FSIA Immunity Found In Suit Against Germany; Neither Commercial Activity Nor Takings Exceptions Applies To Real Property Located in Germany

FSIA Immunity Found In Suit Against Germany; Neither Commercial Activity Nor Takings Exceptions Applies To Real Property Located in Germany

By Louis M. Solomon

Hammerstein v. The Federal Republic of Germany, 09-CV-443 (ARR)(RLM) (E.D.N.Y. Aug. 2011) [enhanced version available to lexis.com subscribers], dismisses for want of subject matter jurisdiction claims asserted against Germany.   Plaintiff fought over the right to own the property located in Germany, ultimately won that fight against claims of ownership by both the government of Schwerin, Germany and the Conference on Jewish Material Claims Against Germany, and then sued for the diminution in the value of the property because of alleged neglect and malfeasance occurring while the court battles were going on to determine ownership.  Only the Republic of Germany was sued. 

The international practice issues addressed in the case include the following:

First, in assessing the subject matter jurisdiction challenge, the Court accepted as true "all material factual allegations in the complaint" but, on the basis two Second Circuit cases, refused to "draw inferences favorable to the party asserting jurisdiction".  For other approaches to the issue of how to assess the presence or absence of subject matter jurisdiction, see our discussion of subject matter jurisdiction in our e-book, International Practice:  Topics and Trends and our blog posting here (among other places).

Second, the Court followed settled law that in finding that the commercial activity exception to the FSIA did not apply because the allegedly improper running of the business on the property and alleged mis-use of the property did not have a "direct effect" in the U.S.  Relying on Antares Aircraft, L.P. v. Federal Republic of Nigeria, 948 F.2d 90 (2d Cir. 1991) [enhanced version  ], the Court found damage to the property in Germany was the paramount damage and that the effects on the plaintiff in the U.S. were not "legally significant" but was "incidental and inconsequential". 

Third, the takings exception did not apply to a case where "the property at issue in not in the United States, and the defendant is a foreign sovereign and not an agency or instrumentality".  The Court rejected the argument that Germany had appropriated the property in violation of international law.

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