Federal Republic of Germany v. Philipp

The case centered on whether U.S. courts have jurisdiction under the Foreign Sovereign Immunities Act (FSIA) over claims that Germany unlawfully took the Welfenschatz, a collection of medieval art, from Jewish art dealers in 1935. The heirs of the dealers sued Germany and the SPK, asserting the forced sale constituted genocide, bringing it within the FSIA's expropriation exception. Germany argued the domestic takings rule barred U.S. courts from adjudicating a sovereign's taking of its own nationals' property. The U.S. Supreme Court unanimously ruled that the expropriation exception requires the taking to violate international law, and the domestic takings rule dictates that a state's taking of its own citizens' property is not a violation of international law. The Court therefore found Germany immune from suit.

In a unanimous decision delivered by Chief Justice Roberts, the Supreme Court reversed the D.C. Circuit’s judgment. The Court held that the FSIA's expropriation exception does not cover a state’s taking of property from its own nationals, as such an act does not violate international law under the domestic takings rule. Consequently, Germany was entitled to sovereign immunity, and the U.S. courts lacked jurisdiction over the case.

The central dispute focused on the interpretation of the “expropriation exception” in the FSIA. Specifically, whether a sovereign’s alleged taking of property from its own nationals falls within the exception as a violation of international law, or whether the “domestic takings rule” precludes such claims, thereby barring the exercise of jurisdiction by U.S. courts.

The ruling significantly limits the ability of Holocaust victims' heirs to use U.S. courts for restitution claims against foreign sovereigns for takings that occurred within that sovereign’s borders against its own nationals. It marked a setback for restitution efforts, emphasizing territorial sovereignty over moral considerations in FSIA interpretation. The decision was welcomed by the German government and museums but criticized by advocates for Holocaust victims who saw it as closing a vital judicial avenue for justice.