By Haggai Carmon

How Comity, Reciprocity and Political Questions became a Hurdle

The federal District Court in Manhattan dealt a blow to a group of Jewish French Holocaust survivors that attempted a class action to hold in the French Republic, Caisse des Dépôts et Consignations (CDC) bank, and the Société Nationale des Chemins de Fer Français (SNCF), France’s national railroad responsible for their property confiscated in a French camp before they were sent to German concentration camps during World War II.  The court dismissed the lawsuit on multiple grounds. First it ruled that plaintiffs’ claims are barred by the Foreign Sovereign Immunities Act (FSIA), which protects “agencies or instrumentalities” of a foreign state. Then, the court found it had no jurisdiction against the bank and the train companies because they met the requirements  of an FSIA article that excludes jurisdiction when the instrumentality is ”is neither a citizen of a State of the United States…nor created under the laws of any third country.”

The court has also found that an exception to immunity under FSIA for “takings” did not apply in that case.  FSIA’s “takings” exception allows courts’ jurisdiction over entities that could otherwise be entitled to immunity if a taking of property “was in violation of international law” and the property is either in the United States “in connection with a commercial activity” carried on in the United States by a foreign state or where the property is held “by an agency or instrumentality” of the foreign state that is engaged in commercial activity here.
The court was reluctant to allow indirect U.S presence of the bank and applied reciprocity concerns. “Declining to recognize CDC’s sovereign immunity based on its limited and largely indirect holdings in other entities would disregard the distinction between CDC and its independent subsidiaries, doing so would encourage foreign courts to do the same when assessing the conduct of U.S. corporations.” With respect to the railroad company, the court dismissed the lawsuit against them although it clearly engaged in commercial activity in the United States, because plaintiffs never argued that the confiscated property is “owned or operated” by the railroad. The court also refused plaintiffs’ request that the court assert “jurisdictional discovery” on the railroad company and the France government because the plaintiffs had difficulty getting access to French archives.  Here the court applied “Comity” considerations, which the court should maintain, while it allowed under FSIA certain lawsuits against foreign states to proceed. The discovery request would “require the court to order a foreign sovereign and its instrumentality to provide access to their sealed archives,” the court said. And ordering discovery on the Société Nationale des Chemins de Fer Français and the French government, would “directly conflict” with an executive agreement between France and the United States signed in 2001 to ensure compensation for victims by resolving all claims arising out of World War II without litigation. It seems that the court was very reluctant to let this lawsuit to proceed because of the underlying fundamental political question doctrine, making judicial abstention appropriate.

Freund v. The Republic of France, 06 Civ. 1637.