Case of the Day: Schubarth v. Germany

J.S. Bach
A famous son of Thuringia.

The case of the day is Schubarth v. Federal Republic of Germany (D.D.C. 2016). The plaintiff, Mady Marieluise Schubarth, inherited 500 acres of land in Thuringia, Germany. She alleged that the land was expropriated by the East German government in 1945. After reunification, she applied to the Thuringia government for restitution, but she was dissatisfied with the award. In 1995, she applied for additional compensation under German law, claiming that under the treaty of friendship, commerce, and navigation between the United States and Germany (she was a US citizen), she was entitled to the fair market value of the land at the time of the expropriation. In 2014—nineteen years later!—the Thuringia government awarded her approximately € 35,000 in compensation, which she asserted was still not nearly enough. She sued in Washington.

The main issue was, of course, sovereign immunity from suit under the FSIA. Schubarth pointed to the expropriation exception, 28 U.S.C. § 1605(a)(3), which applies to any case:

in which rights in property taken in violation of international law are in issue and that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state; or that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States

Everyone agreed that the property that was taken was not “present in the United States.” But Schubarth claimed that the property was owned by BVVG, a German state-owned company responsible for managing, marketing, and selling expropriated property in the former East Germany, and that BVVG was engaged in a commercial activity in the United States because its predecessor agency had a marketing office in New York in the 1990s and that both BVVG and its predecessor marketed the properties worldwide via the Internet, in English. The claim about the New York office failed, because the FSIA looks to whether the commercial activity exists at or near the time of the suit. The web marketing, according to the court, was not aimed at the United States specifically, and it used English as an international language of business rather than as a way to target an American audience specifically. So the court granted Germany’s motion to dismiss.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. Folkman also serves as an arbitrator and is a member of the Commercial and Consumer Panels of the American Arbitration Association. 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 treatise on International Aspects of US Litigation (J. Berger, ed. 2017), 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 and 2014 - 2016.

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