Whether the Supreme Court will be faithful to Congress’s efforts to help Holocaust victims seek redress

Photo: AP Images

IT has been some 80 years since the Nazis and elements of the Hungarian government stripped hundreds of thousands of Jews of their property and herded them into ghettos and concentration camps. Yet only only a few weeks ago, the Supreme Court weighed whether the arm of the law is long enough to give a group of survivors a chance at redress from Hungary in American courts.

In general, the law shields foreign governments from having to defend themselves against suits in US courts, but a slim list of exceptions includes people whose property was taken in violation of international law and then used in America. The survivors argue that since their money and possessions were seized by Hungary’s state railway (MAV) and placed in the government’s coffers, and Hungary has engaged in bond sales and financial dealings in the US over the ensuing decades, that standard was met.

“Hungary and MAV stole respondents’ property while forcing them onto cattle cars,” the survivor’s attorney, Shay Dvoretzky, told the justices. “MAV deposited money exchanged for respondents’ property into funds it continues to hold, and that satisfies the exception given MAV’s commercial activity here.”

The case revolves around dueling readings of the 1976 Foreign Sovereign Immunities Act (FSIA), which set guidelines for when countries are immune from legal actions in the United States. Among its exceptions are attempts to gain compensation for Nazi war crimes and acts of terrorism.

Hungary acknowledges its historic role in Holocaust theft and has received relatively good marks for its restitution efforts. Yet its American attorneys argue that FSIA’s exception is limited to when a line can be drawn from the stolen property directly to the financial transaction that took place on American shores.

“The item at the beginning and the item at the end of the proposed transaction have to be given in return for one another,” Hungary’s lawyer, Joshua Glascow, told the court.

The US Court of Appeals in Washington, D.C., disagreed with that interpretation, ruling last year that when Hungary liquidated the victim’s assets and “co-mingled” the money with other funds, that met the standard of “exchanged” property referred to in the FSIA’s exception. Now, Hungary is asking the Supreme Court to overturn the appeal court’s decision.

The justices’ signature creativity was on display as they probed attorneys for guidelines of what constitutes an “exchange,” with Justice Amy Coney Barrett beginning one question, “Let’s imagine that I steal Justice Gorsuch’s car.” The hypothetical ended with her liquidating the car, buying a painting, and years later selling it and buying a beach house.

“Would we really say that I’ve exchanged Justice Gorsuch’s car for the beach house?” asked Justice Barrett.

Survivors argue that exempting stolen funds that intermingled with legitimate funds would narrow the FSIA’s exception to the point of uselessness.

At one point in the arguments, Justice Elena Kagan agreed.

“Congress wouldn’t have wanted to write a provision that has no meaning,” she told Hungary’s attorney. “Under your theory, I think that there would be precious little meaning to this because it… gives foreign countries an easy way to expropriate property and make sure there’s no accountability for that expropriation.”

Justice Kagan’s logic hues closely to what a bipartisan group of congressmen argued in a brief supporting the survivor’s claims.

“Our understanding is that Congress’s intent was that when good money and bad money are mixed in one pot, the burden is on the one holding the money to prove that what was used was the good money and not the bad,” said Akiva Shapiro, an attorney who authored the brief on behalf of the congressmen.

The Biden administration is backing Hungary’s position. Advocating for a restrictive reading of the FSIA has been a consistent White House policy, and the Trump administration took a similar stance in another Holocaust-related case in 2019.

In the recent arguments, the Solicitor General Office’s Sopan Joshi voiced concerns that ruling for the survivors would constitute a “radical departure” from international norms, putting the United States at risk of “retaliatory or reciprocal actions against us… At any given time, we face thousands of lawsuits overseas.”

Chief Justice John Roberts seemed sympathetic to these concerns, at one point telling Mr. Dvoretzky, “Once you say commingling counts — well, then everything’s…pretty much fair game.

“This is really just throwing out the whole sovereign immunity principle under which the rest of the world operates,” he said.

Mr. Shapiro called the US government’s worries “hyperbolic.”

“The FSIA existed for decades, and not many cases have been brought — that demonstrates its limitation,” he said. “The only time you can have a suit is if a government takes something from a citizen of another country.”

Justice Samuel Alito expressed similar incredulity at the government’s argument.

“Is the United States going around expropriating the property of foreign nationals?” he asked Mr. Joshi.

Over 560,000 Hungarian Jews were murdered in the Holocaust, more than two-thirds of its Jewish population. Most deportations and killings took place in 1944, when Germany invaded Hungary, which until then had been an ally. The survivors now suing were young during the war and claim they were never fully compensated for stolen assets they are now heirs to.

This is not the first time their claim has made its way to the Supreme Court. Their suit began in 2010, and in 2021, the high court coupled their case with another against Germany. Then, the justices unanimously rejected their claim, saying that the FSIA’s exceptions could not be applied to governments that stole from their own citizens. The present group suing Hungary is limited to former residents of other countries. Rosalie Simon, whose name the case bears, was a Czechoslovakian citizen. She was only in Hungary for eight weeks, but it was then that her property was confiscated.

Even if the survivors’ claims succeed, it would only be a first step allowing them to advance their suit in American courts. They would then still have to amass evidence and make their case against Hungary and MAV.

Mr. Shapiro said the case represents a tension that arose in recent decades between the legislative and judicial branches of government. Congress passes laws to grant Holocaust survivors, terror victims, and others ill-treated by foreign entities a road to sue in US courts, only to have the courts themselves halt such efforts from advancing. He said that, in his view, courts have too often been overly deferential to concern from the executive branch, and in the process undone Congress’s intentions.

“Congress passed laws to help Holocaust victims and others who suffered significant wrongs to allow them to have their day in court,” said Mr. Shapiro. “The broader implication of this case is whether the Supreme Court will be faithful to Congress’s efforts to help Holocaust victims seek redress for the wrongs done to them.”

(Originally featured in Mishpacha, Issue 1041)