Lifetime Citizen Portal Access — AI Briefings, Alerts & Unlimited Follows
Supreme Court weighs whether commingled wartime proceeds can subject Hungary to U.S. courts
Loading...
Summary
At oral argument in Hungary v. Simon, the Justices probed whether the FSIA’s expropriation exception reaches proceeds that were liquidated and commingled into fungible state funds decades after the Holocaust and who must bear the burden to prove jurisdiction.
The U.S. Supreme Court heard oral argument in Hungary v. Simon, a dispute over whether the Foreign Sovereign Immunities Act’s expropriation exception allows U.S. courts to hear claims tied to property seized during the Holocaust that later was liquidated and mixed into a nation’s general funds.
Respondents argue the exception applies because Hungary and its national railway, MAV, liquidated victims’ property and commingled the proceeds with other state funds, and later used those commingled funds in the United States. "When Hungary used commingled funds to pay interest and buy equipment in The United States, it put into The United States property that had been exchanged for the expropriated property," respondents’ counsel told the Court.
Petitioners countered that the statute’s key phrase—"exchanged for"—requires a traceable connection between the original expropriated item and the asset now said to be present in the United States. Counsel for Hungary argued that ordinary meaning and the FSIA’s history support a narrow interpretation and that "simply showing that funds entered into the general revenues of an entire nation...followed by untold numbers of transactions...isn't consistent with the plain text." The United States, appearing in support of a narrow reading, urged that the party invoking federal jurisdiction bears the burden of establishing it.
The Justices pressed both sides on two linked problems: (1) what form of tracing or "real and substantial connection" the text requires—whether mathematical or documentary evidence of a direct path, or a lower causal test—and (2) which party must carry the burdens of production and persuasion on jurisdictional facts. Petitioners described three types of evidence that might satisfy a tracing standard in other cases (mathematical withdrawal-impossibility, direct accounting instructions, or close temporal/amount correlations) but said the complaint before the Court did not meet that test. Respondents argued the historical record in this instance includes documentary evidence of liquidation and commingling that Hungary did not rebut in the lower courts.
Several Justices expressed concern about foreign-relations consequences if the exception were read very broadly. Counsel for Hungary and the United States warned of reciprocal litigation risks and international friction if U.S. courts were open to claims whenever a sovereign’s general treasury includes proceeds traceable only in a broad or speculative way. Respondents replied that the FSIA already contains built-in limits—such as the requirement that the taking violate the international law of expropriation and constraints from precedent like Sabatino and subsequent limiting cases—and that the Holocaust-era record here is unusually detailed.
At argument the parties also discussed procedural options: whether a court could allow jurisdictional discovery to test tracing claims, how equitable tracing principles from trust law might (or might not) be borrowed, and whether fungibility of money means that commingling itself can satisfy the jurisdictional hook when an instrumentality engages in commercial activity in the United States. Counsel for respondents said the record contains specific archival materials and bank-account references that would permit an inquiry; petitioners said prior discovery and declarations showed tracing to be impossible in practice.
The case implicates both remedial and jurisdictional questions: respondents seek relief tied to property taken around 1944, and the complaint alleges damages in excess of $5,000,000 (with references in the record to other litigation involving much larger claimed sums). Several Justices asked whether such long chains of transactions would meaningfully be traceable and whether Congress intended the FSIA exception to reach cases beyond the limited, Sabatino-like situations that motivated the Hickenlooper Amendment.
After rebuttal by petitioners, the Court announced the case was submitted.
The Court’s forthcoming decision will determine whether and under what standard claims tied to long-ago expropriations that were later liquidated and commingled may be adjudicated in U.S. courts, and how burdens of proof should be allocated when jurisdiction turns on tracing historical financial flows.