The case of the day is Republic of Hungary v. Simon (S. Ct. 2025). This long-running case will be familiar to many readers. The plaintiffs were survivors of the Holocaust in Hungary and their heirs. They sued Hungary in Washington, asserting that their property had been expropriated during the war. The FSIA provides an exception to the rule of foreign sovereign immunity in cases:

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.

28 U.S.C. § 16085(a)(3)

So it’s obvious that there needs to be some connection, or nexus, between the property that was taken, or “property exchanged for such property,” and the United States. The plaintiffs argued that Hungary had sold their property and put the proceeds in the government’s treasury account, where it was commingled with other funds. Then the government had made investments in the US using funds from that account. The question, as Justice Sotomayor put it in her opinion for a unanimous court, was “whether alleging commingling of funds alone can satisfy the commercial nexus requirement of the expropriation exception of the FSIA.”

The court put the question in the context of the historical disagreement between the courts and Congress about the permissibility under international law of asserting jurisdiction in expropriation cases. In the Sabbatino case, the court held that Cuba’s expropriation of sugar owned by a Cuban company owned by American shareholders was shielded from scrutiny in US courts by the act of state doctrine. Congress enacted a limitation on the act of state doctrine in cases of takings “in violation of the principles of international law.” Later, when Congress enacted the FSIA, it provided for an expropriation exception to foreign sovereign immunity, which, according to the court, “departs from the restrictive theory” of immunity broadly accepted internationally. But to limit the scope of the exception, Congress required a commercial nexus between the property (or property exchanged for the property) and the United States. Still, as the court noted in Germany v. Philipp and the court repeated in today’s case, “no other country has adopted a comparable limitation” on foreign sovereign immunity.

Why is this history important? The court’s ultimate decision was that merely alleging that the foreign state commingled the proceeds of the expropriated property with other state property and that it then funds in the commingled account were used for commercial activities in the United States is not enough. Justice Sotomayor emphasized the Congress had “drafted the expropriation exception against the legal and historical background that includes not only the restrictive theory but also Sabbatino.” Sabbatino, which I won’t review here, involved “segregated funds” that could be “attributable only to the sale of expropriated sugar.” So, as the court notes, “The facts of Sabbatino, along with the FSIA’s plain text requiring identification of distinct property seized, or specific property exchanged for that property, with a commercial nexus to the United States, counsel against the commingling theory …”

The court made another important point: the United States has a “reciprocal interest” in how it is treated in foreign courts. To me this is super-important, especially in 2025. History tells us that no great power stays a great power forever, and it seems as though “forever” may be a lot shorter than it seemed just a few weeks ago. So we, or at least our courts if we cannot rely on the other branches of the government, need to pay more attention than ever to the rules that protect the strongest states and the weakest states.

The decision was narrow: the court made it clear that in some cases it might be possible to trace the proceeds of expropriated property so that commingling would not be fatal to the claim. The court also left open the role of “common-law tracing principles and rules from other contexts,” since the plaintiffs disclaimed them at oral argument.