On 30 September, 2024, the US District Court for the District of Columbia issued the latest decision in the long running de Csepel restitution saga. After almost 15 years of litigation (or 25, if one considers the initial lawsuit filed in Hungary), the case has now been narrowed down to the recovery of one of the over 40 artworks initially claimed: a 16^th century limewood sculpture of Santa Barbara. Alongside the object of the dispute, parties have also shifted, and today only two of the original claimants remain: the Herzog sisters, both Italian nationals residing in Italy. Most importantly, since the District Court for the District of Columbia’s first ruling on this case, in 2011, the Philipp and Simon decisions have significantly altered the landscape of the Foreign Sovereign Immunities Act (FSIA), introducing a series of clear delimitations to its use in restitution cases. The latest de Csepel decision reflects these recent developments, and further restricts the margins of the use of §1605(a)(3) FSIA – the so-called expropriation exception – for claimants that lost their property in connection to Nazi persecution.

District of Columbia Court of Appeals

The possibility to benefit from the application of US legal standards, comparatively more favourable towards original owners, has long attracted Nazi-looted art claimants to this jurisdiction. Since the Altmann case, the expropriation exception has functioned as the main portal towards US courts for Holocaust survivors seeking restitution of artworks located in foreign States. While sovereign actors normally enjoy immunity from the adjudicatory jurisdiction of domestic courts, §1605(a)(3) FSIA codifies an exception for cases revolving around rights in property taken in violation of international law. US courts can therefore hear claims when that property (or any property exchanged for such property): 1) is present in the US in connection with a commercial activity carried on in the US by the foreign State, or 2) is owned or operated by an agency or instrumentality of the foreign State and that agency or instrumentality is engaged in a commercial activity in the US.

Over the years, certain US courts have set a record for interpreting this provision in a rather lenient way, extending their jurisdiction upon claims of restitution even when the links with the US were rather tenuous (in Cassirer, for example, the District Court for the Central District of California considered the possibility to access a Spanish museum’s website from US soil as constituting a commercial activity performed in the US). In 2021, however, the US Supreme Court drastically reduced the scope of applicability of the expropriation exception, clarifying in Philipp that the “violation of international law” codified by the FSIA only referred to the international law of expropriation. This ruling effectively halted any attempt to recharacterise transnational restitution claims under human rights law or the jus cogens prohibition of genocide. Moreover, it sanctioned the applicability of the ‘domestic taking rule’ to FSIA cases, meaning that actions taken by governments against the properties of their own citizens do not qualify as violations of international law. In light of this development, Nazi-looted art claimants have tried to amend their claims arguing that, while formally citizens of a certain State, at the time of the expropriations they were de facto stateless, having been subjected to persecutory treatments that factually stripped them of their nationality. In 2023, however, the D.C. Circuit Court in Simon found that the claimants from that case had failed to prove that expropriations against stateless people qualified as violations of international law under the FSIA. While leaving the door open for future, more persuasive lines of reasoning, the DC court therefore further restricted the current applicability of this exception (the case is currently pending before the Supreme Court, under a different set of questions).

The recent de Csepel ruling follows both the Philipp and Simon decisions, but it goes one step further in restricting the use of the expropriation exception. First of all, it showcases some of the traps awaiting claimants who try to navigate this changing FSIA case law, whilst being engaged in true legal marathons. In over a decade of litigation, for example, it emerged that Santa Barbara might have been taken by German rather than Hungarian forces. At this point, however, the Herzog sisters risked being estopped from invoking the expropriation exception, having previously argued that their predecessors were rendered stateless by the antisemitic Hungarian laws. In this specific case, the court was persuaded by the claimants’ argument that, while de facto stateless, their ancestors remained de jure Hungarian citizens and, as such, fell under the expropriation exception (since the sculpture was taken by German forces). Other courts, under different circumstances, might be less open to accept such a technical distinction. The alterations to the original case also led the court to apply the forum non conveniens doctrine, as the only claimants left were two foreign plaintiffs, with all the relevant elements of the case being otherwise located in Hungary. Most importantly, however, the de Csepel court concluded that a taking of property by the forces of an occupying State against the nationals of an occupied State, during wartime, should be qualified as a violation of the international laws of war. Following Philipp’s restrictive approach, this characterisation excludes any such takings from falling under §1605(a)(3) FSIA, as the latter only covers violations of the international law of expropriation. In other words, according to the current case law set by Philipp, Simon and de Csepel, the expropriation exception does not apply to takings of property by a State against its own nationals, nor a taking against stateless people, nor one against an occupied State’s citizens. This scenario seems to prevent most Nazi-looted art cases from falling under this exception, thus drastically restricting, within the span of three years, the possibility of bringing such cases before US courts.

Image Credits:

Ajay Suresh, District of Columbia Court of Appeals, 2024, CC 2.0 via Wikimedia Commons.