a sovereign to suit in U.S. courts, particularly where the claims involve a contentious

issue of “historical and political significance” to the sovereign. See id. (“The dignity of a foreign

state is not enhanced if other nations bypass its courts without right or good cause.”). Although

no FSIA exception applied to the Republic of the Philippines in Pimentel, see id. at 865 (stating

the FSIA exceptions “are inapplicable here, or at least the parties do not invoke them”), the

28

concern for allowing a class of victims of a foreign dictator to attempt to seize assets that could

rightfully belong to a foreign sovereign is entirely in line with the cautious tone raised by

Altmann and Sosa, see id.at 866.

More recently, in Kiobel v. Royal Dutch Petroleum Co., 18 133 S. Ct. 1659, 1663 (2013),

the Supreme Court expanded on the line of reasoning laid out in Sosa pertaining to the ATS. At

issue in Kiobel were the claims of foreign nationals against foreign companies for alleged

conduct that occurred on foreign soil. See id. at 1662–63. Among the atrocities alleged in

Kiobel were aiding and abetting the state sponsored “beating, raping, killing, and arresting

residents and destroying or looting property.” Id. at 1662. The Kiobel Court noted that, although

the ATS is “strictly jurisdictional,” the presumption against extraterritorial application of U.S.

law—and, consequently, the jurisdiction of United States courts—is rooted in the need to

“protect against unintended clashes between our laws and those of other nations which could

result in international discord.” Id. at 1664 (quoting EEOC v. Arabian Am. Oil Co. (Aramco),

499 U.S. 244, 248 (1991)) (internal quotation marks omitted). The Supreme Court held that “the

danger of unwarranted judicial interference in the conduct of foreign policy is magnified in the

context of the ATS, because the question is not what Congress has done but instead what courts

may do.” Id. (emphasis added). The Kiobel Court cautioned that the foreign policy concerns,

“which are implicated in any case arising under the ATS, are all the more pressing when the

question is whether a cause of action under the ATS reaches conduct within the territory of

another sovereign.” Id. at 1665.

18

Although Kiobel was decided after the motions to dismiss were filed in this case, the Court gave the parties the

opportunity to provide supplemental briefing regarding the impact of Kiobel on the instant matter, see Minute Order

(Apr. 18, 2013), and subsequently submitted their analysis. See Def. RCH Suppl. Mem. Concerning The Effect Of

Kiobel, ECF No. 87; Hungary Defs.’ Suppl. Mem. Regarding The Impact Of The Supreme Court’s Kiobel Decision

On This Case, ECF No. 88; Pls.’ Kiobel Mem.; Def. RCH Reply Mem. Concerning The Effect Of Kiobel On This

Action, ECF No. 91; Pls.’ Mem. Reply Def. RCH’s Reply On The Effect of Kiobel On This Action, ECF No. 94.

29

The practical consequences that could flow from throwing open U.S. courthouse doors to

vindicate harms caused by egregious conduct perpetrated by foreigners overseas were of

particular concern to the Kiobel Court, which stated that “accepting petitioners’ view would

imply that other nations, also applying the law of nations, could hale our citizens into their courts

for alleged violations of the law of nations occurring in the United States, or anywhere else in the

world.” Id. at 1669. Thus, the Court found, “[t]he presumption against extraterritoriality guards

against our courts triggering serious foreign policy consequences, and instead defers such

decisions, quite appropriately, to the political branches.” Id.; see also Doe v. Exxon Mobil Corp.,

654 F.3d 11, 77–78 (D.C. Cir. 2011) (Kavanaugh, J. dissenting in part) (listing ongoing protests

by foreign governments to extraterritorial application of ATS for “improperly interfere[ing] with

their rights to regulate their citizens and conduct in their own territory”), vacated and remanded

by 527 F. App’x 7 (D.C. Cir. 2013).

Similarly to the ATS, the FSIA is a jurisdictional statute because it “take[s] away no

substantive right but simply changes the tribunal to hear the case.” Princz, 26 F.3d 1166, 1170

(alteration in original, quotation marks and citation omitted). Yet, as the exclusive method under

which litigants may hale foreign sovereigns into courts in the United States, see id., the FSIA

implicates the same policy considerations about which the Supreme Court advised caution in

Kiobel, 133 S. Ct. at 1669. If anything, the policy concerns raised in Kiobel, where jurisdiction

was sought over a foreign corporation, see Kiobel, 133 S. Ct. at 1663, apply a fortiori in the

FSIA context, where jurisdiction is sought over a foreign sovereign.

Most recently, in Daimler AG v. Baumann (Daimler), 134 S. Ct. 746, 763 (2014), the

Supreme Court discussed the need to honor international comity, this time in the context of a suit

against a German company, under the ATS and Torture Victim Protection Act, for alleged

30

human rights violations that took place outside of U.S. territory during Argentina’s “dirty war,”

id. at 751. The Supreme Court found that a federal court in California could not exercise general

jurisdiction over the German corporation for its alleged collaboration “with Argentinian state

security forces to kidnap, detain, torture, and kill plaintiffs and their relatives during”

Argentina’s military dictatorship, when no part of the alleged collaboration giving rise to the

plaintiffs’ claims occurred in United States territory and the corporate defendant had insufficient

connection to the forum. Id. at 751. In doing so, the Daimler Court criticized the lower court for

paying “little heed to the risks to international comity” engendered by “its expansive view of

general jurisdiction.” Id. at 763. Of particular concern was that “foreign governments’

objections to some domestic courts’ expansive views of general jurisdiction have in the past

impeded negotiations of international agreements on the reciprocal recognition and enforcement

of judgments.” Id. (citation omitted). The Supreme Court therefore found that “[c]onsiderations

of international rapport thus reinforce our determination that subjecting [the foreign defendant]

to the general jurisdiction of courts in California would not accord with the fair play and

substantial justice due process demands.” Id. (internal quotation marks omitted).

* * *

The plaintiffs seek to hale a foreign sovereign, Defendant Hungary, its instrumentality,

Defendant MÁV, and a foreign private corporation, Defendant RCH, into a U.S. court to answer

for the crimes the entities’ predecessors committed seven decades ago. As the previous

discussion makes clear, cases involving the FSIA and the ATS nearly always raise substantial

comity concerns, which are not diminished by the fact that the claims pertain to the Holocaust

during World War II. See Abelesz v. Magyar Nemzeti Bank, 692 F.3d 661, 667 (7th Cir. 2012).

31

These concerns are heightened with respect to the Hungary Defendants. The FSIA

governs the ultimate resolution of this matter as to the Hungary Defendants and the plaintiffs’

claims against these two defendants must be dismissed unless those claims fall within one of the

FSIA’s exceptions. See 28 U.S.C. § 1604 (“a foreign state shall be immune from the jurisdiction

of the courts of the United States and of the States” subject to certain enumerated exceptions). 19

Beginning with Princz and proceeding through to Daimler, this Circuit and the Supreme Court

have expressed grave reservations about the use of federal courts to adjudicate claims against

foreign entities, under the ATS and the FSIA, for actions that took place on foreign soil,

particularly when those claims may be better addressed on a sovereign-to-sovereign level. 20 The

19

The FSIA does not apply to Defendant RCH, which does not argue that it is an “instrumentality” of the Austrian

state subject to the FSIA. See generally Def. RCH’s Mem. The plaintiffs assert an ATS claim against this

defendant, see FAC ¶¶ 208–12, and application of the ATS to Defendant RCH is discussed at Part III.C.4, infra.

20

Indeed, the defendants have urged the Court to decline to adjudicate this matter under the prudential “political

question doctrine.” See Hungary Defs.’ Mem. at 12–24; Pls.’ Hungary Opp’n at 19–32; Def. RCH’s Mem. at 15

n.12 (adopting Hungary Defs.’ political question briefing). The Supreme Court’s repeated cautions about

“[c]onsiderations of international rapport,” see Daimler, 134 S. Ct. at 762, highlight the justiciability question of

whether the plaintiffs’ claims for damages resulting from the systematic, government-sponsored pillaging and

murder of hundreds of thousands of Hungarian Jews are within the province of the Federal Judiciary to address.

Evaluating the merits of these allegations regarding the widespread official acts of a sovereign and its

instrumentalities to commit genocide, as well as the sufficiency of the sovereign’s efforts to adhere to a treaty

requiring it to make restitution and to atone for the terrible wrongs of a past regime, is a tempting task. See FAC ¶

132 (detailing Hungarian laws designed to “provid[e] compensation” to human rights violations victims); id. ¶ 140

(“The Jewish victims of the Hungarian Holocaust seek only what is due them – compensation and restitution for the

atrocities they suffered at the hands of the Defendants, and a final accounting based on the contents of the Hungarian

archives that have yet to be released.”). Yet, when a sovereign is a party, courts must be mindful of the potential

adverse impact undertaking such a task could have on relations of the United States with that sovereign such that the

task is better committed to representatives of the American people, on a sovereign-to-sovereign level. See, e.g.,

Princz, 26 F.3d at 1174 n.1. Due to this fundamental concern, other courts have dismissed claims by Holocaust

victims against the sovereign nations that engaged in reprehensible genocidal acts before and during WWII as

raising non-justiciable political questions. See, e.g., Whiteman v. Dorotheum GmbH & Co. KG, 431 F.3d 57, 73 (2d

Cir. 2005) (dismissing sovereign defendants from Nazi-era theft case on political question grounds); Alperin v.

Vatican Bank, 410 F.3d 532, 561–62 (9th Cir. 2005) (holding adjudication of Holocaust era slave labor claims was

non-justiciable political question); In re Nazi Era Cases Against German Defendants Litigation, 196 F. App’x 93,

101 (3d Cir. 2006) (holding claims by victim of Nazi-era medical experiments against German sovereign defendants

non-justiciable political question ). More recently, the Seventh Circuit, in Abelesz, recognized the serious comity

issue raised by adjudicating the merits of whether Hungarian efforts to provide restitution to the victims of the

Hungarian Holocaust were sufficient, noting that “[i]f U.S. courts are ready to exercise jurisdiction to right wrongs

all over the world, including those of past generations, we should not complain if other countries’ courts decide to

do the same.” 692 F.3d at 682. Indeed, the “slippery slope” nature of the concern expressed by the Abelesz court

leads inevitably to a question of whether broadening the reach of U.S. courts in the manner requested by the

plaintiffs could lead to plaintiffs suing in foreign courts to obtain redress for the horrors of slavery inflicted upon

millions of African-Americans during the eighteenth and nineteenth centuries in the United States, or for the

32

claims before this Court, to use Blackstone’s international law elements summarized in Sosa, are

more akin to “‘offences [sic] against’ the law of nations [that] are ‘principally incident to whole

states or nations’” than to “mercantile questions, such as bills of exchange and the like . . . .”

Sosa, 542 U.S. at 714–15 (quoting 4 WILLIAM BLACKSTONE, COMMENTARIES *67–68). The

claims here are predicated on the execution of Holocaust-related policies in Hungary, even if

they include ostensibly commercial torts such as conversion and unjust enrichment. See FAC ¶¶

164–225. Violence and expropriation, conducted as an expression of government policy and

perpetrated on a vast scale, simply cannot be addressed in the same way as a bailment claim, see

de Csepel v. Republic of Hung., 714 F.3d 591, 599 (D.C. Cir. 2013), or a suit seeking damages

for falling off a train platform, see Sachs v. Republic of Austria, 737 F.3d 584, 588 (9th Cir.

2013), where Circuit courts have found the FSIA’s exceptions overcome a foreign sovereign’s

immunity. The Supreme Court’s interpretation of the FSIA and the federal courts’ proper role in

adjudicating disputes arising overseas is clear: where principles of international comity are at

issue, the appropriate branch to address grievances is the Executive, not the Judiciary.

For this fundamental reason, over the past twenty years, numerous circuit courts called

upon by Holocaust survivors to obtain redress from the modern-day governments of the nations

which, in the 1930s and 1940s, committed heinous crimes against Jewish members of their

civilian populations, have dismissed the suits. With the exception of cases involving specifically

identifiable expropriated art objects, see de Csepel, 714 F.3d at 594 (denying motion to dismiss

for Holocaust survivor’s heirs’ claim alleging breach of post-war bailment agreement); Altmann

v. Republic of Austria, 317 F.3d 954, 958 (9th Cir. 2002) (denying motion to dismiss for heir’s

claims seeking return of expropriated art), those courts have found, as this Court finds today, that

destruction of property resulting from overseas armed conflicts involving American soldiers since the dawn of the

Republic. Although the Court does not reach this issue since the pending motions are resolved on different grounds,

the concerns the defendants elucidate regarding the political nature of the legal issues posed are significant.

33

recompense for the victims of the Holocaust is unavailable from the Federal Judiciary. See, e.g.,

Princz, 26 F.3d at 1176 (dismissing Holocaust survivor’s claims for lack of subject matter

jurisdiction under FSIA); Garb v. Republic of Pol., 440 F.3d 579, 582 (2d Cir. 2006) (dismissing

Holocaust survivors’ claims based on expropriation on sovereign immunity grounds); Whiteman,

431 F.3d at 74 (dismissing Holocaust survivors’ claims under political question doctrine);

Alperin v. Vatican Bank, 410 F.3d 532, 561–562 (9th Cir. 2005) (same); Abrams v. Societe

Nationale Des Charmins De Fer Francais, 389 F.3d 61, 64–65 (2d Cir. 2004) (per curiam)

(dismissing Holocaust survivors’ claims for lack of subject matter jurisdiction under FSIA);

Deutsch v. Turner Corp., 324 F.3d 692, 703 (9th Cir. 2003) (dismissing Holocaust survivors’

claims California law claims under after invalidating law on Constitutional foreign affairs

doctrine); Sampson v. Fed. Republic of Ger., 250 F.3d 1145, 1146 (7th Cir. 2001) (dismissing

Holocaust survivor’s claims for lack of subject matter jurisdiction and lack of standing); Wolf v.

Fed. Republic of Ger., 95 F.3d 536, 544 (7th Cir. 1996) (same); Haven v. Rzeczpospolita Polska,

68 F. Supp. 2d 947, 958 (N.D. Ill. 1999) (dismissing Holocaust victim’s claims against sovereign

defendants on sovereign immunity grounds under FSIA); Hirsh v. State of Israel, 962 F. Supp.

377, 379 (S.D.N.Y. 1997) (same) aff’d, 133 F.3d 907 (2d Cir. 1997); see also Museum of Fine

Arts, Bos. v. Seger-Thomschitz, 623 F.3d 1, 3 (1st Cir. 2010) (dismissing Holocaust victim’s

heir’s claims to Nazi expropriated painting on statute of limitation grounds); Orkin v. Taylor, 487

F.3d 734, 738 (9th Cir. 2007) (dismissing for failure to state claim Holocaust victim’s heirs’

claims for ownership of art expropriated by Nazis).

Set against these general principles regarding the appropriate exercise of this Court’s

jurisdiction over claims such as those at bar, the Court now turns to an analysis of the

defendants’ jurisdictional grounds for dismissal.

34

B. The Hungary Defendants

The parties do not dispute that the Hungary Defendants are, in the case of Defendant

Hungary, a sovereign nation and, in the case of Defendant MÁV, an agency or instrumentality of

Defendant Hungary. See FAC ¶ 82 (“Defendant Republic of Hungary is a sovereign nation”);

id.¶ 85 (“Defendant MÁV is an agency or instrumentality of the Republic of Hungary for

purposes of the Foreign Sovereign Immunities Act”). The “sole basis for obtaining jurisdiction

over a foreign state [or its instrumentalities] in our courts” is the FSIA. Argentine Republic v.

Amerada Hess Shipping Corp. (Amerada Hess), 488 U.S. 428, 434 (1989). Thus, the plaintiffs

must prove with respect to the Hungary Defendants that their claims for damages stemming from

the expropriation of their property during World War II fit within one of the FSIA’s exceptions

to the general rule of sovereign immunity. See Verlinden, 461 U.S. at 493 (“The [FSIA] must be

applied by the District Courts in every action against a foreign sovereign, since subject matter

jurisdiction in any such action depends upon the existence of one of the specified exceptions to

foreign sovereign immunity.”).

The specified exceptions to the FSIA, found in 28 U.S.C. §§ 1605–07, only apply,

however, if allowing a suit against a sovereign to proceed, pursuant to one of those exceptions,

does not conflict with “existing international agreements to which the United States [was] a party

at the time of the enactment of” the FSIA. See Amerada Hess, 488 U.S. at 434 (quoting 28

U.S.C. § 1604) (alterations in original). The parties devoted their initial briefing on the FSIA to

whether the so-called “expropriation exception” to foreign sovereign immunity, under 28 U.S.C.

§ 1605(a)(3), applies to the claims at issue. See Hungary Defs.’ Mem. at 79; Pls.’ Hungary

Opp’n at 7–19; Hungary Defs.’ Reply Mem. Supp. Mot. Dismiss FAC (“Hungary Defs.’ Reply”)

at 3–11, ECF No. 27; Pls.’ Hungary Sur-Reply Mem. at 1–9, ECF No. 30. Despite

acknowledging the execution before enactment of the FSIA of the 1947 Treaty related to “the

35

restoration of confiscated property” to Jewish people during World War II, see FAC ¶ 127, the

parties did not initially address the “treaty exception,” which provides that a treaty may trump

both a sovereign nation’s immunity and any otherwise applicable FSIA exception, 28 U.S.C. §

1604. The Court invited additional briefing on this issue, see Minute Order (Jan. 10, 2014), to

which the Hungary Defendants and the plaintiffs responded. See Pls.’ Response Re.

Applicability of “Treaty Exception,” 28 U.S.C. §1604 Of The FSIA, To This Case (“Pls.’ Treaty

Mem.”) at 1, ECF No. 107; Hungary Defs.’ Suppl. Mem. Re. Applicability of 28 U.S.C. § 1604

To The Claims Raised In Pls.’ FAC (“Hungary Defs.’ Treaty Mem.”) at 1, ECF No. 108. After

considering these submissions and the applicable law, the Court finds that the 1947 Treaty is an

“existing international agreement[] to which the United States [was] a party at the time of the

enactment” of the FSIA, 28 U.S.C. § 1604, and triggers the FSIA’s treaty exception to deprive

this Court of subject matter jurisdiction over the plaintiffs’ claims. 21

21

This matter is ultimately decided on the basis of the FSIA’s treaty exception. Nevertheless, were the treaty

exception not to apply, the plaintiffs’ attempt to fit their claims against the Hungary Defendants into the

expropriation exception to the FSIA suffers from significant defects. The factual basis for application of the

expropriation exception is the plaintiffs’ allegation that the Hungary Defendants “maintain[] property in[] the United

States[] that has been exchanged for the property [they] stole from the plaintiffs.” FAC ¶ 83; see also id. ¶ 85

(stating that Defendant “MÁV owns and/or operates property and property exchanged for property that it stole from

Hungarian Jewish deportees.”). Specifically, the plaintiffs allege that the Hungary Defendants liquidated the assets

they expropriated, co-mingled the resulting funds with their general revenues, and that this co-mingling has tainted

all property owned by the Hungary Defendants, including any such property present in the United States. See, e.g.,

FAC ¶ 98 (“The monies thus confiscated were remitted to Defendant Hungary’s national treasury and commingled

with general governmental revenues.”); id. ¶ 99 (“The proceeds [from expropriated property] were transferred to the

Hungarian government treasury and co-mingled with other Hungarian government revenues.”); id. ¶ 100

(“Defendant railways’ funds and operations are in part derived from the funds they realized from liquidating the

possessions they stole from Plaintiffs.”); id. ¶ 105 (“These extortionate charges [for water during the deportations]

were also commingled with MÁV’s legitimate revenues.”).

This expropriation theory presents three problems. First, contrary to the plaintiffs’ allegations—and not

mentioned in any of the parties’ briefing—the 1947 Treaty, the terms of which Defendant Hungary declared itself in

full compliance, see Decl. of Lázló Nagy, Partner, Weil, Gotshal & Manges LLP – Budapest (“Nagy Decl.”) ¶ 30,

ECF No. 22-2, contains a clause requiring any unclaimed expropriated property to be deposited in funds for relief

for persecuted communities, see 1947 Treaty art. 27(2). Pursuant to the terms of this treaty, the Hungarian Jewish

Heritage Public Foundation was established with real property, art, and annuities valued at over $27 million and

apparently continues to be funded by the Hungarian government with subsidies in excess of $4.5 million per year.

See Nagy Decl. ¶¶ 28–29. Both Article 27 of the 1947 Treaty and the evidence submitted regarding this Treaty’s

implementation raise a significant issue with the plaintiffs’ contention that the Hungarian state or its

instrumentalities continue to retain property or property exchanged for property expropriated by the Nazi-era

Hungarian state.

36

1. The Treaty Exception To The FSIA

The treaty exception is embodied in the opening clause of 28 U.S.C. § 1604, which reads,

in full:

Subject to existing international agreements to which the United States is a party

at the time of enactment of this Act a foreign state shall be immune from the

jurisdiction of the courts of the United States and of the States except as provided

in sections 1605 to 1607 of this chapter.

If applicable, the treaty exception provides the contours of the immunity to which a sovereign

state is entitled under the FSIA. See H.R. Rep. 94-1487 (1976) (“H.R.”) at 12; S.R. Rep. 94-

1310 (1976) (“S.R.”) at 11 (stating the FSIA “is intended to preempt any other State or Federal

law (excluding applicable international agreements) for according immunity to foreign

sovereigns, their political subdivisions, their agencies, and their instrumentalities.”) (emphasis

added). The text of section 1604 makes plain that the FSIA was not intended to upset or

interfere with the pre-existing scope of sovereign immunity embodied in international

agreements. See 28 U.S.C. § 1604. Instead, the FSIA was designed to provide predictability

Second, the plaintiffs’ contention that the co-mingling of funds taints all property maintained by the

Hungary Defendants is highly attenuated and therefore weak support for application of the expropriation exception.

The expropriation exception has been applied when certain property is identifiable and in the possession of the

defendant sovereign. See Agudas Chasidei Chabad of the U.S. v. Russian Fed’n (Chabad), 528 F.3d 934, 938 (D.C.

Cir. 2008). The theory advanced by the plaintiffs here has been rejected by other courts, since the diffuse nature of

any remaining proceeds would tend to defeat any effort at proving the presence of “property exchanged for

[expropriated] property.” See Freund v. Republic of France, 592 F. Supp. 2d 540, 559–61 (S.D.N.Y. 2008)

(rejecting inference that fact of expropriation and subsequent liquidation was sufficient to show current possession),

aff’d sub nom. Freund v. Societe Nationale des Chemins de fer Francais, 391 F. App’x 939, 942 (2d Cir. 2010); cf.

Abelesz, 692 F.3d at 688–89 (observing, in dicta, that motion to dismiss could be denied based on claims that

foreign sovereign “retains ownership of real property” expropriated from Holocaust victims in addition to liquidated

assets). At the same time, the Court notes that the Hungary Defendants have utterly failed to provide any affidavits

or other proof refuting the bare-bones allegations in the plaintiffs’ FAC regarding the Hungary Defendants’ contacts

with the United States, see FAC ¶¶ 83, 85, 98–100, such as was submitted by Defendant MÁV in Abelesz, see 692

F.3d at 694 (citing declaration from chief executive officer of Defendant MÁV).

Finally, there remains an open question whether the expropriation exception is available absent a showing

that the plaintiffs have exhausted any domestic remedy in the country alleged to have expropriated the subject

property. Compare Abelesz, 692 F.3d at 682 (requiring exhaustion of domestic remedies in Hungary before

allowing Hungarian Holocaust survivors to proceed in action in U.S. court) with Cassirer v. Kingdom of Spain, 616

F.3d 1019, 1022 (9th Cir. 2010) (noting FSIA “does not mandate that the plaintiff exhaust local remedies for

jurisdiction to lie[]” but declining to consider “prudential exhaustion” on limited appeal). Since the Court finds that

the 1947 Treaty provides the exclusive mechanism to address the instant expropriation claims, it need not determine

whether these factual and legal obstacles to the application of the expropriation exception to the plaintiffs’ claims

are insurmountable.

37

where such agreements and extant law did not. See H.R. at 7; S.R. at 8 (stating one of major

rationales for FSIA’s passage was the need “to provide firm standards as to when a foreign state

may validly assert the defense of sovereign immunity”). The negotiated agreements between the

United States and other sovereigns in existence when the FSIA took effect on October 21, 1976,

referred to herein as “pre-existing agreements,” remain unaffected by the FSIA. See 28 U.S.C. §

1604.

Since the FSIA applies to actions taken by a foreign sovereign prior to the FSIA’s

enactment, see Altmann, 541 U.S. at 700, the treaty exception takes on added importance, see

H.R. at 10; S.R. at 6 (“the reference to existing international agreements [in the FSIA] is

essential to make it clear that [the FSIA] would not supersede the special procedures provided in

existing international agreements, such as the North Atlantic Treaty—Status of Forces

Agreement.”). Absent a pre-existing agreement with the United States affecting the scope of

sovereign immunity, the FSIA applies, meaning the foreign sovereign is generally immune,

unless one of the enumerated exceptions applies. See 28 U.S.C. § 1604; see also H.R. at 17; S.R.

at 16 (stating that the FSIA “starts from a premise of immunity and then creates exceptions to the

general principle.”). If a pre-existing agreement addresses the scope of a foreign sovereign’s

immunity with respect to particular claims, the agreement controls. See id. Determining

whether the pre-existing agreement actually concerns the scope of the sovereign’s immunity has

been the key legal issue in cases addressing application of the treaty exception.

A pre-existing agreement may be invoked in litigation against a foreign sovereign in two

ways: plaintiffs may use it offensively in order to overcome a sovereign’s immunity by showing

the agreement effectively amounts to a waiver, at least in part, of that immunity, see generally

Amerada Hess, 488 U.S. at 428, or defendant sovereigns may use it defensively to protect

38

sovereign immunity even when a FSIA exception would otherwise subject the sovereign to suit,

see generally Moore v. United Kingdom, 384 F.3d 1079 (9th Cir. 2004). Offensive use of a pre-

existing agreement is generally disfavored for at least three reasons. First, predicating suit on a

pre-existing agreement essentially requires a finding of a limited waiver of the sovereign

immunity that otherwise applies under the FSIA. Yet, resting such a limited waiver on the treaty

exception effectively bypasses the FSIA exception that already governs both express and implied

waiver by a sovereign state, see 28 U.S.C. 1605(a)(1) (“A foreign state shall not be immune from

the jurisdiction of courts of the United States . . . in any case . . . in which the foreign state has

waived its immunity either explicitly or by implication . . . .”), and, thereby, undermines the

“comprehensive jurisdictional scheme” set out in the FSIA to provide predictability and

consistency in actions against a foreign sovereign, see Altmann, 541 U.S. at 699. Second,

employing the treaty exception to assert subject matter jurisdiction over a sovereign, where no

FSIA exception—including the exception governing immunity waivers—applies, abrogates the

defendant sovereign’s immunity and directly implicates “[c]onsiderations of international

rapport,” Daimler, 134 S. Ct. at 762, and comity among sovereign nations, complicating the

Executive Branch’s responsibility for diplomatic relations. Finally, offensive use of a pre-

existing agreement to assert claims in U.S. courts against a sovereign state may run counter to

the “long recognized . . . presumption against finding treaty-based causes of action, because the

decision to create a private right of action is one better left to legislative judgment in the great

majority of cases.” McKesson Corp. v. Islamic Republic of Iran, 672 F.3d 1066, 1080 (D.C. Cir.

2012) (citing Medellin v. Texas, 552 U.S. 491, 506 n.3 (2004) and Sosa, 542 U.S. at 727)

(internal quotation marks omitted).

39

Defensive use of a pre-existing agreement, on the other hand, does not implicate the same

concerns. A sovereign state’s invocation of a pre-existing treaty to bar a suit is protective of

sovereign immunity, except to the extent reflected in the agreement’s terms, and compliance

with such terms therefore does not disturb international comity and relations. Accord Banco

Nacional de Cuba v. Sabbatino, 376 U.S. 398, 428 (1964) (recognizing that treaty “or other

unambiguous agreement regarding controlling legal principles” would provide exception to act

of state doctrine since compliance with treaty reduces conflict with “political branches of the

Government on matters bearing upon foreign relations”); Ramirez de Arellano v. Weinberger,

745 F.2d 1500, 1540–1541 (D.C. Cir. 1984) (en banc) (finding act of state doctrine unavailable

“when an applicable bilateral treaty governs the legal merits of the controversy,”explaining that

“[w]hen . . . the political branches have specified the controlling legal principles in a treaty with

the foreign sovereign . . . concerning the foreign act, the danger of improper judicial interference

with the Executive’s responsibilities for foreign affairs is greatly reduced.”), vacated on other

grounds, 471 U.S. 1113, 1113 (1985); Kalamazoo Spice Extraction Co. v. Provisional Military

Gov’t of Socialist Eth., 729 F.2d 422, 425, 427–428 (6th Cir. 1984) (finding that “the Supreme

Court’s concern in Sabbatino for judicial interference with foreign policy activity by the

Executive Branch is not a consideration” in adjudication of expropriation claim pursuant to

American-Ethiopian treaty providing for “prompt payment of just and effective compensation”

for expropriated property and, consequently, as urged by Executive Branch, act of state doctrine

was inapplicable). These principles are apparent when reviewing the case law interpreting the

FSIA’s treaty exception.

The Supreme Court confirmed in Amerada Hess that the treaty “exception applies when

international agreements ‘expressly conflict[t]’ with the immunity provisions of the FSIA . . . .”

40

Amareda Hess, 488 U.S. at 442 (citing H.R. at 17; S.R. at 17; U.S. Code Cong. & Admin. News

1976 at 6616) (brackets in original). The Court did not define what constituted an “express

conflict” warranting abrogation of immunity and “carv[ing] out an exception to the FSIA.” Id. at

443. The Court observed that certain international agreements containing “substantive rules of

conduct . . . stat[ing] that compensation shall be paid for certain wrongs[]” were not such

conflicts, noting that “[t]hey do not create private rights of action for foreign corporations to

recover compensation from foreign states in United States courts.” Id. at 442. Moreover, the

Court expressed reluctance to find a waiver of sovereign immunity under 28 U.S.C. § 1605(a)(1),

the FSIA’s waiver exception, when a foreign sovereign “sign[s] an international agreement that

contains no mention of a waiver of immunity to suit in United States courts or even the

availability of a cause of action in the United States.” Id. at 442–43. Although not characterized

as such by the Supreme Court, the plaintiffs in Amerada Hess were attempting to use the treaty

exception offensively, by relying on the terms of treaty as a basis for extending subject matter

jurisdiction over claims against a sovereign and to supersede the FSIA’s sovereign immunity

grant, where no FSIA exception otherwise applied. See id. at 441–42 (dismissing plaintiffs’

claim that “certain international agreements entered into by [the defendant sovereign state] and

by the United States create an exception to the FSIA here.”) (emphasis added).

This denial of the offensive use of the treaty exception is entirely consistent with the

purposes of the FSIA, as outlined by the Supreme Court in Amareda Hess. The overarching

purpose of the FSIA, as set out in section 1604, was to “bar[] federal and state courts from

exercising jurisdiction when a foreign state is entitled to immunity.” Id. at 434 (emphasis in

original). Congress’ intent, according to the Court, was “that the FSIA be the sole basis for

41

obtaining jurisdiction over a foreign state in our courts.” Id. 22 The Court further stated that

section 1604 provided immunity to foreign sovereigns from suit in U.S. courts, even for “those

cases . . . alleg[ing] violations of international law” if such violations “do not come within one of

the FSIA’s exceptions.” Id. at 436. Thus, the Supreme Court rejected the offensive use of the

treaty exception to expand the grounds under which a foreign sovereign could be subjected to

suit in U.S. courts. See id. at 442–43.

The D.C. Circuit considered another offensive use of the treaty exception in Foremost-

McKesson, Inc. v. Islamic Republic of Iran (Foresmost-McKesson), 905 F.2d 438, 451–52 (D.C.

Cir. 1990), and similarly denied the plaintiff’s attempt to use the treaty exception and the terms

of a pre-existing treaty as the basis for suit under U.S. law against a sovereign state, though it did

find the FSIA’s commercial exception conferred jurisdiction. Specifically, in that case, the

plaintiff argued that it had been illegally divested of its investment in an Iranian dairy and that a

treaty between the United States and Iran in effect prior to the FSIA acted as a waiver of

sovereign immunity. See Foremost-McKesson, 905 F.2d at 440–41, 451–52. The D.C. Circuit

rejected that argument, finding that the treaty in question, at most, “sets forth such substantive

provisions” that were found not to trigger the FSIA in Amareda Hess and, consequently, could

not act as a waiver of sovereign immunity against Iran. 23 See id. at 452; see also Frolova v.

U.S.S.R., 761 F.2d 370, 374–75 (7th Cir. 1985) (rejecting attempted offensive use of treaty

exception based on United Nations Charter that did not confer private right of action and finding

that allowing suit would raise “serious foreign policy implications which courts are ill-equipped

22

In a similar vein, the Seventh Circuit surmised that the comprehensiveness and exclusiveness of the FSIA

indicated that “Congress was cautious about the development and source of future exceptions to the immunity it

granted[]” in the FSIA. Sampson, 250 F.3d at 1153.

23

In subsequent litigation in the same matter, the D.C. Circuit made clear that subject matter jurisdiction in that case

was predicated on the FSIA’s commercial activities exception and that, while the treaty at issue provided no right of

action under U.S. law, the treaty did provide a private right of action against Iran under Iranian law, a point

conceded by Iran. McKesson Corp. v. Islamic Republic of Iran, 672 F.3d 1066, 1073, 1078 (D.C. Cir. 2012).

42

to anticipate or handle”); Thai Lao Lignite (Thailand) Co., Ltd. v. Gov’t of Lao People’s

Democratic Republic, No. 10 Civ. 5256, 2013 WL 1703873, at *5 (S.D.N.Y. Apr. 19, 2013)

(rejecting attempted use of New York Convention on enforcement of foreign arbitral awards to

supersede FSIA in case where FSIA barred suit); Chen v. China Cent. Television, No 06 Civ.

414, 2007 WL 2298360, at *4 (S.D.N.Y. Aug. 9, 2007) (rejecting attempted use of Genocide

Convention and the Convention Against Torture to create treaty exception allowing suit against

otherwise immune sovereign); Smith v. Socialist People’s Libyan Arab Jamahiriya, 886 F. Supp.

306, 311–12 (E.D.N.Y. 1995) (rejecting attempted offensive use of treaty exception based on

United Nations Charter and Security Council Resolutions condemning Libyan bombing of Pan

Am 103 to confer subject matter jurisdiction despite prohibition by FSIA); Von Dardel v.

U.S.S.R., 736 F. Supp. 1, 5–6 (D.D.C. 1990) (rejecting attempted offensive use of treaty

exception to obtain jurisdiction over U.S.S.R. based on pre-existing international agreements

where agreements’ language did not confer private right of action).

In 1992, the Ninth Circuit addressed the treaty exception in the context of a suit brought

against the Republic of Argentina for the alleged torture of one plaintiff and expropriation of the

other plaintiffs’ property. See Siderman de Blake v. Republic of Arg., 965 F.2d 699, 702 (9th

Cir. 1992). The Ninth Circuit interpreted the Supreme Court’s ruling in Amareda Hess as

“erect[ing] a serious obstacle to claims that, by subscribing to a treaty or other international

agreement, a defendant state loses its immunity under the FSIA.” Id. at 719. Faced with an

offensive use of the treaty exception, similarly to Amareda Hess and Foremost-McKesson, the

Ninth Circuit found that legally binding treaties, such as the United Nations Charter, do not serve

to abrogate a foreign sovereign’s presumed immunity to suit unless the agreement contained

language “regarding individual remedies or compensation for violations of its substantive rules

43

of conduct.” Id. at 720. Consequently, the Ninth Circuit rejected the offensive use of the treaty

exception to support subject matter jurisdiction over a cause of action if that claim were

otherwise barred by the FSIA. Id. 24

By contrast to cases in which the offensive use of the treaty exception has been denied,

thereby protecting the sovereign immunity of the defendant sovereign under FSIA’s section

1604, the defensive use of the treaty exception by a sovereign to supersede application of a FSIA

exception has been more successful. Recognizing that the language of the treaty exception and

“its meaning is not entirely transparent,” the Ninth Circuit undertook a more detailed analysis in

Moore v. United Kingdom, 384 F.3d 1079, 1084 (9th Cir. 2004). In that case, the plaintiff

claimed to have been injured by a number of British soldiers in a bar fight in Tacoma,

Washington. Id. at 1081. The plaintiff sued the soldiers and the “government of the United

Kingdom” in District Court in Washington, seeking damages for his injuries. Id. “[N]one of the

defendants appeared in the district court,” but “the United States filed an application for leave to

appear as amicus curiae, along with a ‘Suggestion of Lack of Subject Matter Jurisdiction[]’”

based on an international agreement called the North Atlantic Treaty Organization Status of

Forces Agreement (“NATO-SOFA”), id. at 1081–82, which, inter alia, pertains to litigation

against NATO service members “who are within the United States,” id. at 1083.

The operative section of the NATO-SOFA in Moore provided that foreign service

members on active duty in the United States were “ ‘assimilated’ into the United States military”

for the purposes of claims raised against them. Id. at 1086 (quoting Daberkow v. United States,

581 F.2d 785, 789 (9th Cir. 1978)). In essence, the NATO-SOFA provided that the British

24

The Ninth Circuit ultimately found that the foreign sovereign in that case had “implicitly waived it sovereign

immunity with respect to [the plaintiffs’] claims for torture[]” and, on the limited record before it, that the FSIA’s

expropriation and/or commercial activity exceptions applied to the taking of the plaintiffs’ property. Siderman de

Blake, 965 F.2d at 712, 722.

44

soldier defendants were to be treated as U.S. service members for the purposes of litigation,

effectively immunizing the United Kingdom from suit. See id. Thus, the Ninth Circuit

considered whether the treaty exception to the FSIA “can only permit suits against foreign states

where the FSIA would not[,]”—in other words, offensive use of the treaty exception—or

whether pre-existing “agreements can preclude suit where the FSIA would otherwise allow

it[,]”—in other words, defensive use of the exception. See id. at 1084.

The Ninth Circuit’s answer to this question was that the treaty exception may apply in

both circumstances; in other words, a pre-existing agreement may be used defensively to protect

immunity or offensively to abrogate immunity. Id. at 108485 (“[P]reexisting international

agreements could either expand or contract a foreign nation’s amenability to suit as compared to

that under the FSIA”). Relying on Amerada Hess and the legislative history of the FSIA, the

Moore court held that “any conflict with the FSIA immunity provisions, whether toward more or

less immunity, is within the treaty exception.” Id. at 1084. The Ninth Circuit went on to note

that such a reading was “the only sensible one” since “[t]o read § 1604 otherwise, as permitting

pre-existing international agreements only to expand a foreign state’s exposure to suit but not to

limit it, would allow the FSIA to implicitly trump treaties precluding certain kinds of suits

against foreign nations.” Id. at 1084–85. The court found that the pre-existing agreement

embodied in NATO-SOFA applied to the situation in Moore, with the result that the suit had to

be dismissed, even though, absent that agreement, the FSIA would have allowed the plaintiff to

proceed against the United Kingdom. Id. at 1088 (“As the NATO-SOFA controls, there is no

jurisdiction under the FSIA over [the plaintiff’s] suit against the United Kingdom.”). 25 See also

25

Specifically, under the NATO-SOFA, a suit against NATO service members on active duty in the United States

was construed as if the service members were part of the U.S. military, thereby requiring substitution of the United

States, against which the plaintiff’s suit for an intentional tort was barred by the Federal Tort Claims Act, for the

United Kingdom. See Moore, 384 F.3d at 1088.

45

Gutch v. Federal Republic of Germany, 444 F. Supp. 2d 1, 8 (D.D.C. 2006) (declining to find

NATO-SOFA restricted otherwise applicable sovereign immunity when plaintiff attempted

offensive use of treaty exception) disagreed with on other grounds by Nemariam v. Fed.

Democratic Republic of Eth., 491 F.3d 470, 476 (D.C. Cir. 2007); Greenpeace, Inc. (U.S.A.) v.

State of France, 946 F. Supp. 773, 788 (C.D. Cal. 1996) (upholding defensive use of treaty

exception and finding NATO-SOFA barred claim against French soldiers). Thus, Moore

confirmed the principle that the treaty exception may be used defensively by a sovereign, which

is a party to an existing international agreement providing broader immunity than otherwise

available under the FSIA’s exceptions. See id; see also 767 Third Ave. Assocs. v. Permanent

Mission of Republic of Zaire to United Nations, 988 F.2d 295, 297 (2d Cir. 1993) (holding

preexisting agreement granting diplomatic and consular immunities barred application of FSIA);

Mashayekhi v. Iran, 515 F. Supp. 41, 43 (D.D.C. 1981) (holding that immunity provisions in

Treaty of Amity between United States and Iran prohibited suit to which FSIA exception likely

would have applied); Ewald v. Royal Norwegian Embassy, No. 11-cv-2116, 2013 WL 6094600,

at *5 (D. Minn. Nov. 20, 2013) (holding that preexisting agreement declaring foreign missions

“inviolable” superseded application of FSIA exception); Johnson v. U.K. Government, 608 F.

Supp. 2d 291, 296–97 (D. Conn. 2009) (holding preexisting agreement shielded consular official

without deciding whether FSIA would have allowed suit).

In cases—such as Moore and the one at bar—involving the defensive use of the treaty

exception by a sovereign, courts have closely examined the structure and text of the underlying

international agreement relied upon by the sovereign to ascertain whether the agreement failed to

address or protect the sovereign’s immunity on the subject matter of the claims at issue. When

courts have found no “express[] conflict,” Amerada Hess, 488 U.S. at 442, between the pre-

46

existing agreement and application of the FSIA’s exceptions under sections 1605 through 1607,

subject matter jurisdiction has been exercised. For example, in an unpublished opinion, the D.C.

Circuit rejected a foreign sovereign’s attempt to use the treaty exception to avoid application of

FSIA’s state-sponsored terrorism exception, 28 U.S.C. § 1605(a)(7), which strips sovereign

immunity from countries that, “inter alia, ‘provi[ded] material support or resources’ for an act of

‘hostage taking,’ if the state was designated as a state sponsor of terrorism ‘at the time the act

occurred’ or was ‘later so designated as a result of’ the act taken.” Wyatt v. Syrian Arab

Republic, 266 F. App’x 1, 2 (2008) (quoting 28 U.S.C. § 1605(a)(7)) (alteration in original). The

defendant sovereign in that case argued that the United Nations Charter, to which both Syria and

the United States were parties, prohibited the unequal treatment of member states. See id. The

D.C. Circuit found that the state-sponsored terrorism exception treated all U.N. member states

equally, since any of them could be placed on the state-sponsors of terror list by the U.S.

Secretary of State. Id. Thus, the Wyatt court found no conflict between the international

agreement and the FSIA and, consequently, that the treaty exception did not bar application of

the FSIA exceptions. Id.

Likewise, in World Holdings, LLC v. Federal Republic of Germany (World Holdings),

613 F.3d 1310, 1317 (11th Cir. 2010), the Eleventh Circuit denied a sovereign’s defensive use of

the FSIA’s treaty exception based on a pre-existing international agreement pertaining to bonds

issued by Germany in the early twentieth century. 26 In that case, the pre-existing agreement

provided that no bond “shall be enforceable unless and until it shall be validated” by a “Board

26

The Eleventh Circuit reserved decision regarding the general availability of the treaty exception as a defense to a

suit but merely assumed this construction of the FSIA, explaining that “[w]e need not decide whether the ‘subject to’

language applies only to abrogate immunity where it may otherwise exist under the FSIA, or whether an existing

international agreement may alternatively preserve a foreign sovereign’s immunity from the jurisdiction of United

States courts where the foreign sovereign’s conduct otherwise falls under an exception to immunity in the FSIA.”

World Holdings, 613 F.3d at 1315 n.8.

47

for the Validation of German Bonds in the United States established by the Agreement on

Validation Procedures, or by the authorities competent for that purpose in” the sovereign

defendant. Id. at 1315 (quoting the Agreement Between the Government of the United States of

America and the Government of the Federal Republic of Germany Regarding the Validation of

Dollar Bonds of German Issue, U.S.-Ger., Feb. 27, 1953, 4 U.S.T. 797). 27 The plaintiff brought

suit in U.S. District Court to enforce its bonds without first complying with the validation

procedures set out by the agreement between the United States and Germany. See id. at 1314.

Although the parties had stipulated that FSIA’s commercial activity applied, id. at 1315,

Germany nonetheless argued that the court lacked subject matter jurisdiction because its

agreement with the United States “precluded an enforcement action in United States courts on

bonds that have not been validated,” id. at 1314. The Eleventh Circuit concluded that, although

the treaty set out mechanisms for validation of the bonds as a prerequisite for enforcement, the

issue of immunity from suit for purposes of subject matter jurisdiction was a separate and

distinct issue from the merits question of the enforceability of the bonds. See id. at 1316–17.

With respect to the former jurisdictional issue, the court found that the treaty “is silent on the

question of immunity[]” and, consequently, similarly to the treaty considered in Amerada Hess,

“the treat[y] at issue did not expressly conflict with the FSIA because they did not speak to the

issue of sovereign immunity.” Id. at 1316. With respect to the latter merits issue, the court

expressly “advise[d] that this is not a decision as to whether World Holdings’ bonds are, in fact,

enforceable[,]” but merely “that the district court has the authority to decide that issue.” Id. at

27

The lengthy procedural history of World Holdings need not be recounted here. The dispute centered on whether

certain bonds were among those stolen by Soviet forces during World War II after the bonds had been retired. See

World Holdings, 613 F.3d at 1313. The agreement entered into between Germany and the United States was

intended to protect the interests of legitimate American bond holders, who were at risk of losing out to “holders of

the looted bonds” in competition for Germany’s limited foreign currency reserves. See id. (quoting Abrey v. Reusch,

153 F. Supp. 337, 339 (S.D.N.Y. 1957)).

48

1317 (emphasis in original); see also Mortimer Off Shore Servs. v. Fed. Republic of Ger., 615

F.3d 97, 108, 117 (2d Cir. 2010) (affirming dismissal of claims to enforce German bonds under

same treaty at issue in World Holdings, upon finding FSIA’s commercial activity exception

applied providing subject matter jurisdiction as to bonds issued by West Germany, but, on

merits, bonds not validated per terms of treaty so not enforceable); Bleiser v. Bundesrepublik

Deutschland, No. 08 C 6254, 2010 U.S. Dist. LEXIS 107174, at *18–19 (N.D. Ill. Oct. 7, 2010)

(concluding that same treaty at issue in World Holdings did not preclude subject matter

jurisdiction but that “this decision does not preclude a finding that the bonds are unenforceable

for failure to comply with the validation requirement” under the treaty), aff’d sub nom on other

grounds, Korber v. Bundesrepublik Deutschland, 739 F.3d 1009, 1011 (7th Cir. 2014).

Set against this case law regarding the defensive use of the FSIA’s treaty exception, the

Court now turns to its application in the instant matter.

2. The 1947 Peace Treaty

The Hungary Defendants assert that the 1947 Treaty “provides an exclusive mechanism

and forum for the resolution of individuals’ claims against Hungary for expropriation of property

during World War II.” Hungary Defs.’ Treaty Mem. at 1. Citing the FSIA’s treaty exception,

these defendants argue that the terms of the 1947 Treaty preclude the exercise of subject matter

jurisdiction over the instant claims. See id. Based on an examination of the 1947 Treaty, the

Court agrees. See Medellin, 552 U.S. at 506 (“The interpretation of a treaty, like the

interpretation of a statute, begins with its text.”).

Two articles in the 1947 Treaty are relevant to the plaintiffs’ claims: Article 27 and

Article 40. Article 27 reads, in full:

1. Hungary undertakes that in all cases where the property, legal rights or

interests in Hungary of persons under Hungarian jurisdiction have, since

September 1, 1939, been the subject of measures of sequestration, confiscation or

49

control on account of the racial origin or religion of such persons, the said

property, legal rights and interests shall be restored together with their

accessories or, if restoration is impossible, that fair compensation shall be made

therefor.

2. All property, rights and interests in Hungary of persons, organisations

or communities which, individually or as members of groups, were the object of

racial, religious or other Fascist measures of persecution, and remaining heirless

or unclaimed for six months after the coming into force of the present Treaty,

shall be transferred by the Hungarian Government to organisations in Hungary

representative of such persons, organisations or communities. The property

transferred shall be used by such organisations for purposes of relief and

rehabilitation of surviving members of such groups, organisations and

communities in Hungary. Such transfer shall be effected within twelve months

from the coming into force of the Treaty, and shall include property, rights and

interests required to be restored under paragraph 1 of this Article.

1947 Treaty art. 27 (emphasis supplied).

As the text of this article makes plain, this treaty between the Allied Nations and

Defendant Hungary addressed reparations for the victims of the Hungarian Holocaust. See 1947

Treaty art. 27. Defendant Hungary agreed to “restore[] together with their accessories, or, if

restoration is impossible, [make] fair compensation” to all people who were the victims of

“sequestration, confiscation or control on account of racial origin or religion of such persons[.]”

Id. art. 27(1). In addition, the 1947 Treaty contemplated that those victimized by the Hungarian

government during the war would be compensated quickly. See id. art. 27(2). Under Article 27,

confiscated property retained by Defendant Hungary was to be “transferred . . . to organisations

[sic] in Hungary representative of [Holocaust victims], organisations [sic], or communities”

within twelve months if such property went “unclaimed” for six months after the 1947 Treaty

came into force. Id. Thus, the operation of the 1947 Treaty envisioned, perhaps unrealistically

given the trauma the Hungarian Holocaust victims had suffered, that individual victims would

make claims for their wartime losses within six months of the treaty coming into force. See id.

If the victims were unable to do so, the 1947 Treaty provided that confiscated property—or

50

“compensation therefor”—would be delivered to relief organizations to benefit the victims of the

Holocaust. See id.

The other relevant article in the 1947 Treaty is Article 40, which reads in full:

1. Except where another procedure is specifically provided under any

Article of the present Treaty, any dispute concerning the interpretation or

execution of the Treaty, which is not settled by direct diplomatic negotiations,

shall be referred to the Three Heads of Mission acting under Article 39, except

that in this case the Heads of Mission will not be restricted by the time limit

provided in that Article. Any such dispute not resolved by them within a period

of two months shall, unless the parties to the dispute mutually agree upon another

means of settlement, be referred at the request of either party to the dispute to a

Commission composed of one representative of each party and a third member

selected by mutual agreement of the two parties from nationals of a third country.

Should the two parties fail to agree within a period of one month upon the

appointment of the third member, the Secretary-General of the United Nations

may be requested by either party to make the appointment.

2. The decision of the majority of the members of the Commission shall be

the decision of the Commission, and shall be accepted by the parties as definitive

and binding.

1947 Treaty art. 40 (emphasis supplied). This article establishes a three-tiered review procedure

for disputed claims arising under the 1947 Treaty, namely: (1) resolution through direct

diplomatic negotiations, id. art. 40(1); (2) followed by referral to a board of the “Three Heads of

Mission” of the Soviet Union, the United Kingdom, and the United States, see id. art. 39

(defining “Three Heads of Mission”); id. art. 40(1); and (3) final resolution by a “Commission”

made up of representative selected by the parties to a dispute, id. art. 40(1). This procedure must

be used “[e]xcept where another procedure is specifically provided under any Article of the

[1947] Treaty.” Id. This article required that “any dispute concerning the interpretation or

execution of the treaty” was subject to resolution exclusively through the mechanisms described

in the Treaty. The 1947 Treaty goes on to state that the “decision of the majority of the members

of the Commission shall be the decision of the Commission, and shall be accepted by the parties

as definitive and binding.” Id. art. 40(2).

51

Taken together, Article 27 and Article 40 provide an explicit agreement by Defendant

Hungary to provide reparations to the Hungarian government’s wartime victims, id. art. 27(1); a

time period, albeit short, in which claims had to be made, id. art. 27 (2); a three-step review

process for resolution of any disputes over the execution of these reparations, id. art 40(1); and a

clear end to any disputes when a Commission issues a final ruling, id. art.40(2). The question

disputed by the parties is whether this treaty constitutes an “existing international agreement,” 28

U.S.C. § 1604, that is in conflict with the FSIA such that the treaty exception applies.

3. The 1947 Treaty Conflicts With The FSIA

By providing an exclusive mechanism for dispute resolution arising from the

“interpretation or execution of the Treaty,” Defendant Hungary agreed to a limited, conditional

waiver of sovereign immunity regarding the subjects covered by the 1947 Treaty. Although the

plaintiffs contend that the 1947 Treaty “is not at all like” the NATO-SOFA at issue in Moore, see

Pls.’ Treaty Mem. at 3 n.3, the two agreements share material similarities. The NATO-SOFA at

issue in Moore required one sovereign to shift the legal regime applicable to its own service

members by “assimilat[ing]” those service members into the service of an ally and subjecting

them to another sovereign’s legal system. See Moore, 384 F.3d at 1086. Under the 1947 Treaty,

Defendant Hungary relinquishes its sovereign immunity to the limited extent necessary to

recognize rights to restitution and to submit itself to a sui generis legal regime designed to

address the issues covered by the 1947 Treaty. See 1947 Treaty art. 40. As in Moore, the pre-

existing agreement between the foreign sovereign and the United States specified the forum

where certain disputes were to be resolved and, in doing so, altered the contours of each nation’s

sovereign immunity. Far from being “not at all like” the NATO-SOFA, Pls.’ Treaty Mem. at 3

n.3, which the Ninth Circuit found superseded the FSIA under the treaty exception, see Moore,

52

384 F.3d at 1088, the 1947 Treaty shares a key feature of delineating a specific and exclusive

regime to resolve certain types of claims.

There is no dispute that the claims in the instant matter stem from the discriminatory

expropriation of rights and property from Hungarian Jews by the Hungarian state during World

War II and that the subject matter of such claims was addressed in the 1947 Treaty. The

gravamen of the plaintiffs’ FAC is that the Hungary Defendants’ efforts to comply with the 1947

Treaty were “paltry and wholly inadequate.” FAC ¶ 132. Where the parties differ is whether the

1947 Treaty “expressly conflicts” with the provisions of the FSIA, see Amerada Hess, 488 U.S.

at 442, such that the 1947 Treaty controls and precludes jurisdiction in this Court.

The plaintiffs rely heavily on the Seventh Circuit’s decision in Abelesz. See Pls.’ Treaty

Mem. at 4–5. There, the court rejected the application of the treaty exception when asserted by

Defendant MÁV in a case brought by Jewish victims of the Hungarian Holocaust, finding that

the 1947 Treaty did not “expressly conflict” with the FSIA, citing Articles 27 and 40. See

Abelesz, 692 F.3d at 695–96. In response, the Hungary Defendants state that “the Seventh

Circuit erred in this part of its decision.” Hungary Defs.’ Treaty Mem. at 9. The Abelesz

decision is not binding on this Court, nor is its reasoning on this issue ultimately persuasive.

The Abelesz court’s finding is predicated on two critical interpretations of the 1947

Treaty. First, it states that “Article 27 spoke exclusively to Hungary’s obligations. It said

nothing about the rights and responsibilities of the people from whom Hungary expropriated

property.” Id. at 695. Yet, Article 27 expressly provides that “the people from whom Hungary

expropriated property,” id., are to have restored the “property, legal rights and interests” that

were “the subject of measures of sequestration, confiscation or control on account of the racial

origin or religion of such persons,” implicitly establishing a “right” to restitution for victims

53

from whom property was expropriated, 1947 Treaty art. 27(1). Additionally, Article 27 provides

a six month time period for victims to claim their property, after which “unclaimed” property

would be transferred to aid organizations for the victims of the Hungarian Holocaust, thus

implicitly suggesting that the claimants had a responsibility—perhaps unrealistic—to assert

claims within that timeframe. 28 See id. art. 27(2). Thus, while not granting a private right of

action to enforce the restitution obligations undertaken by Hungary, as the Seventh Circuit

pointed out, see Abelesz, 692 F.2d at 695, Article 27 nonetheless does establish individual

“rights” explicitly, and individual “responsibilities,” at least implicitly, to assert claims in a

timely manner—or see the expropriated property turned over to relief agencies, see 1947 Treaty

art. 27.

The Seventh Circuit’s second critical interpretation of the 1947 Treaty concerns Article

40. The Abelesz court acknowledged that the “1947 Treaty did establish an exclusively

executive branch mechanism [for resolution of disputes]—but only for disputes concerning the

interpretation or execution of the Treaty, not for disputes concerning restitution for expropriated

property.” 692 F.3d at 695–96. It then found, without further explanation, that this “exclusive

executive branch mechanism” did not “expressly conflict” with the FSIA. See id. This

28

As previously noted, see supra note 21, Defendant Hungary’s obligation under Article 27 to transfer “[a]ll

property, rights and interests” that it expropriated “to organisations [sic] in Hungary representative of such persons,

organisations [sic] or communities” from whom the property was expropriated undermines the plaintiffs’ assertion

in the FAC that the Hungary Defendants remain in possession of property or property exchanged for property

expropriated from them. See FAC ¶¶ 83, 85. Moreover, although the Hungarian Constitutional Court initially ruled

in the 1990s that Hungary was not in compliance with the 1947 Treaty, the Hungarian government revisited this

issue and determined that the country had come into compliance by 2007, see Hungary Defs.’ Mem. at 26 n.25

(citing Hungary Government Decision 1091/2007). Thus, even if the FSIA were not superseded in this matter by

the pre-existing 1947 Treaty, the plaintiffs would have to overcome significant hurdles to establish that their claims

against the Hungary Defendants fall within the FSIA’s expropriation exception, which requires a foreign sovereign

to retain possession of expropriated property or property exchanged for such expropriated property. See 28 U.S.C. §

1605(a)(3). Since the treaty exception applies to the instant motion, however, the Court need not decide the effect, if

any, on the application of the expropriation exception of the Hungarian government’s 2007 decision finding that

Defendant Hungary was in full compliance with the requirements set out in Article 27(2) of the 1947 Treaty,

implying that all unclaimed confiscated property or interests were transferred to refugee organizations.

54

interpretation turns on an unduly restrictive reading of the meaning of “any dispute concerning

the interpretation or execution of the Treaty.” See 1947 Treaty art. 40(1).

A contextual examination of Article 40, in conjunction with Article 26, which provides

rights for foreign nationals from whom property was expropriated, and Article 27, which

provides rights for people under Hungarian jurisdiction from whom property was expropriated,

as well as other portions of the 1947 Treaty, illustrates why the FSIA’s treaty exception applies

to the instant plaintiffs’ claims. While primarily a peace treaty, the 1947 Treaty contains

numerous provisions relating to the rights and responsibilities of the Allied Nations, the Hungary

Defendants, and the people and armies under their control. For example, the 1947 Treaty also

describes obligations on the part of Hungary pertaining to navigation on the Danube River, see

1947 Treaty art. 38; international rail travel and the rates charged for such travel, see id. art. 34;

treatment of corporations from the Allied Nations within Hungary, see id. art. 33(1)(c);

resolution of claims on behalf of Hungary and its nationals against other nations, see id. art. 32;

and reparations to the Soviet Union, Czechoslovakia, and Yugoslavia for losses caused by

military action, see id. art. 23. All of these provisions are subject to the three-tier resolution

process set forth in Article 40. See 1947 Treaty art. 40. Absent the 1947 Treaty, however,

Defendant Hungary would have sovereign immunity from suits concerning virtually all of the

aforementioned claims.

When viewed through this lens, the “express conflict” with the FSIA comes into focus.

In signing the 1947 Treaty, Defendant Hungary waived its sovereign immunity to a limited

extent in agreeing to make expropriation victims whole. See generally 1947 Treaty. Article 40

is the codification of the condition to this limited waiver to which the Hungary Defendants

55

agreed. Although the words “sovereign immunity” do not appear in Article 40, the conditional

waiver agreed to by the Hungary Defendants is implicit throughout the article.

A critical condition is set out in Article 40, whereby Defendant Hungary subjected itself

to an “exclusive[] executive branch mechanism,” Abelesz, 692 F.3d at 695, for resolution of any

“dispute concerning the interpretation or execution of the Treaty,” 1947 Treaty art. 40(1). The

Seventh Circuit’s narrow reading of this provision in Abelesz is difficult to reconcile with the

language in Article 27. The plaintiffs do not dispute that Defendant Hungary has a

responsibility, under Article 27, to make those from whom it expropriated property whole.

Indeed, neither do the defendants. The plaintiffs instead argue that the Hungary Defendants’

attempts to comply with Article 27 and to make Hungarian Holocaust victims whole were “paltry

and wholly inadequate.” FAC ¶ 132. Whether the plaintiffs are correct is immaterial to the

application of the treaty exception. Since the 1947 Treaty provides a right to be made whole for

the victims of the Hungarian Holocaust, any dispute over the adequacy of those efforts is, by

definition, a dispute over the interpretation or execution of the 1947 Treaty such that Article 40

applies. In such a case, Article 40 creates an exclusive, extrajudicial remedy premised on

diplomacy.

The House and Senate Reports accompanying the FSIA bolster this conclusion.

Congress expressly intended that the “immunity provisions [in the FSIA] are made subject to

‘existing’ treaties and other international agreements to which the United States is a party.” H.R.

at 17; S.R. at 17. As examples, the House Report stated that the FSIA would not “alter the

provisions of commercial contracts or agreements to which the United States is a party, calling

for exclusive nonjudicial remedies through arbitration or other procedures for the settlement of

disputes.” Id. (emphasis added). The “exclusive[] executive branch mechanism” provided for in

56

Article 40 to settle disputes arising from claims within the scope of the 1947 Treaty is just such a

“nonjudicial remed[y]” for which Congress designed the treaty exception. 29

Consequently, the Court holds that the plaintiffs’ claims are entirely based on the

expropriation of their property by the Hungarian government and its instrumentalities during

World War II and, consequently, fall squarely within the scope of Article 27 of the 1947 Treaty.

The plaintiffs’ claims are, in essence, over the adequacy of the Hungary Defendants compliance

with their responsibilities under Article 27. Such an inquiry requires an interpretation of the

1947 Treaty’s terms and the Hungary Defendants’ efforts to execute it. Consequently, Article

40, which provides for an exclusive, extrajudicial mechanism to resolve such disputes,

“expressly conflicts” with the 1947 Treaty. The 1947 Treaty is an “existing agreement” within

the meaning of 28 U.S.C. § 1604, such that the exceptions to the FSIA do not apply and the 1947

Treaty controls. Therefore, the plaintiffs’ requests for relief are properly directed to the

Executive Branch, which may resolve such disputes diplomatically, rather than the Judicial

29

The Supreme Court in Amerada Hess relied on language in the House and Senate Reports stating “[i]n the event

that an international agreement expressly conflicts with this bill, the international agreement would control,” to

create the “express conflicts” test, which has been applied thereafter. See 488 U.S. at 442 (quoting H.R. at 17; S.R.

at 17) (emphasis supplied). Yet, the same reports contain a further elucidation of this principle, noting that “[m]any

provisions in [international] agreements are consistent with, but do not go as far as, the current bill. To the extent

such international agreements are silent on a question of immunity, the bill would control; the international

agreement would control only where a conflict was manifest.” H.R. at 18; S.R. at 17. While somewhat ambiguous,

this report language is generally in keeping with the FSIA’s “premise of immunity” from which certain “exceptions

to the general principle” were created. See H.R. at 17; S.R. at 17. It is possible to read this language as a “magic

words” requirement that demands use of the word “immunity” in a pre-existing agreement before such an agreement

can be found to conflict with the FSIA by not “go[ing] as far as” the statute’s exceptions in restricting immunity.

See id. Such a reading, dependent on an explicit mention of sovereign immunity, is too narrow of a reading of

Congressional intent, especially considering that United States policy prior to 1952 was one of “virtual absolute

immunity” for foreign states. See Princz, 26 F.3d at 1169. Moreover, requiring explicit discussion of immunity in a

pre-existing agreement as a predicate for finding an “express conflict” with the FSIA would essentially conflate the

treaty exception in section 1604 with the explicit waiver exception in section 1605(a)(1). The better reading of this

influential passage in the Congressional reports is that some international agreements—particularly those entered

into before the 1952 Tate letter against the backdrop of absolute sovereign immunity—“do not go as far as” the

FSIA exceptions in restricting immunity and must be given effect, i.e., defensive use of the treaty exception, when

any abrogation of immunity reflected in the agreement is expressly conditioned. Such conditions may “manifest” a

conflict with the FSIA’s exceptions even when the “magic words” of sovereign immunity are absent.

57

Branch, which is constrained by the FSIA to recognize the Hungary Defendants’ sovereign

immunity, consistent with the conditional waiver embodied in the 1947 Treaty.

The plaintiffs contend that the D.C. Circuit’s decision in de Csepel does not “suggest that

this Circuit would reach a different outcome on the inapplicability of the treaty exception than

the Seventh Circuit[]” in Abelesz. Pls.’ Treaty Mem. at 6. The D.C. Circuit analyzed the 1947

Treaty at some length in de Csepel, see 714 F.3d at 601–03, and, albeit in dicta, clarified the

types of claims that would fall within the treaty exception under the 1947 Treaty, see id. at 602.

Contrary to the plaintiffs’ contention, the D.C. Circuit’s discussion is pertinent to the instant

matter and bolsters the conclusion that the plaintiffs’ claims are barred by the treaty exception.

At issue in de Csepel were the efforts of the heirs of a major Hungarian Jewish art

collector to reacquire art objects that were “loaned” to the Hungarian state immediately after

World War II. 714 F.3d at 595–96. The heirs alleged that the arrangement constituted a

bailment “whereby Hungary assumed ‘a duty of care to protect the property and to return it to”

the plaintiff’s family. Id. at 596. The lawsuit centered on the heirs’ claims that Hungary

breached the bailment agreement by refusing to return the artwork in 2008. Id. The D.C. Circuit

rejected Hungary’s argument that the 1947 Treaty and the 1973 Executive Agreement between

the United States and Hungary prevented the District Court from exercising subject matter

jurisdiction. 30 See id. at 602–03. In doing so, the Court accepted Hungary’s description that

Articles 27 and 40 of the 1947 Treaty “[t]aken together . . . establish an exclusive treaty-based

mechanism for resolving all claims seeking restitution of property discriminatorily expropriated

during World War II from individuals subject to Hungarian jurisdiction.” Id. at 602.

Nonetheless, the Court found that the “Peace Treaty presents no conflict with Hungary’s

30

This Court need not reach the question of whether the 1973 Agreement, which was intended to resolve all

outstanding claims of U.S. nationals, bars the claims of the U.S. nationals who are members of the purported class,

since the instant claims may be resolved by reliance on the 1947 Treaty.

58

amenability to suit under the FSIA[]” in that case “for the simple reason that the [heirs’] claims

fall outside the Treaty’s scope.” Id. Specifically, the Court explained that the “family’s claims

rest not on war-time expropriation but rather on breaches of bailment agreements formed and

repudiated after the war’s end.” Id. at 602 (citation omitted). Thus, the D.C. Circuit had no

reason to address whether the 1947 Treaty’s exclusive mechanism for addressing claims based

on expropriated property were in conflict with the FSIA. See id.

The D.C. Circuit’s treatment—without disputing Hungary’s view—of the scope of the

1947 Treaty bolsters this Court’s conclusion that the 1947 Treaty was intended to resolve claims

such as those brought by the plaintiffs in the instant matter for restitution arising from property

confiscated by the Hungarian defendants during the war.

The D.C. Circuit’s interpretation of the 1973 Executive Agreement makes this conclusion

clearer. In de Csepel, Hungary argued that the “1973 Agreement . . . effectuated a ‘full and final

settlement and . . . discharge’ of certain specified claims against Hungary by ‘nationals and the

Government of the United States,’ including, as relevant here, claims for ‘property, rights and

interests affected by Hungarian measures of nationalization, compulsory liquidation,

expropriation, or other taking on or before the date of this Agreement’ and claims for

‘obligations of the Hungarian People’s Republic under Articles 26 and 27 of the [Peace Treaty].”

Id. at 602 (quoting the 1947 Treaty and the Agreement Between the Government of the United

States of America and the Government of the Hungarian People’s Republic Regarding the

Settlement of Claims, U.S.-Hungary, Mar. 6, 1973, 24 U.S.T. 522 (“the 1973 Agreement”)). The

D.C. Circuit found that the 1973 Agreement, which, by its terms, incorporated claims under

Articles 26 and 27 of the 1947 Treaty, “settles claims for property expropriated by Hungary prior

to the date of the [1973] Agreement[.]” Id. at 603.

59

This finding by the D.C. Circuit supports two conclusions. First, the 1973 Agreement,

which resolved outstanding claims under Articles 26 31 and 27 of the 1947 Treaty, comported

with the requirements of Article 40, since Article 40 envisioned the resolution of such claims

through diplomatic negotiation. See 1947 Treaty Art. 40(1) (establishing dispute resolution

procedure for “any dispute concerning the interpretation or execution of the Treaty, which is not

settled by direct diplomatic negotiations” (emphasis added)). The resolution of outstanding

claims through state-to-state negotiation is in keeping with U.S. practice involving the claims of

its citizens against foreign sovereigns. See infra.

Second, the fact that the D.C. Circuit held that the 1973 Agreement resolved claims of

U.S. nationals against Defendant Hungary for property expropriated during the war indicates that

those claims were properly addressed through the 1947 Treaty’s provisions. See de Csepel, 714

F.3d at 602 (“the 1973 Agreement settles claims for property expropriated by Hungary prior to

the date of the [1973] Agreement”). This interpretation of the 1973 Agreement was important in

de Csepel to distinguish the heirs’ claims, which were predicated on a bailment agreement that

became ripe in 2008, rather than expropriation claims covered by either the 1947 Treaty or the

1973 Agreement. See id. In contrast to the claims at issue in de Csepel, the plaintiffs in the

instant matter are pressing claims entirely related to expropriation of property during the war.

See FAC ¶¶ 143 (noting the purported class “consists of (a) all surviving Jewish victims of the

Holocaust . . . who were stripped of personal property by any of the defendants . . . and (b) the

heirs . . . of the deceased Jewish victims of the Holocaust who at any time between September 1,

1939, and May 8, 1945, were stripped of personal property by any of the defendants”); 145(F)

(noting question of law or fact common to the purported class as “[w]hether the defendants, as a

31

Article 26 addressed Hungary’s responsibility to restore property and rights expropriated during the war to

nationals of the Allied Nations. See 1947 Treaty art. 26.

60

matter of course, confiscated the property and possessions of the Hungarian Jews

contemporaneous with their deportation, and failed to return that stolen property to its rightful

owners or provide adequate compensation therefor[,]” mirroring the language of the 1947

Treaty); 164–225 (describing all claims as stemming from expropriation of property and heinous

acts associated with such deportation). In detailing the types of acts that were settled in the 1973

Agreement on behalf of U.S. nationals—which were also covered by the 1947 Treaty—the D.C.

Circuit in de Csepel strongly indicated that, contrary to the plaintiffs’ assertion, see Pls.’ Treaty

Mem. at 6, the D.C. Circuit would find the instant claims covered by that treaty and subject to

the FSIA’s treaty exception.

The plaintiffs’ allegations that the Hungary Defendants have failed to fulfill their

obligations under the 1947 Treaty, or the subsequent 1973 Agreement, are of little relevance in

determining the effect of the treaty exception. Indeed, while generating controversy, diplomatic

settlement of private claims is not unusual when it concerns debts or claims owed by a foreign

sovereign with whom the United States had engaged in conflict. For instance, in Dames &

Moore v. Regan, 453 U.S. 654, 686 (1981), the Supreme Court held that it was not an undue

extension of executive power when, following the 1979 Iranian Hostage Crisis, the President,

acting under the powers provided to him by Congressional legislation and his foreign affairs

power provided by the Constitution in Article II, used an executive order to suspend all claims

against Iran and require all outstanding claims to be resolved through an alternative process,

namely, the Iran-United States Claims Tribunal, id. at 665. In upholding the President’s actions,

the Supreme Court noted that “[n]ot infrequently in affairs between nations, outstanding claims

by nationals of one country against the government of another country are ‘sources of friction’

between the two sovereigns . . . . [and t]o resolve these difficulties, nations have often entered

61

into agreements settling the claims of their respective nationals.” Id. at 679 (citation omitted).

Indeed, the Supreme Court cited the 1973 Agreement with Hungary, 24 U.S.T. 522, mentioned

in Abelesz and de Csepel, as an example of a “binding settlement[] with [a] foreign nation.” Id.

at 680 & n.9. The Court noted that “it is . . . undisputed that the ‘United States has sometimes

disposed of claims of its citizens without their consent, or even without consultation with them,

usually without exclusive regard for their interests, as distinguished from those of the nation as a

whole.’” Id. at 679–80 (quoting L. Henkin, Foreign Affairs and the Constitution 262–63

(1972)); see also City of New York v. Permanent Mission of India, 618 F.3d 172, 194 n. 15 (2d

Cir. 2010) (“The President’s authority to enter Executive Agreements to settle civil claims

between American citizens and foreign governments or foreign nationals is . . . treated as a gloss

on Executive Power.”) (internal quotation marks and citation omitted).

It stands to reason that if the United States government, through a treaty or an executive

agreement with a foreign nation, may make a binding settlement upon all the claims of its

citizens, the Hungarian government, through a negotiated treaty of peace with the Allied Nations

at the end of World War II, had the same power to negotiate and provide for settlement of its

claims on behalf of its citizens “without exclusive regard for their interests, as distinguished from

those of the nation as a whole.” Dames & Moore, 453 U.S. at 680. Although the plaintiffs’

description of the Hungary Defendants’ restitution efforts as “paltry and wholly inadequate,”

FAC ¶ 132, may be entirely accurate, they were pledged as part of a diplomatic process that the

Supreme Court has noted is practiced by the United States and “implicitly approved” by

Congress, Dames & Moore, 453 U.S. at 680. See also Kiaie v. Islamic Republic of Iran, No. 01-

1501, 2006 WL 3833946, at *2 (D.D.C. Dec. 29, 2006) (holding international claims settlement

agreement precluded judicial review of claims against Iran ruled on by commission).

62

The Seventh Circuit noted recently that “[d]iplomacy requires compromise. . . . [and]

diplomatic dispositions of private financial claims against other sovereigns, designed to facilitate

the establishment of peaceful relations among nations, have occurred throughout American

history.” Korber, 739 F.3d at 1012. In Korber, the Seventh Circuit was presented with the same

agreement regarding German bonds as that addressed by the World Holdings court. See id. at

1010–11. The plaintiffs in Korber “maintain[ed] that Germany has not carried out all its

obligations under the 1953 Treaty.” Id. at 1012. The Seventh Circuit held that such a

“contention should be made to the Department of State rather than to a district judge.” Id. Even

when “private parties [are] the intended beneficiaries of treaties,” the Seventh Circuit held, in the

absence of a private right of action provided for in the treaty, “diplomatic rather than judicial

channels are the appropriate ones for consideration of plaintiffs’ grievances.” Id. 32

* * *

In sum, the 1947 Treaty provided a process to administer the class of claims now raised

by the plaintiffs. All expropriated property was to have been returned or “compensation . . .

made therefor” under Article 27(1) of the 1947 Treaty. Any “unclaimed” property was to have

been turned over to relief organizations six months from the execution of the 1947 Treaty. 1947

Treaty art. 40(2). All of the plaintiffs’ claims against the Hungary Defendants pertain to

property or rights expropriated during World War II. See FAC ¶¶ 164–225. An exclusive

mechanism for resolution of disputes regarding “the interpretation or execution” of the 1947

Treaty was provided in Article 40. Consequently, the 1947 Treaty constitutes an “existing

agreement” to which the United States was a party prior to the enactment of the FSIA that

“expressly conflicts” with the FSIA, meaning the 1947 Treaty controls. See Amerada Hess, 488

32

Additionally, the Seventh Circuit held in Korber that a judicial order under the Alien Tort Statute “did not survive

Kiobel,” and that “how Germany administers the [process provided for in the treaty at issue] is for diplomats or

German courts to consider.” Korber, 739 F.3d at 1012.

63

U.S. at 442; H.R. at 18; S.R. at 17. The Hungary Defendants are entitled to sovereign immunity

except as modified by the 1947 Treaty and, consequently, the plaintiffs’ claims must be

dismissed for lack of subject matter jurisdiction. 33

C. Defendant RCH

Defendant RCH asserts four principal grounds in support of its motion to dismiss the

plaintiffs’ claims: (1) the lack of personal jurisdiction over it; (2) the claims are “non-justiciable,

under the political question doctrine[;]” (3) the plaintiffs’ claims are time barred; and (4) venue

in this District is improper “under the doctrine of forum non conveniens.” See Def. RCH’s Mem.

at 1–2. The Court agrees, for the reasons discussed below, that the plaintiffs have not established

sufficient minimum contacts of Defendant RCH with the United States to support the exercise of

personal jurisdiction over it. This conclusion obviates the need to address Defendant RCH’s

alternative arguments for dismissal of the claims against it.

The plaintiffs contend that Defendant RCH may be haled into court in the United States

based upon Federal Rule of Civil Procedure 4(k)(2). This rule provides that “[f]or a claim that

33

The plaintiffs have requested “limited discovery to elucidate further the jurisdictional facts giving rise to

exemptions under FSIA,” if this Court were inclined to grant the Hungary Defendants’ motion to dismiss. Pls.’

Hungary Opp’n at 49 n.50. Presumably, such discovery would entail access to the “official documentation

maintained by Defendants Hungary and MÁV evidencing their depradations [sic,]” to which the Hungary

Defendants have allegedly refused access to Hungarian Holocaust victims. FAC ¶ 158. It is conceivable that access

to this “trove of documents,” which are purported to contain “cargo manifests, bills of lading, invoices, inter-agency

memoranda and the like . . . that specified the details of each shipment of [Hungarian Jewish] deportees,” could

provide the plaintiffs with information regarding the eventual disbursement of their liquidated property. FAC ¶ 104;

see also ¶¶ 137–39 (alleging Hungary Defendants “created and maintained documentation . . . evidencing and

relating to the acts and events” of the Hungarian Holocaust, “including the isolation, ghettoization, enslavement,

plundering and deportation to the death camps of Hungarian Jewry[]” and that the Hungary Defendants “intend[] to

destroy all or part of this historical documentation.”). According to the plaintiffs, the continued withholding and

potential destruction of these documents “constitutes a continuing offense and violation of the Plaintiffs’

fundamental rights as human beings and as Jews.” FAC ¶ 137. By contrast to Defendant Hungary’s alleged

handling of such documentation, the Court notes that the United States, through the Nazi War Crimes Disclosure

Act, Pub. L. 105-246, 112 Stat. 1859 (1998), has gone so far as to require declassification and disclosure of any

documents pertaining to the Holocaust and the crimes against humanity committed during World War II. The

Hungary Defendants’ continued refusal to disclose these documents, if true, nearly seventy years after the end of the

war, is difficult to understand. Nevertheless, the plaintiffs’ claims are covered by the 1947 Treaty and,

consequently, neither the FSIA nor any of its exceptions apply. Accordingly, the Court denies the plaintiffs’ request

for jurisdictional discovery since such discovery would be futile.

64

arises under federal law, serving a summons . . . establishes personal jurisdiction over a

defendant if: (A) the defendant is not subject to jurisdiction in any state’s courts of general

jurisdiction; and (B) exercising jurisdiction is consistent with the United States Constitution and

laws.” FED. R. CIV. P. 4(k)(2); see FAC ¶ 86 (“While [Defendant RCH] is not subject to

jurisdiction in any state’s courts of general jurisdiction, the exercise of federal jurisdiction is

consistent with the United States [C]onstitution and laws in that the claim arises under federal

law, and [Defendant RCH] has substantial contacts with the United States as a whole.”). In

essence, Rule 4(k)(2) operates as a federal long-arm statute, requiring the plaintiffs to meet a

four-pronged test: (1) the claim against the defendant arises under federal law; (2) “a summons

has been served;” (3) the defendant is not subject to personal jurisdiction in any state court of

general jurisdiction; and (4) the exercise of personal jurisdiction by this federal court comports

with due process. Mwani, 417 F.3d at 10.

The parties do not dispute that the first three prongs of this test are met but contest

whether Defendant RCH has the requisite contacts with the United States to allow the exercise of

jurisdiction “consistent with the United States Constitution and laws.” See FED. R. CIV. P.

4(k)(2). 34 The Court first reviews the evolving legal principles governing the exercise of

34

The parties do not address the prerequisite for the application of Rule 4(k)(2), namely, whether the claims raised

“arise[] under federa

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