Victims of the Hungarian Holocaust v. Hungarian State Railways (HSR), No. 10 C 868 (N.D. Ill. July 2011), address claims against an instrumentality of the Government of Hungary that allegedly “played a role in the looting and plundering of Jewish possessions and the expropriation of Jewish funds  during the Holocaust”.  The District Court denied a motion to dismiss and addressed several international litigation practice issues.

First, the Court determined that the expropriation exception to the FSIA was properly plead by the complaint alleging that “(1) rights in property are in issue; (2) that the property was ‘taken’; (3) that the taking was in violation of international law; and (4) that one of the two nexus requirements is satisfied”.  Those nexus requirements are (a) “that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state”, or (b) “that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged is engaged in a commercial activity in the United States”.   The District Court found the pleading sufficient and said that it was not “adjudicating HSR’s defense of sovereign immunity under the FSIA on the merits” since, according to the Court, the issue was “not ripe for adjudication at the motion to dismiss stage”.   Yet the District Court never determined — at least never stated — what the railway company did in the aiding and abetting of the looting.  We have posted on what appears to be an increasing number of what we desribe as “indirect” takings claims that have been found sufficient to constitute an exception to the FSIA.

Second, the District Court also rejected as premature HSR’s contention that the claims in the complaint presented a nonjusticiable political question as well as the contention that the claims were barred by the act of state doctrine. 

Third, the Court applied the pleading standard enunciated in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and in Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009), and determined that the complaint stated enough facts to survive a motion to dismiss.  The Court did not go behind the allegations even to adjudicate the FSIA defenses.

Fourth, the Court rejected a forum non conveniens defense, finding that even if Hungarian courts “provide an available and adequate alternative forum, Defendants have not shown that the convenience of the parties, nor the interests of justice would be best served by a dismissal of the instant action”.  The Court also found no basis for imposing an exhaustion of remedies requirement before asserting a claim relying on an exception to the FSIA.