On February 3, 2021, the U.S. Supreme Court ruled unanimously in favor of Germany in a dispute over whether American courts may preside over a lawsuit brought by the heirs of German Jewish art dealers who alleged that the Nazi regime coerced the 1935 sale of certain artworks.
As we reported in November 2020, heirs of German Jewish art dealers who had once owned a collection of prized medieval religious art works known as the Guelph Treasure, now valued at over $250 million, brought suit in Washington, D.C., against Germany for the return of their property or its value. The heirs alleged that, as the Nazis rose to power, they forced the heirs’ ancestors to sell the Guelph Treasure in 1935 for a fraction of its value before two of them fled the country and a third was killed. For most of the time since then, the Stiftung Preußischer Kulturbesitz (the “SPK”), the Prussian Cultural Heritage Foundation, which is an instrumentality of the state of Germany, has maintained the bulk of the Guelph Treasure.
Pursuant to the Foreign Sovereign Immunities Act (“FSIA”), U.S. courts typically do not have jurisdiction over disputes between a sovereign nation and its own nationals. However, the heirs argued that this case fell within the expropriation exception to that Act, which provides that a sovereign does not enjoy immunity in any case “in which rights in property taken in violation of international law are in issue.” The D.C. Circuit Court of Appeals accepted that argument, holding that the expropriation exception applies because the forced sale of the Guelph Treasure violated the widely accepted international ban on genocide.
The Supreme Court’s Ruling: An Immunity Booster
The question presented to the Supreme Court was whether a country’s alleged taking of property from its own nationals falls within the expropriation exception. In a 9-0 decision, the Court unanimously held it does not.
Writing for the Court, Chief Justice Roberts held that the appeals court read the phrase “in violation of international law” too broadly. Instead, he explained, in light of existing international law and U.S. foreign policy, “the expropriation exception is best read as referencing the international law of expropriation rather than of human rights.” Accordingly, he concluded, “[w]e do not look to the law of genocide to determine if we have jurisdiction over the heirs’ common law property claims. We look to the law of property.” Because the only violation of international law alleged in this case related to genocide, not expropriation, the Court held that this case does not fall within the expropriation exception.
In adopting Germany’s interpretation of the expropriation exception, Chief Justice Roberts relied on the history and text of the FSIA itself. First, he noted that the expropriation exception “places repeated emphasis on property and property-related rights, while injuries and acts we might associate with genocide are notably lacking.” Second, commenting on other aspects of the FSIA, he noted that, when Congress intends to permit lawsuits in U.S. courts against foreign countries for injuries resulting from human rights violations, it does so “explicitly and with precision.” Finally, upon recounting the legislative history and context in which the FSIA was enacted in 1976, he wrote that it was clear at that time that the exception applied only when a state took a noncitizen’s property. He also noted that, from a policy perspective, reading the expropriation exception too broadly would “produc[e] friction” in relations with other nations, “leading some to reciprocate by granting their courts permission to embroil the United States in expensive and difficult litigation.”
The Court declined to reach the other questions presented in the case—namely, (1) whether principles of “international comity” require federal courts to avoid resolving the heirs’ claims even if they have jurisdiction, and (2) whether the lawsuit could still go forward because the art dealers were not German nationals when the sale took place. However, the Court directed the Court of Appeals to instruct the District Court to consider the second question on remand. If the District Court ultimately rules that the heirs were not German nationals at the time of the transaction because the Nazis had stripped German Jews of their citizenship, the heirs could eventually recover in a United States court after all.
The Court’s narrow reading of the expropriation exception severely restricts the pool of cases that can be brought in U.S. courts against foreign states—a result that has particularly significant implications in the context of intrastate takings of art or cultural property.
The D.C. Circuit previously observed that the United States favors litigation in American courts of “Nazi-era art-looting claims,” noting that Congress recently extended statutes of limitation for such claims, and that “the FSIA exempts them from the jurisdictional immunity otherwise afforded certain art collections temporarily exhibited in the United States.” However, the Supreme Court’s opinion makes it difficult, or even impossible, for certain plaintiffs to bring “Nazi-era art-looting claims” in U.S. courts. Likewise, analogous claims against foreign nations involving the looting of art or cultural property by current or predecessor national or quasi-national regimes—such as the Khmer Rouge—likely would not be permitted in U.S. courts.
This will force victims seeking redress or reparations for such takings to rely more heavily on international or intrastate tribunals designed specifically to address harm caused to property in connection with human rights violations, such as the Extraordinary Chambers in the Courts of Cambodia (set up in conjunction with the United Nations) or the German Advisory Commission for the Return of Cultural Property Seized as a Result of Nazi Persecution, Especially Jewish Property (which, in the Guelph Treasure case, rejected the heirs’ claims against the SPK based on a determination that the dealers had received fair value).
 28 U.S.C. § 1605(a)(3).
 Philipp v. Fed. Republic of Germany, 894 F.3d 406, 410-14 (D.C. Cir. 2018), vacated and remanded, 141 S. Ct. 703 (2021).
 Fed. Republic of Germany v. Philipp, 141 S. Ct. 703, 708 (2021).
 Id. at 712.
 Id. at 713-14.
 Id. at 712.
 Id. at 714 (quoting Bolivarian Republic of Venezuela v. Helmerich & Payne Int’l Drilling Co., 137 S. Ct. 1312, 1322 (2017)).
 Id. at 715-16.
 Philipp v. Fed. Republic of Germany, 894 F.3d at 418.