Victims of the Hungarian Holoc v. Magyar Allamvasutak Zrt
777 F.3d 847
| 7th Cir. | 2015Background
- Survivors and heirs sued Hungarian state instrumentalities (Magyar Nemzeti Bank and the national railway) and several private banks (including Austria-based Erste) for Holocaust-era takings and related claims, seeking large monetary damages.
- Plaintiffs invoked the FSIA expropriation exception, the Alien Tort Statute, diversity jurisdiction, and federal-question jurisdiction; defendants moved to dismiss on FSIA/immunity, exhaustion, personal jurisdiction, Kiobel-related limits, and forum non conveniens grounds.
- In 2012 this Court held plaintiffs adequately alleged takings tied to genocide but remanded: jurisdiction over Hungarian instrumentalities under the FSIA’s expropriation exception would require either exhaustion of Hungarian remedies or a legally compelling excuse for non-exhaustion; two private banks were dismissed for lack of personal jurisdiction; review of Erste’s other dismissal grounds was denied.
- On remand the district court found plaintiffs had not exhausted available Hungarian remedies and gave no legally compelling excuse, dismissing claims against the national bank and railway without prejudice.
- After those dismissals the district court granted Erste Bank’s renewed forum non conveniens motion and dismissed Erste without prejudice; plaintiffs appealed both dismissals.
- The Seventh Circuit affirmed: exhaustion-as-comity is required before litigating these international-law takings in US courts unless exhaustion is futile or otherwise legally excused; Hungary offers adequate remedies; dismissal of Erste on forum non conveniens was proper given comity, convenience, and risk of duplicative litigation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs must exhaust Hungarian domestic remedies before suing under FSIA expropriation exception | Abelesz: exhaustion not required; discriminatory takings (e.g., based on religion) are per se violations so exhaustion is unnecessary | Defendants: customary international law/comity requires exhaustion or a convincing excuse before foreign courts hear such claims | Court: FSIA text doesn't mandate exhaustion but international comity (customary international law) does; plaintiffs must exhaust or show compelling excuse |
| Whether plaintiffs’ allegations of discriminatory takings (race/religion) avoid exhaustion | Plaintiffs: Restatement §712 discrimination makes the takings violative of international law regardless of domestic remedies | Defendants: §712 concerns discrimination against aliens, not intra-state discrimination; oppressive genocidal takings are actionable but still subject to exhaustion/as-a-matter-of-comity | Court: Genocidal-linked takings can violate international law, but discrimination argument does not eliminate the comity-based exhaustion requirement |
| Whether Hungary provides adequate and available remedies (procedural/structural barriers, statute-of-limitations, class action absence, judicial independence, anti-Semitism) | Plaintiffs: procedural limits, lack of class action, alleged judicial capture and rising anti-Semitism make Hungarian remedies inadequate or futile | Defendants: Hungary permits civil claims, joinder/group mechanisms, extended/waived limitations, and courts have handled Holocaust claims; recent constitutional changes partially reversed or mitigated | Court: District court did not err — identified Hungarian judicial and non-judicial remedies are sufficiently available and not obviously futile; plaintiffs’ fears were speculative |
| Appropriate forum for claims against Erste Bank (forum non conveniens) | Plaintiffs: US forum appropriate; plaintiff forum choice deserves deference; foreign forum may be unfavorable | Defendants: Hungary is available and adequate; evidence/witnesses and related defendants are in Hungary; dismissing avoids duplicative litigation and respects comity | Court: Affirmed dismissal — Hungary is adequate and private/public interest factors favor Hungary, especially after other defendants were dismissed |
Key Cases Cited
- Abelesz v. Magyar Nemzeti Bank, 692 F.3d 661 (7th Cir. 2012) (earlier opinion holding plaintiffs alleged genocidal takings but requiring exhaustion or a convincing excuse before FSIA expropriation claims against instrumentalities could proceed)
- Abelesz v. OTP Bank, 692 F.3d 638 (7th Cir. 2012) (mandamus directing dismissal of two banks for lack of personal jurisdiction)
- Abelesz v. Erste Group Bank AG, 695 F.3d 655 (7th Cir. 2012) (denying mandamus relief to Erste on interlocutory grounds)
- Zappia Middle East Constr. Co. v. Emirate of Abu Dhabi, 215 F.3d 247 (2d Cir. 2000) (elements for FSIA expropriation exception)
- Sosa v. Alvarez-Machain, 542 U.S. 692 (2004) (customary international law may require exhaustion in appropriate cases)
- Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659 (2013) (Supreme Court decision limiting extraterritorial reach of ATS; cited regarding international friction and limiting principles)
- Republic of Argentina v. NML Capital, Ltd., 134 S. Ct. 2250 (2014) (FSIA interpretation limits: foreign sovereigns cannot obtain special procedural rules beyond Act’s text; discussed re: invoking customary international-law principles)
- Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428 (1989) (FSIA is exclusive basis for jurisdiction over foreign sovereigns)
- Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981) (forum non conveniens framework; alternative forum adequacy standard)
- Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp., 549 U.S. 422 (2007) (district court may dismiss on forum non conveniens without first deciding subject-matter jurisdiction)