The court’s justices said the theory was a bridge too far

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quest by a group of Holocaust survivors to sue Hungary in America for property stolen from them in the war was halted by the Supreme Court. In a unanimous opinion, the justices held fast to the court doctrine recognizing narrow limits on holding foreign nations responsible in US courts.

The plaintiffs’ case focused on the 1976 Foreign Sovereign Immunities Act (FSIA), which set guidelines for when countries are immune from legal actions in the United States. The act authorizes attempts to gain compensation for Nazi war crimes and acts of terrorism. The act also makes exception to a nation’s legal immunity when property was taken in violation of international law and then found a “nexus” in the US — e.g., the nation used the stolen assets in an economic transaction in the United States. That transaction must be directly traceable to the original theft.

But what if the guilty country liquidated the property, so the stolen assets are no longer directly traceable? The plaintiffs argued liquidated property should be exempt from the tracing requirement, since otherwise bad actors would easily be able to subvert the FSIA’s exception. Attorneys for the survivors claimed that since their property was taken by the Hungarian government, sold and mixed with its general funds, and that the nation (several regimes later in the early 2000s) sold bonds in America, the standard of “exchanged” property had been met.

However, the court’s justices said the theory was a bridge too far.

“Commingling allegations alone cannot plausibly establish that any of the relevant proceeds from expropriated property are in the United States,” wrote Justice Sotomayor.

Furthermore, the court said that allowing the suit to advance would open floodgates of litigation.

“Allowing plaintiffs to forgo altogether the statute’s tracing requirements by pleading a commingling theory could allow vastly more suits to proceed,” wrote Justice Sonia Sotomayor on behalf of the court. “This could, in turn, undermine the United States’ foreign relations and reciprocal self-interest.”

The decision adheres to a position endorsed by the court and presidential administrations of both parties to strictly limit when foreign nations can be sued in America, due to the diplomatic problems and risks of retribution that could arise in the absence of such limitations. Critics argue the justices are contravening the intent of Congress, which passed legislation to give such parties additional options for redress.

Yet the justices wrote that the FSIA’s text contradicts the survivor’s liberal reading of its exceptions, pointing out that Congress made no distinction between money and other property in the law’s wording.

Later this term, the justices will again confront the boundaries of suing foreign entities in US courts in a case that pits Jewish terror victims against the PLO. That case revolves around whether a law allowing such suits is consistent with the Fifth Amendment’s due process guarantees.

While the decision closed one route for the plaintiffs’ claims, the court voiced support for the cause of seeking fuller compensation for the injustices they suffered.

“That a particular claim cannot satisfy the expropriation exception means only that it cannot be brought here, not that it cannot be brought in any forum,” wrote Justice Sotomayor. “As the Government correctly recognizes, ‘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.’ ”

(Originally featured in Mishpacha, Issue 1051)