Hungary v. Simon

                   PRELIMINARY PRINT

              Volume 604 U. S. Part 1
                             Pages 115–139




       OFFICIAL REPORTS
                                     OF


   THE SUPREME COURT
                             February 21, 2025


Page Proof Pending Publication


                    REBECCA A. WOMELDORF
                           reporter of decisions




    NOTICE: This preliminary print is subject to formal revision before
  the bound volume is published. Users are requested to notify the Reporter
  of Decisions, Supreme Court of the United States, Washington, D. C. 20543,
  [email protected], of any typographical or other formal errors.
                        OCTOBER TERM, 2024                             115

                                 Syllabus


  REPUBLIC OF HUNGARY et al. v. SIMON et al.

certiorari to the united states court of appeals for
          the district of columbia circuit
  No. 23–867. Argued December 3, 2024—Decided February 21, 2025
The Foreign Sovereign Immunities Act of 1976 (FSIA) provides foreign
  states with presumptive immunity from suit in the United States. 

. To sue a foreign sovereign in United States courts,
  plaintiffs must satisfy one of the exceptions to immunity set forth in
  the FSIA. The FSIA's expropriation exception permits claims when
  “rights in property taken in violation of international law are in issue”
  and either the property itself or any property “exchanged for” the expropriated property has a commercial nexus to the United States.
  § 1605(a)(3).
     Respondents, Jewish survivors of the Hungarian Holocaust and their
  heirs, sued Hungary and its national railway (MÁV) in federal court,
  seeking damages for property allegedly seized during World War II.
  Respondents' complaint alleged that Hungary and MÁV liquidated
Page Proof Pending Publication
  the expropriated property, commingled the proceeds with other government funds, and later used funds from those commingled accounts in
  connection with commercial activities in the United States. The District Court determined that this “commingling theory” satisfied
  § 1605(a)(3)'s commercial nexus requirement. The D. C. Circuit affrmed, reasoning that requiring plaintiffs to trace the particular funds
  from the sale of their specifc expropriated property to the United
  States would make the exception a “nullity” in cases involving liquidated property.
Held: Alleging commingling of funds alone cannot satisfy the commercial
 nexus requirement of the FSIA's expropriation exception. Pp. 126–139.
    (a) The expropriation exception requires plaintiffs to trace either the
 specifc expropriated property itself or “any property exchanged for
 such property” to the United States (or to the possession of a foreign
 state instrumentality engaged in United States commercial activity).
 The provision's plain text treats tangible and fungible property alike:
 For both kinds of property, plaintiffs must plead some facts that enable
 the reasonable tracing of the property to the United States. Thus,
 when property is expropriated and exchanged for cash that is then commingled with other funds, plaintiffs must still plausibly allege that the
 specifc proceeds from their property have the required commercial connection to the United States.
116              REPUBLIC OF HUNGARY v. SIMON

                                 Syllabus

     Plaintiffs might satisfy this requirement in various scenarios: for example, by identifying a United States account holding proceeds from
  expropriated property (as in Banco Nacional de Cuba v. Sabbatino, 

), or by showing that a foreign sovereign spent all funds from a
  commingled account in the United States shortly after the commingling
  occurred. But an allegation that a foreign sovereign liquidated property decades ago, commingled the proceeds with general funds, and later
  used some portion of those funds for commercial activities in the United
  States cannot establish a plausible nexus. This is especially true when
  commingled funds have been used for various activities worldwide or
  when the commingled funds are within a foreign sovereign's treasury.
     The Court does not today address all circumstances where commingling allegations might contribute to establishing the required nexus,
  nor does the Court determine the applicability of common-law tracing
  principles. The Court holds only that commingling allegations alone
  cannot satisfy § 1605(a)(3)'s commercial nexus requirement. Pp. 126–131.
     (b) This interpretation aligns with the FSIA's structure, history, and
  purpose. The Act generally codifes the restrictive theory of sovereign
  immunity, which shields foreign states from suits based on public (rather
  than commercial) acts. Although the FSIA allows claims based on the
  public act of expropriation, this Court has previously rejected the sugPage Proof Pending Publication
  gestion that Congress intended the exception to be a “radical departure”
  from restrictive immunity principles. Federal Republic of Germany v.
  Philipp, 

.
     The exception's text mirrors the Second Hickenlooper Amendment,
  which Congress enacted to permit adjudication of claims after Sabbatino. In that case, the expropriated property's proceeds were traceable
  to a segregated New York account. The FSIA's text requiring identifcation of specifc property, combined with the facts of Sabbatino, counsels against respondents' expansive commingling theory.
     Additionally, the Court interprets the FSIA to avoid producing friction in international relations or inviting reciprocal actions against the
  United States in foreign courts. Congress included the commercial
  nexus requirement and the “in violation of international law” limitation
  to help ensure the exception would “conform fairly closely” with international law. § 1605(a)(3); Bolivarian Republic of Venezuela v. Helmerich & Payne Int'l Drilling Co., 

. Accepting respondents' theory would expand greatly the circumstances in which foreign
  sovereigns could be sued in United States courts for public acts, potentially inviting retaliatory measures against the United States.
  Pp. 131–133.
     (c) Respondents' counterarguments are unpersuasive. First they
  contend that § 1605(a)(3) requires different treatment for fungible versus
  nonfungible property, but the statute's text draws no such distinction.
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                                 Syllabus

  The ordinary meaning of “exchanged for” requires identifying the specifc property received in the exchange: here, the proceeds from selling
  the expropriated property. Commingling those proceeds with other
  funds does not transform the entire commingled account into property
  “exchanged for” the expropriated property. Indeed, the statute's requirement that property be “present in the United States” reinforces
  the need to trace specifc property, as Congress imposed this geographic
  constraint for “any” property, including money.
     Second, respondents argue that the concerns about tracing raised in
  Sabbatino support their position. But the text of § 1605(a)(3), which
  added the commercial nexus requirement not found in the Second Hickenlooper Amendment, refects Congress's intent to limit the exception's
  scope, not expand it. The Second Hickenlooper Amendment itself,
  moreover, permitted claims based upon a confscation or “traced
  through” one. 

(e)(2).
     Finally, respondents contend that rejecting their commingling theory
  would render the expropriation exception a nullity for liquidated property
  claims. But the Court does not categorically reject all comminglingbased claims: It holds only that a commingling theory alone cannot satisfy the commercial nexus requirement. This holding accords with the
  statute's text and purpose of providing only a limited departure from
Page Proof Pending Publication
  the restrictive theory of sovereign immunity. Pp. 133–139.

, vacated and remanded.

  Sotomayor, J., delivered the opinion for a unanimous Court.

  Joshua Scott Glasgow argued the cause for petitioners.
With him on the briefs was Christopher D. Barraza.
  Sopan Joshi argued the cause for the United States as
amicus curiae urging reversal. With him on the brief were
Acting Solicitor General Fletcher, Principal Deputy Assistant Attorney General Boynton, Deputy Solicitor General
Kneedler, Sharon Swingle, and Lewis S. Yelin.
  Shay Dvoretzky argued the cause for respondents. With
him on the brief were Parker Rider-Longmaid, Steven Marcus, Kyser Blakely, Paul G. Gaston, Charles S. Fax, David
H. Weinstein, and L. Marc Zell.*

  *Akiva Shapiro fled a brief for Members of the United States House of
Representatives and Senate as amici curiae urging affrmance.
  Briefs of amici curiae were fled for the Federal Republic of Germany
by Walter E. Diercks, Max Riederer von Paar, and Jeffrey Harris; and
118            REPUBLIC OF HUNGARY v. SIMON

                        Opinion of the Court

  Justice Sotomayor delivered the opinion of the Court.
   To sue a foreign sovereign in the courts of the United
States, plaintiffs must follow the strictures of the Foreign
Sovereign Immunities Act of 1976 (FSIA). In general, the
FSIA provides that foreign sovereigns and their agencies
cannot be haled into this Nation's courts at all, but the Act
sets forth exceptions to that general immunity. One such
exception is the expropriation exception. Plaintiffs may sue
foreign sovereigns who expropriate their property, provided
certain conditions are satisfed, including that the property
(or any property “exchanged for” the expropriated property)
has a commercial nexus to the United States. 

(a)(3).
   Respondents, Jewish survivors of the Hungarian Holocaust
and their heirs, fled this suit in the District Court for the
District of Columbia against Hungary and one of its agencies,
seeking damages for the alleged expropriation of their propPage Proof Pending Publication
erty during World War II. Respondents maintain that
the expropriated property has had a commercial nexus to
the United States because the Hungarian defendants liquidated it, commingled the proceeds from that property with
money in a government treasury account, and then used, decades later, funds from that account in connection with commercial activity in the United States. The issue presented
in this case is whether alleging commingling of funds alone
can satisfy the commercial nexus requirement of the expropriation exception of the FSIA. The Court holds that it
cannot.
                               I
                                 A
  “This Court consistently has recognized that foreign sovereign immunity `is a matter of grace and comity on the part

for The 1939 Society et al. by Benjamin G. Shatz, Michael J. Bazyler,
Stanley W. Levy, and Stanley Goldman.
                   Cite as: 

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                      Opinion of the Court

of the United States.' ” Rubin v. Islamic Republic of Iran,

 (2018) (quoting Verlinden B. V. v. Central
Bank of Nigeria, 

 (1983)). For much of
the Nation's history, the United States adhered to the “classical” or “absolute” theory of foreign sovereign immunity.
Accordingly, “foreign states were `generally granted complete immunity from suit' in United States courts.” Argentine Republic v. Amerada Hess Shipping Corp., 

 (1989) (alteration omitted). Providing foreign
states with such immunity served important national interests and helped preserve the United States' foreign relations. See, e. g., Bolivarian Republic of Venezuela v. Helmerich & Payne Int'l Drilling Co., 

 (2017)
(“To grant [foreign] sovereign entities an immunity from suit
in our courts both recognizes the absolute independence of
every sovereign authority and helps to induce each nation
state, as a matter of international comity, to respect the indePage Proof Pending Publication
pendence and dignity of every other, including our own” (internal quotation marks and alteration omitted)).
   In 1952, however, the State Department adopted a “restrictive” theory of foreign sovereign immunity, under which
a foreign sovereign generally is immune from civil suit for
sovereign acts but not for its commercial acts. See Verlinden, 461 U. S., at 486–487. Based on the “increasing
practice on the part of [foreign] governments of engaging
in commercial activities,” the Department concluded it was
“necessary [to have] a practice which will enable persons
doing business with them to have their rights determined in
the courts.” J. Tate, Changed Policy Concerning the Granting of Sovereign Immunity to Foreign Governments, 26
Dept. State Bull. 984, 985 (1952). The United States was
not alone in adopting the restrictive theory; the Department
observed that an emerging consensus had developed among
nations in favor of this approach to sovereign immunity. 

   Debates over the degree of immunity foreign sovereigns
should enjoy in this Nation's courts followed. In August
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                     Opinion of the Court

1960, protesting a reduction in the U. S. sugar quota for
Cuba, Cuba expropriated $175,250.69 worth of sugar located
in its country but belonging to a subsidiary of Compania Azucarera Vertientes-Camaguey de Cuba (CAV), a Cuban corporation owned by American stockholders. See Banco Nacional de Cuba v. Sabbatino, 

, 401–407 (1964).
Farr Whitlock & Co., a U. S. commodity broker, had contracted with CAV to pay for the sugar in New York for delivery to a Farr Whitlock customer in Morocco; but after Cuba
expropriated the sugar, Farr Whitlock entered into an identical contract with an instrumentality of the Cuban Government. See 

 at 401–404. Cuba then sent the sugar to
Morocco, where Farr Whitlock's customer purchased it. See

 at 405–406.
   After receiving payment in New York from its customer,
however, Farr Whitlock refused to give the proceeds to
Cuba. See 

 CAV had claimed it was the rightful
Page Proof Pending Publication
owner of the sugar, entitling it to the related proceeds, and
agreed to indemnify Farr Whitlock in return for a promise
not to turn the funds over to Cuba. See 

 Shortly
thereafter, the New York Supreme Court served Farr Whitlock with an order enjoining it from taking any action that
might result in the proceeds leaving New York. See 

Then, pursuant to a subsequent court order, Farr Whitlock
transferred the proceeds to Sabbatino, a court-appointed
temporary receiver of CAV's New York assets, pending a
judicial determination of the funds' ownership. See 

   The National Bank of Cuba later brought suit in the Southern District of New York, asserting its ownership in the proceeds. 

. Following a decision by the Court of
Appeals, the State Supreme Court terminated the CAV receivership and the proceeds from the expropriated sugar
were placed in a New York escrow account. See 

.
   The matter eventually reached this Court. The Court declined to decide whether Cuba's expropriation had violated
international law. Observing that there were “few if any
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                      Opinion of the Court

issues in international law today on which opinion seems to
be so divided as the limitations on a state's power to expropriate the property of aliens,” id., at 428, the Court instead
invoked the “act of state” doctrine. That doctrine (the
Court held) precludes United States courts from deciding the
validity of a foreign sovereign's public acts. See id., at
436–437. The Court thus “presumed [the] validity” of Cuba's
expropriation. Id., at 439. In dissent, Justice White
protested that the Court's holding effectively “validate[d]”
Cuba's “lawless act.” Ibid.
   Congress swiftly signaled its disapproval of Sabbatino.
Within months, it passed the Second Hickenlooper Amendment to the Foreign Assistance Act of 1964. The amendment prohibits courts from applying the act of state doctrine
where a “righ[t] to property is asserted” based upon a “taking . . . by an act of that state in violation of the principles
of international law.” 

(e)(2). The amendPage Proof Pending Publication
ment was broadly understood “to permit adjudication of
claims the Sabbatino decision had avoided.” Federal Republic of Germany v. Philipp, 

 (2021) (collecting authorities).
   There the law remained, until in 1976, Congress enacted
the FSIA, the comprehensive statute that now “supplies the
ground rules for `obtaining jurisdiction over a foreign state
in the courts of this country.' ” 

 at 175 (quoting Amerada, 

). The Act provides foreign states with
presumptive immunity from suit in the United States. 

. Thus, “unless a specifed exception applies,
a federal court lacks subject-matter jurisdiction over a claim
against a foreign state.” Saudi Arabia v. Nelson, 

 (1993) (citing Verlinden, 461 U. S., at 488–489).
“For the most part, the Act codife[d], as a matter of federal
law, the restrictive theory of sovereign immunity.” 

.
   One of the FSIA's specifed exceptions, however, departs
from the restrictive theory: the expropriation exception.
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                      Opinion of the Court

§ 1605(a)(3). In crafting the exception addressing the expropriation of property, “Congress used language nearly identical to that of the Second Hickenlooper Amendment.” Philipp, 

. But Congress also added a limitation
to the expropriation exception not found in the Second Hickenlooper Amendment: While the amendment permits claims
“based upon (or traced through) a confscation or other taking,” 

(e)(2), the expropriation exception requires that stolen property, or property exchanged for such
property, have a commercial nexus to the United States.
Specifcally, § 1605(a)(3) allows individuals to sue foreign sovereigns in United States courts when “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.”
Section 1605(a)(3) also allows suit when “that [expropriated]
Page Proof Pending Publication
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.”
   By permitting the exercise of jurisdiction over certain
public acts, “the expropriation exception . . . goes beyond
even the restrictive view” in subjecting foreign sovereigns
to suit. Philipp, 

. As this Court has previously noted, it appears that “no other country has adopted
a comparable limitation on [foreign] sovereign immunity.”

                                 B
  The allegations in respondents' complaint arise out of the
Hungarian Holocaust. According to their complaint, Winston Churchill described the Hungarian Holocaust as “ `probably the greatest and most horrible crime ever committed in
the history of the world.' ” App. 6. During World War II,
Hungary abetted the murder of over 500,000 Hungarian
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                      Opinion of the Court

Jews, leaving just a fraction of Hungary's prewar Jewish
population. Id., at 49. “Nowhere was the Holocaust executed with such speed and ferocity as it was in Hungary.”
Id., at 5.
   Hungary's genocidal campaign included the mass confscation of Jewish property. Per respondents' complaint, offcials from Hungary's national railway, the Magyar Államvasutak Zrt. (MÁV), robbed Hungarian Jews of their
possessions before transporting them to Nazi death camps.
Id., at 40–41. The Hungarian Government, moreover, “declared all valuable objects owned by Jews—except for their
most personal items—part of the national wealth of Hungary.” Simon v. Republic of Hungary, 

(CADC 2023) (Simon III ).
   Respondents are a group of Jewish survivors of the Hungarian Holocaust and their heirs who seek damages for a variety of claims, including, inter alia, conversion, unjust enPage Proof Pending Publication
richment, civil conspiracy to commit tortious acts, and aiding
and abetting the conversion of their property, based on Hungary and MÁV's alleged seizure of their property. They
claim that Hungary, after seizing their property, liquidated
it and deposited the proceeds in the Hungarian treasury.
There the funds became commingled with other Hungarian
Government funds, money Hungary has since used for a wide
variety of governmental and commercial operations. Respondents' complaint further alleges that MÁV also liquidated the property it expropriated and deposited the proceeds into commingled accounts that it owns today and has
used for a wide range of transactions.
   In the 2000s, Hungary allegedly used funds from its treasury to issue bonds in the United States and to purchase military equipment here. See 

, 107–108 (DC
2021). MÁV also engages in commercial activity in the
United States, including by maintaining an agency here that
sells tickets, books reservations, and conducts similar business. 

124            REPUBLIC OF HUNGARY v. SIMON

                       Opinion of the Court

                                C
   In 2010, respondents sued Hungary and MÁV, seeking
compensation for the seizure of their property during the
Holocaust. The procedural history of this case is lengthy.
It includes several appeals to the D. C. Circuit. See Simon
v. Republic of Hungary, 

 (CADC 2016) (Simon
I ); Simon v. Republic of Hungary, 

 (2018)
(Simon II ); Simon III, 

. When the case previously reached this Court, we vacated the judgment in
Simon II and remanded the case for further proceedings
consistent with our decision in Philipp, 

.
See Republic of Hungary v. Simon, 

 (2021)
(per curiam).
   As relevant here, respondents allege that Hungary and
MÁV are subject to the jurisdiction of United States courts
under the expropriation exception. To satisfy § 1605(a)(3)'s
commercial nexus requirement, respondents rely on a “comPage Proof Pending Publication
mingling theory”: They “alleg[e] that the Hungarian defendants liquidated the[ir] stolen property, mixed the resulting
funds with their general revenues, and devoted the proceeds
to funding various governmental and commercial operations.” Simon I, 

. Those commingled
funds, respondents maintain, were once “exchanged for”
their expropriated property and are now “property . . . present in the United States in connection with a commercial
activity carried on in the United States by” Hungary.
§ 1605(a)(3). Among other things, Hungary allegedly used
commingled funds to issue bonds and purchase military
equipment in the United States in the 2000s; and MÁV allegedly still “own[s]” the same commingled funds. See 579
F. Supp. 3d, at 107–109; see also § 1605(a)(3) (permitting suit
when “[expropriated] property or any property exchanged
for such property is owned . . . by an agency . . . of the foreign
state and that agency . . . is engaged in a commercial activity
in the United States” (emphasis added)).
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                      Opinion of the Court

   Following this Court's remand on an unrelated question,
the District Court reaffrmed a prior determination that
respondents' commingling theory satisfed the commercial
nexus element of § 1605(a)(3). Id., at 122, n. 22. The D. C.
Circuit affrmed. It rejected Hungary's assertion that respondents needed to “ `produce evidence tracing property in
the United States or possessed by MÁV to property expropriated from them during World War II.' ” 

. Instead, the court concluded that Congress, by including the phrase “ `or any property exchanged for such
property' ” in the expropriation exception, intended to cover
circumstances in which a foreign state converts stolen property into cash and commingles the cash with other funds.

   The court reasoned, moreover, that “[r]equiring plaintiffs
whose property was liquidated to allege and prove that they
have traced funds in the foreign state's or instrumentality's
Page Proof Pending Publication
possession to proceeds of the sale of their property would
render the FSIA's expropriation exception a nullity for virtually all claims involving liquidation” of property. 

“Given the fungibility of money,” the court explained, “once
a foreign sovereign sells stolen property and mixes the proceeds with other funds in its possession, those proceeds ordinarily become untraceable to any specifc future property or
transaction.” 

 The D. C. Circuit “decline[d] to ascribe
to Congress an intent to create a safe harbor for foreign sovereigns who choose to commingle rather than segregate or
separately account for the proceeds from unlawful takings.”

   The Court granted certiorari, 

 (2024), to decide “[w]hether historical commingling of assets suffces to
establish that proceeds of seized property have a commercial
nexus with the United States under the expropriation exception to the Foreign Sovereign Immunities Act,” Pet. for
Cert. ii.
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                           Opinion of the Court

                                     II
                                     A
  To establish federal jurisdiction under the expropriation
exception, plaintiffs must allege facts suffcient to raise a
plausible inference that either their 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 sovereign, or that those
belongings are “owned or operated by” a foreign state
agency “engaged in a commercial activity in the United
States.” 1 § 1605(a)(3).
  As a general matter, respondents agree, § 1605(a)(3) tasks
plaintiffs with identifying specifc property, or particular
property exchanged for that property, “present in the United
States in connection with a commercial activity . . . by the

Page
  1
             Proof
   In their petition         Pending
                     for certiorari,             Publication
                                     Hungary and MÁV asked this Court to
answer two additional questions. First is whether this Court's decision
in Bolivarian Republic of Venezuela v. Helmerich & Payne Int'l Drilling
Co., 

 (2017), displaced the typical plausibility pleading standard, for actions brought under the FSIA, with a heightened standard for
factual allegations. Pet. for Cert. ii. It is unnecessary to resolve this
question, however, because the commingling theory cannot satisfy the
lower of these two standards. The Court thus assumes without deciding
that the plausibility pleading standard applies here.
   Hungary and MÁV's second additional question concerns who bears the
burden of production to prove (or disprove) that expropriated property
has a commercial nexus with the United States. 

 The Government
asks the Court to answer a related question: Who bears the burden of
persuasion on that issue. Brief for United States as Amicus Curiae I.
The Court declines to answer either question. The parties agree that
respondents bear the burden of production. See Brief for Petitioners 39;
Brief for Respondents 37–38. And it is unnecessary to resolve who bears
the ultimate burden of persuasion because that question arises only after
a plaintiff has pleaded adequately that § 1605(a)(3)'s commercial nexus is
satisfed, which respondents have not done here with their commingling
allegations.
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                      Opinion of the Court

foreign state,” or owned by a foreign state agency engaged
in commercial activity in the United States. 

 Specifcally, plaintiffs must identify either the expropriated property itself (“that property”) or “any property exchanged for
such property.” 

 Doing so inevitably requires that
plaintiffs show a tracing of some sort that explains the property's lineage and how it found itself in the United States (or
in the possession of a foreign sovereign agency that does
commercial activity here).
   When the property at issue is tangible expropriated property itself, a plaintiff must allege some facts that give rise
to a plausible inference that the property is in the United
States. Suppose a foreign sovereign expropriates and retains for its collection a piece of art from a plaintiff. To
bring suit under § 1605(a)(3), the plaintiff would have to put
forth some facts that support tracing that artwork to a location in the United States or to the possession of an agency
Page Proof Pending Publication
of the sovereign with commercial activities in the United
States. A complaint would fail if it instead identifed another unrelated artwork expropriated by the foreign state,
even if that other artwork had the requisite commercial
nexus to the United States. No one disputes that the phrase
“that property” in § 1605(a)(3) refers only to the specifc piece
of property taken from the plaintiff.
   As respondents recognize, the same tracing requirement
would exist if the foreign sovereign were to exchange the
plaintiff 's artwork for another tangible item. Brief for Respondents 42–43. For example, suppose that the sovereign
trades the expropriated artwork for a different piece of art.
That transaction would not extinguish the plaintiff 's ability
to sue: the other piece of art is, of course, property, and
§ 1605(a)(3) permits suit based on “any property exchanged”
for the expropriated property. (Emphasis added.) If the
plaintiff alleges facts suffcient to reasonably conclude that
the different piece of art can be traced to the United States,
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                      Opinion of the Court

§ 1605(a)(3)'s commercial nexus is satisfed. The plaintiff
could not merely allege, however, that the foreign sovereign
maintains an art collection in the United States. Nor would
it be suffcient for the plaintiff to allege that the collection
includes other art that is comparable to the exchanged-for
piece of art. Section 1605(a)(3)'s use of “exchanged for”
means the only relevant art is the one the foreign sovereign
received in return for the plaintiff 's original artwork. Ibid.;
see also American Heritage Dictionary 457 (1975) (defning
“exchange” as “[t]o relinquish (one thing for another)”).
   Respondents' commingling theory accepts all this, but posits an exception to the statute's tracing requirement that applies only when a foreign sovereign converts expropriated
property into money or other fungible property. According
to the commingling theory, if a foreign sovereign exchanges
expropriated property for money, a plaintiff need not identify
the specifc funds for which their property was exchanged.
Instead, respondents claim, a plaintiff need only identify any
Page Proof Pending Publication
fund that was, at any time, no matter how remote, commingled with the proceeds of the foreign sovereign's sale of the
expropriated property. This commingling theory thus does
away with the tracing requirement implicit in the phrase
“exchanged for” within § 1605(a)(3).
   Section 1605(a)(3) contains no such exception. The plain
text of the expropriation exception treats all “property”
alike, whether that property is tangible (like a piece of art)
or fungible (like cash). Thus, if instead of exchanging the
expropriated artwork for another piece of art, the foreign sovereign sells it and deposits the cash proceeds into a
bank account used for commercial activities, that mere fact
does not relieve plaintiffs from alleging some facts that enable the reasonable tracing of those proceeds to the United
States.
   As Sabbatino shows, one way a plaintiff can do so is by
identifying an account within the United States that holds
the proceeds from the sale of seized property. Similarly, a
plaintiff might satisfy § 1605(a)(3)'s commercial nexus by al-
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                          Opinion of the Court

leging that a foreign sovereign, soon after commingling
funds from the sale of expropriated property, spent all the
funds from the commingled account in the United States as
part of its commercial activity here. It would follow that
the proceeds connected to the expropriated property would
likely be present in the United States. The same would be
true if the amount of commingled funds spent exceeds the
amount of the funds in the account unrelated to the alleged
expropriation. Put another way, suppose a foreign sovereign expropriates property and sells it for $1 million. If the
foreign state then deposits those proceeds into an account
containing $250,000 in other funds and immediately spends
$500,000 of the commingled funds for a commercial transaction in the United States, a plaintiff could rely on those facts
to satisfy § 1605(a)(3)'s commercial nexus. Those facts
would establish that (at least) $250,000 of the $1 million proceeds “exchanged for” the expropriated property is “present
in the United States.” § 1605(a)(3).2 These are merely exPage Proof Pending Publication
amples of how the tracing requirement might be met.
   A plaintiff does not make the necessary showing, however,
by alleging only that the foreign sovereign deposited the
proceeds from the sale of expropriated property into an account at some time and eventually used that account for commercial activity in the United States. That is because an
allegation of commingling alone does not give rise to a plausible inference that the specifc property “exchanged for” the
expropriated property, i. e., the cash proceeds from the sale,
is “present in the United States.” Ibid. To the contrary, it
will typically be indeterminate whether an expenditure of
commingled funds includes any of the proceeds connected to
the expropriated property. Commingling allegations are
therefore not enough on their own because they do not allow

   2
     The proximity in time between a foreign sovereign's commingling of
proceeds from expropriated property with other money and its expenditure of those commingled funds in the United States for commercial activity may also be a relevant consideration in assessing whether a plaintiff
has satisfed § 1605(a)(3)'s commercial nexus.
130           REPUBLIC OF HUNGARY v. SIMON

                      Opinion of the Court

for plausible tracing of specifc funds. To conclude otherwise requires accepting an attenuated fction that commingling funds in an account, even if done decades earlier, means
the account today still contains funds attributable to the sale
of expropriated property.
   The problem with such a fction becomes especially clear
when a foreign sovereign has used commingled funds not
just for commercial activities in the United States but also
for commercial and governmental operations all over the
world, as is the case here. App. 33 (alleging that Hungary
“liquidated stolen property, mixed the resulting funds with
their general revenues, and devoted the proceeds to funding
various governmental and commercial operations”). In such
circumstances, it is no more likely that the funds related to
the expropriated property ended up in the United States
than that they ended up anywhere else in the world or remained in Hungary. That is especially true when the comPage Proof Pending Publication
mingled funds are within a foreign sovereign's treasury,
given that old and new revenues fow in and out of the treasury in massive quantities over time. Thus, commingling
allegations alone cannot plausibly establish that any of the
relevant proceeds from expropriated property are in the
United States.
   All this is not to say that, once funds are commingled,
plaintiffs will never be able to satisfy § 1605(a)(3). As previously noted, there are scenarios in which a plaintiff might
satisfy § 1605(a)(3)'s commercial nexus requirement when expropriated property has been exchanged for cash and that
cash has been commingled with other funds. Supra, at 128.
The Court does not today purport to identify all circumstances in which commingling allegations may be part of
broader allegations that collectively satisfy § 1605(a)(3)'s
commercial nexus. Instead, the Court holds only that an
allegation that a foreign sovereign liquidated expropriated
property, commingled the proceeds with other funds, and
then used some of those commingled funds for commercial
                   Cite as: 

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                      Opinion of the Court

activities in the United States (or that a foreign instrumentality retained such proceeds and then commingled them
with other funds) cannot itself establish the required commercial nexus of § 1605(a)(3).
   Because respondents have disclaimed in this case the utility of common-law tracing principles and rules from other
contexts, Tr. of Oral Arg. 76, we leave for another day the
extent to which they may prove helpful to courts tasked with
determining whether a plaintiff has satisfed § 1605(a)(3)'s
commercial nexus when expropriated property has been liquidated and commingled. Cf. Luis v. United States, 

 (2016) (plurality opinion) (referring to “tracing
rules governing commingled accounts” in the trust-law context and citing 4 A. Scott, Law of Trusts § 518 (1956)).
Courts should not import refexively those principles and
rules into this context, however, given the baseline presumption of foreign sovereign immunity. Any application of exPage Proof Pending Publication
isting tracing principles and rules must be consistent with
the overall FSIA scheme and the expropriation exception's
requirements.
                               B
  This interpretation of § 1605(a)(3) is further consistent
with the FSIA's structure, history, and purpose. As a general matter, litigants cannot sue foreign sovereigns in United
States courts. The FSIA “creates a baseline presumption
of immunity from suit.” Philipp, 

; see 

. To the extent the Act permits litigation
against foreign states, it usually requires that the litigation
be premised on the foreign state's private, commercial conduct. That is because the FSIA “ `largely codifes' the restrictive theory” of sovereign immunity, which shields foreign states from being sued for their public acts. Philipp,

. Courts should “take seriously the Act's
general effort to preserve a dichotomy between private and
public acts.” 

132           REPUBLIC OF HUNGARY v. SIMON

                      Opinion of the Court

   Although § 1605(a)(3) allows plaintiffs to bring suit based
on the public act of expropriation, this Court has previously
“reject[ed] the suggestion that Congress intended the expropriation exception to operate as a `radical departure' from
the `basic principles' of the restrictive theory.” Id., at 183
(quoting Helmer ich, 

). Yet reading
§ 1605(a)(3) as broadly as respondents do would undermine
those principles by expanding greatly the circumstances in
which foreign sovereigns can be brought into United States
courts for their public acts.
   Moreover, Congress drafted the expropriation exception
“against th[e] legal and historical backdrop” that includes not
only the restrictive theory but also Sabbatino. Philipp, 592
U. S., at 181. Recall that the text of § 1605(a)(3) mirrors, in
part, that of the Second Hickenlooper Amendment, which
Congress enacted “to permit adjudication of claims the Sabbatino decision had avoided.” Id., at 179. In Sabbatino,
Page Proof Pending Publication
“the proceeds . . . in controversy” could be traced to a New
York account that contained segregated funds attributable
only to the sale of expropriated sugar. 

.
The facts of Sabbatino, along with the FSIA's plain text requiring identifcation of distinct property seized, or specifc
property exchanged for that property, with a commercial
nexus to the United States, counsel against the commingling
theory alone satisfying § 1605(a)(3)'s commercial nexus.
   There is further good reason for the Court not to read
§ 1605(a)(3) so broadly as to permit a commingling theory
alone: the United States' “reciprocal self-interest” in receiving sovereign immunity in foreign courts. National City
Bank of N. Y. v. Republic of China, 

 (1955).
This Court “interpret[s] the FSIA as we do other statutes
affecting international relations: to avoid, where possible,
`producing friction in our relations with [other] nations and
leading some to reciprocate by granting their courts permission to embroil the United States in expensive and diffcult
litigation.' ” Philipp, 

 (quoting Helmerich,
                   Cite as: 

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                      Opinion of the Court

; alteration in original). Although the expropriation exception is “unique” in how it departs from the
restrictive theory, Philipp, 

, its drafters understood it to “ `conform fairly closely' ” with international
law, Helmerich, 

; 

 (observing that “this
Court, like Congress, has paid special attention” to the Government's “views on sovereign immunity”). That is why the
exception requires a commercial nexus with the United
States and a taking of property “in violation of international
law.” § 1605(a)(3). By including this language, Congress
hoped it “would diminish the likelihood that other nations
would each go their own way, thereby `subject[ing]' the
United States `abroad' to more claims `than we permit in this
country.' ” Id., at 181 (quoting Hearing on H. R. 3493 before
the Subcommittee on Claims and Governmental Relations of
the House of Representatives Committee on the Judiciary,
93d Cong., 1st Sess., 18 (1973) (alteration in original)).
   If respondents' commingling theory were accepted,
Page Proof Pending Publication
§ 1605(a)(3) would impose a far greater limitation on foreign
sovereign immunity, expanding the set of circumstances in
which foreign sovereigns could be sued in United States
courts for public acts involving expropriation. The Government represents that this would invite the very risk it
sought to avoid in helping draft § 1605(a)(3): that foreign
states, in response, will subject the United States abroad to
“retaliatory or reciprocal actions” in their courts. Tr. of
Oral Arg. 31. The Court declines to interpret § 1605(a)(3) in
the expansive manner that respondents seek.

                               III
                                A
  Respondents do not resist that the plain text of § 1605(a)(3)
requires plaintiffs to identify and trace their specifc expropriated property, or the particular property exchanged for
their expropriated property, to the United States (or to the
possession of a foreign instrumentality that does commercial
134           REPUBLIC OF HUNGARY v. SIMON

                       Opinion of the Court

activity here) when the property in question is nonfungible.
Yet respondents insist that the same statutory text does
not require similar tracing when the expropriated property
is converted into cash. Instead, respondents maintain,
§ 1605(a)(3) is best read to support their commingling theory
in those circumstances. That argument is unpersuasive.
   Respondents start from the undisputed premise that
money is property. From there, respondents argue that
money can be the “any property” that is “exchanged for”
expropriated property. § 1605(a)(3). If a foreign sovereign
then commingles proceeds from the sale of expropriated
property with other funds, respondents explain, the proceeds
do not lose their status as the property that was “exchanged
for” the expropriated property. Thus, according to respondents, when those commingled funds enter the United States
in connection with a foreign state's commercial activities (or
enter the possession of a foreign agency that does commerPage Proof Pending Publication
cial activities in the United States), the commercial nexus is
satisfed because the commingled funds came from an account where the expropriated proceeds were deposited. No
further tracing is required, they insist, because money is fungible. This fungibility means any given dollar of the proceeds in an account is indistinguishable from, and thus exchangeable with, any dollar in the commingled account.
   Section 1605(a)(3)'s text does not support this theory. For
one, the expropriation exception does not draw any distinctions between nonfungible and fungible property. Nothing
in the text of § 1605(a)(3) establishes distinct tracing requirements for the latter. Moreover, respondents' commingling
theory distorts the ordinary meaning of “exchange.” When
a foreign sovereign sells expropriated property, the cash proceeds it gets in return is the relevant property for purposes
of § 1605(a)(3). This is because those proceeds were “exchanged for” the expropriated property, and it is this property a plaintiff must show is in the United States. The
other money in a foreign sovereign's possession is irrelevant.
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                      Opinion of the Court

Just as a foreign sovereign's art collection in the United
States would be if it does not contain a plaintiff 's specifc
expropriated artwork or a piece of art exchanged for that
artwork.
   Respondents do not argue that a foreign state's cash reserves, if kept separate from proceeds of the sale of expropriated property, can qualify as “property exchanged for” expropriated property. Nor could they: That separate cash
bears no relationship to the expropriated property. That a
foreign sovereign may instead commingle expropriated proceeds with other unrelated funds does not change that conclusion. The only property the sovereign received in “exchange” for the expropriated property is the cash proceeds
it received in that transaction. Yet the commingling theory
requires accepting the idea that the entire account with commingled funds should be regarded as property “exchanged
for” the expropriated property, even if that account's assets
Page Proof Pending Publication
far outweigh what the foreign sovereign received for selling
the expropriated property.
   The facts of this case underscore why this commingling
theory is inconsistent with the ordinary meaning of “exchanged for.” Respondents allege that Hungary used general treasury funds to issue bonds and purchase military
equipment in the United States in the 2000s. That expenditure, respondents maintain, permits their suit to proceed
under § 1605(a)(3) because Hungary allegedly expropriated
their property during World War II, liquidated it, and then
commingled the proceeds with government funds. In the
intervening decades, however, Hungary has made countless
transactions throughout several institutional collapses and
regime changes, resulting in billions in revenues fowing in
and out of its treasury. Against this historical backdrop, it
is implausible to say that the commingling Hungary did in
the 1940s, on its own, establishes that the money it spent in
the United States in the 2000s was “exchanged for” the property Hungary allegedly expropriated from respondents.
136           REPUBLIC OF HUNGARY v. SIMON

                       Opinion of the Court

The same is true for the assertion that any of MÁV's current
possessions were “exchanged for” respondents' property
based solely on the fact that it allegedly liquidated respondents' property in the 1940s and then commingled the proceeds with its general revenues, given that MÁV has used
those commingled funds in the intervening decades for
countless transactions as well. To say otherwise stretches
“exchange” to the point of breaking.
   It is true that, because money is fungible, it will likely be
diffcult to trace cash from the sale of expropriated property
after it is commingled. Section 1605(a)(3), however, contains a further textual indication that reinforces its requirement of tracing specifc property: When a foreign sovereign
is responsible for the expropriation, a suit may proceed only
if the property is “present in the United States.” Congress
was well aware that the location of money can become indeterminate when it is commingled, but it nonetheless
imposed this geographic constraint for “any” property, inPage Proof Pending Publication
cluding money. Ibid. (emphasis added); cf. 

(p)(1)(E), (2) (in the criminal forfeiture context, permitting seizure of “any other property of the defendant” when
property “has been commingled with other property which
cannot be divided without diffculty”).

                                B
  Respondents next argue that the concerns this Court
raised in Sabbatino about tracing expropriated property
helps their position. For instance, the Court observed that
“one would have diffculty determining after goods had
changed hands several times whether the particular articles
in question were the product of ” expropriation. 

. The Court also mentioned specifcally the “diffcult
tas[k] of ascertaining the origin of fungible goods.” Ibid.,
n. 39. Congress nevertheless enacted the Second Hickenlooper Amendment with those observations in mind, and
                       Cite as: 

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                           Opinion of the Court

later passed the expropriation exception, which has language
nearly identical to that of the Second Hickenlooper Amendment. According to respondents, those actions refect Congress's intent to allow the adjudication of expropriation
claims generally, including those premised on a commingling theory.
   It is the statutory text of § 1605(a)(3) that best refects
Congress's intent, however, and it does not support respondents' commingling theory for the reasons discussed. Indeed, the expropriation exception permits only claims that
show a commercial nexus between expropriated property (or
property exchanged for that property) and the United
States, a requirement not found in the Second Hickenlooper
Amendment. Moreover, the Second Hickenlooper Amendment allows claims “based upon (or traced through) a confscation or other taking,” 

(e)(2) (emphasis
added), underscoring the importance of alleging some facts
that enable the reasonable tracing of property to the United
Page Proof Pending Publication
States, in the § 1605(a)(3) context, when claims identify
“property exchanged for [expropriated] property,” 

(a)(3) (emphasis added). Thus, the expropriation exception's roots in Sabbatino and the Second Hickenlooper
Amendment do not provide a compelling reason to abandon
the plain meaning of § 1605(a)(3).3

   3
     Contrary to respondents' assertions, moreover, the Second Hickenlooper Amendment was contemporaneously understood by courts to permit adjudication of claims involving “specifc and identifable and `traceable' property.” French v. Banco Nacional de Cuba, 23 N. Y. 2d 46, 61,

 (1968); see id., at 58, 

 (observing
that the amendment was “restricted, manifestly, to the kind of problem
exemplifed by the Sabbatino case itself, a claim of title or other right to
specifc property which had been expropriated abroad” (emphasis added));
see also Hunt v. Coastal States Gas Prod. Co., 

(Tex. 1979) (“Although the amendment does not refer specifcally to proceeds, it is clear that it was intended to apply to the property as long as
it is traceable”).
138           REPUBLIC OF HUNGARY v. SIMON

                      Opinion of the Court

                               C
   Lastly, respondents argue from purpose. Like the D. C.
Circuit, they maintain that § 1605(a)(3) will be rendered a
nullity if the commingling theory alone cannot plausibly establish a commercial nexus with the United States. The
commingling theory is necessary, they insist, because without it, foreign sovereigns can “commingle the proceeds from
illegally taken property with general accounts” and thereby
“insulate [themselves] from suit [in the United States] under
the expropriation exception.” 

.
   The Court's decision, however, does not categorically reject claims premised on a commingling theory. The Court
holds only that a commingling theory cannot satisfy
§ 1605(a)(3)'s commercial nexus on its own. It is true that it
will be harder for plaintiffs to satisfy § 1605(a)(3)'s commercial nexus element when a foreign sovereign expropriates
property in violation of international law and liquidates it if
Page Proof Pending Publication
they cannot rely on a commingling theory alone. This added
diffculty in bringing some § 1605(a)(3) claims, though, does
not make the expropriation exception a dead letter for the
reasons explained. Supra, at 128–131.
   Respondents' policy concerns, moreover, cannot “ `surmount the plain language of the statute,' ” Truck Insurance
Exchange v. Kaiser Gypsum Co., 

 (2024)
(quoting Arthur Andersen LLP v. Carlisle, 

(2009)), especially given countervailing ones that better conform to the plain text. Allowing plaintiffs to forgo altogether the statute's tracing requirements by pleading a commingling theory could allow vastly more suits to proceed
under § 1605(a)(3), even though the expropriated property
would have an attenuated nexus to the United States. This
could, in turn, undermine the United States' foreign relations
and reciprocal self-interest, as well as § 1605(a)(3)'s conformity with international law. As discussed, the Government
helped craft § 1605(a)(3) expressly to avoid that outcome,
                   Cite as: 

 (2025)           139

                      Opinion of the Court

supra, at 132–133, and Congress intended for § 1605(a)(3) to
operate as only a limited departure from the restrictive theory, which provides foreign sovereign immunity for public
acts like expropriation.
                         …
  Ultimately, today's decision concerns only what plaintiffs
must plead to bring suit against foreign sovereigns for their
actions abroad in the courts of the United States. That a
particular claim cannot satisfy the expropriation exception
means only that it cannot be brought here, not that it cannot
be brought in any forum. As the Government correctly recognizes, “the moral imperative has been and continues to
be to provide some measure of justice to the victims of the
Holocaust, and to do so in their remaining lifetimes.” Brief
for United States as Amicus Curiae 26. The Government
also represents, however, that “[r]especting the limits in the
FSIA aids in the United States' efforts to persuade foreign
Page Proof Pending Publication
nations to establish appropriate redress and compensation
mechanisms for human-rights violations, including the horrendous human-rights violations perpetrated during the
Holocaust.” Ibid.
  For the foregoing reasons, the Court concludes that a commingling theory, without more, cannot satisfy the commercial
nexus requirement of § 1605(a)(3). The judgment of the
Court of Appeals for the D. C. Circuit is vacated, and the
case is remanded for further proceedings consistent with
this opinion.
                                             It is so ordered.
                           Reporter’s Note

  The attached opinion has been revised to refect the usual publication
and citation style of the United States Reports. The revised pagination
makes available the offcial United States Reports citation in advance of
publication. The syllabus has been prepared by the Reporter of Decisions
Page Proof Pending Publication
for the convenience of the reader and constitutes no part of the opinion of
the Court. A list of counsel who argued or fled briefs in this case, and
who were members of the bar of this Court at the time this case was
argued, has been inserted following the syllabus. Other revisions may
include adjustments to formatting, captions, citation form, and any errant
punctuation. The following additional edits were made:

None