Docket 23-867
Hungary
DecidedFeb 21, 2025
9-0decision
Source: CourtListener.
Court rules Holocaust survivors must trace seized property to U.S. to sue Hungary in American courts
Impact4/10
What it does
The Court held that simply claiming a foreign government mixed proceeds from seized property into a general fund — and later used that fund for U.S. commercial activity — is not enough to bring a lawsuit in U.S. courts under the Foreign Sovereign Immunities Act. Plaintiffs must instead plausibly trace the specific proceeds from their expropriated property to the United States. The case was sent back to the lower court for further proceedings consistent with this stricter standard.
Who benefits
Foreign governments and their agencies that are defendants in U.S. lawsuits over property seized abroad, who now have a stronger legal shield against being sued in American courts based solely on the argument that seized-property proceeds were mixed into general funds.
Who is affected
Survivors of foreign government property seizures — including Holocaust survivors and their heirs — who seek to sue foreign governments in U.S. courts for compensation, and who may now face greater difficulty establishing the required connection between seized property and U.S. commercial activity.
Practical impact
Plaintiffs suing foreign governments under the FSIA's expropriation exception can no longer rely solely on a "commingling" argument — that is, they cannot simply allege that seized-property proceeds were mixed into a general fund that was later used in the U.S. Instead, they must plead specific facts that plausibly connect the actual proceeds from their property to U.S. commercial activity, such as identifying a U.S. account holding those proceeds or showing the commingled funds were spent entirely in the U.S. shortly after mixing. For the Hungarian Holocaust survivors in this case, the lawsuit is sent back to lower courts, where they will need to meet this stricter tracing standard or have their claims dismissed.
Majority — Sotomayor
Joined by: Roberts, Thomas, Alito, Kagan, Gorsuch, Kavanaugh, Barrett, Jackson
The Court reasoned that the plain text of the Foreign Sovereign Immunities Act's expropriation exception requires plaintiffs to identify and trace either the specific property taken from them, or the specific property received in exchange for it, to the United States. The majority found that the law treats tangible property (like artwork) and fungible property (like cash) the same way — both require some plausible tracing to the U.S. — and that the statute draws no distinction between the two. The Court explained that merely claiming a foreign government mixed proceeds into a general fund decades ago, and later spent some of that fund in the U.S., does not plausibly show that the specific proceeds from the plaintiff's property ended up here, especially when those funds were also used for countless other transactions worldwide. The majority also reasoned that reading the law as broadly as the plaintiffs urged would conflict with the Act's overall purpose of limiting — not expanding — the circumstances in which foreign governments can be sued in U.S. courts for their public acts. Finally, the Court noted that accepting the plaintiffs' theory could invite other countries to retaliate by allowing more lawsuits against the United States in their own courts, a risk Congress specifically tried to avoid when drafting the law.
Constitutional question
Does alleging that a foreign government sold expropriated property, mixed the proceeds into general funds, and later used some of those funds for commercial activity in the United States satisfy the "commercial nexus" requirement of the Foreign Sovereign Immunities Act's expropriation exception?
Precedent changed
The ruling narrows the D.C. Circuit's prior holding in Simon v. Republic of Hungary, 77 F.4th 1077 (2023), which had allowed the commingling theory alone to satisfy the commercial nexus requirement. The Supreme Court vacated that judgment.