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Lawyers Urge High Court To Leave FSIA Scope To Congress

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Law 360 10 September 2020
By Emma Whitford

Law360 (September 10, 2020, 8:45 PM EDT) -- A group of former U.S. State Department lawyers urged the Supreme Court on Thursday to reverse a D.C. Circuit judgment reviving claims over Nazi officers' alleged misappropriation of more than $250 million dollars in medieval art stolen from German Jews.

The case rests on the scope of the Foreign Sovereign Immunities Act, which determines if foreign nations can be sued in U.S. courts. It should be left to Congress, not the judiciary, to potentially expand an aspect of law, the former legal advisers wrote in an amicus brief.

The appeals court's decision amounts to a significant expansion of FSIA's expropriation exception, the lawyers claimed. The exception was designed to allow Americans and U.S. entities to bring claims against foreign governments over property taken in violation of international law, they said, but this case could expand the scope of the exception to cover cases brought by foreign nationals against their governments.  

This move by the lower court "potentially opens U.S. courts to a wide range of claims against foreign sovereigns arising from situations of mass human rights violations committed against their own people that have been, or could be, characterized as 'genocide' in violation of international law," the group claimed Thursday.

"Whether to make such a consequential change to the statute, and if so, in what terms, is a matter for the legislature, especially in light of the significant foreign relations ramifications for the United States likely to result from the adjudication of such cases," they added.

The group consists of Davis R. Robinson, Abraham D. Sofaer and Edwin Williamson, who served back-to-back as State Department legal advisers from 1981 to 1993, as well as Georgetown University Law Center professor David P. Stewart, who worked in the legal adviser's office from the mid-1970s until 2008.

In the underlying case, descendants of two German art dealers say their relatives were forced to close shop in the 1930s because of laws that punished Jewish businesses. The Government of Prussia in 1935 allegedly bought one of their collections, the medieval Guelph Treasure, at a steep discount, and later gifted it to Adolf Hitler. The plaintiffs say the treasure is now worth $250 million.

The D.C. circuit revived the suit in 2019, after a lower court ruled that Germany is the correct venue, court records show. Germany subsequently appealed to the Supreme Court.

The amici said Thursday that FSIA's expropriation exception was not originally intended to cover the taking of property of a foreign country's "own citizens or nationals within its own territory." In this case, claims brought by Germans against Germany. 

The exception has expanded over time, and the lawyers said they worry the case at hand could blow the doors open. If U.S. courts begin taking up FSIA cases brought by foreign nationals, they predicted, many of these cases could easily clear the additional "commercial nexus" requirement under FSIA, which only requires defendant state agencies to have business in the U.S. 

"Nothing in the statute or its legislative history indicates that Congress had in mind making U.S. courts a global 'claims resolution' forum," the former legal advisers said.

Nicholas O'Donnell of Sullivan & Worcester LLP, who represents Alan Philipp and Gerald Stiebel, the grandson and great-nephew, respectively, of the art dealers, told Law360 on Thursday that the amicus brief "mostly just regurgitates Germany's arguments."

"More puzzling coming from former State Department officials who know better is the deafening silence on more than 75 years of U.S. law, policy and leadership on the restitution of Nazi-looted art, which are precisely why the case belongs in U.S. court," O'Donnell added.

Counsel for the lawyers and for Germany did not immediately respond to requests for comment Thursday.

The former State Department legal advisers are represented by James H. Hulme, Lee M. Caplan, Timothy J. Feighery and Nadia A. Patel of Arent Fox LLP.

Philipp and co-plaintiffs are represented by Nicholas O'Donnell and Erika L. Todd of Sullivan & Worcester LLP.

The Federal Republic of Germany and the Prussian Cultural Heritage Foundation are represented by Jonathan M. Freiman, Tahlia Townsend, Benjamin M. Daniels and David R. Roth of Wiggin and Dana LLP.

The case is Federal Republic of Germany et al. v. Alan Philipp et al., case number 19-351, in the U.S. Supreme Court.

--Additional reporting by Andrew Karpan, Joyce Hanson and Caroline Simson. Editing by Breda Lund.

All court documents in this case can be found at https://www.supremecourt.gov/search.aspx?filename=/docket/docketfiles/html/public/19-351.html

https://www.law360.com/internationalarbitration/articles/1309007/lawyers-urge-high-court-to-leave-fsia-scope-to-congress
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