“And you shall speak to him saying, ‘So said the Lord, “Have you murdered and also inherited?”’”11 Kings 21:19.
Introduction
The Nazis’ Final Solution to eradicate the Jewish people required both the murder of Jewish persons and the plunder of Jewish property.2 Among the property the Nazis seized were hundreds and thousands of works of art,3 books,4 land,5 personal possessions,6 and business property.7
By 1944, with the Final Solution already in motion,8 the Nazis were aware that they were losing World War II,9 so they raced to eradicate the Jewish people.10 Among them were over 430,000 Hungarian Jews who were deported in 147 trains, mostly headed to the Auschwitz death camp.11 In an effort to transport the Hungarian Jews, the Nazis stripped them of their possessions, including cash, jewelry, heirlooms, art, valuable collectibles, gold, and silver.12 The Hungarian Jews were then loaded onto the trains of the Hungarian State Railroad in horrid conditions.13 They were transported to concentration camps and death camps where they were either murdered or forced to work as slave laborers under inhumane conditions.14 Some of these Jews even worked for the Hungarian State Railroad right up to the minute they were deported to concentration camps.15
The Nazis’ expropriation of the Hungarian Jews’ last remaining possessions has given rise to lawsuits brought in the Seventh16 and D.C. Circuits17 for reparations under the expropriation exception to the Foreign Sovereign Immunities Act (FSIA).18 These lawsuits have been brought against the Hungarian government because the Hungarian government owned the Hungarian National State Railroad in 1944.19
In another lawsuit filed in the D.C. Circuit, plaintiffs are suing Germany under the FSIA’s expropriation exception.20 The plaintiffs are descendants and heirs of a group of German-Jewish art dealers.21 They allege the German government expropriated a collection of more than eighty pieces of medieval reliquary art, known as the Welfenschatz.22 The Jewish art dealers initially purchased the Welfenschatz in 192923 and resold pieces to international buyers, but were still in possession of some of the Welfenschatz when the Holocaust began in 1933.24 Viewing the Welfenschatz as an Aryan treasure, the Nazis were disgusted that it was held by Jews and schemed to coerce the dealers into surrendering the Welfenschatz at a fraction of its value.25 By 1935, having suffered through two years of Nazi terror, the dealers, acting under duress, conveyed the remaining collection of the Welfenschatz to a bank acting on the Nazis’ behalf, at a price substantially less than its true value.26 These art relics are the subject of a lawsuit brought against Germany under the expropriation exception to the FSIA.27
Hungary and Germany raised what is known as either a “comity-based abstention” or “prudential exhaustion” defense, which would require plaintiffs to exhaust foreign domestic remedies available in Hungary or Germany prior to commencing suit in the United States.28 The D.C. Circuit rejected this defense as outside the FSIA’s comprehensive set of legal standards that govern immunity in every civil action against a foreign state.29 The Hungarian and German governments petitioned the Supreme Court of the United States to reverse the D.C. Circuit’s decisions.30 In July 2020, the Supreme Court granted Hungary and Germany’s petitions for certiorari,31 and in December 2020, the Supreme Court heard oral arguments.32
These two cases present a direct contrast to the Seventh Circuit’s decisions in Abelesz v. Magyar Nemzeti Bank33Abelesz v. Magyar Nemzeti Bank, 692 F.3d 661 (7th Cir. 2012). and Fischer v. Magar Allamvasutak Zrt,34 where the Seventh Circuit required the plaintiffs, who were victims of the Holocaust, to exhaust remedies available in Hungary prior to litigating in United States courts.35 The implications of the Seventh Circuit’s exhaustion of remedies requirement are not limited to cases involving Holocaust victims. As a result, victims of the Armenian,36 Ugandan,37 and Ovaherero and Nama38 genocides may also be left without any recourse—or recourse involving a substantial burden that may be nearly impossible to overcome39—to secure justice in U.S. courts.40
Although the Supreme Court vacated and remanded both cases (Federal Republic of Germany v. Philipp and Republic of Hungary v. Simon) in February 2021,41 at least one of these two cases (most likely Simon) will inevitably make its way back to the Supreme Court, and the Court will have to decide whether “comity-based abstention” and “prudential exhaustion” fall outside the FSIA.42
This Note argues that when the Supreme Court is presented with this issue, the Court should follow the D.C. Circuit’s approach and not impose an exhaustion of remedies requirement upon plaintiffs seeking to litigate their claims under the expropriation exception of the FSIA, and that a comity-based abstention defense is inconsistent with congressional intent when enacting the FSIA.43
Part I of this Note begins by tracking the development of the FSIA.44 Part I will: (1) describe the procedures courts used to determine foreign sovereign immunity decisions, which eventually gave rise to the FSIA’s enactment;45 (2) outline the expropriation exception to the FSIA and its development as it relates to cases involving victims of genocide;46 (3) define the underlying principles of comity-based abstention and exhaustion and the role of international comity in these theories of exhaustion;47 and (4) describe and track the relevant decisions in the Seventh and D.C. Circuits.48 Part II of this Note will analyze: (1) whether prudential comity-based exhaustion or abstention fit into the expropriation exception;49 (2) the difference between comity-based abstention in the FSIA context and other comity-based abstention doctrines;50 (3) whether such a requirement amounts to a grant of foreign sovereign immunity;51 (4) how prudential exhaustion and comity-based abstention doctrines, in the FSIA context, founded on Interhandel and the Third Restatement of Foreign Relations Law of the United States are based on misunderstandings of Interhandel and the Third Restatement;52 and (5) the likelihood that res judicata bars plaintiffs who exhaust foreign domestic remedies from relitigating their claims in United States courts.53 Part III discusses the Supreme Court’s recent orders in Philipp and Simon.54See infra Part III.
I. Background
A. Development of the Foreign Sovereign Immunities Act
In 1976, Congress passed the Foreign Sovereign Immunities Act (FSIA) and enacted a comprehensive set of guiding principles to help courts evaluate foreign states’ claims of immunity from the jurisdiction of United States courts.55 The United States Constitution does not create or impose any restrictions on foreign sovereign immunity.56 Rather, the origins of foreign sovereign immunity stem from the principles of grace and comity.57
Prior to 1952, the executive branch was charged with determining whether foreign sovereigns should be granted immunity in the United States courts.58 Accordingly, the executive branch’s practice was typically to request immunity in all claims brought against friendly nations.59 However, in 1952, in what is known as the “Tate Letter,” the State Department changed course and embraced a “restrictive” theory of sovereign immunity.60 Pursuant to this theory, foreign sovereigns were shielded in their public, noncommercial acts, but not their commercial activities.61 From the federal courts’ viewpoint, the change in policy had little impact on their approach to sovereign immunity.62 The executive branch, acting through the State Department, still maintained the initial responsibility of deciding issues of foreign sovereign immunity, and the courts continued to abide by the State Department’s suggestions.63
Notwithstanding the fact that federal courts experienced little impact, in immunity determinations in general, the change in policy created overall chaos and disarray because foreign nations applied diplomatic pressure upon the State Department.64 Often, political considerations influenced the State Department to recommend immunity in cases where immunity was not otherwise available under the restrictive theory.65 Complicating matters further, foreign nations did not always request an immunity recommendation from the State Department.66 In such cases, the courts were left with the responsibility to ascertain whether sovereign immunity existed, and they generally relied on previous State Department decisions.67 In this way, the Tate Letter created a system where two distinct branches of government were both involved in sovereign immunity determinations, and their respective decisions were subject to a variety of factors influenced by diplomatic considerations68 and common law.69 Consequently, the standards governing foreign sovereign immunity after 1952 were neither clear nor uniformly applied.70
To remedy these issues, Congress enacted the FSIA in 1976.71 Subsequently, the Supreme Court in Republic of Austria v. Altmann described the FSIA as a “comprehensive statute” that sets forth the legal standards controlling claims of immunity by a foreign state and its political subdivisions, agencies, and instrumentalities in every civil action.72 In Republic of Argentina v. NML Capital, the Supreme Court again emphasized that “[t]he key word . . . is comprehensive”73—meaning the FSIA established a rigorous framework for courts to resolve any claim of sovereign immunity. Accordingly, the FSIA itself indisputably governs determinations over whether a foreign sovereign is entitled to immunity.74 The FSIA instructs courts to resolve foreign states’ claims to immunity in accord with the tenets outlined in the statute.75 The NML Capital Court explicitly stated, “[A]ny sort of immunity defense made by a foreign sovereign in [a U.S.] court must stand on the Act’s text. Or it must fall.”76
B. The Expropriation Exception to the Foreign Sovereign Immunities Act
The FSIA’s grant of immunity from civil liability to foreign sovereigns who are sued in the United States is subject to several exceptions delineated in § 1605.77 Pursuant to § 1605(a)(3), foreign states do not have immunity in cases where the state has expropriated property in violation of international law.78 To overcome foreign sovereign immunity via the FSIA’s expropriation exception, a plaintiff must satisfy three elements.79 First, the claim must be one in which property rights are in issue.80 Second, the property in question must have been taken in violation of international law.81 Third, one of two commercial-activity nexuses with the United States must exist.82
C. Development of the Expropriation Exception to the Foreign Sovereign Immunities Act as It Relates to Cases Involving Victims of Genocide
The expropriation exception to the FSIA has been a focal point in genocide-related suits and has been subject to judicial interpretations that have taken it a considerable distance from the FSIA’s text.83 Genocide victims tend to frame their claims as ones for property expropriation, even where property at issue might be of trivial value, but where the expropriation coexisted with physical and moral atrocities the victims suffered.84 They resort to the expropriation exception because the FSIA’s exception for non-commercial torts does not assist victims of foreign state abuse.85 That exception requires that those torts be committed in United States territory.86 Although bills have been proposed to Congress to amend the FSIA and provide courts with jurisdiction to hear tort suits in cases where the gravest of human rights violations have occurred regardless of location, Congress never enacted these bills.87 Nevertheless, Congress has repeatedly reaffirmed its intent to provide an avenue for genocide victims to seek justice in the United States for atrocities designed to make it easier for Holocaust victims and their heirs to bring claims for restitution in the United States.88
Initially, courts found the expropriation exception to be inapplicable to cases involving a foreign state that had expropriated property from its own citizens under a domestic takings exception to the expropriation exception.89 Under the domestic takings exception, a foreign state’s expropriation of property from its own citizens was considered outside the purview of international law and did not involve violations of international law within the meaning of § 1605(a)(3).90 As a result, many victims of horrors committed by foreign states were left with no recourse against those foreign actors under the FSIA.91 Eventually, the courts created a carve-out to this domestic takings exception for cases “in which the defendant state had expropriated property of people only nominally its citizens, such as those whom it had not considered or treated as full citizens at the time of the expropriations.”92
Additionally, the Seventh Circuit created an exception to sovereign immunity that does not take victim’s nationality into account and found jurisdiction under the FSIA where the alleged expropriation related to a policy of genocide, without any further inquiry.93 The D.C. Circuit later extended this reasoning to equate the act of property expropriation with genocide, meaning that the very act of seizure and disposition of property constitutes genocide under the FSIA.94
However, in February 2021, when considering Philipp v. Federal Republic of Germany, the Supreme Court overturned the circuits’ equation of expropriation with genocide, without taking the victim’s nationality into account.95 The Court held that § 1605(a)(3)’s phrase “rights in property taken in violation of international law” pertains to “violations of the international law of expropriation.”96 Accordingly, § 1605(a)(3) incorporates the domestic takes rule, which assumes that a country’s conduct with regard to its own citizen’s property “within its own borders, is not the subject of international law.”97 Going forward, in order to bring a claim under the expropriation exception, plaintiffs will likely have to prove that they were not citizens of the country that expropriated their property.98 One of the more recent Seventh Circuit “interpretations” of the FSIA has been a requirement to exhaust foreign domestic remedies.99 That means, in expropriation cases, plaintiffs are required to exhaust foreign domestic remedies prior to instituting suit in a United States court.100 As a result, genocide victims seeking relief for property taken from them are being sent to foreign courts, where their chances of success are very slim, and their only hope of being reheard in the United States will depend on their ability to persuade a court to grant a new trial notwithstanding a foreign judgment.101
D. The Role of International Comity in Theories of Exhaustion
This Section will: (1) set forth the underlying principles to prudential doctrines of exhaustion and how they relate to comity-based exhaustion and comity-based abstention;102 (2) illustrate the Supreme Court’s definition of “international comity” and the lower courts’ difficulties in applying this concept;103 and (3) explain that the Supreme Court has never authorized comity-based abstention in favor of foreign courts, and that circuits recognizing international comity-based abstention have done so as an extension of Colorado River Water Conservation District v. United States (Colorado River), a case limited to pending and parallel proceedings.104
1. Comity-Based Theories of Exhaustion vs. Prudential Theories of Exhaustion
A prudential theory of exhaustion is an overarching principle upon which a court might dismiss a case in favor of resolution in a different forum.105 Prudential theories of exhaustion fall outside the standard procedural devices courts employ in service of Federal Rule of Civil Procedure 1’s mandate that disputes be resolved in a just, speedy, and inexpensive manner.106 The power to dismiss a case in favor of resolution in a different forum derives from common law.107 The Supreme Court has long recognized that district courts possess inherent powers that are not governed by rules or statutes, but by the control vested in the courts to manage their own affairs so as to achieve orderly and expeditious disposition of cases.108
Among the forums a U.S. district court may consider dismissing a case in favor of is a foreign government actor, such as a foreign court or agency.109 The U.S. court might direct a plaintiff to exhaust its remedies in a foreign forum prior to litigating in a U.S. court.110 Courts have referred to this alternatively as “comity-based exhaustion”111 or “comity-based abstention,”112 i.e., the principles of comity require the courts to abstain from resolving the dispute, in favor of resolution in a foreign forum.113 The underlying concept balances the principle of international comity, or the recognition of a foreign nation’s legislative, executive, or judicial acts, with a nation’s international duty, convenience, and the rights of its own citizens and other people under the protection of its laws.114 In functional terms, comity-based exhaustion and comity-based abstention provides deference to foreign government actors, which is not required by law, but incorporated into domestic law.115
2. International Comity
The Supreme Court has frequently described foreign sovereign immunity as a “gesture of comity.”116 In its 1895 Hilton v. Guyot opinion, the Court insisted that comity is “neither a matter of absolute obligation . . . nor of mere courtesy and good will.”117 Rather, the Hilton Court defined comity as “the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens, or of other persons who are under the protection of its laws.”118 Several leading scholars have called this definition incomplete and ambiguous.119 Further, courts and legal scholars have repeatedly confessed they still do not completely understand the concept of comity.120 Courts complain that comity “has never been well-defined,”121 is “vague,”122 and is “elusive.”123 Legal scholars echo these concerns.124 They point out that courts do not clearly or consistently apply comity principles,125 appearing to have an insufficient understanding of what comity consists of and how much weight to afford each factor within a comity analysis.126 Justice Benjamin N. Cardozo, while a judge on the N.Y. Court of Appeals, described comity as a “misleading word” that “has been responsible for much . . . trouble.”127 Nevertheless, international comity has long played a central role in United States foreign relations law and served as the basis for the conflicts of laws and the enforcement of foreign judgments in the United States.128
3. Comity-Based Abstention
Comity-based abstention is a form of adjudicative comity, whereby a court exercises restraint in favor of another court.129 The Supreme Court recognized this in the context of abstention in favor of proceedings in state court.130 Three cases where the Supreme Court recognized this are: Colorado River,131 Younger v. Harris,132 and Railroad Commission of Texas v. Pullman Co.133 However, outside of forum non conveniens, the Supreme Court never authorized such restraint in favor of foreign courts.134
Several lower courts have gone further and developed comity-based abstention doctrines in international cases.135 The Seventh Circuit did so in Abelesz and Fischer.136 The Ninth Circuit, inspired by a footnote in the Supreme Court’s Sosa v. Alvarez-Machain137Sosa v. Alvarez-Machain, 542 U.S. 692, 733 n.21 (2004) (“[T]he European Commission argues as amicus curiae that basic principles of international law require that before asserting a claim in a foreign forum, the claimant must have exhausted any remedies available in the domestic legal system, and perhaps in other forums such as international claims tribunals. . . . We would certainly consider this requirement in an appropriate case.”). decision, developed such a doctrine in the context of human rights claims under the Alien Tort Statute.138 The Ninth Circuit later expanded it to an expropriation claim brought under the FSIA, but that decision was ultimately vacated.139
Several other circuits have recognized international comity abstention doctrine as an application or extension of Colorado River to foreign proceedings.140 Canonically, federal courts may exercise discretion to stay proceedings in deference to other federal courts.141 However, in Colorado River, the Supreme Court clarified that under Landis v. North American Co., district courts only have the authority to decline jurisdiction in favor of other federal courts.142 While the Supreme Court has developed several abstention doctrines that permit federal courts to abstain from jurisdiction in favor of state courts,143 and the Colorado River Court recognized the possibility of additional circumstances in which abstention would be appropriate,144 the Court emphasized that abstention must be justified by exceptional circumstances.145 The circuit courts have limited Colorado River abstention to instances of pending and parallel state court proceedings,146 and those circuits that have applied or extended Colorado River to foreign proceedings have held that international comity abstention is only appropriate where there are pending parallel proceedings.147
E. The Circuit Split over Whether the Foreign Sovereign Immunity Act’s Expropriation Exception Requires Plaintiffs to Exhaust Foreign Domestic Remedies Prior to Commencing Litigation in United States Courts
1. The Seventh Circuit’s Development and Creation of a Prudential Exhaustion Requirement
The Seventh Circuit initially took up the exhaustion of remedies requirement in 2012 when it decided Abelesz.148Abelesz v. Magyar Nemzeti Bank, 692 F.3d 661, 684 (7th Cir. 2012). There, more than twenty plaintiffs filed a class action lawsuit against the Hungarian National Railway, which had transported them from Hungary to Auschwitz and other concentration camps and had confiscated their personal possessions.149 The Seventh Circuit based its exhaustion requirement on “the comity between sovereign nations that lies close to the heart of most international law.”150 The court explained that its exhaustion requirement is “a well-established rule of customary international law” that the United States itself invoked in Switzerland v. United States (Interhandel).151 The Circuit reasoned that Interhandel was helpful because it laid the foundation for “the sovereignty and comity concerns underlying the domestic exhaustion principle.”152 In Interhandel, the United States had requested that the International Court of Justice abstain from deciding a claim as the plaintiffs had failed to exhaust remedies available in the United States.153 The Seventh Circuit noted that principles of comity required that the United States would reciprocate if the circumstances arose.154 Additionally, the Seventh Circuit relied on the Third Restatement of Foreign Relations Law of the United States (Third Restatement), stating that under international law, a domestic state is usually under no obligation to consider a claim for an injury to its citizen that is inflicted by a foreign state until that individual has exhausted foreign domestic remedies.155
In 2015, the Seventh Circuit clarified in Fischer I156The Abelesz and Fischer cases were consolidated. Fischer I, 777 F.3d 847, 853-55 (7th Cir. 2015). that exhaustion was not a substantive requirement under the FSIA, but rather a procedural limitation on where such claims may be brought.157 The court portrayed this limitation as a prudential exhaustion requirement based on principles of international comity.158
Subsequently, the Fischer I plaintiffs sought remedy in Hungary by filing a complaint in Budapest’s Capital Regional Court, but the Hungarian court dismissed the case in October 2016.159 The Hungarian court determined that national law required plaintiffs to support their claim to recover for any losses of personal property with evidence independent of their own testimony.160 Moreover, the Hungarian court concluded that any Holocaust-related claim for noneconomic damages based upon events alleged to have occurred before March 1978 was not cognizable under the applicable provision of the Hungarian Civil Code.161 Ultimately, Fischer’s 2018 appeal to the Seventh Circuit was dismissed on other grounds.162
Additionally, in Scalin v. Société Nationale des Chemins de Fer Français, plaintiffs litigated claims similar to those of Fischer.163 The Scalin plaintiffs attempted to prove that the remedies available in France were inadequate and that it would take an “unreasonably prolonged” amount of time for them to receive any such remedy in their effort to establish that they had exhausted their remedies under Abelesz.164 However, they were unsuccessful.165
2. The D.C. Circuit’s Antithesis of a Prudential Exhaustion Requirement
a. Agudas Chasidei Chabad v. Russian Federation
The D.C. Circuit first addressed whether § 1605(a)(3) requires plaintiffs to exhaust local remedies in Agudas Chasidei Chabad v. Russian Federation.166Agudas Chasidei Chabad v. Russian Fed’n, 528 F.3d 934, 948-50 (D.C. Cir. 2008). There, Chabad167 sought to reclaim a collection of religious books, manuscripts, and documents that were assembled by their religious leaders throughout Chabad’s history and comprise the textual basis for the group’s core teachings and traditions.168 Among the arguments raised by Russia and considered by the D.C. Circuit was whether Chabad was required to exhaust remedies available in Russia.169
In its analysis, the D.C. Circuit pointed out that there is nothing in § 1605(a)(3)’s expropriation exception to suggest that a plaintiff is required to exhaust foreign domestic remedies prior to commencing a lawsuit in the United States.170 Additionally, the circuit applied statutory construction to infer that Congress’s inclusion of an exhaustion requirement in a closely related section indicates Congress’s omission of such a requirement in the expropriation exception was intentional,171 and so Congress intended for § 1605(a)(3) not to have an exhaustion requirement.172
Addressing the Third Restatement, the Chabad court explained that Restatement section 713, comment f does not create an exhaustion requirement for § 1605(a)(3).173 This is because this comment addresses claims of one state against another.174 Comment f’s logic is that before a nation decides to litigate against another nation, the individual being represented by the plaintiff nation should first attempt to resolve the dispute in the domestic courts of the defendant nation, provided the defendant nation’s domestic courts offer an adequate remedy.175 However, § 1605(a)(3) involves suits that pit an individual of one nation against another nation.176 In this type of case, there is no reason apparent “for systematically preferring the courts of the defendant state.”177
However, the D.C. Circuit did acknowledge “a more compelling theory” to support an exhaustion requirement based on Justice Breyer’s concurrence in Republic of Austria v. Altmann.178 In Altmann, Justice Breyer noted that a plaintiff seeking relief under § 1605(a)(3) might be required to demonstrate “an absence of remedies in the foreign country sufficient to compensate for any taking.”179 Justice Breyer reasoned that one who sues under the expropriation exception in the United States in disregard of postdeprivation remedies available in the offending country may have difficulty showing a taking in violation of international law.180 The D.C. Circuit explained that Justice Breyer drew upon a substantive constitutional theory that there cannot be an “unlawful taking if a [foreign nation]’s courts provide adequate postdeprivation remedies.”181
Nevertheless, the D.C. Circuit held that even if an exhaustion requirement exists, the only remedy Russia identified was inadequate.182 The remedy Russia identified amounted to selling the property back to the plaintiff.183
b. The Aftermath of Chabad and Resulting District Court Split in the D.C. Circuit
Following Chabad, several plaintiffs filed claims against Hungary and Germany in the D.C. District Court under the expropriation exception seeking recompense for atrocities committed against Jews during the Holocaust.184 Plaintiffs filed Simon v. Republic of Hungary185Simon’s plaintiffs sought relief from Hungary and the Hungarian National Railway for their role in confiscating personal possessions from Hungarian Jewish victims en route to concentration camps and death camps. See Simon’s Complaint, supra note 184, at 3-4. and de Csepel v. Republic of Hungary186In de Csepel, plaintiffs sought recovery of valuable artworks that belonged to Baron Herzog and his family, who had collected more than 2,000 pieces of artwork, including works of El Greco, Francisco de Zurbaran, and Lucas Cranach the Elder, among others. See de Csepel’s Complaint, supra note 184, at 1; see also Vogel, supra note 3. De Csepel alleged more than forty works of art from Herzog’s collection were in the wrongful possession of the Museum of Fine Arts, the Hungarian National Gallery, and the Museum of Applied Arts, who came into possession of these artworks during the genocidal campaign directed at Hungarian Jews during World War II. See de Csepel’s Complaint, supra note 184, at 2. in 2010 and Philipp v. Federal Republic of Germany in 2015.187 The defendants in each of these suits asserted the plaintiffs were required to exhaust foreign domestic remedies prior to litigating in the United States.188 The defendants have posited three possible bases for an exhaustion requirement: (1) exhaustion is required based on the expropriation exception itself; (2) exhaustion is required based upon Justice Breyer’s Altmann concurrence; and (3) the principles of comity require plaintiffs to prudentially exhaust foreign domestic remedies.189
The D.C. Circuit resolved the first two arguments in Simon v. Republic of Hungary (Simon I).190 First, the D.C. Circuit explicitly stated that there is no exhaustion requirement under the expropriation exception itself.191 Second, the Court found the reasoning of Justice Breyer’s Altmann concurrence inapplicable to cases of genocidal takings.192 The Breyer logic would only apply in cases involving basic international law expropriation claims, where the claim is of a taking without just compensation—without the genocidal component.193 In genocidal takings cases, the international law violation is not the basic prohibition against a taking without just compensation, but rather, the mere taking of property violates international law as an act of genocide.194 The violation being challenged is the genocide itself, which occurred at the moment of the taking.195 Accordingly, genocidal takings violate international law within the meaning of the expropriation exception regardless of whether the plaintiff has exhausted domestic remedies.196 However, regarding a prudential exhaustion requirement, the D.C. Circuit acknowledged that the Seventh Circuit had adopted such a requirement but declined to address its merits as it was not raised on appeal.197
Following the D.C. Circuit’s decision in Simon I, three district judges addressed the merits of a prudential exhaustion requirement.198 First, Judge Huvelle, in de Csepel v. Republic of Hungary rejected prudential exhaustion by relying upon Chabad.199 Similarly, Judge Kollar-Kotelly in Philipp v. Federal Republic of Germany, endorsed the position taken by Judge Huvelle and pointed out that the Chabad court had opined that it was “likely correct” that a plaintiff was not required to exhaust foreign domestic remedies before litigating in a United States court.200 However, on remand in Simon, Judge Howell adopted the position taken by the Seventh Circuit.201 Judge Howell reasoned that the D.C. Circuit in Simon I had referenced Fischer I’s application of the “prudential exhaustion doctrine” to very similar claims, arising from the same genocide, with approval.202 As a result, Judge Howell applied the prudential exhaustion requirement203 and dismissed the case for failure to exhaust prudential remedies available in Hungary.204
c. The D.C. Circuit’s Rejection of Comity-Based Prudential Exhaustion and Judge Katsas’s Dissenting Opinion
The D.C. Circuit finally rejected prudential exhaustion in July 2018, in its Philipp I decision.205 There, the D.C. Circuit held that plaintiffs are not required to exhaust foreign domestic remedies as a matter of international comity because Congress’s underlying objective in enacting the FSIA does not accommodate such a prudential requirement.206 Five months later, the D.C. Circuit reconsidered prudential exhaustion in Simon II and rejected the doctrine again.207 This time, the D.C. Circuit also explained that, as a preliminary matter, the fundamental concept of exhaustion requires plaintiffs to press their claims through a decisional forum whose decision is then subject to review by a federal court; but when plaintiffs litigate their claims in a foreign court, the foreign court’s decision likely precludes judicial review in a U.S. court by operation of res judicata.208
Germany then petitioned for a rehearing en banc, but the D.C. Circuit denied the petition.209 Judge Katsas dissented from the denial of rehearing en banc.210 Judge Katsas argued the FSIA does accommodate prudential exhaustion or a comity-based abstention defense under § 1606 and that res judicata would not bar federal court review in the same way that abstention in favor of state courts and in favor of tribal courts are not barred from federal court review.211
In Philipp I, Germany asserted that plaintiffs were required to exhaust foreign domestic remedies as a matter of international comity.212 However, the D.C. Circuit pointed out that the “key case” of NML Capital213See id. at 415 (“The key case is the Supreme Court decision in [NML Capital], where Argentina claimed immunity from post-judgment discovery as a matter of international comity. The [Supreme] Court rejected that claim . . . .”). explained that: (1) nothing in the FSIA’s text authorizes immunity as a matter of international comity; and (2) Congress enacted the FSIA as a means to comprehensively replace the “old executive-driven, factor-intensive, loosely common-law-based . . . regime” extant prior to the FSIA.214 Since its enactment, the FSIA, not common law, indisputably governs determinations over a foreign nation’s entitlement to sovereign immunity.215 The D.C. Circuit held that NML Capital had concluded that any immunity defense raised by a foreign state in a United States court “must stand on the Act’s text. Or it must fall.”216
Germany attempted to circumvent NML Capital by appealing to 28 U.S.C. § 1606, which provides that a foreign state not entitled to immunity “shall be liable in the same manner and to the same extent as a private individual under like circumstances.”217 Germany posited that exhaustion is a non-jurisdictional common law doctrine like forum non conveniens, which remains applicable in FSIA cases.218 However, the D.C. Circuit was not persuaded.219 Citing Chabad, it reasoned that Congress’s inclusion of an exhaustion requirement in the terrorism exception to the FSIA strengthened the inference that its omission from the expropriation exception was intentional.220 Moreover, § 1606’s terms only permit defenses “equally available to ‘private individual[s]’”; surely “a ‘private individual’ cannot invoke a ‘sovereign’s right to resolve a dispute against itself.’”221
In addressing the Seventh Circuit’s contrary position, the D.C. Circuit explained that Fischer I relied on the Third Restatement, which the Chabad court had previously defined as addressing claims of one state against another, rather than those of an individual against a state.222 Furthermore, the Fourth Restatement clarifies that the rule cited by the Seventh Circuit applies to international proceedings in nation-against-nation litigation.223
In Simon II,224 Hungary also asserted that plaintiffs were required to prudentially exhaust foreign domestic remedies as a matter of international comity.225 However, Judge Millett, writing for the majority,226 explained that as a preliminary matter, the concept of “exhaustion” required clarification.227 “Exhaustion involves pressing claims through a decisional forum . . . whose decision is then subject to the review of a federal court.”228 Accordingly, when a plaintiff is required to exhaust remedies available in another forum, the plaintiff “retains the legal right to judicial review of the underlying decision.”229 However, the prudential exhaustion requirement “Hungary invoke[d] omits [this] crucial element of traditional ‘exhaustion.’”230 When a plaintiff prudentially exhausts remedies in a foreign court, any remedy the foreign court affords them is likely to preclude judicial review in the United States by operation of the doctrine of res judicata.231
Judge Millett then reiterated the position taken in Philipp I: when Congress intends a statute to include an exhaustion requirement, Congress includes it in the statute’s text.232 Accordingly, the FSIA is explicit; if there is an applicable statutory exception to immunity, a foreign state is not immune from jurisdiction of the United States courts, and courts cannot circumvent that by “relabeling an immunity claim as ‘prudential exhaustion.’”233 Finally, Judge Millett explained that § 1606 does not save any sort of “common law” doctrine of exhaustion for sovereigns whose immunity claims fail under § 1605(a)(3).234 Judge Millett reasoned that prudential exhaustion is not among those historical legal doctrines, such as forum non conveniens, that Congress decided to preserve when it enacted the FSIA.235
In Philipp II, Judge Katsas dissented from the majority’s decision to deny Germany’s petition for a rehearing en banc.236 Judge Katsas referred to “prudential exhaustion” as an “exhaustion or comity-based abstention defense.”237 Judge Katsas’s primary argument was that the FSIA affirmatively accommodates such a defense via § 1606.238 Under § 1606, a foreign sovereign not entitled to immunity under any of the exceptions is “liable in the same manner and to the same extent as a private individual under like circumstances.”239 Private individuals, under like circumstances, would ordinarily litigate their claims under the Alien Tort Statute, which allows defendants to raise exhaustion and abstention defenses.240
In response to the majority’s view that the FSIA comprehensively sets forth immunity defenses and does not expressly provide for a comity-based abstention defense, Judge Katsas posited that this defense is no different than other judge-made defenses, including forum non conveniens, the act-of-state doctrine, and political-question doctrine.241 These defenses are available to foreign sovereigns even though the FSIA does not expressly include them.242
In response to the position that res judicata would bar plaintiffs who attempt to exhaust remedies available in foreign countries, Judge Katsas pointed to England v. Louisiana State Board of Medical Examiners243England v. La. State Bd. of Med. Exam’rs, 375 U.S. 411, 413-19 (1964) (holding that a federal court that had abstained from exercising jurisdiction in favor of a state court, under the Pullman abstention doctrine, is not precluded from relitigating the issue in federal court under res judicata). But see Laker Airways, Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 926-27 (D.C. Cir. 1984) (explaining that even in the context of parallel proceedings, the presumption is that both cases “should ordinarily be allowed to proceed simultaneously, at least until a judgment is reached in one which can be pled as res judicata in the other”). See also Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623, 642 (1977) (plurality opinion) (citing Kline v. Burke Construction Co., 260 U.S. 226, 230 (1922) (explaining that in an action subject to parallel jurisdiction, “[e]ach court is free to proceed in its own way and in its own time, without reference to the proceedings in the other court,” but “[w]henever a judgment is rendered in one of the courts and pleaded in the other, the effect of that judgment is to be determined by the application of the principles of res adjudicata”); N.J. Educ. Ass’n v. Burke, 579 F.2d 764, 774 (3d Cir. 1978) (considering England and Justice Rehnquist’s opinion in Vendo and holding that “where a federal suit is commenced before a final decision by [a] state court, the proper rule is that . . . a state court judgment forecloses a . . . litigant from raising grievances in federal court” when the state court has rendered a decision); Restatement (Second) of Judgments § 86 cmt. f (Am. Law Inst. 1982) (“On the problem posed by the interaction of the requirement of exhaustion of state remedies and the rule of res judicata, see [N.J. Educ. Ass’n.]”); Professor Dodge’s Amicus Brief, supra note 141, at 16-17. and Iowa Mutual Insurance Co. v. LaPlante244Iowa Mut. Ins. Co. v. LaPlante, 480 U.S. 9, 19 (1987) (“Although petitioner must exhaust available tribal remedies before instituting suit in federal court, the Blackfeet Tribal Courts’ determination of tribal jurisdiction is ultimately subject to review.”). But see id. at 21 (Stevens, J., dissenting) (pointing out that the majority’s decision grants tribal courts greater deference on the merits than state courts ,and “[i]t is not unusual for a state court and a federal court to have concurrent jurisdiction over the same dispute”). as examples of abstention doctrines where subsequent judicial review in federal district courts was not barred under res judicata.245
II. Analysis
A. Whether There Is Room Within the FSIA for a Comity-Based Abstention or Prudential Exhaustion Requirement
This Section resolves the circuit split in favor of the D.C. Circuit as follows. First, it will explain why comity-based abstention doctrines do not fit into the FSIA’s expropriation exception.246 Second, it will describe the fallacy inherent in analogizing comity-based abstention in the foreign sovereign immunity context to other comity-based abstention doctrines.247 Third, it will explain that prudential comity-based abstention or exhaustion amounts to a grant of sovereign immunity due to the obstacle of res judicata.248
1. There Is No Room in the FSIA’s Expropriation Exception for Common Law Doctrines Like Comity-Based Abstention
Congressional intent in enacting the FSIA and the Supreme Court’s subsequent decisions leave no room for common law doctrines like comity-based abstention. While the underpinnings of foreign sovereign immunity, and ultimately the FSIA itself, is international comity,249 the FSIA was enacted to abate the Tate Letter-era bedlam associated with immunity determinations.250 During that era, foreign sovereign immunity decisions were under disarray, subject to various factors, and loosely based on common law.251 Yet, today, when courts consider abstention arguments within the principle of “international comity,” courts still use a variety of factors, and their decisions are loosely based on common law.252 Even the cases Hungary cited in its petition for certiorari as “close cousin[s]” to their “prudential abstention doctrine[]”253 engage in lengthy analyses that evaluate the interests at stake and create common law authority upon which lower courts may base their decisions.254 However, Hungary, Germany, and Judge Katsas overlook the very purpose of the FSIA: to enact a “comprehensive set of legal standards” to resolve all claims of sovereign immunity.255 The Supreme Court in NML Capital explicitly stated the keyword in the FSIA is “comprehensive.”256 This means Congress enacted the FSIA for the very purpose of “abat[ing] the bedlam” caused by the factor-driven, “loosely common-law-based” immunity determinations.257 Accordingly, it would seem illogical to suggest that, despite Congress’s abolishment of immunity decisions based on amorphous factors and loosely based on common law, Congress intended the courts to enjoy another factor-driven, loosely common-law-based means to grant foreign sovereigns a comity-based abstention defense that amounts to a grant of immunity.258 It logically follows that any newfound proposal seeking to implement a multi-factored balancing test for claims brought within the ambit of the FSIA would be in direct conflict with the FSIA and decades of well-settled Supreme Court case law.259
2. The Fallacy Inherent in Analogizing Comity-Based Abstention in the Foreign Sovereign Immunity Context to Other Comity-Based Abstention Doctrines
Hungary inappropriately calls “comity-based abstention” in the context of the FSIA “a close cousin to other prudential abstention doctrines.”260 However, comity-based abstention in the FSIA is not analogous to other prudential abstention doctrines. The doctrines Hungary refers to pertain to abstention in favor of state courts261 and tribal courts.262 While the Supreme Court might have previously held or stated that exhaustion might be appropriate in certain cases,263 those cases do not implicate a substantive and comprehensive federal statute that dictates precisely which disputes may be litigated in federal courts.264 Accordingly, since Congress enacted a comprehensive set of criteria to determine whether federal courts are permitted to hear cases against foreign sovereigns,265 the courts—even the Supreme Court—may not create new criteria upon which to prevent the federal courts from exercising jurisdiction in claims against foreign sovereigns. Finally, and crucially, any suggestion that these judicially created exhaustion doctrines apply here overlooks the fact that those doctrines apply to circumstances where there is no federal statute. Here, Hungary stands in direct opposition to a congressional determination, the FSIA.266
Conflating these fundamentally different abstention doctrines creates two problems.267 First, conflating comity-based abstention with other comity doctrines “may undermine state and congressional interests that these other comity doctrines are [attempting] to protect.”268 Second, this conflation creates confusion because “the transplanted factors often do not map logically onto the question of abstention.”269 This “muddling decreases the transparency of judicial reasoning” and “increase[s] error rates.”270 What Hungary forgets is that “[c]omity is not a single doctrine, but [rather] a [set of] principle[s] that inflects a variety of doctrines.”271 Each doctrine requires its own analysis, which “involve[s] different starting presumptions” and results in differing conclusions.272
3. Comity-Based Abstention Amounts to Foreign Sovereign Immunity
Immunity, in the foreign sovereign sense, constitutes an exemption from litigation in U.S. courts.273 Hungary mistakenly argues that “prudential abstention doctrines,” such as comity-based abstention, are not de facto forms of sovereign immunity from jurisdiction.274 Rather, prudential abstention recognizes that in some instances, even if the U.S. courts do have jurisdiction, deference should be shown to another sovereign with a greater interest in the controversy,275 and would require plaintiffs to exhaust remedies in such nation rather than suing in the United States.276 According to Germany and Judge Katsas, foreign sovereign immunity is distinct from exhaustion because foreign sovereign immunity eliminates subject matter jurisdiction, while abstention and exhaustion are non-jurisdictional defenses.277
However, here, a prudential-based abstention or exhaustion requirement amounts to a grant of sovereign immunity.278 A plaintiff who is forced to exhaust remedies in a foreign nation prior to commencing suit in the United States will face the obstacle of res judicata.279 Germany, Hungary, and Judge Katsas overlook that the Fourth Restatement makes this clear: a final, conclusive, and enforceable judgment rendered by a foreign court is entitled to recognition in U.S. courts and is afforded the same preclusive effect as judgments rendered by other domestic courts.280 As a result, a plaintiff who seeks to exhaust remedies in a foreign nation will likely be barred from relitigating in a U.S. court.281 In this roundabout way the “prudential abstention doctrine” that Hungary invokes,282 and the “non-jurisdictional defense” of abstention and exhaustion that Germany raises283 amount to foreign sovereign immunity.
B. Prudential Exhaustion and Comity-Based Abstention Doctrines Are Based on a Misunderstanding of Interhandel and the Third Restatement
The Seventh Circuit’s reliance on Interhandel and the Third Restatement to support its prudential exhaustion requirement lacks muster.284 In Abelesz, the Seventh Circuit correctly interpreted Interhandel as requiring exhaustion prior to instituting international proceedings,285 and section 713, comment f as applying to state-versus-state claims.286 However, Abelesz incorrectly relied upon these authorities to hold that private plaintiffs are required to exhaust remedies prior to initiating domestic proceedings.287 Fischer I then inappropriately invoked section 713, comment f288 for the proposition “that international law typically requires exhaustion of domestic remedies before any . . . takings claim can be heard in a foreign court.”289
The Seventh Circuit erroneously invoked both Interhandel and section 713, comment f290 for at least three reasons. First, the Interhandel proceedings were brought in an international court, not a domestic court, giving it no binding authority.291 Second, though there may be compelling reasons to find Interhandel persuasive,292 the FSIA renders the Interhandel decision moot with respect to cases brought under the FSIA as Interhandel predates the FSIA.293 Third, the Seventh Circuit’s misguided reliance on section 713, comment f overlooks that the section addresses claims by one state against another, not claims by a private individual against another state.294 The Fourth Restatement explicitly stated the expropriation exception does not contain an exhaustion requirement295 and chastised the Seventh Circuit for creating296 an additional substantive requirement for jurisdiction unsupported by the FSIA or its legislative history.297
C. Contrary to Judge Katsas’s Dissent, Res Judicata Would Likely Bar Plaintiffs Who Exhaust Foreign Domestic Remedies from Relitigating Their Claims in U.S. Courts
In his misguided Philipp II dissent, Judge Katsas was unconvinced that plaintiffs who exhaust remedies in a foreign nation for their domestic torts would be later barred from ever bringing their claims in the United States.298 In support, Judge Katsas erroneously pointed to England v. Louisiana State Board of Medical Examiners299England v. La. State Bd. of Med. Exam’rs, 375 U.S. 411, 413-19 (1964) (holding that a federal court that had abstained from exercising jurisdiction in favor of a state court is not precluded from relitigating the issue under res judicata). and Iowa Mutual Insurance Co. v. LaPlante.300
In the context of international proceedings, where international law requires plaintiffs to first exhaust domestic remedies prior to litigating in an international forum, res judicata does not bind a domestic ruling upon an international tribunal.301 However, in the context of proceedings in U.S. courts, res judicata would likely bind a foreign court’s decision on the merits upon a U.S. district court.302
In Hilton v. Guyot, the Supreme Court explained that “the merits of the case should not, in an action brought in this country upon the judgment, be tried afresh” provided that “there has been opportunity for a full and fair trial abroad before a court of competent jurisdiction . . . after due citation or voluntary appearance of the defendant, and under a system of jurisprudence likely to secure an impartial” non-prejudicial administration of justice.303 More recently, the Supreme Court explained that generally, in an action subject to parallel jurisdiction, both courts are permitted to entertain proceedings at their own pace and without reference to the other court’s proceedings.304 However, when “a judgment is rendered in one of the courts and pleaded in the other, the effect of that judgment is to be determined by the application of the principles of res adjudicata.”305 Moreover, the Fourth Restatement undeniably asserts that a decision on the merits rendered by a court of a foreign state is subject to the principles of res judicata.306
In practice, if plaintiffs were to exhaust remedies and a foreign court rendered a decision on the merits, the Uniform Foreign-Country Money Judgments Recognition Act would bar the plaintiffs from relitigating their claims in the D.C. Circuit.307 The District of Columbia adopted the Uniform Foreign-Country Money Judgments Recognition Act in 2012.308 Under this Act, foreign judgments are entitled to recognition and full faith and credit.309 Although there are grounds for non-recognition, they are narrow and they do not permit review of the merits.310 Accordingly, a plaintiff who attempts to exhaust foreign domestic remedies311 and receives a determination on the merits by a foreign domestic court will likely be barred from raising the same issues in a U.S. district court under the principles of res judicata.312
Judge Katsas not only overlooks the current state of the law, but he also erroneously assumes that the Supreme Court will likely create an exception to res judicata, as it did in England v. Louisiana State Board of Medical Examiners313England v. La. State Bd. of Med. Exam’rs, 375 U.S. 411, 413-19 (1964) (holding that a federal court that had abstained from exercising jurisdiction in favor of a state court is not precluded from relitigating the issue under res judicata). and Iowa Mutual Insurance Co. v. LaPlante.314 The stark difference between exhausting remedies in a foreign nation’s tribunal and exhausting remedies in a domestic state or tribal court is that in the former, subsequent review by a federal court risks offending a foreign nation and upsetting foreign policy.315 Accordingly, it is unlikely that the Supreme Court would create an exception to res judicata in cases where plaintiffs exhaust foreign domestic remedies.
III. Exhausting Victims by “Kicking the Can Down the Road.”
In Simon and Philipp, the Supreme Court had an opportunity to decide whether an individual suing a foreign nation under the expropriation exception to the FSIA is required to prudentially exhaust remedies in the foreign nation prior to litigating in the United States.316 Instead of resolving this issue—which has led to confusion among courts in the Seventh and D.C. circuits317—the Supreme Court punted.318 Chief Justice Roberts penned a narrow and unanimous opinion in Philipp with respect to whether § 1605(a)(3)’s phrase “rights in property taken in violation of international law” incorporates domestic takings.319 The Court then vacated and remanded Philipp and Simon for proceedings consistent with its opinion without addressing the comity issue.320
On remand, the district court will presumably evaluate whether the plaintiffs in Simon and Philipp were respectively Hungarian and German citizens when their property was taken from them.321 The district court will probably find that some of Simon’s named plaintiffs were not Hungarian citizens before, during, and after World War II,322 meaning their claims are unlikely to be barred under the “domestic takings rule” the Supreme Court articulated in Philipp.323 Accordingly, the comity issue remains, and, at least, Simon will inevitably to make its way back up to the Supreme Court.324
The fallout of the Roberts Court’s reluctance to “face the music,”325 is that after more than ten years of litigation (with Hungary yet to file an answer), Simon’s plaintiffs are bound to face years of further litigation, and two more trips to the Supreme Court.326 With only a handful of Holocaust victims still alive,327 it is becoming exceedingly unlikely that the Simon plaintiffs will live to see justice in the United States courts for the atrocities committed against them.328
Nevertheless, when the Supreme Court finally does “face the music,” the Justices’—both liberal and conservative—line of questioning during Simon’s oral argument instills optimism that the Court will not impose an exhaustion requirement upon plaintiffs bringing claims under the expropriation exception.329 During Simon’s oral argument, the justices expressed doubt as to whether the FSIA could accommodate a comity-based abstention or exhaustion doctrine.330 The justices questioned: (1) the historical basis of such a doctrine;331 (2) whether such a doctrine would recreate pre-FSIA factor-driven immunity determinations and, accordingly, the pre-FISA “bedlam” the FSIA was designed to eradicate;332 (3) whether, if the Court believed that comity did not exist prior to the FSIA’s 1976 enactment, did the Court have the authority to create such a doctrine;333 and (4) whether it was prudent to have the nearly seven hundred U.S. district court judges assess, under a multifactor test, whether a particular case implicates foreign relations concerns.334
Conclusion
The Supreme Court will eventually have to decide whether a plaintiff suing a foreign nation under the expropriation exception to the FSIA is required to prudentially exhaust remedies in the foreign nation prior to litigating in the United States.335 It is this Note’s position that such a plaintiff should not be required to first exhaust foreign domestic remedies.336 Should plaintiffs inevitably be required to exhaust foreign domestic remedies prior to attempting to litigate further in the United States, the consequences of such a requirement will leave a significant impact upon the remaining survivors of the horrors inflicted by the Nazis during World War II and their victims’ heirs.337 Indeed, an exhaustion requirement would likely extend to all survivors of genocides from whom property has been expropriated, including those of the Armenian,338 Ugandan,339 and Ovaherero and Nama340 genocides—the latter of which have sought to sue foreign sovereigns in U.S. courts to recover property expropriated from them under the FSIA’s expropriation exception.341 When the Supreme Court ultimately decides this issue, the Court should not require the plaintiffs to exhaust foreign domestic remedies.342