Case of the Day: de Csepel v. Hungary

The case of the day is de Csepel v. Hungary (D.C. Cir. 2013). The case concerns the art collection of Baron Mór Litót Herzog, a “passionate Jewish art collector in pre-war Hungary.” Baron Herzog died in 1934, and his wife and then his children, Erzsébet (who married Alfonz Weiss de Csepel, hence the name of the case), István, and András, inherited the collection. In a depressingly familiar story, during the Second World War, the Hungarian government plundered the property of Jews, and art in particular. The Herzog family attempted to save the art collection, “one of Europe’s great private collections of art, and the largest in Hungary,” by hiding the works in the cellar of one of the family’s factories, in Budafok. But the Hungarian government discovered the collection, confiscated the collection, and gave it to Adolf Eichmann, who displayed many of the best works at Gestapo headquarters. Some of the art was given to the Museum of Fine Arts and other museums in Hungary.

The Agony in the Garden
El Greco, The Agony In The Garden
Several members of the Herzog family managed to escape from Hungary and to avoid extermination at the hands of the Nazis. The heirs began a decades-long struggle to recover it. In 1999, Martha Nirenberg, Erzsébet’s daughter, sued in the Budapest Metropolitan Court. That court “initially found in [her] favor,” but the Metropolitan Appellate Court reversed and ordered the case dismissed on the grounds that the claim was extinguished by an executive agreement between the United States and Hungary settling certain claims by US nationals, and that those then in possession of the paintings had acquired title by adverse possession.

In 2010, several members of the Herzog family sued Hungary and several Hungarian museums in the District of Columbia, asserting various common law claims. The primary claim was that the museums were bailees 1 and had a duty to return the collection to the Herzogs on demand.

Hungary moved to dismiss, citing the FSIA and, among other things, claiming that the Hungarian judgment was entitled to recognition. 2 (This, by the way, is the point that I will be focused on). The district court granted the motion in part, holding that Hungary was entitled to dismissal as to all of the artworks that had been at issue in the Hungarian litigation, but otherwise denying the motion. The district court certified its decision for interlocutory appeal, and Hungary appealed the partial denial of the motion. The heirs cross-appealed the decision to grant comity to the Hungarian judgment.

The DC Circuit’s decision covers all of the arguments (FSIA, the treaty questions, forum non conveniens, etc.), and I recommend it to readers. I want to focus on the heirs’ cross-appeal and the treatment the lower court gave to the Hungarian judgment. The court reversed the decision on this point on procedural grounds.

The Herzog heirs had urged two grounds for denying recognition to the Hungarian judgment. First, they claimed the judgment was contrary to US public policy because it misconstrued the executive agreement between the two countries. Second, they claimed they had been denied due process in the Hungarian proceedings. The court rejected their first argument on the grounds that it was “precisely the kind of mere assertion by a party that a foreign judgment was erroneous in law or in fact that the Supreme Court has held may not be grounds for declining to respect the results of foreign judgments.” But the court held that because it would be Hungary’s burden to prove that the Hungarian proceedings had afforded the heirs due process (since it is up to the proponent of a foreign judgment to show that the judgment is deserving of recognition), the heirs’ failure at the pleading stage to allege facts that would show that they were denied due process in Hungary was not fatal; in general there is no requirement that a plaintiff “plead around” affirmative defenses that the defendant will have the burden to plead and prove.

This aspect of the decision seems correct on all points. I would like to compare it for a moment with the Second Circuit’s decision in Naranjo, which, recall, holds that a party cannot sue a judgment creditor and seek a declaration that a foreign money judgment is unenforceable under the UFMJRA until the judgment creditor seeks recognition under the statute. I’ve disagreed with the basic thrust of Naranjo (while agreeing with the outcome on the grounds that it seems to me there was no real case or controversy sufficient to support a declaratory judgment action). But both cases involve the idea of ripeness. Naranjo says, rightly or wrongly, that you can’t ask a court to reject a foreign money judgment that your opponent means to use offensively until someone else asks the court to recognize the judgment. De Csepel says that when there is an argument of a denial of due process in a foreign case, you can’t assert that a claim fails because it is precluded by the foreign judgment until you have shown that it is entitled to recognition; it is not enough that your opponent has failed to show that the judgment is not entitled to recognition.

Notes:

  1. I’m not sure if bailment will be familiar to civil law readers. A bailment is a transfer of personal property by the owner (“the bailor”) to another (“the bailee”) for safekeeping. It’s not a transfer of ownership. It’s not a lease, and the bailee doesn’t have the right to use the property. A classic example: you leave your car with a valet when you’re dining out.
  2. Note that this wasn’t decided under the UFMJRA or the UFCMJRA, because the judgment was not a money judgment. Rather, the question is one of comity under the standard of Hilton v. Guyot, 159 U.S. 113 (1895).

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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