In Philipp v. Federal Republic of Germany, No. 17-7064, 925 F.3d 1349 (D.C. Cir. 2019), the United States Court of Appeals for the District of Columbia Circuit affirmed an earlier decision allowing a lawsuit involving art taken by the Nazis to proceed in district court in Washington, D.C., but also highlighted judicial disagreement regarding the application of the Foreign Sovereign Immunities Act (“FSIA”).  The FSIA generally bars claims against foreign governments, but specifically provides for an “expropriation” exception involving the taking of property. Ultimately the court found that the taking of the art in this case fell under the exceptions and allowed the plaintiffs to proceed with their claim.
The background of the dispute is that the plaintiffs claim to be heirs of German-Jewish art dealers who allegedly had had valuable art taken by the Nazis. That art consisted of items of the “Welfenschatz (Guelph Treasure)”, which was a “unique collection of medieval relies and devotional art” derived from the House of Welf, an ancient European dynasty. For generations, the Guelph Treasure was housed in Brunswick Cathedral. In 1929, the Duke of Brunswick sold 82 items of the Treasure to a consortium of Frankfurt art dealers. The heirs claimed that the German government, and more specifically Hermann Goering, had forced the sale of these items of the Welfenschatz in 1935 at a price “barely 35% of its actual value.”
The heirs first submitted their claim to the German “Advisory Commission for the Return of Cultural Property Seized as a Result of Nazi Persecution, Especially Jewish Property”, but the Advisory Commission concluded that “the sale of the Welfenschatz was not a compulsory sale due to persecution.” In response, the claimants filed suit in Washington, D.C. The claimants sought either return of the art work, “and/or” $250 million.
The defendants – the German government and the Stiftung Preussischer Kulturbesitz (the Prussian Cultural Heritage Foundation – “SPK” -, , a German sovereign instrumentality) moved to dismiss the complaint, arguing that it qualified for sovereign immunity under the FSIA. While the FSIA generally prevents lawsuits against foreign sovereigns in the US, there is an “expropriation exception,” which applies where “rights in property taken in violation of international law are in issue,” and that “there is an adequate commercial nexus between the United States and the defendant.” The court found that although a government’s taking of its own citizen’s property is not a violation of international law, if the taking “amounted to the commission of genocide,” the exception to the FSIA will apply because genocide is in violation of international law. As for the adequate commercial nexus, the court determined jurisdiction over the foreign government only applies where the property at issue is located in the US. As this was not the case, the court dismissed the claim against the German government. However, the court noted that the rule is different for an “instrumentality” of the foreign sovereign, such as the SPK. Therefore, the court determined, the heirs would be permitted to pursue their case against the SPK, which owned the property and engaged in commercial activity in the US. Finally, the court found that the claimants need not “exhaust administrative remedies” in Germany before pursuing their claim in US courts.
The foregoing appellate ruling, allowing the plaintiffs to proceed against the SPK but not the German government, was decided by a three-judge appellate panel. Thereafter, the defendants sought “en banc review,” which would allow reconsideration of the decision by the entire DC Circuit panel consisting of 17 judges. The DC Circuit denied the petition for en banc review. In so doing, however, one of the judges, Judge Katsas, issued a 17-page dissent, in which he argued that the FSIA should mandate dismissal of the action. Judge Katsas’ dissent highlighted the circuit-split regarding the exceptions to the FSIA, and noted that the Seventh, Ninth, and Eleventh Circuits had taken different approaches. Judge Katsas also objected that the underlying decision “makes the district court sit as a war crimes tribunal to adjudicate claims of genocide arising in Europe during World War II.” However, Judge Katsas also focused on the “genocide” basis for finding a violation under international law. He explained: “The expropriation exception …[under the FISA] … encompasses only property taken in violation of international takings law…genocide is not about the taking of property.” 
On September 16, 2019, the defendants petitioned for review before
the US Supreme Court, which remains pending.
 28 U.S.C. § 1604.
 Philipp v. Federal Republic of Germany, No. 1:15-cv-0026, 648 F. Supp. 3d 59 (D.D.C. 2017).
 28 U.S.C. § 1605(a)(3).
 Philipp v. Federal Republic of Germany, No. 17-7064, 894 F.3d 406, 410-11 (D.C. Cir. 2018).
 894 F.3d at 414.
 894 F.3d at 415.
 Philipp v. Federal Republic of Germany, No. 17-7064, 925 F.3d 1349 (D.D.C. 2019)
 925 F.3d at 1350.
 925 F.3d at 1351.