SCOTUS Makes Unanimous Ruling in Hungary v. Simon

In Hungary v. Simon, 604 U.S. ____ (2025), the U.S. Supreme Court held that alleging commingling of funds alone cannot satisfy the commercial nexus requirement of the expropriation exception of the Foreign Sovereign Immunities Act of 1976 (FSIA). The Court’s decision was unanimous.

Facts of the Case

The Foreign Sovereign Immunities Act of 1976 (FSIA) provides foreign states with presumptive immunity from suit in the United States. To sue a foreign sovereign in United States courts, plaintiffs must satisfy one of the exceptions to immunity set forth in the FSIA. The FSIA’s expropriation exception permits claims when “rights in property taken in violation of international law are in issue” and either the property itself or any property “exchanged for” the expropriated property has a commercial nexus to the United States.

The expropriation exception requires plaintiffs to trace either the specific expropriated property itself or “any property exchanged for such property” to the United States (or to the possession of a foreign state instrumentality engaged in United States commercial activity). Tangible and fungible property are treated the same. For both kinds of property, plaintiffs must plead some facts that enable the reasonable tracing of the property to the United States. Accordingly, when property is expropriated and exchanged for cash that is then commingled with other funds, plaintiffs must still plausibly allege that the specific proceeds from their property have the required commercial connection to the United States.

Respondents, Jewish survivors of the Hungarian Holocaust and their heirs, sued Hungary and its national railway (MÁV) in federal court, seeking damages for property allegedly seized during World War II. Respondents’ complaint alleged that Hungary and MÁV liquidated the expropriated property, commingled the proceeds with other government funds, and later used funds from those commingled accounts in connection with commercial activities in the United States. The District Court determined that this “commingling theory” satisfied the FSIA’s commercial nexus requirement.

The D.C. Circuit Court of Appeals affirmed. It reasoned that requiring plaintiffs to trace the particular funds from the sale of their specific expropriated property to the United States would make the exception a “nullity” in cases involving liquidated property.

Supreme Court’s Decision

The Supreme Court disagreed. It held that alleging commingling of funds alone can’t satisfy the commercial nexus requirement of the FSIA’s expropriation exception.

“Commingling allegations are…not enough on their own,” Justice Sonia Sotomayor explained, “because they do not allow for plausible tracing of specific funds.” She added: “To conclude otherwise requires accepting an attenuated fiction that commingling funds in an account, even if done decades earlier, means the account today still contains funds attributable to the sale of expropriated property.”

In support of its decision, the Court cited the FSIA’s structure, history, and purpose of the statute, emphasizing that Court interprets the FSIA to avoid producing friction in international relations or inviting reciprocal actions against the United States in foreign courts.

“If respondents’ commingling theory were accepted, §1605(a)(3) would impose a far greater limitation on foreign sovereign immunity, expanding the set of circumstances in which foreign sovereigns could be sued in United States courts for public acts involving expropriation,” Justice Sonia Sotomayor explained. “The Government represents that this would invite the very risk it sought to avoid in helping draft §1605(a)(3): that foreign states, in response, will subject the United States abroad to “retaliatory or reciprocal actions” in their courts.”

Finally, the Court emphasized that it was not categorically rejecting all commingling-based claims; instead, it held that a commingling theory alone cannot satisfy the commercial nexus requirement. According to Justice Sotomayor, the fact that “a particular claim cannot satisfy the expropriation exception means only that it cannot be brought here, not that it cannot be brought in any forum.”

“As the Government correctly recognizes, ‘the moral imperative has been and continues to be to provide some measure of justice to the victims of the Holocaust, and to do so in their remaining lifetimes,” she added.