A natural pairing: restitution and the jurisdictional question, this time with a twist

WASHINGTON, DC. In virtually every restitution claim filed in federal court against a defendant foreign nation, the defendant challenges the basis of the court's jurisdiction. In December it was Spain and now it's Hungary who claims that neither the "expropriation" or the "commercial" exceptions to the Foreign Sovereign Immunities Act (the "FSIA") apply to give the federal district court in DC jurisdiction to hear and adjudicate the suit instituted by Baron Herzog's heirs against Hungary and four state-owned museums for the restitution of "at least 40 works" looted by the government and its Nazi collaborators in 1944. From a litigation strategy perspective, it's not surprising that, where the defendant is a foreign sovereign nation, the initial response is to seek dismissal on the grounds of lack of jurisdiction. This is because if successful, it avoids having to mount a defense on the merits of the claim. However, the "jurisdictional question" in this particular case is unique due to the 1973 US-Hungarian Claims Settlement Agreement which, according to Hungary, overrides the FSIA exceptions should these even apply to give jurisdiction (Hungary says they do not). 

Modeled on the Rumanian and Bulgarian lump sum agreements of 1960 and 1963, respectively, the US-Hungarian Agreement was aimed at the "preadjudication" of claims of the United States and its nationals against Hungary for property claims arising out of the Hungarian government's actions during WWII. By its terms, the Agreement was "in full and final settlement" of claims against Hungary in respect of which the United States received a lump sum of $18.9 million (as settlement for claims allegedly worth $80,296,047), payable in 20 equal installments starting June 30, 1973. In return, the United States agreed to waive all claims against Hungary upon full payment, whether on its behalf or on behalf of its nationals, existing or prospective. The distribution of the funds received fell within the exclusive competence of the United States with Hungary incurring no liability whatsoever in respect thereof and US nationals looking to their own government for compensation.

Aside from contesting jurisdiction, Hungary has also argued that plaintiff De Csepel's relatives already received compensation under a US 1955 programme constituting another possible ground for dismissal. Counsel for the plaintiffs has "urged the court to reach an independent decision on the merits of the family’s claim and disregard the technical roadblocks once more being raised by Hungary." But this is not a winning argument in favor of invoking the court's jurisdiction: the court cannot legitimately find jurisdiction based on its own view that the plaintiffs deserve adjudication of their claim. Likewise, emphasising Hungary's current Presidency of the EU and its obligations under the Washington Principles and the Terezin Declaration may put pressure on Hungary to compensate the plaintiffs but it has nothing to do with resolving the jurisdictional question. The plaintiffs' response is due April 1.