The Supreme Court issued its opinion in the Guelph Treasure case this week, and unfortunately it was not good news for my cousin Alan Philipp and the other plaintiffs. As I wrote about here, the plaintiffs, heirs to the Consortium of art collectors who once owned the Guelph Treasure, alleged that Germany and its agency, the SPK, had expropriated their property in violation of international law when the Nazis fraudulently and illegally coerced the Consortium into selling the Guelph Treasure to them at a third of its value in June 1935. After unsuccessfully seeking reparations from Germany, the plaintiffs brought their claims in the US federal courts for wrongful expropriation of their property in violation of international law.
The defendants asserted immunity from suit in the US under the Foreign Sovereignty Immunity Act (“FSIA”), claiming that Germany and its agents could not be sued in US courts. The plaintiffs asserted in response that their claims fell within the expropriation exception of the FSIA, which allows claims against foreign nations based on property taken in violation of international law, as I explained here. The plaintiffs argued that the forced sale of the Guelph Treasure to the Nazis had violated international law because it was coerced and consummated as part of the Nazi persecution of Jews during the Holocaust.
The District Court and the Court of Appeals agreed with the plaintiffs that the expropriation exception applied and that the case could be heard in the US federal courts, but the Supreme Court has now reversed those decisions and remanded the case back to the District Court. The Supreme Court held in a unanimous decision that the plaintiffs’ claims did not fit into the expropriation exception of the FSIA if they were claims by German nationals against Germany. They read the “in violation of international law” language in the exception narrowly to refer only to the international law of property, not to international law respecting human rights. Then they addressed the “domestic takings” principle of international property law, which precludes US courts from adjudicating claims by a country’s nationals against that country. The court concluded that the domestic takings rule would apply here and deprive the plaintiffs of their right to have their claims against Germany heard in US courts if the members of the Consortium were nationals of Germany.
The plaintiffs are, however, left with one possible argument to allow the case to go forward in the US courts: that the members of the Consortium were no longer German “nationals” in June 1935 because Nazi persecution of the Jews in Germany destroyed their standing as German nationals, and thus their claim is not a claim by a German national against Germany and thus not precluded under the domestic takings rule. The Supreme Court remanded the case back to the District Court for consideration of that issue.1
The decision is obviously disappointing for the plaintiffs and for other descendants of German Jews who might seek relief in American courts for property stolen by the Nazis. The court’s opinion focuses primarily on the statutory language and legislative history. But the court also made it clear that it was concerned about the policy implications of allowing such claims in the US—in particular, the possibility that a foreign court could likewise adjudicate claims by American nationals against the US for violations of their human rights.
What the court failed to address are the policy implications of its decision. Their ruling means that those descended from Jews who lived in Germany during the Nazi era are deprived of the right to bring property claims in US courts against the country that persecuted them because they were nationals of Germany. The argument on remand should establish that by persecuting, dehumanizing, torturing and killing its Jewish residents because they were considered subhuman and dangerous, Germany forfeited the right to claim that those same Jewish residents were German nationals and thus should be subject to suit in the US under the expropriation exception of the Foreign Sovereign Immunities Act.
You can read the Supreme Court decision here: Philipp v Germany SCOTUS opinion
- The defendants claimed that the plaintiffs had waived that argument in the lower courts and thus could not revive it now; the Supreme Court said that was also to be determined by the District Court. ↩