Supreme Court: Descendants May Not Sue in US for Property Seized by Nazis

February 4, 2021 Updated: February 4, 2021

The heirs of art dealers whose property was taken in Nazi-era Germany can’t pursue lawsuits seeking compensation from the government of that country in the courts of the United States, the Supreme Court ruled unanimously on Feb. 3.

The ruling was a victory for the Trump administration, now out of office, which had opposed that legal stance, arguing that the claims for damages should be pursued overseas and that letting the litigation proceed in the United States threatened to entangle the judiciary in sensitive foreign policy questions best left to the executive branch.

Chief Justice John Roberts wrote the opinion in the case known as Federal Republic of Germany v. Philipp, vacating a decision by the U.S. Court of Appeals for the D.C. Circuit. At the same time, the court also dealt with a companion case, also vacating a decision by the D.C. Circuit in Republic of Hungary v. Simon.

Before World War II ended, Germany and Hungary maintained brutal anti-Semitic policies that culminated in the systematic persecution, deportation, and murder of 6 million Jews in the Holocaust.

The Foreign Sovereign Immunities Act (FSIA) presumes that foreign nations are immune from the jurisdiction of U.S. courts but carves out exceptions, including in cases “in which rights in property taken in violation of international law are in issue,” the opinion states.

The case here dealt with whether Germany’s taking of property, consisting of several dozen medieval relics and devotional objects known as the Welfenschatz, from its own nationals falls within this exception.

The treasure, or schatz, of the German Welf dynasty, dates back to the early days of the Holy Roman Empire and occupies a unique position in German history and culture. It was accumulated within Germany’s Brunswick Cathedral over the course of several centuries, before being moved to a Hanoverian chapel in 1671 and later to Switzerland for safekeeping in the wake of World War I.

During oral arguments on Dec. 7, 2020, Trump administration attorney Edwin Kneedler said the U.S. government “deplores the atrocities committed against victims of the Nazi regime and has long had a policy of encouraging Germany and other countries to provide mechanisms to afford a measure of justice.”

But the litigants took the wrong path when they sued Germany in U.S. courts, he said, because “the exception to sovereign immunity on which they rely is limited to violations of the international law of takings or expropriations, which has long prohibited only the taking of a foreign national’s property if done without compensation.”

To interpret the expropriation exception “as opening U.S. courts to suits based on human rights violations would constitute a major … departure from the FSIA’s text, structure, and context, and require U.S. courts to make sensitive judgments about a foreign state’s treatment of the persons within its territory,” Kneedler said.

Roberts explains in the court opinion that before the Nazi takeover of Germany, a consortium of three art firms owned by Jewish residents of Frankfurt purchased the Welfenschatz. By 1931, the consortium had sold about half of the collection’s pieces to museums and individuals in Europe and the United States. After the Nazis took power, Hermann Goering, Adolph Hitler’s deputy and the prime minister of Prussia, allegedly strong-armed the consortium into selling the remaining treasure to Prussia in 1935 for about one-third of its value.

The United States took possession of the treasure when it occupied Germany, eventually turning the collection over to the Federal Republic of Germany. A German agency maintains the treasure, which is displayed at the Museum of Decorative Arts in Berlin. Two U.S. citizens and a UK citizen descended from the three owners of the consortium claimed the sale of the treasure to the Prussian government was unlawful. The agency investigated and ruled against them but agreed to submit the dispute to a commission that upheld the ruling. The descendants then sued in the U.S. courts.

Germany argued in the U.S. courts that the sale of the treasure couldn’t have been unlawful because a sovereign’s taking of its own nationals’ property isn’t unlawful under the international law of expropriation. The heirs countered that the exception did apply because Germany’s purchase was an act of genocide and the taking, therefore, violated the international law of genocide. The U.S. District Court ruled against Germany and the D.C. Circuit affirmed.

The Supreme Court ruled FSIA “provides the carefully constructed framework necessary for addressing” claims of “international concern.”

“The heirs have not shown that the FSIA allows them to bring their claims against Germany,” Roberts writes. “We cannot permit them to bypass its design.”

“We need not decide whether the sale of the consortium’s property was an act of genocide, because the expropriation exception is best read as referencing the international law of expropriation rather than of human rights,” the chief justice writes.

“We do not look to the law of genocide to determine if we have jurisdiction over the heirs’ common law property claims. We look to the law of property.”

Besides, adjudicating claims from abroad could backfire on the United States, Roberts writes.

“As a nation, we would be surprised—and might even initiate reciprocal action—if a court in Germany adjudicated claims by Americans that they were entitled to hundreds of millions of dollars because of human rights violations committed by the United States government years ago,” he writes.

“There is no reason to anticipate that Germany’s reaction would be any different were American courts to exercise the jurisdiction claimed in this case.”