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Media Alerts - De Csepel v. Republic of Hungary
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April 20, 2013
  De Csepel v. Republic of Hungary
Headline: D.C. Circuit reinstates suit of Hungarian Jews trying to recover art collection seized by the Hungarian Government and the Nazis during World War II.

Area of Law: Foreign Sovereign Immunities Act (FSIA)

Issues Presented: Whether repudiation of a bailment agreement falls within the "commercial activity" exception to the Foreign Sovereign Immunities Act, and whether the doctrine of international comity requires U.S. courts to honor the judgment of a foreign court when it is alleged that the foreign court denied the party due process.

Brief Summary: The Herzog family, Hungarian Jews who fled the country in 1944, seek the return of more than forty works of art - the famed "Herzog Collection" - confiscated by the Nazis and the Hungarian government during World War II. Subsequent to World War II, the Herzog family entered into a bailment agreement with the Hungarian government, pursuant to which the Hungarian government was permitted to retain the artworks for safekeeping but agreed to surrender them to family members upon demand. In 1999, a family member not a party to this suit sought return of twelve pieces of the collection in Hungarian court. Other family members intervened. The Hungarian courts ultimately dismissed the action in 2008. On July 27, 2010, several members of the Herzog family filed suit in the United States District Court for the District of Columbia, seeking the return of the more than forty works of art from the Republic of Hungary.

Hungary moved to dismiss, arguing that the district court lacked jurisdiction under the FSIA and that the family's claims were barred both by the FSIA's "treaty exception" and by the doctrine of international comity. The district court granted the motion in part and denied the motion in part. The court dismissed the claims regarding the pieces of art that were the subject of the Hungarian suits on comity grounds. However, the district court rejected Hungary's arguments premised on the FSIA and comity. It found that it had jurisdiction under the expropriation exception, which abrogates sovereign immunity in any case involving rights in property taken in violation of international law, and that the "treaty exception" did not apply because petitioners were not United States citizens at the time these takings occurred. Both parties cross-appealed.

The Court of Appeals for the District of Columbia Circuit reversed the district court's dismissal, finding that international comity did not require dismissal where, as here, petitioners allege that the foreign court had denied due process. The court affirmed the remaining claims, finding that it had jurisdiction under the "commercial activity" exception to the FSIA and that the bailment claims were outside the scope of the "treaty exception." In order to fit in the "commercial activity" exception, the court found that (1) there must be an act taken in connection with commercial activity and (2) that act must have a direct effect in the United States. The D.C. Circuit found that the repudiation of the bailment was a simple repudiation of a contract - precisely the kind of act in which a private market player engages. The court specifically rejected Hungary's argument that the bailment agreement was premised on a treaty, finding that the family's claim was instead founded on agreements between the family and the Hungarian government executed after the war. The court next held that, since the petitioners now live in the United States, Hungary's repudiation of the bailment caused the requisite direct effect. Finally, the court concluded that, since the complaint alleged a breach of a bailment founded not on a treaty provision but on a post-war contract, Hungary's remaining claims fell outside the scope of FSIA's "treaty exception."

The full text of the opinion can be viewed at:

Panel: Tatel, Williams, and Sentelle

Argument Date: January 23, 2013

Date of Issued Opinion: April 19, 2013

Docket Number: No. 11-7096, consolidated with 12-7025 and 12-7026

Decided: Affirmed in part, reversed in part

Case Alert Author: Joseph Maher

Counsel (if known): Thaddeus J. Stauber, D. Grayson Yeargin, Sarah E. Andre, and David D. West for Appellants. Michael S. Shuster, Dorit Ungar Black, Sheron Korpus, Alycia Regan Benenati, Michael D. Hays, Daniel D. Prichard, Agnes Peresztegi, and Alyssa T. Saunders for Appellees

Author of Opinion: Tatel

Alert Supervisors: Elizabeth Beske/Ripple Weistling

    Posted By: Ripple Weistling @ 04/20/2013 08:03 AM     DC Circuit  

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