In Republic of Hungary et al. v. Rosalie Simon et al.1, the U.S. Supreme Court unanimously affirmed that the Foreign Sovereign Immunities Act (FSIA) requires a tangible connection between expropriated property – or its proceeds – and commercial activity in the United States. In an opinion authored by Justice Sonia Sotomayor, the Court stressed that generalized allegations of “commingling” foreign treasury funds with expropriated assets do not suffice to pierce sovereign immunity.
I. Background of the case
The plaintiffs, Jewish survivors of the Hungarian Holocaust and their heirs, filed suit against Hungary and its national railway, MÁV, for the seizure of their property in World War II. Their complaint alleged that, after liquidating the confiscated goods, Hungary placed the proceeds in treasury accounts and later used that money for commercial activities in the United States (such as issuing bonds or procuring equipment). The plaintiffs argued that such a historical commingling of funds sufficed to meet the expropriation exception of the FSIA, which allows lawsuits against a foreign state if the seized property (or property exchanged for it) is tied to commercial activity in the United States.
a. Overview of the FSIA and the expropriation exception
Enacted in 1976, the FSIA codifies the principles of restrictive sovereign immunity, under which foreign states are broadly immune from U.S. court jurisdiction unless a specific statutory exception applies. One of these exceptions – the “expropriation exception,” 28 U.S.C. §1605(a)(3) – authorizes suits alleging that:
- “Rights in property taken in violation of international law” are at issue; and
- The property (or property exchanged for it) bears a commercial nexus to the United States (meaning the property is present in the United States in connection with a commercial activity, or else owned or operated by an entity engaged in such activity).
This exception departs somewhat from the baseline of sovereign immunity, permitting suits over foreign states’ public acts if the relevant property can be traced to commerce in the United States. Congress tailored this provision to avoid making the United States a forum for all manner of expropriation disputes worldwide, while providing a limited path to hold foreign governments accountable where a clear U.S. link exists.
b. The heirs’ position
The survivors and their heirs claimed that Hungary’s one-off commingling of confiscated proceeds in its general treasury and subsequent use of those funds in various U.S. business dealings should suffice to overcome Hungary’s immunity. Because money is fungible, they argued, any transaction involving the treasury account effectively included the liquidated value of their property. They further argued that the FSIA treats fungible and non-fungible property differently. In their view, while the commingled funds cannot be isolated or traced to specific transactions, the mere fact that these funds once originated from the expropriated assets should suffice to establish a connection to U.S. commercial activity.
c. Hungary’s position
Hungary (joined by MÁV) countered that such a broad reading would gut the FSIA’s sovereign immunity framework. In their view, the FSIA demands that plaintiffs plausibly trace their specific expropriated assets (or the direct proceeds from them) to identifiable U.S. commercial transactions. Hungary stressed that a foreign sovereign must be connected to specific, identifiable U.S. transactions through the direct proceeds of the expropriated property – not through a broad, speculative nexus. In their view, simply alleging that funds from expropriated assets were deposited into a general account and later used for various U.S. commercial activities does not satisfy the requirement for establishing a commercial link. Instead, they argued that a stricter standard is necessary, one that mandates a clear, direct connection between the expropriated property and particular U.S. transactions to invoke jurisdiction under the FSIA. Permitting a generic “commingling” theory would expand jurisdiction over public acts well beyond what Congress intended and would invite reciprocal litigation risks for the United States abroad.
II. Supreme Court’s decision and reasoning
The Court unanimously agreed with Hungary’s narrower reading of the expropriation exception, holding that allegations of historical commingling alone cannot establish the required commercial nexus. Justice Sotomayor’s opinion stressed that the FSIA’s plain text refers to the particular property “exchanged for” the expropriated item, indicating a need to demonstrate a tangible link between the seizure and the specific funds used in U.S. commerce.
The Court also noted that the statute’s added requirement that such property be “present in the United States in connection with a commercial activity” underlines Congress’s intention to maintain a meaningful safeguard of sovereign immunity. Merely showing that a foreign government eventually spent money on U.S.-based transactions – after depositing it in its treasury decades earlier – is too attenuated to justify piercing the FSIA’s usual protections.
III. Implication of the ruling and a more limited application moving forward
In tightening the tracing requirement, the Court has delimited the need for a clear nexus between the expropriation and U.S. commercial activities. Cases in which property or proceeds were mixed into a foreign treasury many years ago will require more concrete – and often difficult – evidentiary showings. Critics contend that the decision, while preserving comity and avoiding overreach, may hamper recourse for victims of mass atrocities, especially where tracing documentation has long since vanished. But supporters argue that Congress never intended the FSIA to allow speculative lawsuits against sovereigns; rather, it set forth a targeted mechanism for litigating expropriation claims directly tied to U.S. commerce.
Conclusion
The Supreme Court’s ruling reinforces sovereign immunity protections under the FSIA and narrows the scope for suing foreign states in U.S. courts over past expropriations. Although this outcome heightens hurdles for Holocaust survivors and others seeking redress, it also reflects judicial caution in broadening immunity exceptions. Looking ahead, individuals pressing similar claims must show a tighter nexus between the expropriated property and ongoing commercial operations in the United States to meet the FSIA’s jurisdictional threshold.
- Republic of Hungary et al. v. Rosalie Simon et al., case number 23-867, in the Supreme Court of the United States.
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