Amicus Curiae Brief — Republic of Hungary, et al., Petitioners v. Rosalie Simon, et al.
Supreme Court briefSep 3, 2024
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No. 23-867
In the Supreme Court of the United States
REPUBLIC OF HUNGARY, ET AL., PETITIONERS
v.
ROSALIE SIMON, ET AL.
ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
BRIEF FOR THE UNITED STATES
AS AMICUS CURIAE SUPPORTING PETITIONERS
RICHARD C. VISEK
Principal Deputy Legal
Adviser
Department of State
Washington, D.C. 20520
BRIAN H. FLETCHER
Acting Solicitor General
Counsel of Record
BRIAN M. BOYNTON
Principal Deputy Assistant
Attorney General
EDWIN S. KNEEDLER
Deputy Solicitor General
SOPAN JOSHI
Assistant to the Solicitor
General
SHARON SWINGLE
LEWIS S. YELIN
Attorneys
Department of Justice
Washington, D.C. 20530-0001
SupremeCtBriefs@usdoj.gov
(202) 514-2217
QUESTIONS PRESENTED
The Foreign Sovereign Immunities Act of 1976, 28
U.S.C. 1330, 1441(d), 1602 et seq., provides that foreign
states, including their agencies and instrumentalities,
generally are immune from civil lawsuits in state and
federal courts, save for limited exceptions. Under the
“expropriation exception,” federal and state courts have
jurisdiction over certain cases involving rights in property if, among other things, “that property or any property exchanged for such property” has a specified connection to commercial activity carried on in the United
States. 28 U.S.C. 1605(a)(3) (emphasis added). The
questions presented are:
1. Whether the entirety of a foreign sovereign’s
treasury may be treated as “property exchanged for
[expropriated] property,” 28 U.S.C. 1605(a)(3), if the
sovereign disposed of the expropriated property and
deposited the proceeds in its general treasury.
2. Whether, in the course of determining if the plaintiff has made out a legally valid claim that an exception
to sovereign immunity applies, a court should resolve
contested facts underlying the claimed exception at the
outset of the case instead of relying on the complaint’s
allegations.
3. Whether a plaintiff suing a foreign state has the
burden to prove that an exception to sovereign immunity applies, or whether instead the defendant has the
burden to prove that the claimed exception does not apply.
(I)
TABLE OF CONTENTS
Page
Interest of the United States....................................................... 1
Statement ...................................................................................... 2
Summary of argument ................................................................. 8
Argument:
I. The deposit of proceeds from the sale of
expropriated property in a sovereign’s general
treasury does not establish that all general
treasury funds were “exchanged for” the
expropriated property ................................................... 11
A. The commingling theory is inconsistent with
the FSIA’s text and context ................................... 11
B. The commingling theory is inconsistent with
the FSIA’s history and purposes ........................... 16
C. The court of appeals’ contrary reasoning lacks
merit ......................................................................... 23
II. In determining whether a plaintiff has a valid
claim that an exception to sovereign immunity
applies, the court should resolve factual disputes at
the outset of the case ..................................................... 26
III. Under the FSIA, the plaintiff bears the burden to
prove that an exception to sovereign immunity
applies ............................................................................. 30
Conclusion ................................................................................... 33
TABLE OF AUTHORITIES
Cases:
Abramski v. United States, 573 U.S. 169 (2014) ................ 13
Alfred Dunhill of London, Inc. v. Republic of Cuba,
425 U.S. 682 (1976)........................................................ 18, 19
American Insurance Association v. Garamendi,
539 U.S. 396 (2003).............................................................. 26
Argentine Republic v. Amerada Hess Shipping
Corp., 488 U.S. 428 (1989) .................................................. 17
(III)
IV
Cases—Continued:
Page
Ashcroft v. Iqbal, 556 U.S. 662 (2009) .................................. 27
Azar v. Allina Health Services, 587 U.S. 566 (2019) ......... 31
Badgerow v. Walters, 596 U.S. 1 (2022) .............................. 22
Baker Botts L.L.P. v. ASARCO LLC,
576 U.S. 121 (2015).............................................................. 23
Banco Nacional de Cuba v. Sabbatino,
376 U.S. 398 (1964).................................................... 9, 20, 21
Belize Social Development Ltd. v. Government of
Belize, 794 F.3d 99 (D.C. Cir. 2015), cert. denied,
580 U.S. 1046 (2017)............................................................ 30
Bell Atlantic Corp. v. Twombly,
550 U.S. 544 (2007).............................................................. 27
Bolivarian Republic of Venezuela v. Helmerich &
Payne International Drilling Co., 581 U.S. 170
(2017) ................................................... 7, 10, 17, 21, 26-29, 32
Boos v. Barry, 485 U.S. 312 (1988) ...................................... 18
Cutter v. Wilkinson, 544 U.S. 709 (2005) ............................ 25
Dole Food Co. v. Patrickson, 538 U.S. 468 (2003) .............. 16
FBI v. Fikre, 601 U.S. 234 (2024) ........................................ 28
Federal Republic of Germany v. Philipp,
592 U.S. 169 (2021)......................................... 5, 20-22, 24, 29
Great-West Life & Annuity Insurance Co. v.
Knudson, 534 U.S. 204 (2002) ........................................... 24
Gwaltney of Smithfield, Ltd. v. Chesapeake Bay
Foundation, Inc., 484 U.S. 49 (1987) ................................ 28
Helvering v. William Flaccus Oak Leather Co.,
313 U.S. 247 (1941).............................................................. 13
Hertz Corp. v. Friend, 559 U.S. 77 (2010) ........................... 31
Johnson v. City of Shelby, 574 U.S. 10 (2014) .................... 27
Kokkonen v. Guardian Life Insurance Co.,
511 U.S. 375 (1994).............................................................. 31
V
Cases—Continued:
Page
Luis v. United States, 578 U.S. 5 (2016) ............................. 25
National City Bank v. Republic of China,
348 U.S. 356 (1955).............................................................. 18
National Rifle Association v.
Vullo, 602 U.S. 175 (2024) .................................................. 28
Persinger v. Islamic Republic of Iran,
729 F.2d 835 (D.C. Cir.), cert. denied,
469 U.S. 881 (1984).............................................................. 18
Preston v. Keene, 39 U.S. 133 (1840) ................................... 12
Republic of Austria v. Altmann,
541 U.S. 677 (2004).............................................................. 29
Republic of Sudan v. Harrison, 587 U.S. 1 (2019) ............. 12
Rukoro v. Federal Republic of Germany,
976 F.3d 218 (2d Cir. 2020), cert. denied,
141 S. Ct. 2724 (2021) ......................................................... 24
Sandifer v. United States Steel Corp.,
571 U.S. 220 (2014).............................................................. 12
Saudi Arabia v. Nelson, 507 U.S. 349 (1993) ..................... 31
Transamerican Steamship Corp. v. Somali Democratic Republic, 767 F.2d 998 (D.C. Cir. 1985) .......... 30, 31
Truck Insurance Exchange v. Kaiser Gypsum Co.,
144 S. Ct. 1414 (2024) ......................................................... 23
Verlinden B.V. v. Central Bank of Nigeria,
461 U.S. 480 (1983)................................................... 17-19, 32
Victory Transport Inc. v. Comisaria General
de Abastecimientos y Transportes,
336 F.2d 354 (2d Cir. 1964),
cert. denied, 381 U.S. 934 (1965) ....................................... 20
Statutes and rules:
Foreign Sovereign Immunities Act of 1976,
28 U.S.C. 1330, 1441(d), 1602 et seq. ................................... 1
28 U.S.C. 1330(a) ............................................................. 31
VI
Statutes and rules—Continued:
Page
28 U.S.C. 1603(a) ............................................................... 3
28 U.S.C. 1604 .................................................................... 3
28 U.S.C. 1605(a) ............................................................... 3
28 U.S.C. 1605(a)(3) ........................ 3-5, 8, 11-16, 21-23, 29
28 U.S.C. 1606 .................................................................... 3
22 U.S.C. 2370(e)(2) ............................................................... 21
28 U.S.C. 1391(f )(4) ............................................................... 33
Fed. R. Civ. P.:
Rule 12(b)(1) .................................................................... 28
Rule 12(b)(6) .............................................................. 27, 28
Miscellaneous:
Black’s Law Dictionary (5th ed. 1979) ................... 12, 13, 15
Department of Justice, Office of Foreign Litigation,
www.justice.gov/civil/office-foreign-litigation
(updated Mar. 22, 2025)...................................................... 18
H.R. Rep. No. 1487, 94th Cong., 2d Sess. (1976) ................ 31
Office of the Special Envoy, Bureau of European
and Eurasian Affairs, U.S. Department of State,
JUST Act Report (Mar. 2020), www.state.gov/
wp-content/uploads/2020/02/JUST-Act5.pdf ..................... 2
The American Heritage Dictionary (1975) .................. 12, 15
5 The Oxford English Dictionary (2d ed. 1989) ................. 12
Webster’s New International Dictionary
(2d ed. 1934)................................................................... 12, 15
5B Charles Alan Wright et al., Federal Practice and
Procedure (4th ed. West 2024) .......................................... 27
In the Supreme Court of the United States
No. 23-867
REPUBLIC OF HUNGARY, ET AL., PETITIONERS
v.
ROSALIE SIMON, ET AL.
ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
BRIEF FOR THE UNITED STATES
AS AMICUS CURIAE SUPPORTING PETITIONERS
INTEREST OF THE UNITED STATES
This case concerns the substantive and procedural
standards for establishing subject-matter jurisdiction
in a civil action against a foreign state under the expropriation exception to sovereign immunity in the Foreign
Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C.
1330, 1441(d), 1602 et seq. Civil litigation against foreign sovereigns in U.S. courts can have significant
foreign-relations implications for the United States and
can affect the reciprocal treatment of the United States
in the courts of other nations. The United States thus
has a substantial interest in this case.
Although the United States agrees with petitioners
that the court of appeals erred in interpreting and applying the FSIA’s expropriation exception, the United
States deplores the atrocities committed by the Nazi re(1)
2
gime and its allies and supports efforts to provide their
victims with remedies for the egregious wrongs they
have suffered. Since Hungary’s transition from Communism, the United States has worked in numerous
ways to achieve a measure of justice for victims of the
Hungarian Holocaust and their heirs, and—with the
United States’ encouragement—the Hungarian government has provided some relief to compensate Holocaust
survivors and other victims of the Nazis. See Office of
the Special Envoy, Bureau of European and Eurasian
Affairs, U.S. Department of State, JUST Act Report 8488 (Mar. 2020), www.state.gov/wp-content/uploads/2020/
02/JUST-Act5.pdf. The United States has a paramount
interest in ensuring that its foreign partners establish
appropriate domestic redress and compensation mechanisms for Holocaust victims and seeks to prevent litigation in U.S. courts that could undermine that objective.
STATEMENT
1. Respondents are, or are heirs to, Jewish survivors
of the Hungarian Holocaust. Pet. App. 3; see Br. in Opp.
ii. Respondents filed suit in the United States District
Court for the District of Columbia against petitioners—
the Republic of Hungary and the state-owned Hungarian railway, Magyar Államvasutak Zrt. (MÁV)—on behalf of a putative class of Hungarian Holocaust survivors and their heirs. Pet. App. 12. Respondents allege
that Hungary collaborated with the Nazis to exterminate Hungarian Jews and expropriate their property,
and that MÁV assisted that effort both by transporting
Hungarian Jews to death camps and by stripping them
of their personal property at the point of embarkation.
See id. at 11, 96-97. As relevant here, respondents seek
“compensation for the seizure of their property during
3
the Holocaust.” Id. at 3. To that end, the operative complaint alleges various common-law property torts, including conversion and unjust enrichment, as well as
other claims. Id. at 99-100.
The FSIA provides that as a general matter, a foreign state, including its agencies and instrumentalities,
“shall be immune from the jurisdiction” of federal and
state courts. 28 U.S.C. 1604; see 28 U.S.C. 1603(a) (defining “foreign state” to include “an agency or instrumentality of a foreign state”). The FSIA further provides, however, that “[a] foreign state shall not be immune from the jurisdiction of courts of the United
States or of the States” where suit is expressly permitted by certain international agreements or by exceptions enumerated in the FSIA. 28 U.S.C. 1605(a). If
one of those exceptions applies, “the foreign state shall
be liable in the same manner and to the same extent as
a private individual under like circumstances,” subject
to certain limitations on punitive damages not relevant
here. 28 U.S.C. 1606.
Respondents asserted that the district court had
subject-matter jurisdiction because their claims fell
within the expropriation exception to immunity set
forth in 28 U.S.C. 1605(a)(3). Section 1605(a)(3) provides that “[a] foreign state shall not be immune from
the jurisdiction of courts of the United States or of the
States in any case * * * in which rights in property
taken in violation of international law are in issue” and
“that property or any property exchanged for such
property” has a specified connection to commercial activity in the United States. Ibid. Specifically, that connection can be established if “that property or any property exchanged for such property” is either “present in
the United States in connection with a commercial ac-
4
tivity carried on in the United States by the foreign
state,” or “owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the
United States.” Ibid.
The principal substantive dispute now before this
Court involves the meaning of the phrase “any property
exchanged for such property” in 28 U.S.C. 1605(a)(3).
Respondents do not allege that any of the actual property allegedly taken from them has the requisite connection to commercial activity in the United States. Instead, they allege that Hungary’s general treasury
funds have the requisite connection, and that those general treasury funds qualify as “property exchanged for
[respondents’] property” because at some point in time
Hungary sold the expropriated property and deposited
the proceeds into its general treasury. Ibid.; see J.A.
33-35. The parties call that basis for establishing the
connection to commercial activity the “commingling
theory.” Pet. Br. 1; Br. in Opp. 5.
2. This case was filed in 2010 and has accumulated a
lengthy and complex procedural history. Petitioners
have filed four motions to dismiss, which have given rise
to multiple trips to the court of appeals and a previous
grant of certiorari by this Court. Pet. App. 12-15, 100129 (recounting the history); see 592 U.S. 207.
a. Two prior rulings are most relevant here. First,
in 2016, the D.C. Circuit endorsed the commingling theory. See 812 F.3d 127, 147. The court explained that
allegations “that the Hungarian defendants liquidated
the stolen property, mixed the resulting funds with
their general revenues, and devoted the proceeds to
funding various governmental and commercial operations * * * suffice to raise a ‘plausible inference’ that
5
the defendants retain the property or proceeds thereof ”
for purposes of the expropriation exception’s property
requirement. Ibid. (brackets and citation omitted).
And consistent with circuit precedent, the court explained that “the defendants [i.e., petitioners] will bear
the burden of persuasion to ‘establish the absence of the
factual basis [of commingling] by a preponderance of
the evidence.’ ” Ibid. (emphasis added; citation omitted).
Second, in 2020, this Court granted certiorari to review the D.C. Circuit’s holding that international comity did not preclude adjudication of this case, 141 S. Ct.
187, but ultimately issued a per curiam order vacating
and remanding in light of Federal Republic of Germany
v. Philipp, 592 U.S. 169 (2021), which held that the expropriation exception does not encompass claims based
on “a foreign sovereign’s taking of its own nationals’
property,” id. at 176. See 592 U.S. at 208.
b. The case was then remanded to the district court,
which granted in part and denied in part petitioners’
fourth motion to dismiss. Pet. App. 93-192.
As relevant here, the district court reaffirmed its
previous determination that respondents had, under the
commingling theory, adequately alleged that funds
from Hungary’s general treasury were “present in the
United States in connection with” Hungary’s commercial activities here (issuing certain bonds and purchasing military equipment), and that MÁV “own[s]” a portion of those funds and likewise engages in commercial
activity here (maintaining an agency to book reservations, sell tickets, and the like), 28 U.S.C. 1605(a)(3).
See Pet. App. 118-120 (citing 443 F. Supp. 3d 88, 99116); id. at 152 n.22.
6
The district court also explained that, notwithstanding their previous suggestion that they were Hungarian
nationals, some respondents had sufficiently alleged
that they or their family members were not Hungarian
nationals at the time their property was allegedly taken,
and their claims thus could proceed notwithstanding
this Court’s decision in Philipp. See Pet. App. 151-179.
3. The court of appeals affirmed in part and reversed in part. Pet. App. 1-90.
a. As relevant here, the court of appeals reiterated
its endorsement of the commingling theory, rejecting
petitioners’ contention that respondents were required
to “produce evidence tracing property in the United
States or possessed by MÁV to property expropriated
from them during World War II.” Pet. App. 71 (citation
omitted); see id. at 71-75. The court explained that respondents “had no such burden” and that “[r]equiring
plaintiffs whose property was liquidated to allege and
prove that they have traced funds in the foreign state’s
or instrumentality’s possession to proceeds of the sale
of their property would render the FSIA’s expropriation exception a nullity for virtually all claims involving
liquidation” of property. Id. at 71-72. The court observed that “[g]iven the fungibility of money, once a foreign sovereign sells stolen property and mixes the proceeds with other funds in its possession, those proceeds
ordinarily become untraceable to any specific future
property or transaction.” Id. at 72.
The court of appeals concluded that “because the
sovereign defendant bears the burden of proving that
the plaintiff ’s allegations do not bring its case within a
statutory exception to immunity,” petitioners “must at
least affirmatively establish by a preponderance of the
evidence that their current resources do not trace back
7
to the property originally expropriated.” Pet. App. 74
(citations and internal quotation marks omitted). Nevertheless, because the district court had relied on respondents’ allegations rather than engage in its own
factfinding on this issue of jurisdictional fact, the court
of appeals remanded to the district court “to make the
necessary factual findings” about “whether property
[petitioners] received in exchange for [respondents’]
confiscated property is present in the United States in
connection with Hungary’s commercial activity there or
is possessed by MÁV.” Id. at 70-71.
With respect to whether respondents or their family
members were nationals of Hungary when the alleged
takings occurred, the court of appeals likewise understood petitioners’ challenge to involve “jurisdictional
facts.” Pet. App. 44 (citation omitted). But instead of
requiring factfinding (as it had done with the property
issue), the court applied “the plausible-pleading standard” used “for assessing factual allegations in a complaint” on a motion to dismiss for failure to state a claim.
Id. at 38-39; see id. at 42. The court rejected petitioners’ argument that applying that standard contravened
Bolivarian Republic of Venezuela v. Helmerich &
Payne International Drilling Co., 581 U.S. 170 (2017),
which held that to establish jurisdiction under the expropriation exception, “the relevant factual allegations
must make out a legally valid claim” that the exception
applies. Id. at 174. The court understood that language
to address only “the degree to which plaintiffs’ legal
theories must be correct on their merits,” not “ ‘the factual allegations a complaint must contain to survive a
motion to dismiss.’ ” Pet. App. 39 (citation omitted); see
id. at 67, 71. Applying the plausible-pleading standard,
the court found that some respondents had adequately
8
alleged a lack of Hungarian nationality at the time of
the takings. See id. at 42-53.
b. Judge Randolph concurred in part and dissented
in part. Pet. App. 85-90. In his view, none of the respondents had adequately preserved their argument
that they or their family members “were nationals of a
country other than Hungary when the takings occurred.” Id. at 89.
SUMMARY OF ARGUMENT
I. The FSIA’s text, context, history, and purposes
indicate that a foreign sovereign’s commingling of the
proceeds from the sale of expropriated property with its
general treasury funds does not transform all of those
funds into property “exchanged for” the expropriated
property within the meaning of 28 U.S.C. 1605(a)(3).
A. The ordinary meaning of the verb “exchange” is
to give or transfer one thing and receive something else
in return. Statutory context indicates that “exchanged
for” in Section 1605(a)(3) should be read broadly enough
to encompass a sale—and not just a barter or trade—as
well as to encompass a series of transactions, and not
just a single exchange. But specific property cannot be
said to have been “exchanged for” expropriated property through such a series of transactions unless it can
actually be traced back through that chain of transactions to the expropriated property. Such tracing obviously would be required when the exchanges involve
tangible things like artwork or jewelry; there is no textual basis for applying a different rule when the exchanges involve fungible property like money. When
expropriated property is sold and the proceeds are deposited and commingled with funds in the sovereign’s
general treasury, there may be no set of funds in the
treasury that could be identified as funds that were spe-
9
cifically exchanged for the proceeds. And the difficulty
in tracing specific funds back to the expropriated property only becomes more pronounced over time as additional funds are deposited in and withdrawn from the
treasury. And even if some portion of general treasury
funds could be viewed as having been “exchanged for”
the expropriated property, there is no plausible textual
basis for deeming all of those funds to have been “exchanged for” the expropriated property—yet that is
what the commingling theory holds.
B. The FSIA’s history and purposes reinforce that
plain textual reading. This Court has recognized that
the FSIA largely codifies the so-called “restrictive” theory of sovereign immunity adopted by the Executive
Branch in 1952, and that the expropriation exception—
which no other country has adopted—goes beyond that
theory for the limited purpose of allowing courts to adjudicate takings claims of the sort at issue in Banco
Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964).
But the claim in Sabbatino involved specifically identifiable proceeds from the sale of expropriated property
that had been segregated in a New York escrow account. Reading the expropriation exception to encompass claims that do not seek to recover from such traceable property would go far beyond the claim in Sabbatino and the restrictive theory of sovereign immunity. Doing so would undermine the exception’s conformity with customary international law, would risk offending the dignity of foreign states, and would invite reciprocal actions against the United States in foreign courts.
C. The court of appeals largely rested its contrary
holding on its policy concern that without the commingling theory, a sovereign that liquidated expropriated
property and did not segregate the proceeds could es-
10
cape liability under the expropriation exception. But
the court failed to appreciate that applying the commingling theory would mean that virtually every claim alleging liquidation would satisfy the expropriation exception, contrary to the FSIA’s purposes and the limited and unique nature of the expropriation exception.
Although it will be difficult for some plaintiffs to trace
their expropriated property to the defendant’s current
property, tracing is not impossible; indeed, courts apply
tracing rules in various areas of the law.
II. In Bolivarian Republic of Venezuela v. Helmerich
& Payne International Drilling Co., 581 U.S. 170
(2017), this Court made clear that when a foreign state
defendant challenges the factual basis for a claimed
exception to sovereign immunity, the court should resolve the factual dispute “as near to the outset of the
case as is reasonably possible” rather than simply accept the plaintiff ’s well-pleaded allegations. Id. at 174.
Although the court of appeals remanded for resolution
of the factual disputes concerning the commingling theory, the court incorrectly accepted respondents’ factual
allegations underlying their contention that the survivors were nationals of Hungary at the time of the takings, even though petitioners challenged those facts as
well. That contravened Helmerich’s plain directive.
III. The FSIA’s text makes clear that sovereign immunity is jurisdictional, and the burden of establishing
subject-matter jurisdiction always rests with the party
asserting jurisdiction. It follows that when a plaintiff
suing a foreign state invokes one of the FSIA’s exceptions to sovereign immunity, the plaintiff bears the ultimate burden of proving that the exception applies. The
court of appeals’ contrary holding that the sovereign defendant bears the burden to disprove the exception’s
11
applicability apparently rests on legislative history describing sovereign immunity as an affirmative defense
under the FSIA. But legislative history cannot override
the explicit text of the statute.
ARGUMENT
I. THE DEPOSIT OF PROCEEDS FROM THE SALE OF
EXPROPRIATED PROPERTY IN A SOVEREIGN’S GENERAL TREASURY DOES NOT ESTABLISH THAT ALL
GENERAL TREASURY FUNDS WERE “EXCHANGED
FOR” THE EXPROPRIATED PROPERTY
If a foreign sovereign deposits proceeds from the
sale of expropriated property in its general treasury,
where they are commingled with other funds, that does
not mean that all of the treasury funds should be
deemed to have been “exchanged for” the expropriated
property within the meaning of 28 U.S.C. 1605(a)(3).
Instead, the text, context, history, and purposes of the
FSIA establish that only those funds that are traceable
to, and thus the identifiable proceeds of, the sale of expropriated property are properly viewed as having been
“exchanged for” the expropriated property. The court
of appeals erred in holding otherwise.
A. The Commingling Theory Is Inconsistent With The
FSIA’s Text And Context
The most natural reading of the FSIA’s text precludes treating the entirety of a foreign state’s general
treasury as having been “exchanged for [the expropriated] property” simply because proceeds from the sale
of the expropriated property were deposited in the
state’s general treasury and became commingled with
the funds there. 28 U.S.C. 1605(a)(3). “It is a ‘fundamental canon of statutory construction’ that, ‘unless
otherwise defined, words will be interpreted as taking
12
their ordinary, contemporary, common meaning.’ ”
Sandifer v. United States Steel Corp., 571 U.S. 220, 227
(2014) (citation omitted). That principle applies to interpreting the FSIA, where this Court generally has
adopted “the most natural” reading of the statutory
text, in light of its “ordinary meaning.” Republic of Sudan v. Harrison, 587 U.S. 1, 8, 15 (2019).
The critical phrase in Section 1605(a)(3) is “exchanged for.” In this context, the natural, ordinary, and
contemporaneous meaning of the verb “exchange” is “to
give and receive in a reciprocal manner”; “to relinquish
(one thing for another)”; or “to provide or transfer
(goods or services, for example) in return for something
of equal value.” The American Heritage Dictionary
457 (1975) (American Heritage) (capitalization omitted); see Black’s Law Dictionary 505 (5th ed. 1979)
(Black’s) (“To barter; to swap. To part with, give or
transfer for an equivalent.”); see also 5 The Oxford English Dictionary 502 (2d ed. 1989) (OED) (“To change
away; to dispose of (commodities, possessions, etc.) by
exchange or barter; to give, relinquish, or lose (something) whilst receiving something else in return.”) (noting consistent usage since 1484); Webster’s New International Dictionary 889 (2d ed. 1934) (Webster’s Second) (“To part with, give, or transfer to another in consideration of something received as an equivalent.”).
Those definitions could be read to suggest that the
term “exchange” refers only to a trade of one property
for another—not to a sale of that property. Cf. Black’s
505 (“To barter; to swap.”); OED 502 (“by exchange or
barter”). Indeed, in many other contexts, an “exchange” is contradistinguished from a “sale.” E.g.,
Preston v. Keene, 39 U.S. 133, 136 (1840) (describing a
state law defining “exchange” to mean to “give to one
13
another one thing for another, whatever it be, except
money; for in that case, it would be a sale”) (citation
omitted); see Black’s 505 (citing multiple cases defining
“exchange” to mean a transaction for consideration
“other than money”); cf. Helvering v. William Flaccus
Oak Leather Co., 313 U.S. 247, 249 (1941) (analyzing
“sale” and “exchange” separately under a tax provision). If that strict definition applied here, it would
mean that if a foreign state ever sold the allegedly expropriated property, the “property” element of the expropriation exception could never be satisfied. As explained below, however, the context and history of the
FSIA indicate that Congress was not using the word
“exchanged” in Section 1605(a)(3) in so strict a manner.
See pp. 21-22, infra. Accordingly, if a foreign state sells
expropriated property, the specific proceeds qualify as
“property exchanged for [the expropriated] property”
under 28 U.S.C. 1605(a)(3).
Similarly, one could view “exchanged for” as referring only to the initial trade of property, not to subsequent trades. That is, if a person trades A for B and
later trades B for C, one might say that C was “exchanged for” B but that C was not “exchanged for” A.
Again, though, context weighs against that reading; this
Court generally avoids reading statutes in a way that
would permit easy circumvention. See Abramski v.
United States, 573 U.S. 169, 185 (2014). Just as a statute addressing the sale of firearms to particular individuals is best read to encompass such sales when accomplished in two steps (using a straw purchaser) rather
than one, see id. at 179-185, the last piece of property
obtained after a chain of transactions may reasonably
be viewed as having been “exchanged for” the first
property in that chain under 28 U.S.C. 1605(a)(3), as
14
long as the properties exchanged in each transaction remain identifiably distinct.
Even that plaintiff-friendly interpretation of “exchanged for,” however, necessarily requires tracing the
property involved in a series of transactions. In the example above, one might say that C was exchanged for A
even though the exchange took two steps. But no
speaker of English would say that other property held
by C’s owner—say, D—was “exchanged for” A. And
that would remain true even if D were equivalent in
value to C—indeed, even if D were identical to C and
they were stored together. By hypothesis, D would
have been obtained through some independent means
and thus would have no relevant connection to A. In
those circumstances, no reasonable interpretation of
“exchanged for” would permit saying that D was “exchanged for” A simply because D is held as part of the
owner’s overall pool of assets.
That straightforward tracing principle thus flows
from the most natural reading of Section 1605(a)(3) in
context, and would seem to be both obvious and uncontroversial when dealing with identifiable property, such
as artwork or jewelry: If a necklace is expropriated and
traded for a ring, which is later traded for a bracelet,
that bracelet has been “exchanged for” the necklace
within the meaning of Section 1605(a)(3)—but a different bracelet in the owner’s collection has not. There is
no reason the same principles should not apply when
dealing with fungible property like money; certainly,
nothing in the FSIA suggests that the two should be
treated differently. If an object is sold and the proceeds
deposited in their own segregated account, the funds in
that account obviously have been “exchanged for” the
object. If the proceeds are instead deposited in a gen-
15
eral account and commingled with other funds there,
the proceeds (like other deposits) generally have lost
their distinct identity. The difficulty in tracing any particular funds in the account back to the expropriated
property would only become increasingly pronounced
over time as additional funds are deposited and withdrawn over the years. And even if some portion of the
funds in the account might still be regarded as having
been “exchanged for” the object despite the commingling, the other funds in the account cannot be said to
have been “exchanged for” the object, any more than D
can said to have been “exchanged for” A in the example
above.
Yet the commingling theory would allow just that: it
would hold that all funds that are (or ever were) in a
commingled account may be treated as having been “exchanged for” the expropriated property—including
funds that have no relationship to that property other
than that they are (or once were) in the same general
account into which proceeds from the sale of the property were once deposited. That stretches the term
“property exchanged for [the expropriated] property”
far beyond any reasonable reading. 28 U.S.C. 1605(a)(3).
Indeed, many common definitions of “exchange” emphasize that the “something” being obtained in the
trade is usually “of equal value.” American Heritage
457; see Black’s 505 (“equivalent”); Webster’s Second
889 (“equivalent”). The commingling theory, however,
would taint all commingled funds, even if they were orders of magnitude larger than the proceeds from the
sale of the expropriated property.
Other contextual indications reinforce that straightforward and natural reading of “exchanged for” in Section 1605(a)(3). For example, the expropriation excep-
16
tion requires that the identified property of the foreign
state (either the expropriated property or property exchanged for it) be present in the United States “in connection with” the foreign state’s commercial activity
here. 28 U.S.C. 1605(a)(3). But almost by definition,
the “commercial activity” (ibid.) of a foreign state is
bound to use or generate money that will be present in
the United States, and those expenses or revenues almost certainly will ultimately be drawn from or deposited into the foreign state’s treasury. As a result, if the
entirety of a foreign state’s treasury into which the proceeds of an exchange for expropriated property were
once deposited were deemed to satisfy the “property”
requirement in Section 1605(a)(3)—as necessarily
would be the case under the commingling theory—the
“in connection with” requirement would be rendered effectively superfluous. The same would be true of the
requirement that an agency or instrumentality “own[]
or operate[]” the relevant property, ibid., at least when
(as is likely often the case) the agency or instrumentality has ever received funds from, or deposited revenues
into, the state’s treasury. The Court should avoid an
interpretation of “exchanged for” that would have the
effect of rendering those other statutory provisions effectively superfluous. See Dole Food Co. v. Patrickson,
538 U.S. 468, 476-477 (2003) (explaining that absent
some contrary indication in the statute, courts should
“not construe the [FSIA] in a manner that is strained
and, at the same time, would render a statutory term
superfluous”).
B. The Commingling Theory Is Inconsistent With The
FSIA’s History And Purposes
The FSIA’s enactment history confirms what its text
indicates: the entirety of a foreign state’s general treas-
17
ury cannot be deemed to have been “exchanged for” allegedly expropriated property simply because proceeds
from the sale of that property were once deposited in
the general treasury and commingled with the funds
there.
1. For much of the Nation’s history, the United
States adhered to the “classical” or “absolute” theory of
foreign sovereign immunity, under which foreign states
were not subject to civil suit without their consent. See,
e.g., Verlinden B.V. v. Central Bank of Nigeria, 461
U.S. 480, 486 (1983). Accordingly, “foreign states were
‘generally granted complete immunity from suit’ in
United States courts, and the Judicial Branch deferred
to the decisions of the Executive Branch on such questions.” Argentine Republic v. Amerada Hess Shipping
Corp., 488 U.S. 428, 434 n.1 (1989) (citation and ellipsis
omitted); see Verlinden, 461 U.S. at 486 (explaining that
because “foreign sovereign immunity is a matter of
grace and comity on the part of the United States, * * *
this Court consistently has deferred to the decisions of
the political branches—in particular, those of the Executive Branch—on whether to take jurisdiction”).
Providing foreign states with immunity from civil
suit serves important national interests: It preserves
the dignity of foreign sovereigns, avoids damaging potentially sensitive international relations, and promotes
comity between nations. See, e.g., Bolivarian Republic
of Venezuela v. Helmerich & Payne International Drilling Co., 581 U.S. 170, 179 (2017) (“To grant [foreign]
sovereign entities an immunity from suit in our courts
both recognizes the absolute independence of every sovereign authority and helps to induce each nation state,
as a matter of international comity, to respect the independence and dignity of every other, including our
18
own.”) (brackets, citations, and internal quotation
marks omitted); National City Bank v. Republic of
China, 348 U.S. 356, 362 (1955) (sovereign immunity derives from concerns that include “respect for the ‘power
and dignity’ of the foreign sovereign”) (citation omitted).
In addition, sovereign immunity serves the “reciprocal self-interest” of the United States. National City
Bank, 348 U.S. at 362. The United States engages in
extensive activities in support of its worldwide diplomatic,
security, and law-enforcement missions, and it is not infrequently sued in foreign courts. See Department of
Justice, Office of Foreign Litigation, www.justice.gov/
civil/office-foreign-litigation (“At any given time, foreign lawyers under OFL’s direct supervision represent
the United States in approximately 1,800 lawsuits pending in the courts of over 100 countries.”). Because
“some foreign states base their sovereign immunity decisions on reciprocity,” Persinger v. Islamic Republic of
Iran, 729 F.2d 835, 841 (D.C. Cir.), cert. denied, 469
U.S. 881 (1984), protecting foreign states from civil suits
in U.S. courts can help to avoid embroiling the United
States in expensive and difficult litigation abroad. Cf.
Boos v. Barry, 485 U.S. 312, 323 (1988) (highlighting importance of “concept of reciprocity” in international law
and diplomacy and explaining that respecting diplomatic immunity of foreign states “ensures that similar
protections will be accorded” to the United States).
In 1952, the Department of State adopted what is
called the “restrictive” theory of foreign sovereign immunity, under which a foreign state generally is immune from civil suit for sovereign or public acts but not
for its commercial acts. See Verlinden, 461 U.S. at 486487; see also Alfred Dunhill of London, Inc. v. Republic
of Cuba, 425 U.S. 682, 711-715 (1976) (reproducing 1952
19
State Department letter). The Department observed
that an emerging consensus had developed among nations in favor of the restrictive rather than absolute theory of sovereign immunity. Alfred Dunhill, 425 U.S. at
714. The Department further observed that the United
States had long declined to claim immunity for its merchant vessels abroad, and that “the widespread and increasing practice on the part of governments of engaging in commercial activities makes necessary a practice
which will enable persons doing business with them to
have their rights determined in the courts.” Ibid. (citation omitted). The Department thus announced a “policy to follow the restrictive theory of sovereign immunity in the consideration of requests of foreign governments for a grant of sovereign immunity.” Ibid. (citation omitted).
Just as before adoption of the restrictive theory, “initial responsibility for deciding questions of sovereign
immunity fell primarily upon the Executive acting
through the State Department, and the courts abided
by ‘suggestions of immunity’ from the State Department.” Verlinden, 461 U.S. at 487. But because “foreign nations often placed diplomatic pressure on the
State Department in seeking immunity,” Congress
eventually enacted the FSIA, in part “to free the Government from the case-by-case diplomatic pressures.”
Id. at 487-488. “For the most part, the [FSIA] codifies,
as a matter of federal law, the restrictive theory of sovereign immunity.” Id. at 488.
2. One exception to that wholesale codification of the
restrictive theory as previously applied by the Executive is the FSIA’s expropriation exception. Under the
restrictive theory, a foreign state’s expropriation of
property is deemed to be a public act, not a commercial
20
act, and the foreign state would thus be immune from
civil suits for such expropriations. See, e.g., Victory
Transport Inc. v. Comisaria General de Abastecimientos y Transportes, 336 F.2d 354, 360 (2d Cir. 1964) (explaining that under the restrictive theory, “legislative
acts, such as nationalization,” are public acts), cert. denied, 381 U.S. 934 (1965). Accordingly, “the expropriation exception, because it permits the exercise of jurisdiction over some public acts of expropriation, goes beyond even the restrictive view” of foreign sovereign immunity. Federal Republic of Germany v. Philipp, 592
U.S. 169, 183 (2021). “In this way, the exception is
unique; no other country has adopted a comparable limitation on sovereign immunity.” Ibid.
In interpreting the scope of the expropriation exception’s departure from the restrictive view, courts should
be informed by the exception’s origins and history,
which are rooted in Cuba’s nationalization of certain
American property interests in 1960. See Banco
Nacional de Cuba v. Sabbatino, 376 U.S. 398, 401-406
(1964). Asked to review the validity of that expropriation under international law, this Court in Sabbatino
held that the act of state doctrine—which prevents
courts in the United States from determining the validity of the public acts of a foreign sovereign within its
own territory—required the Court to “presume[ the]
validity” of Cuba’s expropriation. Id. at 438; see id. at
416-439.
Congress responded to Sabbatino by enacting the
Second Hickenlooper Amendment to the Foreign Assistance Act of 1964; that Amendment “prohibits United
States courts from applying the act of state doctrine
where a ‘right to property is asserted’ based upon a ‘taking by an act of that state in violation of the principles
21
of international law.’ ” Philipp, 592 U.S. at 179 (brackets, citation, and ellipsis omitted); see 22 U.S.C.
2370(e)(2). The Amendment was broadly understood
“to permit adjudication of claims the Sabbatino decision
had avoided.” Philipp, 592 U.S. at 179. “But nothing in
the Amendment purported to alter any rule of international law.” Ibid. Congress then “used language nearly
identical to that of the Second Hickenlooper Amendment 12 years later in crafting the FSIA’s expropriation
exception.” Ibid.; see 28 U.S.C. 1605(a)(3).
The expropriation exception is thus best understood
to extend as far as—but no farther than—the similarly
worded Second Hickenlooper Amendment. And more
generally, this Court has “reject[ed] the suggestion that
Congress intended the expropriation exception to operate as a ‘radical departure’ from the ‘basic principles’ of
the restrictive theory.” Philipp, 592 U.S. at 183 (citation omitted); see Helmerich, 581 U.S. at 181.
3. The commingling theory would go far beyond
what the Second Hickenlooper Amendment—and thus
the expropriation exception—was intended to permit,
and would mark a radical departure from the restrictive
theory. As noted, the Amendment was understood as a
narrow extension of the restrictive theory “to permit
adjudication of claims the Sabbatino decision had
avoided.” Philipp, 592 U.S. at 179.
The claim that was “avoided” in Sabbatino involved
Cuba’s expropriation of sugar owned by an Americanowned company, where the sugar had been resold by an
American broker and the proceeds ultimately deposited
in a New York escrow account. See 376 U.S. at 401-407.
Sabbatino thus involved a claim where specific proceeds
from the sale of the expropriated property indisputably
were present in the United States, clearly identified as
22
such, and segregated. That is why the expropriation exception’s reference to “property exchanged for [the expropriated] property,” 28 U.S.C. 1605(a)(3), is properly
read to encompass money for which the expropriated
property was sold. See p. 13, supra. Were it otherwise,
the expropriation exception would not “permit adjudication of claims the Sabbatino decision had avoided,”
Philipp, 592 U.S. at 179, contrary to the purposes of the
Second Hickenlooper Amendment.
At the same time, however, Sabbatino did not involve
an expropriation claim where the United States funds
establishing the connection to commercial activity were
simply funds that once had been in an overseas account
into which proceeds from the sale of the expropriated
sugar had been deposited. Accordingly, there is no basis to read the expropriation exception as extending
even further beyond the restrictive theory of sovereign
immunity to encompass such a claim, as the commingling theory would require. Cf. Badgerow v. Walters,
596 U.S. 1, 18 (2022) (“[I]t is one thing to make an exception, quite another to extend that exception everywhere.”).
Indeed, such a broad reading of the expropriation exception would undermine the exception’s conformity
with customary international law, especially given that
no other country has adopted an equivalent exception;
would risk offending the dignity of foreign states; and
would invite reciprocal actions against the United
States in foreign courts. See pp. 17-18, supra. None of
those consequences would be consistent with the purposes of the FSIA in general and the expropriation exception in particular.
23
C. The Court Of Appeals’ Contrary Reasoning Lacks Merit
The court of appeals appeared to accept the commingling theory largely to alleviate its policy concerns
about the tracing rule reflected in Section 1605(a)(3)’s
text. The court’s 2016 decision neither provided any rationale for accepting the theory nor attempted to grapple with the text, context, or history of the FSIA and
the expropriation exception. See 812 F.3d 127, 147. In
its most recent decision, the court reasoned that given
“the fungibility of money,” the commingling theory was
necessary because without it, a foreign sovereign could
“commingle the proceeds from illegally taken property
with general accounts” and thereby “insulate itself from
suit under the expropriation exception.” Pet. App. 72.
The court “decline[d] to ascribe to Congress an intent
to create a safe harbor for foreign sovereigns who
choose to commingle rather than segregate or separately
account for the proceeds from unlawful takings.” Ibid.
Such “a ‘parade of horribles’ argument generally
cannot ‘surmount the plain language of the statute.’ ”
Truck Insurance Exchange v. Kaiser Gypsum Co., 144
S. Ct. 1414, 1427 (2024) (citation omitted). And more
fundamentally, rejection of the commingling theory
does not create a “safe harbor” for foreign sovereigns;
they remain liable for their actions in whatever forums
or proceedings are otherwise available. Rather, rejection of the commingling theory simply honors the terms
and scope, in light of the unique nature and history, of
the limited expropriation exception to the general rule
of immunity of a foreign state for its actions abroad—a
rule followed in this context by every nation other than
the United States.
Indeed, while the court expressed concern that without the commingling theory, “virtually all claims involv-
24
ing liquidation” will fail to satisfy the expropriation exception, Pet. App. 72, the court failed to appreciate that
applying the commingling theory would have the opposite effect: “virtually all claims involving liquidation”
would satisfy that exception. See pp. 15-16, supra.
That scenario raises the troubling concerns described
above for foreign relations, conformity with customary
international law, and reciprocity. See pp. 17-18, supra;
see also Philipp, 592 U.S. at 183 (cautioning against a
reading that would “transform[] the expropriation exception into an all-purpose jurisdictional hook for adjudicating human rights violations”). Such dilemmas underscore why courts should simply “follow the text even
if doing so will supposedly ‘undercut a basic objective of
the statute.’ ” Baker Botts L.L.P. v. ASARCO LLC, 576
U.S. 121, 135 (2015) (citation omitted).
It might well be difficult for a plaintiff whose property was expropriated and liquidated decades ago to
trace it through a chain of transactions to specifically
identifiable property in the foreign state’s possession
today. But it is not necessarily impossible; “[t]here may
be circumstances where it is possible to trace the proceeds a sovereign received from expropriated property
to funds spent on property present in the United
States,” Rukoro v. Federal Republic of Germany, 976
F.3d 218, 225-226 (2d Cir. 2020), cert. denied, 141 S. Ct.
2724 (2021). And even if the tracing requirement means
that some claims cannot go forward, that is what Congress required in the FSIA. Nor is that an unusual requirement in the law; for example, a constructive trust
or equitable lien requires that the “money or property
identified as belonging in good conscience to the plaintiff c[an] clearly be traced to particular funds or property in the defendant’s possession.” Great-West Life &
25
Annuity Insurance Co. v. Knudson, 534 U.S. 204, 213
(2002); see Luis v. United States, 578 U.S. 5, 22 (2016)
(plurality opinion) (“Courts use tracing rules in cases
involving fraud, pension rights, bankruptcy, trusts, etc.”).
If this Court rejects the commingling theory, it
would still be open to plaintiffs in respondents’ position
to attempt to trace their allegedly expropriated property to property currently in the foreign state’s possession. Tracing rules developed in other contexts might
well be instructive in developing the applicable principles. Cf. Luis, 578 U.S. at 22 (plurality opinion) (referring to “tracing rules governing commingled accounts”
in the trust-law context). But any tracing rule in this
context would have to respect both the general rule of
immunity under the FSIA and the unique nature and
history of the limited expropriation exception. In any
event, this Court need not address those questions here.
Respondents appear to have disclaimed any ability to
trace the proceeds of the expropriated property at issue
here. Br. in Opp. 20. Because they have not attempted
to make that showing, and because the court of appeals
did not address what an appropriate tracing rule might
be, the Court should leave that issue to a future case in
which the question has been squarely addressed and
factually developed. Cf. Cutter v. Wilkinson, 544 U.S.
709, 718 n.7 (2005) (“[W]e are a court of review, not of
first view.”).
* * *
The United States deplores the acts of violence that
were committed against respondents and their family
members and supports efforts to provide them with a
remedy for the wrong they suffered. The policy of the
United States on claims for restitution or compensation
by Holocaust survivors and other victims of the Nazi era
26
has consistently been motivated by the twin concerns of
justice and urgency. No amount of money could provide
compensation for the suffering that the victims of Naziera atrocities endured. But the moral imperative has
been and continues to be to provide some measure of
justice to the victims of the Holocaust, and to do so in
their remaining lifetimes. The United States has advocated that concerned parties, foreign governments, and
nongovernmental organizations act to resolve matters
of Holocaust-era restitution and compensation through
dialogue, negotiation, and cooperation, thereby avoiding the prolonged uncertainty and delay that accompany litigation. Cf. American Insurance Association v.
Garamendi, 539 U.S. 396, 420-423 (2003). Respecting
the limits in the FSIA aids in the United States’ efforts
to persuade foreign nations to establish appropriate redress and compensation mechanisms for human-rights
violations, including the horrendous human-rights violations perpetrated during the Holocaust.
II. IN DETERMINING WHETHER A PLAINTIFF HAS A
VALID CLAIM THAT AN EXCEPTION TO SOVEREIGN
IMMUNITY APPLIES, THE COURT SHOULD RESOLVE
FACTUAL DISPUTES AT THE OUTSET OF THE CASE
In the second question presented in the petition for
a writ of certiorari, petitioners contend that the court of
appeals failed to enforce the pleading requirements set
forth in Helmerich, supra. There, this Court held that
when a plaintiff invokes the expropriation exception,
“the relevant factual allegations must make out a legally
valid claim that a certain kind of right is at issue (property rights) and that the relevant property was taken in
a certain way (in violation of international law).”
Helmerich, 581 U.S. at 174 (emphasis omitted). The
Court rejected the contention that “a party need only
27
make a ‘nonfrivolous’ argument that the case falls
within the scope of the exception.” Id. at 173. Petitioners contend (Br. 47) that Helmerich thus imposed a
“heightened standard” at the pleading stage and that
the court of appeals erred in applying a “plausiblepleading standard,” Pet. App. 39; see id. at 71.
Petitioners’ contention appears to rest on a view that
under the “plausible-pleading standard” (Pet. App. 39),
a court determines whether the alleged facts, taken as
true, would amount to a plausibly legally valid claim (instead of an actually legally valid claim). If that is what
the court of appeals meant, it would indeed contradict
Helmerich. But the court indicated (ibid.) that it was
applying the pleading standard applicable to a motion
to dismiss for failure to state a claim for relief under
Rule 12(b)(6) of the Federal Rules of Civil Procedure,
as described in cases like Bell Atlantic Corp. v.
Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556
U.S. 662 (2009). Those cases “concern the factual allegations a complaint must contain to survive a motion to
dismiss,” Johnson v. City of Shelby, 574 U.S. 10, 12
(2014) (per curiam), not the validity of the plaintiff ’s legal theory. To survive a Rule 12(b)(6) motion, the plaintiff is still required to plead a “legally cognizable claim,”
5B Charles Alan Wright et al., Federal Practice and
Procedure § 1357 (4th ed. West 2024), no different from
Helmerich’s requirement to plead a “legally valid
claim,” 581 U.S. at 174. And because “the facts [we]re
not in dispute” in Helmerich as a result of the parties’
“stipulations,” there was no occasion for the Court to
address the standard for evaluating disputed factual allegations in a case involving the FSIA. Id. at 187.
That said, there is an important difference between
a motion to dismiss for failure to state a claim under
28
Rule 12(b)(6) and one for lack of subject-matter jurisdiction under Rule 12(b)(1). Courts addressing a Rule
12(b)(6) motion must “assume[] the truth of ‘wellpleaded factual allegations’ and ‘reasonable inferences’
therefrom,” National Rifle Association v. Vullo, 602
U.S. 175, 181 (2024) (brackets and citation omitted), but
“subject-matter jurisdiction can be called into question
either by challenging the sufficiency of the allegation or
by challenging the accuracy of the jurisdictional facts
alleged,” Gwaltney of Smithfield, Ltd. v. Chesapeake
Bay Foundation, Inc., 484 U.S. 49, 68 (1987) (Scalia, J.,
concurring in part and concurring in the judgment).
As Helmerich suggests, when a foreign state defendant makes the former type of challenge, a court may—
just as it would when addressing a motion to dismiss on
the merits—“tak[e] all of the plaintiffs’ well-pleaded allegations as true,” “constru[e] the complaint in the light
most favorable to the plaintiffs,” and then evaluate
whether those facts would “make out a legally valid
claim”—that is, whether an exception to sovereign immunity would apply—as a matter of law. 581 U.S. at
174-176; see FBI v. Fikre, 601 U.S. 234, 237 n.* (2024)
(similar, for other jurisdictional claims). The decision
below thus did not contravene Helmerich by stating
that where “ ‘the defendant challenges only the legal
sufficiency of the plaintiff ’s jurisdictional allegations,’ ”
“[t]he Rule 12(b)(1) standard in this context ‘is similar
to that of Rule 12(b)(6),’ ” Pet. App. 67 (citation omitted); see id. at 39.
Instead, the decision below contravened Helmerich
in a different way. Helmerich explained that “where jurisdictional questions turn upon further factual development, the trial judge may take evidence and resolve
relevant factual disputes,” and “should normally resolve
29
those factual disputes and reach a decision about immunity as near to the outset of the case as is reasonably
possible.” 581 U.S. at 174; see id. at 187. Making such
findings at the outset of litigation is particularly important in cases involving sovereign immunity, whose
“basic objective” is “to free a foreign sovereign from
suit,” not merely liability. Id. at 174; see Republic of
Austria v. Altmann, 541 U.S. 677, 696 (2004) (the “principal purpose of foreign sovereign immunity” is to “give
foreign states and their instrumentalities some present
‘protection from the inconvenience of suit as a gesture
of comity’ ”) (citation omitted). Deciding sovereign immunity questions at the outset is thus necessary to ensure that the foreign state actually receives the protections of immunity if no exception applies, to preserve
the dignity of the foreign state and comity between nations, and to safeguard the reciprocal interests of the
United States when it is sued in foreign courts. See pp.
17-18, supra.
Here, the court of appeals correctly recognized that
because petitioners challenged the factual basis underlying the expropriation exception, the district court
should have made “findings of fact germane to the expropriation exception’s property element.” Pet. App.
70. Yet when it came to addressing nationality, the
court of appeals asked only whether respondents had
“adequately alleged” that they or their family members
were not Hungarian nationals at the time of the takings,
rather than remanding for factfinding on that issue. Id.
at 53; see id. at 42-53. That was error. The issue of
nationality affects whether the alleged taking was “in
violation of international law,” 28 U.S.C. 1605(a)(3), and
thus whether the expropriation exception furnishes a
basis for jurisdiction. See Philipp, 592 U.S. at 187. The
30
court thus should have disposed of the factual dispute
over nationality in the same way it did the factual dispute over the property element: by requiring the district court to make findings of fact with respect to each
survivor’s nationality at the time of the alleged expropriations, instead of simply accepting respondents’
well-pleaded allegations.
III. UNDER THE FSIA, THE PLAINTIFF BEARS THE
BURDEN TO PROVE THAT AN EXCEPTION TO SOVEREIGN IMMUNITY APPLIES
In line with its precedent, the court of appeals held
that where a plaintiff suing a foreign state invokes one
of the FSIA’s exceptions to sovereign immunity, “the
sovereign defendant bears the burden of proving that
the plaintiff ’s allegations do not bring its case within a
statutory exception to immunity.” Pet. App. 68 (citation
and internal quotation marks omitted); see id. at 74; see
also, e.g., Belize Social Development Ltd. v. Government of Belize, 794 F.3d 99, 102 (D.C. Cir. 2015) (“[T]he
defendant state ‘bears the burden of proving that the
plaintiff ’s allegations do not bring its case within a statutory exception to immunity.’ ”) (emphasis added; citation omitted), cert. denied, 580 U.S. 1046 (2017);
Transamerican Steamship Corp. v. Somali Democratic
Republic, 767 F.2d 998, 1002 (D.C. Cir. 1985) (“[T]he
burden of proof in establishing the inapplicability of
these exceptions is upon the party claiming immunity.”). For example, the court held in this case that petitioners have the burden to show that the general
treasury funds used in connection with Hungary’s commercial activities or owned by MÁV do not trace back
to the expropriated property. Pet. App. 74.
That holding and the precedent on which it relied are
incorrect. “[T]he burden of establishing” that a federal
31
court has subject-matter jurisdiction always “rests
upon the party asserting jurisdiction.” Kokkonen v.
Guardian Life Insurance Co., 511 U.S. 375, 377 (1994);
see Hertz Corp. v. Friend, 559 U.S. 77, 96 (2010). And
“unless a specified exception [to immunity] applies, a
federal court lacks subject-matter jurisdiction over a
claim against a foreign state.” Saudi Arabia v. Nelson,
507 U.S. 349, 355 (1993); see 28 U.S.C. 1330(a) (granting
district courts subject-matter jurisdiction in civil actions against foreign states only for claims “with respect
to which the foreign state is not entitled to immunity”).
It follows that the plaintiff, not the sovereign defendant,
bears the burden of establishing that an exception to
sovereign immunity applies to her claim.*
The court of appeals appears to have derived its contrary view from a statement in the FSIA’s legislative
history describing sovereign immunity as an “affirmative defense which must be specially pleaded” and stating that “the burden will remain on the foreign state to
produce evidence in support of its claim of immunity.”
H.R. Rep. No. 1487, 94th Cong., 2d Sess. 17 (1976)
(House Report); see Transamerican, 767 F.2d at 1002
(relying on the House Report). But “legislative history
is not the law,” Azar v. Allina Health Services, 587 U.S.
566, 579 (2019) (citation omitted), and the House Report’s description of sovereign immunity as an affirmative defense cannot be reconciled with the “explicit statutory language” in the FSIA that makes the existence
of sovereign immunity a bar to subject-matter jurisdic* Petitioners argue that the plaintiff bears the burden of production, but seem willing to accept that the foreign sovereign bears the
ultimate burden of proof. Pet. Br. 43-44. In the government’s view,
both burdens properly rest with the plaintiff invoking federal jurisdiction.
32
tion, Helmerich, 581 U.S. at 177. Indeed, this Court
long ago repudiated the House Report’s description of
sovereign immunity as an affirmative defense, emphasizing that because “subject-matter jurisdiction turns
on the existence of an exception to foreign sovereign immunity, * * * even if the foreign state does not enter
an appearance to assert an immunity defense, a district
court still must determine that immunity is unavailable
under the [FSIA].” Verlinden, 461 U.S. at 493 n.20 (citation omitted). The court of appeals’ holding that the
sovereign defendant bears the burden of disproving
subject-matter jurisdiction thus cannot be squared with
the plain text of the FSIA or with this Court’s precedents on subject-matter jurisdiction in general or on the
FSIA and sovereign immunity in particular.
Contrary to respondents’ suggestion at the certiorari stage (Br. in Opp. 25), the question of who bears the
ultimate burden to prove (or disprove) the applicability
of an exception to sovereign immunity is important irrespective of whether the commingling theory is accepted. Even if this Court were to accept that theory,
correcting the court of appeals’ error as to the burden
of proof would at least require respondents to demonstrate that their expropriated property was in fact liquidated for cash that was commingled with funds now
present in the United States in connection with Hungary’s commercial activities or owned by MÁV. Conversely, if this Court were to reject the commingling
theory but not address the burden of proof, the court of
appeals might still require petitioners to “affirmatively
establish by a preponderance of the evidence that their
current resources do not trace back to the property
originally expropriated,” Pet. App. 74—a burden that
could be effectively impossible, depending on how the
33
court of appeals applied it. In addition, the district
court noted a “dearth of facts” regarding the nationality
of some survivors, id. at 173, suggesting that the burden
of proof might be dispositive on that issue as well.
More generally, the court of appeals’ rule that foreign sovereign defendants bear the burden to disprove
subject-matter jurisdiction has the potential to upset
foreign relations and the United States’ own reciprocal
interests by too permissively abrogating foreign sovereign immunity. See pp. 17-18, supra. And given that
venue for civil actions against foreign states always lies
in the District of Columbia, see 28 U.S.C. 1391(f )(4), it
is especially important to correct the court’s egregiously wrong interpretation of the FSIA.
CONCLUSION
The judgment of the court of appeals should be
reversed.
Respectfully submitted.
RICHARD C. VISEK
Principal Deputy Legal
Adviser
Department of State
BRIAN H. FLETCHER
Acting Solicitor General *
BRIAN M. BOYNTON
Principal Deputy Assistant
Attorney General
EDWIN S. KNEEDLER
Deputy Solicitor General
SOPAN JOSHI
Assistant to the Solicitor
General
SHARON SWINGLE
LEWIS S. YELIN
Attorneys
SEPTEMBER 2024
* The Solicitor General is recused in this case.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.