Exceptions to the Foreign Sovereign Immunities Act
On March 14, 2016, the United States District Court for the District of Columbia granted in part and denied in part the defendants' Renewed Motion to Dismiss in the matter of De Csepel v. Republic of Hungary. The Court found that it did indeed have subject matter jurisdiction under the expropriation exception to the Foreign Sovereign Immunities Act, but that the claim of jurisdiction under the statute's commercial activity exception does not apply.
The case involves forty-four paintings that were to be inherited by the heirs of the Baron Mór Lipót Herzog, a Hungarian Jew and the original collector and owner of the Herzog Collection. During World War II, much of the collection was seized by the Hungarian government and its Nazi collaborators. The defendants - in particular, Hungarian museums - are currently in possession of forty of these paintings, falling into four categories: (1) art acquired by defendants after the Holocaust; (2) art confiscated during the Holocaust that was never returned to plaintiffs; (3) art confiscated during the Holocaust that was returned to plaintiffs, and then subsequently seized back by criminal forfeiture; and finally, (4) art confiscated during the Holocaust that was returned to plaintiffs, and then subsequently deposited with the museums by the 1950 bailment agreement. Thus, plaintiffs allege that defendants breached post-WWII bailment agreements when defendants refused to return the pieces to the plaintiffs in 2008.
In turn, defendants filed their third motion to dismiss in 2015, claiming that neither the FSIA's commercial activity exception nor its expropriation exception applies to plaintiffs' claim. After examination, the Court found that it has subject matter jurisdiction under the expropriation exception to the FSIA, but that plaintiffs cannot show a factual basis for their claim of jurisdiction under the statute's commercial activity exception.
The commercial activity exception may be applied in situations where the action is based upon commercial activity within the United States, performed in the United States in connection with commercial activity of the foreign state elsewhere, or outside the United States in connection with commercial activity elsewhere that causes a direct effect on the United States. Using the 1950 bailment agreements as evidence, the Court found that the evidence presented by the plaintiff to demonstrate commercial activities that affected the United States in some way is not enough for the commercial activity exception to apply. The Court had initially ruled on an earlier Motion to Dismiss that the bailment agreements inferred a direct effect on the United States; however, the Court now writes: The 1950 bailment agreement contained no hints regarding Hungary's future obligations. But if there was an unspoken understanding at all regarding performance, it is decidedly implausible that it obligated Hungary to return art to the United States. Given legal restrictions on exporting art from the country and the pattern of conduct between Hungary and the Herzog family… there is no basis to conclude that the either party understood the bailment as implying such a performance requirement. In this case, an inference was not enough to prove an effect.
Meanwhile, the expropriation exception of the FSIA applies in any case where rights in property taken in violation of international law are in issue. Citing the recent decision in Simon v. Hungary, the Court concluded, among other things, that because the forty-two paintings that were seized during World War II were taken in violation of international law due to the genocidal nature of the Holocaust, the Court does have subject-matter jurisdiction over the case. In reference to the eventual return of the artwork years after the conclusion of WWII, the Court states: It is puzzling to suggest that artwork confiscated during the Holocaust as part of a campaign of genocide loses its status as property taken in violation of international law because it is eventually released to its owner after years of deprivation. Therefore, while the expropriation exception to the FSIA does apply, the commercial activity exception simply does not. -- Kathryn Campbell, Legal Assistant, Berliner Corcoran & Rowe LLP, Washington, DC.
Thu, / Embassy Law Link
Some do, others don't: Workers Comp
Self-insurance, statutory workers compensation, foreign sovereign immunity and the widely recognized principle of internal organization of missions conspire to create the setting of an interesting case in Massachusetts: Ted Folkman, Case to Watch: Merlini v. Consulate General of Canada. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.
Thu, / Embassy Law Link