Illinois Federal District Court Upholds ATS Claims Against Banks for Aiding and Abetting Genocide by Looting

Holocaust Victims of Bank Theft v. Magyar Nemzeti Bank, et al., No. 10 C 1884 (N.D. Ill. May 2011), addresses motions to dismiss filed by international banking institutions that allegedly “played a role in a wealth expropriation scheme involving the theft and withholding of assets and funds from Hungarian Jews who were victims of the Holocaust and their next of kin”.  The case is, by our reckoning as well as the Court’s, one of first or close-to-first impression; the causes of action arise from a link that is trying to be drawn is between banking institutions and direct or complicit involvement in the Holocaust. 

The District Court observed that the plaintiffs based their claims on alleged violation of the “historical norms established by the treaties, customary international law, and the limited area of law governing areas such as genocide”.  The Court did not see such claims foreclosed by Sosa v. Alvarez-Machain, 542 U.S. 692 (2004).  That the claims were novel did not doom them, said the Court, and “[g]enocide by looting and aiding and abetting genocide by looting falls within the limited scope of jurisdiction recognized in Sosa”. 

Next, the District Court discussed the issue whether the Alien Tort Statute (ATS)  can or cannot subject a corporation to liability.  The District Court acknowledged that the Second Circuit in Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111 (2d Cir. 2010) (discussed here; denial of rehearing here), held that a corporation could not be held liable under international law.  However, the Court found Kiobel “non-controlling”, instead relying on “persuasive precedent indicating that corporations can be held liable under the ATS”.  Citing Romero v. Drummond Co., 552 F.3d 1303 (11th Cir. 2008) (we discuss this 2011 decision in that case here).

The District Court then rejected the balance of the defendants’ grounds for dismissal, including not merely defenses based on personal jurisdiction but forum non conveniens, statute of limitations, political question, immunity under the FSIA, and the act of state doctrine.  The Court denied the motions to dismiss in their entirety.

The District Court did not address the issue of what showing is needed before international norms could be considered violated, here by financial institutions allegedly aiding and abetting by looting. See our discussion (here) where the Court (here the dissent in a decision by the First Circuit) limits the types of cases where universal condemnation and hence universal jurisidiction is available.  Also, for a different analysis and result with respect to both Sosa and Kiobel, see Boimah Flomo v. Firestone Natural Rubber Co., 744 F. Supp. 2d 810 (S.D. Ind. 2010).

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