Amicus Curiae Brief — Republicof Austria v. Altmann

No. 03-13

In the Supreme Court of the United States

REPUBLIC OF AUSTRIA, ET AL., PETITIONERS

MARIA V. ALTMANN

ON WRIT OF CERTIORARI!

TOTHE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONERS

THEODORE B. OLSON

Nolicitor er rhe ra!

( ‘Ow? sel of Re cord

PETER D. KEISLER

Assistant Attorne y

(x rlé ral

EDWIN S. KNEEDLER

Th puty Solicitor (x rie ral

JEFREY P. MINEAR

WILLIAM H. TAFT. IV Assistant to the Solicitor

Legal Adviser General

JONATHAN B. SCHWARTZ MARK B. STERN

Deputy Legal Adviser DOUGLAS HALLWARD-DRIEMEIER

ELIZABETH M. TEE Attorneys

Attorney-Advise r 5. partie nt of Justice

Depart nt of Nrate Wasi ington . 7 C 20530-0001

—

Wash „gen. D.C. 20520 (202) 515-221;

QUESTION PRESENTED

Whether the Foreign Sovereign Immunities Act of 1976

(FSIA), 28 U.S.C. 1602 et se., authorizes United States

courts to exercise jurisdiction over a claim, arising before

the FSIA’s enactment, that a foreign state expropriated

property in violation of international law.

— —

TABLE OF CONTENTS

A. Foreign sovereign immunity

B. The factual allegations in this case

2 ——

Argument:

The FSIA does not authorize United States courts

to exercise jurisdiction over an expropriation claim

against a foreign state based on conduct that occurred

before enactment of the FSIA . . .

A. This Court’s retroactivity decisions preclude

application of the FSIA’s expropriation excep-

tion to claims that arose before enactment

——————

1. The FSIA is subject to established retro-

activity principles ....... 2

2. The application of those retroactivity princi-

ples depends on the particular FSIA provision

at issue

3. The FSIA’s expropriation exception created

a new substantive liability that is subject

to the presumption of non-retroactive

application

4. There is no basis for overcoming the pre-

sumption that the FSIA’s expropriation

exception is non-retroactive —

5. Retroactive application of the FSIA’s expro-

priation exception would be inconsistent

with international norms

(III)

I 2 WS to

11

12

14

17

IV

Table of Contents—Continued:

B. The court of appeals erred by relying on

unfounded speculation that, before enactment

of the FSIA, the Executive Branch would

have abridged a foreign state’s sovereign

immunity in the instance of Holocaust claims

1. The court of appeals erred in attempting

to surmise whether the Executive Branch

would have recognized a special exception

for Holocaust claims before enactment of

the FSIA .....

2. The United States did not condition a

foreign state’s right to absolute immunity

on whether the state was an “unfriendly”

nation

3. The United States did not depart from the

governing principles of sovereign immunity

in the case of Holocaust-related claims ...............

4. Austria did not lose its right to absolute

sovereign immunity in United States

courts by adopting the restrictive theory

of foreign sovereign immunity

TABLE OF AUTHORITIES

Cases:

Abrams v. Societe Nationale des Chemins de Fer

Francais, 332 F.3d 173 (2d Cir. 2003), petition for

cert. pending, No. 03-284 (filed Aug. 19, 2008) .................

Alfred Dunhill of London, Inc. v. Cuba, 425 U.S.

682 (1976)

Ambatielos Case (Greece v. United Kingdom), 1952

I CJ. 28

21

» 8

3, 13

Cases—Continued: Page

American Hawaiian Ventures, Inc. v. M.V_J.

Latuharhary, 257 F. Supp. 622 (D.N.J. 1966) 27

American Ins. Ass 'n v. Garamendi, 123 S. Ct. 2374

(2003) 18, 22

Argentine Republic v. Amerada Hess Shipping

Corp., 488 U.S. 428 (1989) 1, 19, 25

Banco Nacional de Cuba v. Sabbatino, 376 U.S.

398 (1964) 26, 27

Bernstein v. N. V. Nederlandsche-Amerikaansche:

173 F.2d 71 (2d Cir. 1949) 26

210 F. 2d 375 (2d Cir. 1954) 26, 27

California v. Deep Sea Research, Inc., 523 U.S. 491

(1998) 16

Carl Marks & Co. v. Union of Soviet Socialist,

Republics, 841 F.2d 26 (2d Cir.), cert. denied,

487 U.S. 1219 (1988) 10, 12

Carrato v. United States, [1982] 40 O.R. (2d) 459

(H.C.), judgment endorsed and appeal dismissed,

File No. 22/83 (Ont. Ct. App. Oct. 17, 1983) 19

Chemical Natural Res., Inc. v. Republic of

Venezuela, 215 A.2d 864 (Pa. 1966) 13

Dames & Moore v. Regan, 453 U.S. 654 (1981) 14, 22

Deutsch v. Turner Corp, 324 F.3d 692 (9th Cir.),

cert. denied, 124 S. Ct. 105 (2003) 28

Fujitsu Ltd. v. Federal Experss Corp, 247 F.3d 423

(2d Cir.), cert. denied, 534 U.S. 891 (2001) 17

Garb v. Republic of Poland, 72 Fed. Appx. 850

(2d Cir. 2003), petitions for cert. pending, Nos. 03-500

& 03-517 20

Guaranty Trust Co. v. United States, 304 U.S. 126

(1938) 3,11

Hughes Aircraft Co. v. United States ex rel.

Schumer, 520 U.S. 939 (1997) 7, 9, 10, 28

INS v. St. Cyr, 533 U.S. 289 (2001) 11, 15, 16

VI

Cases—Continued: Page

Jackson v. People’s Republic of China, 794 F.2d

1490 (11th Cir. 1986), cert. denied, 480 U.S. 917

(1987) 10, 12, 15

Johnson v. Eisentrager, 339 U.S. 763 (1950) 22

Joo v. Japan, 332 F.3d 679 (D.C. Cir. 2003) 10, 11, 12,

15, 18, 19, 22

Landgraf v. USI Film Prod., 511 U.S. 244

... —h— ͤͤ—— 9

Lindh v. Murphy, 521 U.S. 320 (1997 15

Mexico v. Hoffman, 324 U.S. 30 (1945) 3, 21, 24

Minnesota v. United States, 305 U.S. 382 (1939) ............. 29

Princz v. Federal Republic of Germany, 26 F.3d

1166 (D.C. Cir. 1994), cert. denied, 513 U.S. 1121

—...—.——— _ 25

Republic of Argentina v. Weltover, Inc., 504 U.S.

607 (1992) 13

Republic of Peru, Ex parte, 318 U.S. 578 (1948) .......... 3, 10,

11, 21, 23

Ricaud v. Amerian Metal Co., 246 U.S. 304

(1918) 22

Rich v. Naviera Vacuba, S. A, 197 F. Supp. 710

(E. D. Va.), aff d 295 F.2d 24 (4th Cir. 1961) 13

Sampson v. Federal Republic of Germany, 250 F.3d

1145 (7th Cir. 2001) 25, 26

Saudi Arabia v. Nelson, 507 U.S. 349 (1993) 1,13

19, 24, 25

Smith v. Socialist People’s Libyan Arab

Jamahiriya, 101 F.3d 229 (2d Cir. 1996) 26

Stephen v. Zivnostenska Banka, 15 A.D.2d 111

(N.Y. App. Div. 1961), aff d, 186 N.E.2d 676 (1962) 13-14

The Santissima Trinidad, 20 U.S. (7 Wheat.) 283

(1822) 16

The Schooner Exchange v. M Fadden, 11 US.

(7 Cranch) 116 (1812) 2,21

Tritt v. United States, [1989] Ont. Sup. C. J. Lexis

455 19

VII

Cases—Continued:

Underhill v. Hernandez, 168 U.S. 250 (1897)

Verlinden B. V v. Central Bank of Nigeria, 461 US.

480 (1983) 2, 4, 10, 12, 20, 21

Victory Transport, Inc. v. Comisaria General de

Abastecimientos y Tranportes, 336 F.2d 354 (2d Cir.

1964), cert. denied, 381 U.S. 934 (1965) 12-13, 24, 28

W.S. Kirkpatrick & Co. v. Environmental Tectonics

Corp., Int'l, 493 U.S. 400 (1990)

Ware v. Hylton, 3 U.S. (3 Dall.) 198 (1796)

Weltover, Inc. v. Republic of Argentina, 941 F. 2d

145 (2d Cir. 1991), aff d, 504 U.S. 607 (1992)

Wulfsohn v. Russian Socialist Federated Soviet

Republic, 138 N. E. 24 (N.Y. 1923)

Zwack v. Kraus Bros. & Co., 237 F.2d 255 (2d Cir.

1956)

Treaties, statutes and rules:

Agreement Relating to the Agreement of Oct. 24, 2000,

Concerning the Austrian Fund “Reconciliation, Peace,

and Cooperation”, Jan. 23, 2001, U.S.-Aus., 2001 WL

935261, Annex A

Austria: Settlement of Certain Claims Under Article

26 of the Austrian State Treaty, May 22, 1959, U.S.

Aus., 10 U.S.T. 1158

Bulgaria: Claims, Jul. 2, 1963, U.S.-Bulg., 14 U.S. T.

969

Convention on the Settlement of Matters Arising out

of the War and the Occupation, as amended, Oct. 23,

1954, 6 U.S.T. 4411

Council of Europe: European Convention on State

Immunity and Additional Protocol, art. 35(3), 11 I.L.M.

470, 482 (1972)

Declaration on Austria at Moscow, S. Exec. Rep. No. 8,

84th Cong., Ist Sess. (1955)

18

19

VIII

Treaties and statutes—Continued: Page

Poland: Settlement of Claims of United States

Nationals, Jul. 16, 1960, U.S.-Pol., 11 U.S.T.

Romania: Settlement of Claims of United States

Nationals and Other Financial Matters, Mar. 30,

I 14

State Treaty for the Re- establishment of an Indepen-

dent and Democratic Austria, May 15, 1955, art. 26,

1 ⁰ͤ—¶T1—— 18

Treaty of Peace with Japan, Sept. 8, 1951, 3 U.S. T

—. . ?]ñ 18

Vienna Convention on the Law of Treaties, S. Exec.

Doc. L, 92d Cong., Ist Sess. (1971) 1 17

Yugoslavia: Claims of United States Nationals

Nov. 5, 1964, U.S.-Yugo., 16 U.S. T. 1 14

Antiterrorism and Effective Death Penalty Act of

1996, Pub. L. No. 104-132, f 221(c), 110 Stat. 1248 ........... 16

Foreign Sovereign Immunities Act of 1976,

Pub. L. No. 94-583, 90 Stat. 2891 (28 U.S.C. 1330, 1602

et seg.) — 1, 3-4

28 U.S.C. 1602 . _ 15, 20

28 U.S.C. 16030b) * * 6

29 ..——.——— 4. 11, 19

28 U.S.C. 16050) (1) 7 12, 25

Oe 7 12

28 U.S.C. 16050) (3) a . 5, la

28 U.S.C. 1605-1607 4

International Claims Settlement Act Amendments

of 1955, ch. 645. 69 Stat. 562 (22 U.S.C. 1641 et seg.) 22

International Claims Settlement Act Amendments of

1958, Pub. L. No. 85-604, 72 Stat. 527 (22 U.S.C.

1642 et seq.) 14

International Emergency Economic Powers Act,

99. ' 22

Trading with the Enemy Act, ch. 106, 40 Stat. 411

(50 U.S.C. App. 1 et seq.) 22

IX

Statutes—Continued: Page

War Claims Act of 1948, ch. 826, 62 Stat. 1240 (50 U.S.C.

App. 2001 et seq.) — — — — 18, 22

112.1 2 —— 27

Foreign States Immunities Act, 1985, § 7 (Austl.)

(reprinted in 25 J. L. M. 715 (1986)) .. ... 19

State Immunity Act, 1978, § 23 (Eng.) (reprinted in

Wee. ——— 19

State Immunity Act, 1979, § 1 (Sing) (available at

<http://agevidb4.age.gov.Sg/>) ..... 19

State Immunity Act, 1982 (Can.) (reprinted in

IX 4. ⁵ͤꝗV—᷑ 19

Miscellaneous:

Comment, American Oil Investors’ Access to Domes-

tic Courts in Foreign Nationalization Disputes,

123 U. Pa. L. Rev. 610 Gan. 1975) . . . . 13, 27

Note, Avoiding Expropriation Loss, 79 Harv. L. Rev.

rr. ²̃%⁰ä—ç2 13, 14

Note, The Castro Government in American Courts:

Sovereign Immunity and the Act of State Doc-

trine, 75 Harv. L. Rev. 1666 (June 1962) . . 13

Dep’t of St. Bull., July 9, 1956... ..... 18

H.R. Rep. No. 1487, 94th Cong., 2d Sess. (1976) 15, 20, 29

1 Robert Jennings & Arthur Watts, Oppenheim’s

International Law (9th ed. 1992) . . . .... 17

Letter from Legal Adviser Monroe Leigh to the

Solicitor General (Nov. 26, 1975) (reprinted in

425 U.S. 706 (1976)) 27

Letter from Acting Legal Adviser Jack B. Tate to

Acting Attorney General Phillip B. Perlman

(May 19, 1962) (reprinted in 425 U.S. 711 (1976) 3

Andreas F. Lowenfeld, The Sabbatino Amendment

International Law Meets Civil Procedure, 59 Am.

4. Tent’ Le. GBD (IGG) cccccccscscscccssececesesesoscssesssonsssssssssosvsssoscsosoese 13, 27

Miscellaneous—Continued: Page

Gerald Fitzmaurice, The Law and Procedure of the

International Court of Justice, 1951-54: General Prin-

ciples and Sources of Law, XXX British Year Book

of International Law 5 (198809L———2ͤ—————— 17

In the Supreme Court of the United States

No. 03-13

REPUBLIC OF AUSTRIA, ET AL., PETITIONERS

D.

MARIA V. ALTMANN

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONERS

INTEREST OF THE UNITED STATES

The United States has a substantial interest in the proper

construction of the Foreign Sovereign Immunities Act of

1976 (FSIA), 28 U.S.C. 1602 et seg., which presents the sole

basis for civil litigants to obtain jurisdiction over a foreign

state in United States courts. See Saudi Arabia v. Nelson,

507 U.S. 349, 355 (1993); Argentine Republic v. Amerada

Hess Shipping Corp., 488 U.S. 428 (1989). The United States

has a particularly strong interest in questions respecting the

FSIA’s retroactive application, which carry the potential

for serious adverse effects on our Nation’s foreign relations.

The United States also has a unique perspective on the

government’s sovereign immunity practice before enactment

of the FSIA, when the Executive Branch bore primary re-

sponsibility for making immunity determinations.

(1)

STATEMENT

Petitioners Republic of Austria and the Austrian Gallery

(collectively, Austria) challenge a court of appeals’ decision

arising from respondent’s suit to recover artwork that was,

respondent alleges, unlawfully confiscated from her uncle

during the Holocaust. The court of appeals affirmed the

determination of the United States District Court for the

Central District of California, on Austria’s motion to dismiss,

that the FSIA confers jurisdiction over the suit and that

respondent satisfied other procedural preconditions for

bringing that action.

A. Foreign Sovereign Immunity

The United States’ approach to the question of foreign

sovereign immunity can be separated into three distinct

periods of the Nation’s history. From the Nation’s founding

until 1952, the United States adhered to the “absolute”

theory of foreign sovereign immunity. See Verlinden B.V. v.

Central Bank of Nigeria, 461 U.S. 480, 486 (1983). The

Court endorsed that principle in The Schooner Exchange v.

M’Fadden, 11 U.S. (7 Cranch) 116 (1812), reasoning that, as a

necessary consequence of the dignity to be accorded foreign

sovereigns and the need for the courts to avoid upsetting

international relations, “the person of the sovereign [is

immune] from arrest or detention within a foreign territory”

if he enters “with the knowledge and license of its sover-

eign.” Id. at 137. Under the “absolute theory of sovereign

immunity,” as understood and applied by the Executive

Branch, “foreign sovereigns and their public property are

* * * not * * * amenable to suit in our courts without

Because this case is before the Court on the court of appeals’ affir-

mance of the district court’s denial of Austria’s motion to dismiss, the

allegations of the complaint are accepted as true for purposes of resolving

petitioners’ jurisdictional objections. See Pet. App. 9a.

their consent.” Guaranty Trust Co. v. United States, 304

U.S. 126, 134 (1938).”

In 1952, the United States’ practice was altered when, in

the “Tate Letter,” the Executive announced its adoption of

the “restrictive” theory of foreign sovereign immunity. See

Letter from Acting Legal Adviser Jack B. Tate to Acting

Attorney General Philip B. Perlman (May 19, 1962)

(reprinted in Alfred Dunhill of London, Inc. v. Cuba, 425

U.S. 682, 711-715 (1976)). The Tate Letter stated that

thenceforth the Department of State would recommend to

United States courts, as a matter of policy, that foreign

states be granted immunity only for their sovereign or public

acts Cure imperii), and not for their commercial acts Cure

gestionis). Ibid. See Verlinden, 461 U.S. at 486-487. The

United States adopted the restrictive theory in light of the

growing acceptance of that theory among foreign nations

and the need for a judicial forum to resolve disputes stem-

ming from the “widespread and increasing practice on the

part of governments oi engaging in commercial activities.”

Alfred Dunhill, 425 U.S. at 714 (Tate Letter).

In 1976, Congress enacted the FSIA, which reflects the

United States’ current approach to foreign sovereign

immunity. See Pub. L. No. 94-583, 90 Stat. 2891 (28 U.S.C.

2 Although, under the traditional approach, foreign sovereigns were

absolutely immune from suit in United States courts, the question occa-

sionally arose whether a particular res should be entitled to the sover-

eign’s immunity. See, e. g., Mexico v. Hoffman, 324 U.S. 30, 37 (1945). In

recognition of the potential for international conflict inherent in such

determinations, the courts developed the practice of deferring to the

Executive Branch’s judgment in such matters. See, e. g., Ex parte

Republic of Peru, 318 U.S. 578, 588-589 (1943). The courts determined

whether the particular property at issue was entitled to the benefit of the

foreign sovereign’s immunity “in conformity to the principles aseegcved by

the department of the government charged with the conduct of our foreign

relations.” Hoffman, 324 U.S. at 34-35.

1330, 1° 02, et seg.). The FSIA “contains a comprehensive set

of legal standards governing claims of immunity in every

civil action against a foreign state or its political sub-

divisions, agencies, or instrumentalities.” Verlinden, 461

U.S. at 488. “For the most part, the Act codifies, as a matter

of federal law, the restrictive theory of sovereign immunity.”

Ibid. The FSIA sets forth a general rule that foreign states

are immune from suit in United States courts, 28 U.S.C.

1604, and that courts may exercise jurisdiction over foreign

states only if the suit comes within one of the specific excep-

tions to that rule established by Congress, see 28 U.S.C.

1605-1607. Thus, if the suit does not come within one of the

exceptions, the fundamental rule of Section 1604 retains the

foreign sovereign’s immunity. Congress specifically in-

tended to relieve the State Department of the diplomatic

pressures associated with case-by-case suggestions of im-

munity and to establish iegal principles to guide the courts.

See Verlinden, 461 U.S. at 488.

B. The Factual Allegations In This Case

Respondent was a Jewish citizen of Austria who fled Nazi

persecution and came to the United States, where she be-

came an American citizen. She brought this action to re-

cover six paintings by the famous Austrian artist Gustav

Klimt that the Republic of Austria currently possesses and

houses within the Austrian Gallery. The paintings at issue

include the now-famous Klimt portraits of respondent’s aunt,

Adele Bloch-Bauer. Respondent alleges that, during the

Holocaust, Nazi officials confiscated the paintings from her

uncle, Ferdinand Bloch-Bauer, in violation of international

law. Pet. App. 38a-41a.

According to respondent’s complaint, Ferdinand Bloch-

Bauer’s heirs attempted to recover the expropriated prop-

erty under post-war restitution laws, but Austria maintained

that Adele Bloch-Bauer, who had died in 1925, had be-

— oo — *

queathed the Klimt paintings to Austria. Pet. App. 4Ia-42a

Respondent recounts that, in the immediate post-war period,

Austrian Gallery officials insisted that Ferdinand’s heirs re-

linquish their claims to those Klimt paintings in exchange for

the right to export other recovered property. Id. at 41a-44a.

Respondent further asserts that, in 1998, she obtained docu-

ments from the Austrian Gallery’s archives revealing that,

even in 1948, the Gallery had known that Adele’s testa-

mentary wish that the paintings be donated to the Gallery

was not legally binding. Id. at 42a-43a & n.8, 45a n.11.

Respondent and her fellow heirs filed an administrative

claim in Austria, seeking return of the Klimt paintings. Pet.

App. 46a-47a. The administrative committee returned a

number of Klimt drawings and a portion of Ferdinand’s

valuable porcelain collection to Ferdinand’s heirs. But tne

committee voted, allegedly under politica! pressure, to deny

the claims as to the Klimt paintings. Id. at 47a. Although

respondent could have sought review of the administrative

decision through the Austrian courts upon paying a filing

fee, id. at 8a, she instead filed this suit in federal district

court, ibid. a

Respondent claims that Austria expropriated the Klimt

paintings in violation of international law and that the dis-

trict court has jurisdiction pursuant to the FSIA’s expro-

priation exception, 28 U.S.C. 1605(a)(3) (reproduced in

Appendix, infra, la). Austria moved to dismiss, arguing,

inter alia, that the FSIA could not be applied retroactively

to conduct that occurred in the 1930s and 1940s. The district

court denied the motion, holding that the FSIA

expropriation exception confers jurisdiction over disputes

arising from events predating its enactment. Pet. App. 59a.

8 Throughout the litigation, the parties have accepted that the

Republic of Austria is a foreign state, that the Austrian Gallery is an

“agency or instrumentality” of that foreign state, and that the Gallery is

Austria appealed pursuant to the collateral order doctrine.

See Weltover, Inc. v. Republic of Argentina, 941 F.2d 145,

147 (2d Cir. 1991), aff’d, 504 U.S. 607 (1992). The court of

appeals affirmed, ruling that “the exercise of jurisdiction in

this case does not work an impermissible retroactive appli-

cation of the FSIA.” Pet. App. 2a. That court did “not reach

the broad conclusion of the district court that the FSIA may

be generally applied to events predating the 1952 Tate

Letter.” Id. at lla. It acknowledged rulings of other courts

“not to apply the FSIA to events predating its enactment,”

id. at 13a-14a, and it assumed, “without deciding,” that those

cases were correct, id. at 14a. The court nevertheless con-

cluded that application of the FSIA’s expropriation excep-

tion would not be impermissibly retroactive because, in the

court’s estimation, the Executive Branch would not have

recognized Austria’s claim of immunity from respondent’s

World-War-II-era claim. Id. at 14a-2la. The court cited con-

temporaneous State Department pronouncements that the

Allies reserved the right to declare forced property trans-

fers in Axis territories invalid and that the courts should not

refrain from passing on the validity of acts of Nazi officials.

See id. at 17a-18a. The court reasoned, from those state-

ments, that the Executive Branch would have allowed

American courts to exercise personal jurisdiction over these

therefore subject to the FSIA’s protections. See 28 U.S.C. 1603(b). Al-

though respondent’s complaint alleges that the Republic and the Gallery

had separate legal identities at the time of suit, see Compl. para. 5, respon-

dent concedes that, “both before and after the recent ‘privatization,’” the

Gallery “was and is an organ of the Austrian Ministry of Education of

Culture” that satisfies the FSIA definition of “agency or instrumentality.”

Plaintiff Maria Altmann’s Memorandum of Points and Authorities in

Opposition to Defendants’ Motion to Dismiss Under Fed. R. Civ. P. 12(b)

at 17n.9. The district court stated, without explanation, that “the Gallery

* * * (was] no longer an organ of the Republic” when suit was filed, Pet.

App. 64a, but neither party apparently shares that view.

“unfriendly” nations to compel the return of property seized

in violation of international law. See id. at 18a-19a.*

SUMMARY OF ARGUMENT

Congress enacted the FSIA to provide statutory rules

governing the scope of foreign sovereign immunity and to

grant the courts responsibility for making immunity deter-

minations pursuant to those legislatively prescribed prin-

ciples. In part, the FSIA codified the immunity practices

that the State Department had announced in 1952. But the

FSIA also established new substantive rules of sovereign

immunity, including a new exception from the general rule of

immunity allowing United States courts to exercise juris-

diction, in certain circumstances, over suits arising from a

foreign nation’s taking of property in violation of inter-

national law.

Respondent is mistaken in urging that the FSIA, and the

expropriation provision in particular, should be applied re-

troactively to allow individuals to sue foreign states in

United States courts based on conduct occurring sixty years

ago. This Court’s decisions governing non-retroactivity

establish that, in the absence of a clear statement of contrary

The court also relied on three additional considerations. First, the

court reasoned that, because Austria had itself accepted the restrictive

theory of immunity prior to World War II, opening American courts to

hear claims against Austria merely affected “where a suit may be brought,

not whether it may be brought at all.” Pet. App. 20a (quoting Hughes

Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939, 951 (1997)).

Second, the court stated that other judicial decisions holding that the

FSIA does not apply retroactively to pre-1952 conduct had involved

“economic transactions” in which the foreign state had not recognized the

restrictive theory of immunity at the time of the conduct at issue. /d. at

20a. Finally, the court distinguished those decisions on the ground that a

foreign government’s commercial activity is entitled to greater protection

from retroactive legislation than are its sovereign acts taken in violation of

international law. Id. at 2la.

intent not present here, federal legislation does not apply

new rules of substantive law to events long past. That

principle has particular force in this case, where the type of

conduct at issue is extensively addressed through treaties,

agreements, and separate legislation that were all adopted

against the background assumption that such claims could

not be litigated in United States courts.

The court of appeals’ retroactivity analysis rests on a

fundamental misunderstanding of the United States’ law and

practice regarding foreign sovereign immunity before the

1952 Tate Letter. Contrary to that court’s impression, the

United States adhered to the “absolute” theory of immunity

at the time of Austria’s challenged conduct and did not

recognize an exception to immunity for expropriations or

other violations of international law. The United States did

not follow any established exception allowing this Nation’s

courts to exercise jurisdiction over “unfriendly” nations.

Indeed, even today, the FSIA does not provide any such

categorical exception. The courts should not engage in an

attempt to surmise whether, more than half a century ago,

the Executive Branch would have denied immunity to a

particular foreign state on some extraordinary or ad hoc

basis, such as punishment for particularly egregious conduct.

The courts of that era would never have presumed the

authority to make such inherently political decisions, and the

FSIA does not provide the courts of this era authority to

speculate retroactively on what the Executive and the

courts might have done.

|

ARGUMENT

THE FSIA DOES NOT AUTHORIZE UNITED

STATES COURTS TO EXERCISE JURISDICTION

OVER AN EXPROPRIATION CLAIM AGAINST A

FOREIGN STATE BASED ON CONDUCT THAT

OCCURRED BEFORE ENACTMENT OF THE FSIA

The court of appeals erred in two fundamental respects.

First, it failed to give proper account to this Court’s retro-

activity decisions, which counsel that the FSIA’s expropria-

tion exception should not be applied retroactively to conduct

that predated enactment of the FSIA and, indeed, predated

the United States’ adoption of the restrictive theory of for-

eign sovereign immunity in 1952. Second, the court erred by

relying on its own speculation that, notwithstanding the

United States’ pre-1952 adherence to the doctrine of abso-

lute sovereign immunity, the Executive Branch would have

departed from the United States’ practice during that period

in the case of Holocaust claims.

A. This Court's Retroactivity Decisions Preclude Appli-

cation Of The FSIA’s Expropriation Exception To

Claims That Arose Before Enactment Of The FSIA

1. The FSIA is subject to established retroactivity prin-

ciples. This Court’s decisions establish that any statute that

“would impair rights a party possessed when he acted, in-

crease a party’s liability for past conduct, or impose new

duties with respect to transactions already completed,” is

presumed to apply prospectively only. Landgraf v. USI

Film Prod., 511 U.S. 244, 280 (1994). That presumption ap-

plies to statutes that, although termed “jurisdictional,”

change the law in a way that “eliminates a defense to * * *

suit.” Hughes Aircraft Co. v. United States ex rel. Schumer,

520 U.S. 939, 948 (1997). Such a change “does not merely

allocate jurisdiction among forums.” Id. at 951. “Rather, it

10

creates jurisdiction where none previously existed; it thus

speaks not just to the power of a particular court but to the

substantive rights of the parties as well.” Ibid. “Such a

statute, even though phrased in ‘jurisdictional’ terms, is as

much subject to [the] presumption against retroactivity as

any other.” Ibid.

The defense of foreign sovereign immunity is a matter of

“substantive federal law,” Verlinden 461 U.S. at 493

(emphasis added). See Ex parte Republic of Peru, 318 U.S.

at 588 (describing foreign sovereign immunity as “an over-

riding principle of substantive law”). As in Hughes, Con-

gress's elimination of such a defense is subject to the pre-

sumption against retroactive legislation. Indeed, every

court of appeals that has squarely addressed the issue has

concluded that the abolition of a foreign state’s previously

recognized immunity from suit constitutes a substantive

change that is subject to the presumption against retro-

activity. See Joo v. Japan, 332 F.3d 679, 684 (D.C. Cir. 2003)

(“The commercial activity exception to the FSIA, by quali-

fying what previously had been the absolute immunity of

foreign sovereigns, * * * ‘creates jurisdiction where none

previously existed’ and therefore affects the substantive

rights of the concerned parties.” (quoting Hughes, 520 U.S.

at 951)); Carl Marks & Co. v. Union of Soviet Socialist

Republics, 841 F.2d 26, 27 (2d Cir.) (“retroactive application

of the FSIA [to claims based on bearer bonds issued in 1916]

would affect adversely the USSR’s settled expectation

* * * of immunity from suit in American courts”), cert.

denied, 487 U.S. 1219 (1988); Jackson v. People’s Republic of

China, 794 F.2d 1490, 1497-1498 (11th Cir. 1986) (“to give the

Act retrospective application to pre-1952 events would

interfere with antecedent rights of other sovereigns” and

would be “manifestly unfair”), cert. denied, 480 U.S. 917

(1987).

—

ot

1]

2. The application of those retroactivity principles de-

pends on the particular FSIA provision at issue. Federal

statutes are frequently an amalgam of procedural and sub-

stantive provisions. As a result, retroactivity principles

must be applied in light of the content of the particular pro-

visions at issue. On the one hand, some provisions of a

statute may be properly characterized as procedural or as

not affecting substantive rights, and they are properly ap-

plied to all pending cases. On the other hand, provisions that

create new substantive obligations and liabilities are prop-

erly presumed to apply only prospectively unless Congress

clearly expresses a contrary intent. See, e.g., INS v. St. Cyr,

533 U.S. 289 (2001).°

In the case of the FSIA, some provisions—such as the

service-of-process and removal provisions—are readily

identifiable as procedural and presumptively apply to all

litigation filed after the FSIA’s effective date. See St. Cyr,

533 U.S. at 318. Other provisions, such as the FSIA’s codifi-

cation of the general rule of foreign sovereign immunity, 28

U.S.C. 1604, and the common-law exceptions regarding

waiver and counterclaims that existed before the FSIA and,

indeed, before the Tate Letter, see, e.g., Ex parte Republic

of Peru, 318 U.S. at 589; Guaranty Trust Co., 304 U.S. at

134-135, simply restate pre-existing principles and apply

regardless of when the challenged conduct occurred. See,

e. g., Joo, 332 F.3d at 686-687 (considering but rejecting pro-

position that Japan’s violation of fundamental international

5 In St. Cyr, the Court analyzed the question of retroactivity sepa-

rately for each provision of the statute at issue, concluding that some

provisions would present no question of retroactivity while others, which

affected substantive rights, were subject to a presumption against retro-

active application. See 533 U.S. at 318-320. In undertaking this provision-

by-provision analysis, the Court concluded that statements of congres-

sional intent as to the retroactive application of some provisions did not

imply a similar intent with regard to other provisions. See ibid.

12

law norms in the 1930s and 1940s would constitute an

implied waiver of immunity under 28 U.S.C. 1605(a)(1)); Carl

Marks, 841 F.2d at 27 (noting that a pre-1952 claim against

the Soviet Union could have proceeded under the FSIA if

the Soviet Union had “consented to suit”).

Other provisions of the FSIA, however, require a dif-

ferent result. Most significantly, new exceptions to the

general rule of foreignmsovereign immunity that abrogate

past protections from suit are properly viewed under

Hughes as abridging substantive rights. In that situation,

however, care must be taken in examining the character of

the right in question. For example, the FSIA’s “commercial

activity” exception (28 U.S.C. 1605(a)(2)), for the most part,

codified past practice, but only as it had existed since the

issuance of the Tate Letter in 1952, which announced that a

foreign state’s commercial activities could provide a predi-

cate for a cause of action in United States courts. See

Verlinden, 461 U.S. at 488. Consequently, the FSIA’s com-

mercial activity exception generally can be applied, without

raising retroactivity concerns, to conduct occurring after

1952. See Joo, 332 F.3d at 684; Carl Marks, 841 F.2d at 27;

Jackson, 794 F.2d at 1497-1498.

3. The FSIA’s expropriation exception created a new

substantive liability that is subject to the presumption of

non-retroactive application. Under the absolute theory of

sovereign immunity, a foreign state, by definition, was not

subject to liability for expropriations within its own borders.

And even under the restrictive theory, a foreign state’s act

of expropriation was a public or “sovereign” act, as to which

the foreign state retained its sovereign immunity. The

expropriation exception very clearly did not exist in 1952

and, indeed, was a new development in the doctrine of sover-

eign immunity when the FSIA was enacted 24 years later.

The Second Circuit directly addressed that question in

Victory Transport Inc. v. Comisaria General de Abasteci-

13

mientos y Transportes, 336 F. 2d 354 (1964), cert. denied, 381

U.S. 934 (1965). The court explained that, even under the

restrictive theory of sovereign immunity, foreign states

continued to enjoy immunity with respect to suits chal-

lenging “strictly political or public acts about which sover-

eigns have traditionally been quite sensitive,” which in-

cluded, in particular, suits respecting the “nationalization” of

property. Id. at 360.“ The Second Circuit’s analysis in Vic-

tory Transport was recognized at the time as an “authorita-

tive statement of the sovereign immunity doctrine in the

United States.” Andreas F. Lowenfeld, The Sabbatino

Amendment-International Law Meets Civil Procedure, 59

Am. J. Int’l L. 899, 907 (1965). Indeed, this Court has

frequently cited the Victory Transport decision as illustrat-

ing the pre-FSIA application of the restrictive theory of

sovereign immunity. See Saudi Arabia v. Nelson, 507 U.S.

349, 361 (1993); Republic of Argentina, 504 U.S. at 613;

Alfred Dunhill, 425 U.S. at 703 (plurality opinion).

6 See Note, Avoiding Expropriation Loss, 79 Harv. L. Rev. 1666, 1666

(June 1966) (“Since expropriation is not a ‘private’ state act for purposes of

the restrictive doctrine of sovereign immunity announced in the Tate

Letter, a United States investor is not able to litigate his claim by ob-

taining quasi-in-rem jurisdiction over an expropriating state’s assets in

the United States.” (footnotes omitted)); Note, The Castro Government in

American Courts: Sovereign Immunity and the Act of State Doctrine, 75

Harv. L. Rev. 1607, 1618 (June 1962) (“Since expropriation is a govern-

mental act, sovereign immunity will frustrate attempts to sue the state.”).

7 See also Comment, American Oil Investors’ Access to Domestic

Courts in Foreign Nationalization Disputes, 123 U. Pa. L. Rev. 610, 625

(1975) (noting that “no judicial opinion has challenged” Victory Trans-

port’s conclusion that expropriations were jure imperii as to which a

foreign state retained its immunity). See, g., Chemical Natural Res.,

Inc. v. Republic of Venezuela, 215 A.2d 864 (Pa. 1966) (dismissing expro-

priation claim in which State Department filed suggestion of immunity;

Rich v. Naviera Vacuba S.A., 197 F. Supp. 710, 724-725 (E.D. Va.)

(accord), aff d 295 F.2d 24 (4th Cir. 1961); but ef. Stephen v. Zivnostenska

14

The Victory Transport decision rested on the pre-FSIA

understanding that private complaints about foreign expro-

priations were simply not matters for resolution in United

States courts. Rather, they were to be resolved through (1)

“negotiation,” (2) “remedies in the local courts” of the expro⸗

priating government, or (3) State Department espousal, in

which case the State Department would seek compensation

“through either diplomatic negotiation or adjudication before

an arbitral body or international court.” Note, Avoiding Ex-

propriation Loss, 79 Harv. L. Rev. 1666, 1666 (June 1966).

There are numerous pre-FSIA examples of such executive

agreements through which the State Department espoused

and settled private expropriation claims. See generally

Dames & Moore v. Regan, 453 U.S. 654, 679-683 (1981).

4. There is no basis for overcoming the presumption

that the FSIA’s expropriation exception is non-retroactive.

Respondent would have the courts infer that Congress in-

tended the FSIA’s expropriation exception to authorize liti-

gation of all expropriation claims, including claims that arose

when the United States adhered to the absolute theory of

immunity. There is no basis for doing so.

Banka, 15 A.D. 2d 111, 119-120 (N.Y. App. Div. 1961), aff’d, 186 N.E.2d

676 (1962).

8 See, e.g., Yugoslavia: Claims of U.S. Nationals, Nov. 5, 1964, U. S-

Yugo., 16 U. S. T. 1; Bulgaria: Claims, Jul. 2, 1963, U.S.-Bulg., 14 U. S. T. 969;

Poland: Settlement of Claims of U.S. Nationals, Jul. 16, 1960, U.S.-Pol., 11

U.S.T. 1953; Romania: Settlement of Claims of U.S. Nationals and Other

Financial Matters, Mar. 30, 1960, U.S.-Rom., 11 U.S.T. 317. As a further

example, when Congress chose to provide unilateral relief to United

States citizens whose property was expropriated by Czechoslovakia, it did

so through an :dministrative scheme funded with proceeds from the sale

of blocked foreign state assets; it did not encourage wholesale litigation

against the foreign state. See International Claims Settlement Act

Amendments of 1958, Pub. L. No. 85-604, 72 Stat. 527 (22 U.S.C. 1642

et seq.).

2

|

5

i

15

This Court has made clear that it will not infer that Con-

gress intended retroactive application of a substantive pro-

vision in the absence of a “clear indication” of congressional

intent. St. Cyr, 533 U.S. at 316. Rather, a law will be given a

“truly ‘retroactive’ effect” only where the “statutory lan-

guage * * * [is] so clear that it could sustain only one

interpretation.” Lindh v. Murphy, 521 U.S. 320, 328 n.4

(1997). The FSIA does not contain the “clear indication” that

would be required to upset a foreign state’s reasonable ex-

pectations of continued immunity from suit based on alleged

expropriations occurring before the FSIA was enacted. The

FSIA is simply bare of any unambiguous indication that

Congress intended the expropriation exception, or like sub-

stantive provisions, to reach conduct that occurred during

World War II. See Joo, 332 F.3d at 685-686; see also

Abrams v. Societe Nationale des Chemins de Fer Francais,

332 F.3d 173, 184 (2d Cir. 2003), petition for cert. pending,

No. 03-284 (filed Aug. 19, 2003).

9 Some courts have attempted to determine Congress’s intention by

reference to a statement in the FSIA’s “Findings and declaration of pur-

pose” that “[c]laims of foreign states to immunity should henceforth be

decided by courts of the United States and of the States in conformity

with the principles set forth {in the FSIA].” 28 U.S.C. 1602 (emphasis

added). That statement, however, provides no clear guidance. The “most

probable meaning of the sentence is that the State Department would no

longer consider petitions for sovereign immunity” and that such deter-

minations would thereafter be decided by the courts. Joo, 332 F.3d at 686;

see H.R. Rep. No. 1487, 94th Cong., 2d Sess. 7, 14 (1976). In doing so, the

courts could be expected to apply usual rules of statutory construction, in-

cluding the presumption against retroactive application of new sub-

stantive rules. In any event, Section 1602 manifests no clear intent to

deny immunity that would have been recognized for past sovereign

conduct. See Jackson, 794 F.2d at 1497 (this language “appeared to be

prospective” only and counseled against retroactive application); see also

Abrams, 332 F.3d at 184 (noting that “[clourts have in fact reached

diametrically opposite conclusions regarding Congressional purpose“).

16

By contrast, Congress has provided “clear indication,” in

subsequent FSIA amendments, when it has sought to give

substantive FSIA provisions retroactive effect. See, e.g.,

Antiterrorism and Effective Death Penalty Act of 1996, Pub.

L. No. 104-132, § 221(c), 110 Stat. 1243 (providing that the

immunity exception for designated state sponsors of ter-

rorism “shall apply to any cause of action arising before, on,

or after the date of the enactment of this Act”). Those

specifications not only provide clear guidance on the proper

application of the provisions at issue, but also indicate that

Congress is attentive to the need to designate clearly those

substantive provisions that shall have retroactive effect. See

St. Cyr, 533 U.S. at 318-319 (Halnother reason for declining”

to adopt a retroactive reading of § 304(b) “is provided by

Congress’ willingness, in other sections of IIRIRA, to

indicate unambiguously its intention to apply specific pro-

visions retroactively”). "°

10 This Court's in rem decisions, which recognize that a federal court’s

jurisdiction is not barred by a mere suggestion of a foreign government's

ownership of a res, are inapposite to the inquiry here. See California v.

Deep Sea Research, Inc., 523 U.S. 491, 507 (1998); note 2, supra. As this

Court has explained, there is a critical distinction between adjudicating

legal title over disputed property that is present within the court's terri-

torial jurisdiction, even where one of the claimants is a foreign govern-

ment, and resolving a separate claim of wrongdoing against a foreign

sovereign through in personam or quasi in rem jurisdiction. See The

Santissima Trinidad, 20 U.S. (7 Wheat.) 283, 351 (1822) (recognizing

“the exemption of a public ship from proceedings in rem, in our Courts for

illegal captures on the high seas,” but holding that no similar rule

“exempts her prizes in our ports from the ample exercise of our juris-

diction”). See also Wulfsohn v. Russian Socialist Federated Soviet

Republic, 138 N.E. 24, 25 (N.Y. 1923) (distinguishing between proceedings

respecting “title to property situated within the jurisdiction of our courts”

and suits where t hhe government itself is sued for an exercise of sover-

eignty within its own territories”).

17

5. Retroactive application of the FSIA’s expropriation

exception would be inconsistent with international norms.

This Court may usefully consult international norms in

assessing whether the expropriation provision is retroactive.

The general understandings of the international community

support the conclusion that the expropriation exception

should not be given retroactive effect. For example, in cases

before the International Court of Justice, a party’s obliga-

tions and liabilities arising from past conduct “must be

appraised * * * in the light of the rules of international law

as they existed at the time, and not as they exist today.”

Gerald Fitzmaurice, The Law and Procedure of the Inter-

national Court of Justice, 1951-54: General Principles and

Sources of Law, XXX British Year Book of International

Law 5 (1953). See, e.g., Ambatielos Case (Greece v. United

Kingdom), 1952 1.C.J. 28, 40 (Preliminary Objection of Jul. 1)

(rejecting an argument of Greece that “would mean giving

retroactive effect to Article 29 of the Treaty of 1926”).

The presumption against projecting new legal develop-

ments onto past acts in the international arena is directly

11 Similarly, international commentators have recognized “the general

principle that a juridical fact must be appreciated in light of the law con-

temporary with it.“ 1 Robert Jennings & Arthur Watts, Oppenheim’s

International Law 1281-1282 (9th ed. 1992). That principle also finds

expression in Article 28 of the Vienna Convention on the Law of Treaties

(entitled “Non-retroactivity of treaties”), which provides that, “[uJnless a

different intention appears from the treaty or is otherwise established, its

provisions do not bind a party in relation to any act or fact which took

place or any situation which ceased to exist before the date of the entry

into force of the treaty with respect to that party.” Although the United

States has not ratified the Vienna Convention, the United States

generally recognizes the Convention as an authoritative guide to prin-

ciples of treaty interpretation. See, eg. Fujitsu Ltd. v. Federal Express

Corp., 247 F.3d 423, 433 (2d Cir.), cert. denied, 534 U.S. 891 (2001); see also

Vienna Convention on the Law of Treaties, S. Exec. Doc. L. 92d Cong., Ist

Sess. 1, 19 (1971).

18

relevant in the case of World-War-Il-era claims. Long

before the FSIA established the expropriation exception for

the first time, the United States had entered into numerous

treaties and executive agreements that addressed claims

relating to the conduct of Germany and its Axis allies, as

well as Austria, during World War II.” The United States

and other foreign nations entered into those agreements

against the background assumption that foreign states could

not be sued in United States courts. The retroactive applica-

tion of the FSIA to pre-1952 conduct therefore would intro-

duce significant new issues that the negotiators of those

instruments could not have foreseen.”

12 See, e.g., State Treaty for the Re-establishment of an Independent

and Democratic Austria, May 15, 1955, art. 26, 6 U.S.T. 2369, 2435 (pro-

viding for return by Austria of all property confiscated on account of the

racial origin or religion of the owner); Dep’t St. Bull., July 9, 1956, at 66

(announcing Austrian law procedures for compensation of persons who

had fled Austria); Austria: Settlement of Certain Claims Under Article 26

of the Austrian State Treaty, May 22, 1959, U.S.-Aus., 10 U.S.T. 1158

(establishing administrative settlement fund for certain property claims);

Convention on the Settlement of Matters Arising out of the War and the

Occupation, as amended, Oct. 23, 1954, 6 U.S.T. 4411 (Germany); Treaty of

Peace with Japan, Sept. 8, 1951, 3 U.S.T. 3169; War Claims Act of 1948, ch.

826, 62 Stat. 1240 (50 U.S.C. App. 2001 et seg.) (administrative system for

making payments from vested enemy assets to prisoners of war). In 2001,

the United States and Austria also concluded an agreement under which

the Government of Austria committed to the establishment of a fund to

make payments to certain people with Holocaust-related claims. See

American Ins. Ass n v. Garamendi, 123 S. Ct. 2374, 2383 & n.3 (2003).

That agreement excludes claims, such as the one in this case, for artwork.

See Agreement Relating to the Agreement of Oct. 24, 2000, Concerning

the Austrian Fund “Reconciliation, Peace, and Cooperation”, Jan. 23, 2001,

U.S.-Aus., 2001 WL 935261, Annex A (Reconciliation Fund). Austria has,

however, adopted a domestic administrative mechanism to review art

restitution claims. See Pet. App. 7a, 46a.

13 For instance, in Joo, the plaintiffs sued Japan respecting that

nation’s conduct during World War II. See 332 F.3d at 680. The plaintiffs

— ..

19

In short, both domestic and international law principles

lead to the same result. The FSIA “provides the sole basis

for obtaining jurisdiction over a foreign state in the courts of

this country,” Saudi Arabia, 507 U.S. at 355 (quoting Argen-

tine Republic v. Amerada Hess Shipping Corp., 488 U.S.

428, 443 (1989)), and the FSIA exceptions can be applied

retroactively to override the rule of immunity set forth in

Section 1604 only where the particular exception at issue

was recognized by the United States at the time of the

challenged conduct. Because the United States did not rec-

ognize an expropriation exception before the FSIA’s adop-

tion, respondent cannot invoke that exception as the basis

for asserting jurisdiction, particularly with respect to an

alleged expropriation during the 1930s or 19408.“

urged that their claims fell within the FSIA’s exceptions and that the 1951

Japan Peace Treaty did not speak with sufficient clarity to cut off their

right to litigate war-related claims in United States courts. The drafters,

however, had no reason to provide such clear language in the Treaty

because they could not reasonably have conceived of war-related claims

being litigated in the courts of the United States or other allied powers.

See id. at 684-685.

14 This result is consistent with the approach of other countries that

have adopted statutes similar to the FSIA. Typically, those enactments

expressly provide that the exceptions to immunity are not retroactive or

have been so construed by the courts. See State Immunity Act, 1978, § 23

(Eng.) (reprinted in 17 I.L.M. 1123 (1978)); Foreign States Immunities

Act, 1985, § 7 (Austl.) (reprinted in 25 I.L.M. 715 (1986)); State Immunity

Act, 1979, § 1 (Sing.) (available at http://agevldb4.age.gov.sg/); State

Immunity Act, 1982 (Can.) (reprinted in 21 I.L.M. 798 (1982)); see Tritt v.

United States, [1989] Ont. Sup. C.J. Lexis 455, at * 6 (stating that the

Canadian statute is non-retroactive); accord Carrato v. United States,

[1982] 40 O.R. (2d) 459 (H.C.), judgment endorsed and appeal dismissed,

File No. 22/83 (Ont. Ct. App. Oct. 17, 1983) (unreported). While the for-

eign statutes post-date the FSIA, Congress presumably was aware of the

governing principle, which also appeared in the European Convention on

State Immunity. See Council of Europe: European Convention on State

Immunity and Additional Protocol, art. 35(3), 11 I.L.M. 470, 482 (1972)

20

B. The Court Of Appeals Erred By Relying On Unfounded

Speculation That, Before Enactment Of The FSIA, The

Executive Branch Would Have Abridged A Foreign

State’s Sovereign Immunity In The Instance Of Holo-

caust Claims

1. The court of appeals erred in attempting to surmise

whether the Executive Branch would have recognized a

special exception for Holocaust claims before enactment of

the FSIA. Because Congress did not clearly express an

intent that the FSIA’s expropriation exception would have

retroactive effect, the judicial inquiry into the availability of

that exception for pre-FSIA conduct should be at an end.

Instead, the court of appeals mistakenly attempted to divine

whether, before enactment of the FSIA, the Executive

Branch might have departed from established sovereign

immunity principles on a country-specific or case-specific

basis. The FSIA, which directs the courts to resolve foreign

sovereign immunity claims “in conformity with the principles

set forth in the [FSIA],” 28 U.S.C. 1602, provides no room

for such speculation, which would usurp, retroactively, the

Executive’s foreign policy responsibility with respect to

foreign sovereign immunity at that time. See Verlinden, 461

U.S. at 486. In any event, the court’s conjectures are with-

out foundation.”

(“Nothing in this Convention shall apply to proceedings arising out of, or

judgments based on, acts, omissions or facts prior to the date on which the

present Convention is opened for signature.”); see also H.R. Rep. No.

1487, supra, at 23, 25 (referring generally to the European Convention).

15 The Second Circuit has adopted a similarly mistaken approach in

Garb v. Republic of Poland and Whiteman v. Austria, 72 Fed. Appx. 850,

854 (2003) (“we remand for determinations of the Department of State’s

policy prior to FSIA with respect to sovereign immunity for Poland and

Austria in the circumstances presented in each of the instant cases”),

petitions for cert. pending, Nos. 03-500 & 03-517. The Court should

21

2. The United States did not condition a foreign state’s

right to absolute immunity on whether the state was an

“unfriendly” nation. The court of appeals mistakenly sug-

gested that, before enactment of the FSIA, only “friendly”

nations qualified for sovereign immunity. See Pet. App. 14a-

15a (quoting Verlinden, 461 U.S. at 486). Although the term

“friendly foreign sovereigns” does appear in some decisions

from the time when the United States applied the absolute

theory of immunity, there was no generally recognized

exception to immunity for “unfriendly” sovereigns. That

language has its origin in in rem cases and refers only to the

unremarkable fact that the United States would not refrain

from seizing an enemy’s warships or other property during

time of war! There is no support in this Court’s decisions

for the proposition that United States courts would have

reached out to exercise in personam or quasi in rem juris-

diction over a foreign state for sovereign acts taken within

therefore hold those petitions and dispose of them in accordance with its

disposition of this case.

16 The Court’s references to “friendly” foreign states (Verlinden, 461

U.S. at 486) can be traced through past in rem cases, including Hoffman,

324 U.S. at 34, and Ex parte Republic of Peru, 318 U.S. at 588, to The

Schooner Exchange. In that case, the Court stated the general principle

that “the person of the sovereign lis immune] from arrest or detention

within a foreign territory” if he enters “with the knowledge and license of

its sovereign.” 11 U.S. (7 Cranch) at 137. The Court then discussed

whether that immunity extended to a foreign sovereign’s warship that had

entered an American harbor. The Court observed that “the ports of a

friendly nation are considered as open to the public ships of all powers

with whom it is at peace,” id. at 141, and it held, therefore, that immunity

also extends to “national ships of war, entering the port of a friendly

power open for their reception.” Id. at 145-146. The implicit indication

that the United States would not refrain from seizing a belligerent

nation’s warships if they entered a United States port during time of war

says nothing about whether that nation would be subject to private suit in

United States courts during the hostilities or after they ceased.

22

its own territory simply because the United States was not

on “friendly” terms with that government during the period

of the challenged conduct.”

Contrary to the court of appeals’ mistaken impression,

the United States has not followed a practice of withholding

sovereign immunity from “unfriendly” foreign states.

Rather, the United States’ longstanding policy and practice

is to prevent courts from becoming entangled in the conduct

of foreign relations and to resolve war-related claims

through diplomatic or political, rather than judicial, means.”

Creating an exception for “unfriendly” nations would likely

cause the very type of “embarrass[ment] * * * [to] the

Government in conducting foreign relations” that the doc--

17 The United States, on occasion, has taken steps to freeze, seize, or

divest an enemy nation’s assets within this country so as to deprive the

enemy of their use. See, eg, International Emergency Economic Powers

Act, 50 U.S.C. 1701 et seg. Trading with the Enemy Act, ch. 106, 40 Stat.

411 (50 U.S.C. App. 1 et seg). But such actions cannot be equated with

authorizing United States courts to adjudicate claims directly against a

non-consenting, unfriendly sovereign with respect to acts committed

within its own territory, including after normal relations between nations

had resumed. See Wulfsohn, 138 N.E. at 25.

18 See note 8, supra; see also, e., Johnson v. Eisentrager, 339 U.S.

763, 789 n.14 (1950) (“the rights of our citizens [under the Geneva Con-

vention relating to prisoners of war) are vindicated only by Presidential

intervention”); Joo, 332 F.3d at 684-685 (noting policy that World War II

claims against Japan be resolved exclusively through diplomatic means);

ef. Garamendi, 123 S. Ct. at 2380-2382; Dames & Moore, 453 U.S. at 679-

680; Ricaud v. American Metal Co., 246 U.S. 304, 310 (1918); Oetjen, v.

Central Leather Co., 246 U.S. 297, 308 (1918); Underhill v. Hernandez, 168

U.S. 250, 252 (1897). Indeed, when Congress itself has acted to provide

redress for war-related claims, as after World War II, it has done so

through administrative war claims commissions, not through the courts.

See, e. g., War Claims Act of 1948, ch. 826, 62 Stat. 1240 (50 U.S.C. App.

2001 et seq.); International Claims Settlement Act Amendments of 1955,

ch. 645, 69 Stat. 562 (22 U.S.C. 1641 et seg.)

— — —

23

trine of immunity is intended to avoid. See Ex parte Repub-

lic of Peru, 318 U.S. at 588.”

Indeed, even if the United States had followed a pre-

FSIA practice of withholding immunity from “unfriendly”

nations, the responsibility for drawing lines among foreign

governments and determining when to strip them of im-

munity would have belonged with the political Branches that

are charged with responsibility for this Nation’s foreign rela-

tions. The court of appeals’ approach would require courts to

establish their own definition of “friendly,” to assess histori-

cal relationships of the United States under that definition,

and to decide how to weigh changes in relations during the

period when suit might have been brought. That approach is

not only unprecedented, but it is fraught with difficulties.”

The FSIA does not permit courts to draw such lines, but

instead continues the United States’ historic policy and

practice. It contains no exception to the general rule of

foreign sovereign immunity for “unfriendly” sovereigns.

The court of appeals’ mistaken understanding would subject

foreign nations to suit on precisely those claims that the

19 As a practical matter, an in personam suit could be meaningfully

pursued only once the hostilities are over and the warring nations have

resumed friendly relations. If the conclusion of battlefield operations

signaled the start of new hostilities in each nation’s courts, those nations

would find it far more difficult, if not impossible, to move past their former

antagonisms and build constructive new relations. See Ware v. Hylton,

3 U.S. (3 Dall.) 198, 230 (1796) (opinion of Chase, J.).

2° For example, contrary to the court of appeals’ view, the United

States was not at war with the State of Austria during World War II.

Indeed, the United States took the view that Austria was the first country

to be occupied by Nazi Germany. See Declaration on Austria at Moscow,

quoted in S. Exec. Rep. No. 8, 84th Cong., Ist Sess. 3 (1955). Such subtle

distinctions in our Nation’s foreign relations highlight the problem with

courts undertaking the kinds of assessments that the court of appeals’

24

courts have heretofore consistently recognized to lie at the

core of a foreign state’s sovereign immunity.”

3. The United States did not depart from the governing

principles of sovereign immunity in the case of Holocaust-

related claims. The court of appeals further concluded that,

before enactment of the FSIA, the United States would have

rejected a foreign nation’s assertion of sovereign immunity

from Holocaust-related claims based on the extraordinary

character of those claims. Pet. App. 15a-2la. The court re-

lied on government statements, documents, and actions

expressing the United States’ strong condemnation of Nazi

atrocities. Those expressions, however, do not suggest,

much less establish, a policy of the United States that the

vast universe of potential private claims against the foreign

states that formerly had Nazi governments should be re-

solved through litigation in United States courts.

Before enactment of the FSIA, United States courts

clearly understood that questions of sovereign immunity

would be decided “in conformity to the principles accepted

by the department of the government charged with the

conduct of our foreign relations.” Hoffman, 324 U.S. at 34-35

(emphasis added). Those courts would not have taken it

upon themselves to try to discern, from public pronounce-

ments that do not address the question of foreign sovereign

immunity, whether the State Department might announce a

new immunity exception, with potentially serious conse-

quences for the United States’ foreign relations. This Court

has previously rejected the notion that the scope of foreign

21 See Saudi Arabia v. Nelson, 507 U.S. at 361-363, 362 n.5 (noting

that, under the restrictive theory, foreign sovereigns retained their

immunity “with respect to claims involving the exercise of the power of

the police or military”); Victory Transport, 336 F.2d at 360 (restrictive

theory retains immunity for “public acts about which sovereigns have

traditionally been quite sensitive,” such as “acts concerning the armed

forces”).

— eee ae se —

25

sovereign immunity can be pared back by reference to

statements that have little or nothing to do with the issue.

See Amerada Hess Shipping, 488 U.S. at 442 (holding that

even a treaty “stat[ing] that compensation shall be paid for

certain wrongs” by a foreign government does not imply an

abrogation of immunity from private suit). The Court should

likewise reject the notion that such statements are useful in

determining the retroactive scope of the FSIA.

For example, the court of appeals believed that the fact

that Nazi atrocities had violated international law, see Pet.

App. 15a, and that the chief architects of the Holocaust had

been tried before the international court at Nuremberg, see

id. at 19a-20a, was evidence that “the international commun-

ity, and particularly the United States . would not have

supported a broad enough immunity to shroud the[se] atroci-

ties” from suit, ibid. (quoting Princz v. Federal Republic of

Germany, 26 F.3d 1166, 1179 (D.C. Cir. 1994) (Wald, J., dis-

senting), cert. denied, 513 U.S. 1121 (1995)). But the other

courts of appeals that have encountered such arguments,

including the D.C. Circuit in Princz, have rejected them.

The majority in Princz held that the FSIA did not provide

an exception to immunity that reached the Nazis’ slave labor

atrocities, and it rejected Judge Wald’s contention that vio-

lations of fundamental human rights should be deemed an

“implied waiver” of immunity under 28 U.S.C. 1605(a)(1).

Princz, 26 F.3d at 1171-1175. The majority reasoned that

“something more nearly express is wanted before we impute

to the Congress an intention that the federal courts assume

jurisdiction over the countless human rights cases that

might well be brought by the victims of all the ruthless

military juntas, presidents-for-life, and murderous dictators

of the world.” Id. at 1174-1175 n. I.

The Seventh Circuit, in Sampson v. Federal Republic of

Germany, 250 F.3d 1145 (2001), also rejected the argument

that the Nazi slave labor atrocities warranted creating an

26

exception from immunity. The court stated that “(t]he

potential scope of a customary international law exception to

foreign sovereign immunity * * * would allow for a major,

open-ended expansion of our jurisdiction into an area with

substantial impact on the United States’ foreign relations.”

Id. at 1156. Similarly, the Second Circuit rejected such

arguments in holding that a foreign state retained its im-

munity from suit alleging that the state was responsible for a

terrorist bombing of an airliner. See Smith v. Socialist

People’s Libyan Arab Jamahiriya, 101 F.3d 239, 244 (1996).

The court of appeals also placed mistaken reliance on the

act of state doctrine and, in particular, the so-called “Bern-

stein” exception to that doctrine. See Pet. App. 16a-18a.

The act of state doctrine and the Bernstein exception say

nothing about the scope of foreign sovereign immunity.

Indeed, the Bernstein litigation (note 22, supra), which led to

the recognition of the Bernstein exception, involved a Dutch

corporation, not a foreign government. The State Depart-

2 The act of state doctrine is a rule of decision, founded on con-

siderations of comity and deference to the Executive Branch's conduct of

foreign relations, that “precludes the courts of this country from inquiring

into the validity of the public acts of a recognized foreign sovereign power

committed within its own territory.” Banco Nacional de Cuba v.

Sabbatino, 376 U.S. 398, 401 (1964). See W.S. Kirkpatrick & Co. v.

Environmental Tectonics Corp., Int l, 493 U.S. 400 (1990). The Bernstein

exception arose from a private plaintiff's attempt to recover commercial

property, originally seized by the Nazis, from a Dutch corporation. See

Bernstein v. N. V. Nederlandsche-Amerikaansche, 173 F. 2d 71, 72 (2d Cir.

1949). The plaintiff's claims raised questions respecting the validity of

acts of Nazi officials in Germany. The Second Circuit initially concluded

that the act of state doctrine precluded inquiry into those questions. Ibid.

The State Department thereafter issued the so-called Bernstein Letter

stating a policy “to relieve American courts from any restraint upon the

exercise of their jurisdiction to pass upon the validity of the acts of Nazi

officials.” See Bernstein v. Nederlandsche-Amerikaansche, 210 F 2d 375,

376 (2d Cir. 1954).

27

ment’s Bernstein Letter addressed solely whether it was

appropriate for a United States court to “pass upon the

validity of the acts of Nazi officials” in Germany. Bernstein

v. N.V. Nederlandsche-Amerikaansche, 210 F.2d 375, 376

(2d Cir. 1954). The Bernstein Letter does not speak at all to

the susceptibility of the German government, let alone the

Austrian government, to suit in United States courts for acts

in Austria. See Letter from Legal Adviser Monroe Leigh to

the Solicitor General (Nov. 26, 1975) (describing the Bern-

stein Letter as “advis[ing] that the act of state doctrine need

not apply to a class of cases involving Nazi confiscations”

(emphasis added)), reprinted in Alfred Dunhill, 425 U.S. at

706, 708.”

In focusing on irrelevant matters, such as the Bernstein

exception to the act of state doctrine, the court of appeals

ignored the concrete steps the United States has actually

taken to redress Nazi-era wrongs. The United States did

not encourage private litigation against foreign states in

3 This Court has itself recognized that, while the act of state doctrine

“shares with the immunity doctrine a respect for sovereign states,” the

doctrines are distinct and serve different purposes. Sabbatino, 376 U.S. at

438. See Zwack v. Kraus Bros. & Co., 237 F.2d 255, 259-261 (2d Cir. 1956)

(declining, with reference to the Bernstein Letter, to recognize the

validity of Hungary's uncompensated expropriation, while, at the same

time, recognizing that the Hungarian government itself was “not subject

to the jurisdiction of the court below unless its should voluntarily

appear”). The distinction between the doctrines is also evident in the so-

called Second Hickenlooper Amendment, which, in response to Sabbatino,

eliminated the act of state doctrine in certain cases concerning expro-

priations in violation of international law. 22 U.S.C. 2370(e)(2). It was

widely understood that this legislation was “restricted entirely to the act

of state doctrine” and did not “deny the foreign defendant its defense of

sovereign immunity.” Comment, supra, 123 U. Pa. L. Rev. at, 623 n.64.

See also Andreas F. Lowenfeld, supra, 59 Am. J. Int’l L. at, 907; American

Hawaiian Ventures, Inc. v. M.V.J. Laturharhary, 257 F. Supp. 622

(D.N.J. 1966).

28

United States courts as the appropriate means of remedying

those wrongs. Instead, the United States committed con-

siderable energy to obtaining redress through other means.

It entered into post-war treaties with both Germany and

Austria, obtaining promises on the part of those govern-

ments to provide for the return of confiscated property. See

note 12, supra. It also negotiated agreements or provided,

through legislation, for the payment of certain claims. See

note 18, supra. Those arrangements envisioned restitution

or compensation under schemes adopted as part of domestic

German or Austrian law, through diplomatic arrangements,

or through domestic administrative schemes, such as

Austria’s recent program to review claims for the return of

art. See Pet. App. 7a, 46a. In no case has the United States

created “a private right of action against our wartime

enemies or their nationals.” Deutsch v. Turner Corp., 324

F.3d 692, 712 (9th Cir.), cert. denied, 124 S. Ct. 105 (2003).

4. Austria did not lose its right to absolute sovereign

immunity in United States courts by adopting the restric-

tive theory of foreign sovereign immunity. The court of

appeals incorrectly concluded that application of the FSIA

expropriation exception to Austria was not impermissibly

retroactive because it “affect[s] only where a suit may be

brought, not whether it may be brought at all.” Pet. App. 20a

(quoting Hughes, 520 U.S. at 951). The court of appeals

reached that conclusion on the mistaken understanding that,

because Austria had itself adopted the restrictive theory of

foreign sovereign immunity in the 1920s, it “could have had

no reasonable expectation of immunity in a foreign court.”

Id. at 19a. But, as previously explained, the restrictive

theory preserved a foreign state’s immunity from claims con-

cerning its distinctly public acts, “such as nationalization.”

Victory Transport, 336 F.2d at 360. Consequently, the

timing of Austria’s adoption of the restrictive theory of

immunity is irrelevant.

29

Moreover, Austria’s application of the restrictive theory

of immunity to foreign states in its own courts would not

have precluded it from asserting absolute immunity in other

countries that continued to adhere to that doctrine. The

United States continued through the 1960s to invoke abso-

lute immunity in countries that followed that theory, despite

the fact that the United States had applied restrictive

immunity principles since 1952. See H.R. Rep. No. 1487,

supra, at 9. Austria likewise was entitled to invoke sover-

eign immunity from claims of expropriation in United States

courts until the United States provided an exception from

that claim of immunity in the FSIA.™

* * * * *

The United States has strongly condemned the Nazi

atrocities, and it has sought to rectify Nazi wrongs through

diplomatic and other means. But the United States has not

authorized United States courts to serve as the fora for

resolving war-related claims against the governments of

Germany, its Axis allies, or other nations, such as Austria,

that Germany occupied during the war. In the absence of

such authorization, the courts would not, on their own, have

created an exception to the doctrine of absolute immunity.

The court of appeals’ contrary conclusion is mistaken, it de-

parts from settled understandings in the international com-

munity, and it may have serious consequences for the United

States’ conduct of its foreign relations, including reciprocal

treatment of the United States in foreign courts.

24 Austria was also entitled to invoke its right to sovereign immunity in

United States courts even though Austria had enacted laws allowing re-

spondent to litigate her takings claim in Austrian courts. A nation’s

waiver of its sovereign immunity in its own courts does not constitute a

waiver of its sovereign immunity in another sovereign’s courts. See, e.g.,

Minnesota v. United States, 305 U.S. 382, 388-389 (1939).

30

CONCLUSION

The judgment of the court of appeals should be

reversed.

Respectfully submitted.

THEODORE B. OLSON

Solicitor General

PETER D. KEISLER

Assistant Attorney

General

EDWIN S. KNEEDLER

Deputy Solicitor General

JEFREY P. MINEAR

WILLIAM H. Tarr, IV Assistant to the Solicitor

Legal Adviser General

JONATHAN B. SCHWARTZ MARK B. STERN

Deputy Legal Adviser DouGLAS HALLWARD-DRIEMEIER

ELIZABETH M. TEEL Attorneys

Attorney-Adviser

Department of State

NOVEMBER 2003

APPENDIX

The expropriation exception of the Foreign Sovereign

Immunities Act provides:

(a) A foreign state shall not be immune from the

jurisdiction of courts of the United States or of the

States in any case—

* * * * *

(3) in which rights in property taken in violation of

international law are in issue and that property or any

property exchanged for such property is present in the

United States in connection with a commercial activity

carried on in the United States by the foreign state; or

that property or any property exchanged for such

property is 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.

28 U.S.C. 1605(a)(3).

(la)