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United States: Supreme Court Holds Germany Not Liable for Forced Sale of Artifacts by German Jewish Art Dealers during 1930s

(Feb. 16, 2021) On February 3, 2021, the United States Supreme Court delivered a unanimous opinion in Federal Republic of Germany v. Philipp, holding that heirs to Jewish art dealers whose relics were acquired by the German government during Nazi rule are barred from recovery in United States courts under the Foreign Sovereign Immunities Act (FSIA). The heirs had argued that the German government forced the sales and purchased the items for one third of their value. In response, Germany argued that it was immune from suit under the FSIA, and none of that law’s exceptions applied. Ruling in favor of Germany, the Supreme Court vacated a decision by the Court of Appeals for the D.C. Circuit that the case could move forward.

The FSIA was enacted in 1976 and provides that foreign governments are immune from suit in the United States unless a specific exception is triggered from the events giving rise to a lawsuit. The heirs argued that their case should proceed under 28 U.S.C. § 1605(a)(3), known as the expropriation exception, which applies when “rights in property taken in violation of international law are in issue.” Specifically, the heirs argued that the allegedly coerced sale of the art collection was an act of genocide, in violation of international law.

The Supreme Court’s opinion focuses on a property law concept called the domestic takings rule. Under this rule, the taking of property is wrongful under international law only if a state deprives a foreigner of property. Put another way, international law does not apply to a situation where a national government acquires the property of its own citizens. Because the art dealers were German nationals at the time the German government obtained the artifacts, the Supreme Court held that their heirs’ lawsuit could not prevail under international law, and no exceptions to the FSIA’s shield of immunity could be applied to their claims.

The heirs initially filed this lawsuit after unsuccessfully attempting to reclaim the property through German legal proceedings. The Supreme Court also issued a short opinion in a similar case, Republic of Hungary v. Simon. The litigants in Simon are Holocaust survivors who sought compensation from Hungary for confiscation of Jewish property. The Supreme Court remanded both cases to the lower courts for further proceedings consistent with its opinion in Philipp.