On December 3, 2024, the U.S. Supreme Court heard argument in Republic of Hungary v. Simon. The case involves Hungary’s theft of valuable items from Jewish families during the Holocaust. The plaintiffs sued the Republic of Hungary and its national railway in the United States, arguing that a federal court in Washington, D.C. could exercise jurisdiction over Hungary under the Foreign Sovereign Immunities Act (FSIA). FSIA provides that foreign sovereigns can be sued in the United States in cases where “rights in property taken in violation of international law are in issue and that property or any property exchanged for such property is present in the United States” and is used for a commercial activity. The plaintiffs argued that the valuable items stolen by Hungary were sold and the proceeds placed in Hungary’s bank accounts. Since Hungary currently uses funds in its bank accounts for commercial activities in the United States, the plaintiffs argued that Hungary could be sued there as a result of its conduct during the Holocaust.  

The D.C. Circuit Court of Appeals agreed. The Circuit Court held that the plaintiffs do not have to “trace funds in the foreign state’s…possession to proceeds from the sale of their property” because to do so “would render the FSIA’s expropriation exception a nullity for virtually all claims involving liquidation.” The Circuit Court relied upon “the fungibility of money” and contended that holding otherwise would “create a safe harbor for foreign sovereigns who choose to commingle rather than segregate or separately account for the proceeds from unlawful takings.” Hungary sought review in the U.S. Supreme Court, which agreed to hear the case. During oral argument on December 3, 2024, the justices heard from both sides and from the United States, which argued in favor of Hungary. The justices asked tough questions, but a majority appeared to disagree with the D.C. Circuit. 

Justice Elena Kagan appeared sympathetic to the D.C. Circuit’s holding, worrying that Hungary’s position would “provide a roadmap to any country that wants to expropriate property.” Other justices, such as Justice Ketanji Brown Jackson, questioned whether the D.C. Circuit’s approach was consistent with the statutory text, noting that under the FSIA, “we have to find the connection between the original expropriation and [the property] they’re pointing to today.” Justices Neil Gorsuch and Samuel Alito suggested that courts should apply “tracing rules from” cases outside the sovereign immunity context, such as cases involving misappropriation of funds by fiduciaries.

Justice Clarence Thomas suggested that once the proceeds from expropriated goods are deposited “in a general account,” the funds are “off limits to FSIA claims.” Justice Brett Kavanaugh worried about the “friction” the D.C. Circuit’s holding might create with other countries, while Chief Justice John Roberts raised concerns that the plaintiffs were advocating for “throwing out the whole sovereign immunity principles under which the rest of the world operates.” Justices Sonia Sotomayor and Amy Coney Barrett questioned whether, once property has been liquidated and the resulting cash used to purchase something else, that ultimate purchase meets the FSIA requirement that the property in the United States was “exchanged for” the stolen property, given the chain of transactions involved. 

Despite the dark underlying subject matter, the justices drew a few laughs during oral argument. When Justice Gorsuch asked the United States why it did not offer much argument on the issue of who bears the burden of proof on this issue, and the United States responded that “we are word-limited in our briefs,” Justice Gorsuch replied that “[y]ou can always use them wisely too.” When the United States later asked for more time during the argument to “push back” on a point Justice Gorsuch made, he responded “I think you’ve pushed back enough.” Justice Barrett caused some chuckles when she raised a hypothetical in which she “steal[s] Justice Gorusch’s car.”

Although the issue before the Court is limited to unique facts and the FSIA’s expropriation provision, the Court’s decision could potentially impact other aspects of FSIA jurisdiction. The Court’s opinion could address issues of who bears the burden of proof in establishing that FSIA’s jurisdictional exceptions do or do not apply, and the extent to which FSIA plaintiffs have to allege a nexus between the United States and certain funds or property at issue. The Court’s decision is one to watch.