Alien tort statute

• Pages: 2-10

2Volume 21, January–March 2015 international law update

© 2015 International Law Group, LLC. All rights reserved. ISSN 1089-5450, ISSN 1943-1287 (on-line) | www.internationallawupdate.com

ALIEN TORT STATUTE

Seventh Circuit affirms dismissals

without prejudice of lawsuits by

Holocaust victims against Hungarian

national railway, Hungarian national

bank, and other private banks for

their complicit role during World

War II; international comity requires

that Plaintiffs first exhaust available

Hungarian remedies

Holocaust survivors and heirs of Holocaust

victims (Plaintis) brought suits against the

Hungarian national railway, the Hungarian national

bank, and several private banks (Defendants) for the

roles they or their predecessors played in carrying

out genocide against Hungarian Jews during World

War II.

Plaintis’ complaints described the seizure,

transport, and murder of hundreds of thousands of

Hungarian Jews during 1944 and 1945. Plaintis’

claims for takings of property during this period

70 years ago were asserted against both foreign

sovereign entities and private banks with relatively

few ties to the United States. ey brought

two separate suits: one against the Hungarian

banks seeking to hold them jointly and severally

responsible for damages of approximately $75

billion; and another against the Hungarian national

railway seeking damages of approximately 1.25

billion. Plaintis alleged seven causes of action

against the banks: genocide, aiding and abetting

genocide, bailment, conversion, unjust enrichment,

constructive trust, and accounting; and nine causes

of action against the national railway: takings in

violation of international law, aiding and abetting

genocide, complicity in genocide, violations of

customary international law, unlawful conversion,

unjust enrichment, fraudulent misrepresentations,

accounting, and declaratory relief pursuant to the

Foreign Sovereign Immunities Act, 28 U.S.C. §

2201.

Plaintis relied on several bases of U.S. courts’

jurisdiction, including the Foreign Sovereign

Immunities Act, 28 U.S.C. § 1330(a), the

Alien Tort Statute, 28 U.S.C. § 1350, diversity

jurisdiction under the Class Action Fairness Act

(CAFA), 28 U.S.C. § 1332(d), and federal question

jurisdiction, 28 U.S.C. § 1331.

e Foreign Sovereign Immunities Act (“FSIA”)

“bars jurisdiction in United States federal courts

against foreign sovereigns for claims for death or

personal injury or damage to or loss of property that

does not occur in the United States. See Abelesz v.

Magyar Nemzeti Bank, 692 F.3d at 677, citing 28

U.S.C. § 1605(a)(5).” However, “the FSIA permits

jurisdiction over foreign sovereigns for claims for

takings of property in violation of international law.

28 U.S.C. § 1605(a)(3).” Plaintis’ claims focus

on the role that the Hungarian banks played in

expropriating money and other property from Jews

alleging that these expropriations were essential to

nance the continued German war eort and the

Hungarian genocide itself.

In the 2012 appeals in these cases the Court

held that the national railway and national bank

could be sued on these claims in the United States

federal court “only if plaintis could demonstrate

on remand that they had exhausted any available

Hungarian remedies or had a legally compelling

reason for their failure to do so. Abelesz v. Magyar

Nemzeti Bank, 692 F.3d 661 (7th Cir.2012).” On

remand the District Court held that plaintis had

not exhausted Hungarian remedies and had not

provided a legally compelling reason for not doing

so, and dismissed the claims against the national

bank and national railway. Furthermore, the

District Court also dismissed Erste Group Bank AG

(“Erste Bank” – a private Austrian bank that had

acquired a Hungarian bank that Plaintis alleged

had participated in the Holocaust) from suit on

forum non conveniens grounds. Plaintis appealed.

e U.S. Court of Appeals for the Seventh

Circuit arms all the dismissals. e key issue

here is whether the district court has subject matter

jurisdiction over a foreign state instrumentality

under the expropriation exception to the Foreign

Sovereign Immunities Act.