David De Csepel v. Republic of Hungary
2017 U.S. App. LEXIS 10814
| D.C. Cir. | 2017Background
- Baron Mór Lipót Herzog amassed the Herzog Collection (2,000+ artworks); his heirs (the Herzog family) allege Hungary and associated museums unlawfully seized ~44 pieces during WWII and retained or later repossessed them.
- Plaintiffs sue the Republic of Hungary, three museums, and a university in D.C. asserting common-law claims (bailment, conversion, unjust enrichment) to recover the artworks or obtain compensation.
- Hungary moved to dismiss under the Foreign Sovereign Immunities Act (FSIA), invoking (a) a 1947 Treaty of Peace and (b) sovereign immunity generally; plaintiffs invoked FSIA exceptions (expropriation and previously commercial-activity).
- On prior appeal the court held plaintiffs met the commercial-activity exception; on remand the district court found the expropriation exception applied to most pieces and denied dismissal (with two paintings dismissed).
- This appeal addresses (1) whether the 1947 treaty bars the suit, (2) whether plaintiffs’ common-law bailment/conversion claims place “rights in property taken in violation of international law” at issue under §1605(a)(3), (3) whether the requisite commercial nexus permits suing Hungary itself or only its agencies/instrumentalities, and (4) collateral issues including exhaustion and leave to amend under the Holocaust Expropriated Art Recovery (HEAR) Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 1947 Treaty of Peace bars extra‑treaty suits | de Csepel: Treaty provides one mechanism but not exclusive remedy; treaty did not extinguish U.S. nationals’ claims. | Hungary: Treaty settled wartime property claims and precludes FSIA exceptions. | Held for plaintiffs: Simon controls — Article 27 does not create an exclusive remedy; treaty does not bar these suits. |
| Whether plaintiffs’ common‑law claims invoke “rights in property taken in violation of international law” under §1605(a)(3) | de Csepel: Conversion/bailment claims are garden‑variety common‑law claims that can place Holocaust takings in issue. | Hungary: Claims are post‑war commercial bailment disputes, distinct from wartime expropriation. | Held for plaintiffs (as to ~25 pieces never returned): Holocaust-era takings place property rights in issue; for ~15 pieces returned postwar, remand to determine whether repossession is sufficiently tied to the wartime taking. |
| Whether the commercial‑activity nexus in §1605(a)(3) authorizes suit against the Republic itself when only agencies/instrumentalities carried out commercial activity in U.S. | Plaintiffs: A foreign state may be sued if its agencies’ commercial activity satisfies the second clause. | Hungary: The second clause refers only to agencies/instrumentalities; the Republic lacks the required nexus and must be dismissed. | Held for defendants re: Republic: Under Simon, the first clause (property present in U.S.) must be satisfied to sue the foreign state; only agencies/instrumentalities lose immunity under the second clause — Republic of Hungary is dismissed. |
| Whether plaintiffs may amend to invoke the HEAR Act and whether exhaustion is required | de Csepel: HEAR Act removes limitations obstacles; leave to amend appropriate. | Defendants: Plaintiffs haven’t explained choosing earlier theories; exhaustion in Hungary or new claims process should be required. | Held: Grant leave to amend under Rule 15 in light of HEAR Act; appeal from district court denial of exhaustion dismissed for lack of appellate jurisdiction (collateral‑order doctrine covers FSIA immunity only). |
Key Cases Cited
- de Csepel v. Republic of Hungary, 714 F.3d 591 (D.C. Cir. 2013) (prior panel decision describing procedural history and discussing commercial‑activity exception)
- Simon v. Republic of Hungary, 812 F.3d 127 (D.C. Cir. 2016) (held Hungary’s wartime seizures violated international law and explained treaty/non‑exclusivity and nexus distinctions under §1605(a)(3))
- Agudas Chasidei Chabad of U.S. v. Russian Federation, 528 F.3d 934 (D.C. Cir. 2008) (addressed expropriation exception and treated agency commercial activity as satisfying §1605(a)(3) for purposes of jurisdiction over the foreign state — background precedent discussed and debated)
- Helmerich & Payne Int’l Drilling Co. v. Bolivarian Republic of Venezuela, 137 S. Ct. 1312 (2017) (Supreme Court reference on interpreting FSIA exceptions and that common‑law claims can trigger exceptions)
- Foremost‑McKesson, Inc. v. Islamic Republic of Iran, 905 F.2d 438 (D.C. Cir. 1990) (explained presumption of independent status for instrumentalities and principles for attributing acts to a foreign state)
- Garb v. Republic of Poland, 440 F.3d 579 (2d Cir. 2006) (second‑circuit treatment of nexus thresholds for suing foreign states under the expropriation exception)