Alan Philipp v. Federal Republic of Germany

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 2, 2018 Decided July 10, 2018

No. 17-7064

ALAN PHILIPP, ET AL.,

APPELLEES

v.

FEDERAL REPUBLIC OF GERMANY AND STIFTUNG

PREUSSISCHER KULTURBESITZ,

APPELLANTS

Consolidated with 17-7117

Appeals from the United States District Court

for the District of Columbia

(No. 1:15-cv-00266)

Jonathan M. Freiman argued the cause for appellants.

With him on the briefs were Benjamin M. Daniels, David R.

Roth, and David L. Hall.

Nicholas M. O'Donnell argued the cause and filed the brief

for appellees.

Gary A. Orseck, Ariel N. Lavinbuk, Daniel N. Lerman, and

D. Hunter Smith were on the brief for amicus curiae David

Toren in support of appellees.

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Before: TATEL, GRIFFITH, and WILKINS, Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge: In this case, the heirs of several

Jewish art dealers doing business in Frankfurt, Germany in the

1930s seek to recover a valuable art collection allegedly taken

by the Nazis. Defendants, the Federal Republic of Germany

and the agency that administers the museum where the art is

now exhibited, moved to dismiss, claiming immunity from suit

under the Foreign Sovereign Immunities Act. They also argued

that the heirs failed to exhaust their remedies in German courts

and that their state-law causes of action are preempted by

United States foreign policy. The district court rejected all three

arguments and denied the motion to dismiss. For the reasons

set forth below, we largely affirm.

I.

Because this appeal comes to us from the district court’s

ruling on a motion to dismiss, “we must accept as true all

material allegations of the complaint, drawing all reasonable

inferences from those allegations in plaintiffs’ favor.” de

Csepel v. Republic of Hungary, 714 F.3d 591, 597 (D.C. Cir.

2013) (internal quotation marks omitted). Viewed through that

lens, the complaint relates the following events:

In 1929, three Frankfurt-based firms owned by Jewish art

dealers joined together into a “Consortium” and purchased “a

unique collection of medieval relics and devotional art” called

the Welfenschatz. First Amended Compl. (FAC) ¶ 1, Philipp v.

Federal Republic of Germany, 248 F. Supp. 3d 59 (D.D.C.

2017) (No. 1:15-cv-00266); see id. ¶¶ 34–35. The treasure—or

“schatz”—acquired its name due to its association with the

House of Welf, an ancient European dynasty. See id. ¶ 30.

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Dating primarily from the eleventh to fifteenth centuries, the

several dozen pieces that make up the Welfenschatz were

housed for generations in Germany’s Brunswick Cathedral. See

id. After displaying the Welfenschatz throughout Europe and

the United States and selling a few dozen pieces, the

Consortium placed the remainder of the collection, which at

that time retained about eighty percent of the full collection’s

value, into storage in Amsterdam. Id. ¶¶ 41, 78.

The heirs allege that “[a]fter the [1933] Nazi-takeover of

power in Germany, . . . the members of the Consortium faced

catastrophic economic hardship,” id. ¶ 10, and in 1935,

following “two years of direct persecution” and “physical peril

to themselves and their family members,” id. ¶ 145, the

Consortium sold the Welfenschatz to the Nazi-controlled State

of Prussia for 4.25 million Reichsmarks (the German currency

at the time), id. ¶¶ 145–160, “barely 35% of its actual value,”

id. ¶ 12. “Standing behind all of this was [Hermann] Goering,”

id. ¶ 73, “Prime Minister of Prussia at that time,” id., a

“notorious racist and anti-Semite,” id. ¶ 74, and “legendary” art

plunderer, id. ¶ 75. Goering “seldom if ever” seized outright

the art he desired, preferring “the bizarre pretense of

‘negotiations’ with and ‘purchase’ from counterparties with

little or no ability to push back without risking their property

or their lives.” Id. The Welfenschatz was then shipped from

Amsterdam to Berlin, see id. ¶ 157, where Goering presented

it to Adolf Hitler as a “surprise gift,” id. ¶ 179 (quoting Hitler

Will Receive $2,500,000 Treasure, Balt. Sun, Oct. 31, 1935, at

2). All but one of the Consortium members then fled the

country. See id. ¶¶ 163, 170–171. The remaining member died

shortly after, officially of “cardiac insufficiency,” id. ¶ 163, but

“rumors” circulated that he was “dragged to his death through

the streets of Frankfurt by a Nazi mob,” id. ¶ 166.

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“After the war, [the Welfenschatz] was seized by U.S.

troops,” id. ¶ 181, and eventually turned over to appellant

Stiftung Preussischer Kulturbesitz (SPK), a German agency

formed “for the purpose . . . of succeeding to all of Prussia’s

rights in cultural property,” id. ¶ 184; see id. ¶¶ 181–84. The

Welfenschatz is now exhibited in an SPK-administered

museum in Berlin. Id. ¶ 26(iv).

In 2014, appellees, Alan Philipp, Gerald Stiebel, and Jed

Leiber, heirs of Consortium members, sought to recover the

Welfenschatz, and they and the SPK agreed to submit the claim

to a commission that had been created pursuant to the

Washington Conference Principles on Nazi–Confiscated Art,

id. ¶ 220, an international declaration that “encouraged”

nations “to develop . . . alternative dispute resolution

mechanisms” for Nazi-era art claims, id. ¶ 197 (quoting U.S.

Dep’t of State, Washington Conference Principles on Nazi-

Confiscated Art ¶ 11 (1998) [hereinafter Washington

Principles]). Known as the German Advisory Commission for

the Return of Cultural Property Seized as a Result of Nazi

Persecution, Especially Jewish Property, id. ¶ 205, the

Advisory Commission concluded “that the sale of the

Welfenschatz was not a compulsory sale due to persecution”

and it therefore could “not recommend the return of the

Welfenschatz to the heirs,” Advisory Commission,

Recommendation Concerning the Welfenschatz (Guelph

Treasure) (Mar. 20, 2014), Appellants’ Supp. Sources 7; see

also FAC ¶ 221.

Seeking no further relief in Germany, the heirs filed suit in

the United States District Court for the District of Columbia

against the Federal Republic of Germany and the SPK

(collectively, “Germany”), asserting several common-law

causes of action, including replevin, conversion, unjust

enrichment, and bailment. See FAC ¶¶ 250–304. They sought

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the return of the Welfenschatz “and/or” 250 million dollars, id.

Prayer for Relief, a “conservative estimate[]” of its value, id.

¶ 33. Germany moved to dismiss, arguing that it enjoyed

immunity from suit under the Foreign Sovereign Immunities

Act (FSIA), that international comity required the court to

decline jurisdiction until the heirs exhaust their remedies in

German courts, and that United States foreign policy

preempted the heirs’ state-law causes of action. The district

court rejected all three arguments and, aside from a few

uncontested issues, denied the motion to dismiss. Philipp, 248

F. Supp. 3d at 87.

Germany appealed the district court’s FSIA determination

as of right. See Owens v. Republic of Sudan, 531 F.3d 884, 887

(D.C. Cir. 2008) (“[W]hen . . . a denial [of a motion to dismiss]

subjects a foreign sovereign to jurisdiction, the order is ‘subject

to interlocutory appeal.’” (quoting El–Hadad v. United Arab

Emirates, 216 F.3d 29, 31 (D.C. Cir. 2000))). On Germany’s

motion, the district court certified the other two issues for

interlocutory appeal, Philipp v. Federal Republic of Germany,

253 F. Supp. 3d 84 (D.D.C. 2017), and this court granted

Germany’s petition to present them now, Per Curiam Order, In

re Federal Republic of Germany, No. 17-8002 (D.C. Cir. Aug.

1, 2017). Reviewing de novo, we address Germany’s

immunity, comity, and preemption arguments in turn.

II.

Under the FSIA, foreign sovereigns and their agencies

enjoy immunity from suit in United States courts unless an

expressly specified exception applies. 28 U.S.C. § 1604. The

heirs assert jurisdiction under the statute’s “expropriation

exception,” see id. § 1605(a)(3), which “has two

requirements”: that “‘rights in property taken in violation of

international law are in issue,’” and that “there is an adequate

commercial nexus between the United States and the

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defendant[],” de Csepel v. Republic of Hungary, 859 F.3d

1094, 1101 (D.C. Cir. 2017) (quoting 28 U.S.C. § 1605(a)(3)).

Germany “bears the burden of proving that [the heirs’]

allegations do not bring [the] case within” the exception.

Phoenix Consulting Inc. v. Republic of Angola, 216 F.3d 36, 40

(D.C. Cir. 2000).

A.

As to the expropriation exception’s first requirement, we

explained in Simon v. Republic of Hungary, 812 F.3d 127 (D.C.

Cir. 2016), that although an “intrastate taking”—a foreign

sovereign’s taking of its own citizens’ property—does not

violate the international law of takings, id. at 144, an intrastate

taking can nonetheless subject a foreign sovereign and its

instrumentalities to jurisdiction in the United States where the

taking “amounted to the commission of genocide,” id. at 142.

This, we explained, is because “[g]enocide perpetrated by a

state,” even “against its own nationals[,] . . . is a violation of

international law.” Id. at 145. In so holding, we adopted the

definition of genocide set forth in the Convention on the

Prevention of the Crime of Genocide. Id. at 143. “[A]dopted by

the United Nations in the immediate aftermath of World War

II,” id., the Convention defines genocide, in relevant part, as

“[d]eliberately inflicting” on “a national, ethnical, racial or

religious group . . . conditions of life calculated to bring about

its physical destruction in whole or in part,” Convention on the

Prevention and Punishment of the Crime of Genocide

(Genocide Convention), art. 2, Dec. 9, 1948, 78 U.N.T.S. 277.

In Simon, “survivors of the Hungarian Holocaust,” 812

F.3d at 134, alleged that in 1944–45 Hungary “forced all Jews

into ghettos, . . . confiscating Jewish property” in the process,

id. at 133, and then “transport[ed] Hungarian Jews to death

camps, and, at the point of embarkation, confiscate[d] [their

remaining] property,” id. at 134. Assuming the truth of these

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allegations—like here, the case came to us from a ruling on a

motion to dismiss—we held that because the allegations of

“systematic, wholesale plunder of Jewish property . . . aimed

to deprive Hungarian Jews of the resources needed to survive

as a people . . . describe[d] takings of property that are

themselves genocide within the legal definition of the term,” id.

at 143–44 (internal quotation marks omitted), they “fit[]

squarely within the terms of the expropriation exception,” id.

at 146.

A year later, in de Csepel v. Republic of Hungary, 859 F.3d

1094 (D.C. Cir. 2017), we considered claims by the heirs of a

Jewish collector whose art was seized by the “Hungarian

government and its Nazi collaborators,” id. at 1097. We held,

among other things, that plaintiffs could pursue their

“bailment” claim for return of the art. Id. at 1103. The case, we

explained, was “just like Simon.” Id. at 1102. “Here, as there,

Hungary seized Jewish property during the Holocaust. Here, as

there, plaintiffs bring ‘garden-variety common-law’ claims to

recover for that taking.” Id.

In today’s case, the heirs argue that, after Simon and de

Csepel, “[i]t is beyond serious debate that Nazi Germany took

property in violation of international law by systematically

targeting its Jewish citizens to make their property vulnerable

for seizure.” Appellees’ Br. 27. The district court agreed,

concluding that, “like in Simon, the taking of the Welfenschatz

as alleged in the complaint bears a sufficient connection to

genocide such that the alleged coerced sale may amount to a

taking in violation of international law.” Philipp, 248 F. Supp.

3d at 71. Germany disagrees, insisting that “[t]he allegations

here have little in common with the Simon allegations except

that they happened under Nazi rule.” Appellants’ Br. 35.

According to Germany, four differences between this case and

Simon compel a different result.

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First, Germany argues that unlike in Simon, where the

Nazis confiscated “food, medicine, clothing, [or] housing,”

here they seized art. Id. at 40. Although de Csepel also involved

a seizure of art, we had no need to decide then whether Simon

applied because the Hungarian government had conceded that

the seizure there was genocidal, see de Csepel v. Republic of

Hungary, 169 F. Supp. 3d 143, 164 (D.D.C. 2016). Thus, we

are asked for the first time whether seizures of art may

constitute “takings of property that are themselves genocide.”

Simon, 812 F.3d at 144 (emphasis omitted). The answer is yes.

Congress has twice made clear that it considers Nazi art-

looting part of the Holocaust. In enacting the Holocaust

Victims Redress Act, which encouraged nations to return Nazi-

seized assets, Congress “f[ound]” that “[t]he Nazis’ policy of

looting art was a critical element and incentive in their

campaign of genocide against individuals of Jewish . . .

heritage.” Holocaust Victims Recovery Act, Pub. L. No. 105-

158, § 201, 112 Stat. 15, 15 (1998). And in the Holocaust

Expropriated Art Recovery Act (HEAR Act), which extended

statutes of limitation for Nazi art-looting claims, Congress

again “f[ound]” that “the Nazis confiscated or otherwise

misappropriated hundreds of thousands of works of art and

other property throughout Europe as part of their genocidal

campaign against the Jewish people and other persecuted

groups.” Holocaust Expropriated Art Recovery Act of 2016,

Pub. L. No. 114-308, § 2, 130 Stat. 1524, 1524 (emphasis

added).

In this case, moreover, the Welfenschatz was more than

just art. As Germany acknowledges, “the Consortium bought

[the Welfenschatz] not for pleasure or display, but as business

inventory, to re-sell for profit.” Appellants’ Br. 12. By seizing

businesses’ inventory—like the other economic pressures

alleged in the complaint, such as the “boycott of Jewish-owned

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businesses,” FAC ¶ 58, and “exclu[sion]” of Jews from certain

professions, id. ¶ 120—the Nazis “dr[ove] Jews out of their

ability to make a living,” id. ¶ 61, and thereby, in the words of

the Genocide Convention, “inflict[ed] . . . conditions of life

calculated to bring about [a group’s] physical destruction in

whole or”—at the very least—“in part,” Genocide Convention

art. 2(c).

Second, Germany argues that whereas Simon involved a

“forcible deprivation” of property, Appellants’ Br. 40, this case

involves only a “forced sale . . . for millions of Reichsmarks,”

id. at 42. For purposes of this appeal, however, Germany

concedes that the forced sale qualifies as a “tak[ing],” id. at 28

n.12, and it offers no reason why a taking by forced sale cannot

qualify as a genocidal taking. Indeed, the heirs’ allegations—

allegations that, we repeat, we must accept as true at this stage

of the litigation—support just that conclusion. According to the

complaint, Goering “routinely went through the bizarre

pretense of ‘negotiations’ with and ‘purchase’ from” powerless

counterparties. FAC ¶ 75. In addition, the heirs allege, the

Nazis made it impossible for Jewish dealers to sell their art on

the open market. Jewish art dealers’ “means of work” were

“effectively end[ed],” and “[m]ajor dealers’ collections were

liquidated because they could not legally be sold.” Id. ¶ 120.

“Jewish art dealers . . . lost” even “their Jewish customers,”

because, as a result of the crippling economic policies, “there

was no money left to buy art.” Id. ¶ 124. “By spring of 1935,”

the heirs allege, “the exclusion of Jews from . . . German life

. . . had become nearly total. The means by which German art

could be sold by Jewish dealers had effectively been

eliminated.” Id. ¶ 138. It was within that context, the heirs

allege, that the Nazis pressured the Consortium to sell the

Welfenschatz for well below market value. Id. ¶ 139. “The

Consortium had,” the heirs allege, “only one option.” Id. ¶ 145.

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Fearful of losing the entire value of their property, or worse,

the Consortium acquiesced. Id. ¶ 139.

Third, Germany claims that “conditions for Hungarian

Jews in 1944–45”—the period of time at issue in both Simon

and de Csepel—“were far different from conditions for

German Jews nearly a decade earlier, in the summer of 1935.”

Appellants’ Br. 40 n.23. The sale of the Welfenschatz,

Germany points out, predated “the Nuremberg Laws, . . . the

Decree on the Elimination of the Jews from Economic Life

. . . , and . . . the mass murder of German Jews.” Id.

In Simon, however, we explained that the “Holocaust

proceeded in a series of steps.” Simon, 812 F.3d at 143. “‘The

Nazis . . . achieved [the Final Solution] by first isolating [the

Jews], then expropriating the Jews’ property, then ghettoizing

them, then deporting them to the camps, and finally, murdering

the Jews and in many instances cremating their bodies.’” Id. at

144 (alterations in original) (quoting Complaint ¶ 91, Simon v.

Republic of Hungary, 37 F. Supp. 3d 381 (D.D.C. 2014) (No.

1:10-cv-1770)). Although the events at issue in Simon occurred

at the later steps of the Holocaust, i.e., ghettoization and

deportation, and the events at issue here occurred at the earlier

steps, i.e., isolation and expropriation, both are “steps” of the

Holocaust, id. at 143. And, as the heirs allege, those earlier

steps began as early as 1933, more than two years before the

Nazis seized the Welfenschatz. Specifically, the heirs allege

that the Nazis rose to power in the early 1930s by “blam[ing]

Jews for any and all economic setbacks,” FAC ¶ 48, and once

in power, “encourage[d]” the “boycotts of Jewish businesses

[that] spread in March and April 1933, just weeks after Hitler’s

ascension,” id. ¶ 58. Moreover, the 1933 “found[ing] [of] the

Reich Chamber of Culture,” which “assumed total control over

cultural trade” and excluded Jews, “effectively end[ed] the

means of work for any Jewish art dealer in one stroke.” Id.

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¶ 120. The heirs also allege that outright violence against

German Jews began several years before the seizure, including

that “[b]y the spring 1933, . . . the murder of Jews detained [in

the Dachau concentration camp] went unprosecuted.” Id. ¶ 59.

Moreover, in two statutes dealing with Nazi-era art-looting

claims, Congress has expressly found that the Holocaust began

in 1933. In the first statute—the very section of the FSIA at

issue here—Congress provided jurisdictional immunity for

certain art exhibition activities, 28 U.S.C. § 1605(h), but

created an exception for art taken during the “Nazi[] era,”

defined as beginning in January 1933, id. § 1605(h)(2)(A). In

the second, the HEAR Act, Congress again defined January

1933 as the beginning of the Nazi era. HEAR Act § 4 (defining

“covered period” as “beginning on January 1, 1933”).

The heirs’ position finds further support in a timeline on

the website of the United States Holocaust Memorial Museum,

which Germany itself cites for its observation that the taking of

the Welfenschatz predated the Nuremburg Laws. See

Appellants’ Br. 40 n.23. That same timeline demonstrates that,

by the time of the taking in 1935, the Nazi government had

already opened the Dachau concentration camp, excluded Jews

from all civil-service positions, and organized a nationwide

boycott of Jewish-owned businesses.

Fourth, emphasizing that the definition of genocide

includes an “intent to destroy,” Genocide Convention art. 2(c)

(emphasis added), Germany argues that this case differs from

Simon because unlike there, where the plaintiffs alleged that

the takings were “aimed to deprive Hungarian Jews of the

resources needed to survive as a people,” Simon, 812 F.3d at

143, here the heirs allege that the Nazis wanted the

Welfenschatz because it was “historically, artistically and

national-politically valuable,” FAC ¶ 111. Elsewhere in the

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complaint, however, the heirs make clear that “[the Nazis] took

the collection from [the Consortium] in order to ‘Aryanize’

[it].” Id. ¶ 25(iv). More specifically, the heirs allege that “the

collection was wrongfully appropriated not least because [the

Consortium members] were regarded as state’s enemies for

holding the iconic Welfenschatz,” id. ¶ 25(ii), that “the

Gestapo[] opened files on the members of the Consortium

because of their ownership of the Welfenschatz and their

prominence and success,” id. ¶ 67, and that “Prussian interest

in the Welfenschatz was . . . revived . . . [once] the Consortium

was . . . vulnerable,” id. ¶ 68. In short, the heirs have

sufficiently alleged that in seizing the Welfenschatz the Nazis

were motivated, at least in part, by a desire “to deprive

[German] Jews of the resources needed to survive as a people.”

Simon, 812 F.3d at 143.

Finally, unable to demonstrate that this case falls outside

Simon’s reach, Germany warns that allowing this suit to go

forward will “dramatically enlarge U.S. courts’ jurisdiction

over foreign countries’ domestic affairs” by stripping

sovereigns of their immunity for any litigation involving a

“transaction from 1933–45 between” a Nazi-allied government

and “an individual from a group that suffered Nazi

persecution.” Appellants’ Br. 42–43. But as we have just

explained, our conclusion rests not on the simple proposition

that this case involves a 1935 transaction between the German

government and Jewish art dealers, but instead on the heirs’

specific—and unchallenged—allegations that the Nazis took

the art in this case from these Jewish collectors as part of their

effort to “drive[] [Jewish people] out of their ability to make a

living.” FAC ¶ 61. Because Germany has failed to carry its

burden of demonstrating that these allegations do not bring the

case within the expropriation exception as defined and applied

in Simon, the district court properly denied Germany’s motion

to dismiss.

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B.

In Simon we held that, with respect to foreign states (but

not their instrumentalities), the expropriation exception’s

second requirement—“an adequate commercial nexus between

the United States and the defendant[],” de Csepel, 859 F.3d at

1101—is satisfied only when the property is present in the

United States. Simon, 812 F.3d at 146. Because the Simon

plaintiffs had offered but a “bare, conclusory assertion” to that

effect, we dismissed the Republic of Hungary from the action.

Id. at 148. We faced the same issue in de Csepel because the

art at issue there was not in the United States. de Csepel, 859

F.3d at 1107. Bound by Simon, we again dismissed the

Republic of Hungary. Id.

Relying on Simon and de Csepel, Germany argues that

because the Welfenschatz is in Berlin, not the United States,

the Federal Republic of Germany must be dismissed. Although

the heirs initially urged us to “reverse course on th[is]

question,” Appellees’ Br. 34, as they acknowledged at oral

argument, this panel is bound by Simon and de Csepel, Oral

Arg. 50:14–40. Accordingly, on remand, the district court must

grant the motion to dismiss with respect to the Federal Republic

of Germany—but not the SPK, an instrumentality for which the

commercial-nexus requirement can be satisfied without the

presence of the Welfenschatz in the United States. See de

Csepel, 859 F.3d at 1007 (explaining that “an agency or

instrumentality loses its immunity if” the agency or

instrumentality owns or operates the property at issue and is

engaged in commercial activity in the United States).

III.

In Simon, we left open the question whether a court,

despite having jurisdiction over an expropriation claim,

“nonetheless should decline to exercise [it] as a matter of

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international comity unless the plaintiffs first exhaust domestic

remedies (or demonstrate that they need not do so).” Simon,

812 F.3d at 149. In arguing that the answer to that question is

yes, Germany does not claim, as it did in the district court, that

we should defer to the Advisory Commission’s refusal to

recommend the return of the Welfenschatz, see Philipp, 248 F.

Supp. 3d at 81. Instead, Germany argues that the heirs must

“exhaust [their] remedies against [Germany] in [its] courts

before pressing a claim against it elsewhere.” Appellants’ Br.

65. “‘[B]ypass[ing] [its] courts,’” Germany insists, would

“undermine [its] ‘dignity [as] a foreign state.’” Id. at 68

(quoting Republic of Philippines v. Pimentel, 553 U.S. 851, 866

(2008)). The district court rejected this argument, as do we.

The key case is the Supreme Court’s decision in Republic

of Argentina v. NML Capital, Ltd., 134 S. Ct. 2250 (2014),

where Argentina claimed immunity from post-judgment

discovery as a matter of international comity. The Court

rejected that claim because nothing in the FSIA’s plain text

provided for such immunity. Id. at 2255. As the Court

explained, although courts once decided on a case-by-case

basis whether to grant foreign states immunity as matter of

international comity, “Congress abated the bedlam in 1976,

replacing the old executive-driven, factor-intensive, loosely

common-law-based immunity regime with the [FSIA]’s

‘comprehensive set of legal standards governing claims of

immunity in every civil action against a foreign state.’” Id.

(quoting Verlinden B.V. v. Central Bank of Nigeria, 461 U.S.

480, 488 (1983)). “[A]fter the enactment of the FSIA,” the

Court continued, “the Act—and not the pre-existing common

law—indisputably governs the determination of whether a

foreign state is entitled to sovereign immunity.” Id. at 2256

(quoting Samantar v. Yousuf, 560 U.S. 305, 313 (2010)). Going

forward, “any sort of immunity defense made by a foreign

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sovereign in an American court must stand on the Act’s text.

Or it must fall.” Id.

Acknowledging that nothing in the text of the FSIA’s

expropriation exception requires exhaustion, Germany argues

that applying NML Capital here “confuses immunity from

jurisdiction with non-immunity common-law doctrines.”

Appellants’ Reply Br. 38. The FSIA, Germany points out,

operates as a pass-through, “granting jurisdiction yet leaving

the underlying substantive law unchanged.” Id. at 39 (quoting

Owens v. Republic of Sudan, 864 F.3d 751, 763 (D.C. Cir.

2017)). As Germany emphasizes, FSIA section 1606 provides

that foreign states not entitled to immunity, “shall be liable in

the same manner and to the same extent as a private individual

under like circumstances.” Id. at 38 (quoting 28 U.S.C.

§ 1606). According to Germany, “exhaustion is a non-

jurisdictional common-law doctrine,” that, like forum non

conveniens, “‘remains fully applicable in FSIA cases.’” Id. at

39 (quoting Price v. Socialist People’s Libyan Arab

Jamahiriya, 294 F.3d 82, 100 (D.C. Cir. 2002)).

Germany’s effort to circumvent NML Capital fails for

several reasons. To begin with, although a different provision

of the FSIA, its terrorism exception, conditions jurisdiction on

the claimant “afford[ing] the foreign state a reasonable

opportunity to arbitrate the claim,” 28 U.S.C.

§ 1605A(a)(2)(A)(iii), no such requirement appears in the

expropriation exception, and we have long recognized “the

standard notion that Congress’s inclusion of a provision in one

section strengthens the inference that its omission from a

closely related section must have been intentional,” Agudas

Chasidei Chabad of U.S. v. Russian Federation, 528 F.3d 934,

948 (D.C. Cir. 2008). Moreover, far from demonstrating that

the FSIA leaves room for an exhaustion requirement, the very

FSIA provision that Germany relies on, section 1606,

16

forecloses that possibility. By its terms, that provision permits

only defenses, such as forum non conveniens, that are equally

available to “private individual[s],” 28 U.S.C. § 1606.

Obviously a “private individual” cannot invoke a “sovereign’s

right to resolve disputes against it.” Appellants’ Br. 68

(emphasis added).

To be sure, the Seventh Circuit, in a case similar to Simon,

required the plaintiffs—survivors of the Hungarian Holocaust

and the heirs of other victims—to “exhaust any available

Hungarian remedies or [show] a legally compelling reason for

their failure to do so,” Fischer v. Magyar Allamvasutak Zrt.,

777 F.3d 847, 852 (7th Cir. 2015). In doing so, the court

distinguished NML Capital, holding that “defendants need not

rely on . . . the FSIA,” but may “invoke the well-established

rule that exhaustion of domestic remedies is preferred in

international law as a matter of comity.” Id. at 859. The

Seventh Circuit drew that “well-established rule” from a

provision of the Third Restatement of Foreign Relations Law

of the United States, but as this court has explained, that

“provision addresses claims of one state against another,”

Agudas Chasidei Chabad of U.S. v. Russian Federation, 528

F.3d 934, 949 (D.C. Cir. 2008). Confirming that interpretation,

the tentative draft of the Fourth Restatement explains that “the

rule cited by the [Seventh Circuit] applies by its terms to

‘international . . . proceedings,’” Restatement (Fourth) of

Foreign Relations Law of the United States § 455 Reporters’

Note 9 (Am. Law Inst., Tentative Draft No. 2, 2016)—i.e.,

“nation vs. nation litigation,” Chabad, 528 F.3d at 949; see also

Agudas Chasidei Chabad of U.S. v. Russian Federation, 466 F.

Supp. 2d 6, 21 (D.D.C. 2006) (“[T]his court is not willing to

make new law by relying on a misapplied, non-binding

international legal concept.”). And as we explained above, the

FSIA, Congress’s “comprehensive” statement of foreign

sovereign immunity, which “is, and always has been, a ‘matter

17

of grace and comity,’” NML Capital, 134 S.Ct. at 2255

(quoting Verlinden, 461 U.S. at 486), leaves no room for a

common-law exhaustion doctrine based on the very same

considerations of comity.

In so concluding, we have considered the contrary position

advanced by the United States in an amicus brief recently filed

before a different panel of this court, where it argued that “[t]he

fact [that] the FSIA itself does not impose any exhaustion

requirement for expropriation claims . . . does not foreclose

dismissal on international comity grounds.” Brief of United

States as Amicus Curiae at 14–15, Simon v. Republic of

Hungary, No. 17-7146 (D.C. Cir. June 1, 2017). This position,

of course, is flatly inconsistent with NML Capital, a case the

government fails to cite, relying instead on non-FSIA cases, see

id. at 15. Accordingly, nothing in the government’s brief alters

our conclusion that the heirs have no obligation to exhaust their

remedies in Germany.

Germany protests that, as a “staunch U.S. ally,” it

“deserves the chance to address [the heirs’] attacks” in its own

courts. Appellants’ Br. 77. As the Court made clear in NML

Capital, however, such “apprehensions are better directed to

that branch of government with authority to amend the

[FSIA].” NML Capital, 134 S. Ct. at 2258.

IV.

This brings us, finally, to Germany’s argument that the

heirs’ state-law causes of action—replevin, conversion, unjust

enrichment, and bailment—conflict with, and thus are

preempted by, United States foreign policy. In support,

Germany cites the Washington Principles, which “encouraged”

nations “to develop . . . alternative dispute-resolution

mechanisms for resolving ownership issues,” Washington

Principles ¶ 11, as well the Terezin Declaration, a follow-up

18

agreement also urging alternative dispute resolution.

According to Germany, “letting [the heirs] press [the] same

claims” they already presented to the Advisory Commission

“again in a U.S. court” may cause signatories to the

Washington Principles to “question whether [they] should

follow the [] Principles,” thereby “undermin[ing] the

considerable diplomatic effort that the U.S. devoted to them.”

Appellants’ Br. 56–57.

Germany relies principally on two cases, American

Insurance Association v. Garamendi, 539 U.S. 396 (2003), and

Crosby v. National Foreign Trade Council, 530 U.S. 363

(2000). In Garamendi, the Supreme Court began by reiterating

the basic rule that “at some point an exercise of state power that

touches on foreign relations must yield to the National

Government’s policy, given the ‘concern for uniformity in this

country’s dealings with foreign nations’ that animated the

Constitution’s allocation of the foreign relations power to the

National Government in the first place.” Garamendi, 539 U.S.

at 413 (quoting Banco Nacional de Cuba v. Sabbatino, 376

U.S. 398, 427 n.25 (1964)). Applying that rule to the facts of

the case before it, the Court found California’s attempt to

regulate Holocaust-era insurance claims preempted by “the

foreign policy of the Executive Branch, as expressed

principally in . . . executive agreements with Germany, Austria,

and France.” Id. In those executive agreements, the United

States had “promised to use its ‘best efforts, in a manner it

considers appropriate,’ to get state and local governments to

respect [an internal dispute resolution process] as the exclusive

mechanism.’” Id. at 406 (quoting Agreement Concerning the

Foundation “Remembrance, Responsibility and the Future,”

Ger.-U.S., July 17, 2000, 39 I.L.M. 1298, 1300). In particular,

the United States agreed that in any case involving Holocaust-

era insurance claims, it would submit a statement “‘that U.S.

policy interests favor dismissal on any valid legal ground.’” Id.

19

(quoting Agreement Concerning the Foundation

“Remembrance, Responsibility and the Future,” 39 I.L.M. at

1304). Acknowledging that the executive agreements

contained no preemption clause, the Court nonetheless

concluded that the “express federal policy and the clear conflict

raised by the [California] statute. . . require[d] state law to

yield.” Id. at 425.

Similarly, in Crosby, the Court found Massachusetts’s

regulation of commerce with Burma to be “an obstacle to the

accomplishment of Congress’s full objectives under [a] federal

Act” that imposed some economic sanctions on Burma and

gave the President discretion to impose more. 530 U.S. at 373.

The Massachusetts law, the Court explained, by “imposing a

different, state system of economic pressure against the

Burmese political regime,” could “blunt the consequences of

discretionary Presidential action,” id. at 376.

This case is very different. Although the Washington

Principles and Terezin Declaration both “encourage[]” nations

“to develop . . . alternative dispute resolution mechanisms for

resolving ownership issues,” Washington Principles ¶ 11,

neither requires that the alternative mechanisms be exclusive or

otherwise “takes an explicit position in favor of or against the

litigation of claims to Nazi-confiscated art.” Brief of United

States as Amicus Curiae at 18, Saher v. Norton Simon Museum

of Art at Pasadena, 131 S. Ct. 3055 (2011) (No. 09-1254), 2011

WL 2134984, at *18. Unlike in Garamendi, where the

President promised to seek “dismissal on any valid legal

ground,” 539 U.S. at 406 (internal quotation marks omitted), or

in Crosby, where the state law at issue “blunt[ed]” the force of

discretion Congress had explicitly granted the President, 530

U.S. at 376, here, as the district court explained, there is no

“direct conflict between the property-based common law

20

claims raised by Plaintiffs and [United States] foreign policy,”

Philipp, 248 F. Supp. 3d at 78.

Indeed, far from adopting, as in Garamendi, an “express

federal policy,” 539 U.S. at 425, of disfavoring domestic

litigation of Nazi-era art-looting claims, the United States has

repeatedly made clear that it favors such litigation. Congress,

as explained above, see supra at 8, recently extended statutes

of limitation for Nazi-era art-looting claims, see HEAR Act

§ 4, and the FSIA exempts them from the jurisdictional

immunity otherwise afforded certain art collections

temporarily exhibited in the United States, see 28 U.S.C.

§ 1605(h)(1)–(3).

V.

For the foregoing reasons, we affirm the district court’s

denial of the motion to dismiss, except that on remand, the

district court must, as required by Simon and de Csepel, grant

the motion to dismiss with respect to the Federal Republic of

Germany.

So ordered.