[00:00:00] Speaker 00:
Case number 20-7047, David L. de Suspell et al.

[00:00:05] Speaker 00:
versus Republic of Hungary, a foreign state et al.

[00:00:08] Speaker 00:
and case number 20-801, Inry Republic of Hungary et al.

[00:00:12] Speaker 00:
petitioners.

[00:00:13] Speaker 00:
Mr. Stauber for the balance, Ms.

[00:00:15] Speaker 00:
Beninadi for the appellees.

[00:00:20] Speaker 01:
Good morning.

[00:00:21] Speaker 01:
May it please the court.

[00:00:22] Speaker 01:
Good morning.

[00:00:23] Speaker 01:
Thaddeus Starber on behalf of the Hungarian parties and my colleague Sarah Andre on the brief.

[00:00:29] Speaker 01:
The plaintiffs advised the Supreme Court that they included Hungary as a defendant for good reason.

[00:00:34] Speaker 01:
Not only is Hungary the primary wrongdoer in this case, and owner of the artworks, but petitioner will face serious obstacles to enforcing a favorable judgment if Hungary is dismissed from the suit.

[00:00:47] Speaker 01:
Upon this we agree.

[00:00:50] Speaker 01:
With Hungry Found Immune, the Supreme Court in Pimentel and this court in Kickapoo instruct us that the rule 19 analysis is more circumscribed, not somewhat circumscribed as a district court below mistakenly stated.

[00:01:05] Speaker 01:
And as such, there is very little room for balancing of other factors because immunity may be viewed as one of those interests compelling by themselves.

[00:01:16] Speaker 01:
To end Ron Pimentel and Kickapoo,

[00:01:18] Speaker 01:
The plaintiff sought to add a new party upon remand, MNV, the successor to what the lower court stated was a governmental entity, AKA Hungary, known as the Treasury Asset Department.

[00:01:32] Speaker 01:
But by plaintiff's own expert's admission, MNV's core functions are the same as the Treasury Asset Department.

[00:01:39] Speaker 01:
That is management of state property, a core function which

[00:01:45] Speaker 01:
as Garbin versus Republic of Poland tells us, is indisputably governmental activity.

[00:01:51] Speaker 02:
Sir, I understand your point that the management of government property, that's the core function of MNV.

[00:02:04] Speaker 02:
But don't we have to look at what property we're talking about?

[00:02:08] Speaker 02:
I mean, this isn't military property.

[00:02:12] Speaker 02:
a government public building.

[00:02:13] Speaker 02:
This is an art museum, right?

[00:02:16] Speaker 02:
And isn't it, how can you make the argument that managing an art museum and an art collection is a core government function?

[00:02:27] Speaker 02:
I mean, governments don't have to have art collections and there are many private ones.

[00:02:33] Speaker 01:
Your honor, yes, there are many private art collections.

[00:02:36] Speaker 01:
And in this particular case, the issue and the interest that issue here is not the management of the museum.

[00:02:44] Speaker 01:
It's not the management of an art collection.

[00:02:47] Speaker 01:
It is the ownership, the ownership of historically important property that is part of that state's national collection.

[00:02:56] Speaker 02:
Your point's well taken.

[00:02:58] Speaker 02:
It's ownership.

[00:02:59] Speaker 02:
I agree with you.

[00:03:00] Speaker 02:
But what we're talking about here is ownership of artworks.

[00:03:04] Speaker 01:
Yes, we are your owner.

[00:03:06] Speaker 01:
Pardon me?

[00:03:08] Speaker 01:
Go ahead.

[00:03:09] Speaker 02:
Why is that a core governmental function?

[00:03:13] Speaker 01:
The core function test looks not necessarily at what the property is or necessarily how the property is conducted, but the fact that we have MNV handling state property, not just artwork, but it's real estate, it's contracts,

[00:03:34] Speaker 01:
and we look at Transero tells us.

[00:03:37] Speaker 02:
Well, actually, if you look at the declaration from plaintiffs experts, it looks like everything MNV does is commercial.

[00:03:51] Speaker 02:
They operate transport, they own transport companies, a gambling service provider, an energy group, kind of goes on and on.

[00:04:03] Speaker 02:
It just seems as if what MNV owns are properties that are predominantly commercial.

[00:04:20] Speaker 02:
I understand your Rule 19 argument.

[00:04:24] Speaker 02:
Under your Rule 19 argument, we don't even have to address this question, correct?

[00:04:29] Speaker 01:
Correct, Your Honor.

[00:04:30] Speaker 02:
Let's stick with this for a minute.

[00:04:37] Speaker 02:
I just need to know how an entity like MNV can be considered.

[00:04:43] Speaker 02:
I mean, we've heard, we've held that, you know, that the second circuit held that, what was it, the Polish foreign ministry was core government.

[00:04:53] Speaker 02:
That makes sense.

[00:04:55] Speaker 02:
We held in Transatlantic and Air Force's core government in

[00:05:01] Speaker 02:
In the Argentina case, they said bonds were not.

[00:05:05] Speaker 02:
So this seems more like commercial.

[00:05:08] Speaker 02:
It's a kind of thing that a government doesn't have to do and that others can.

[00:05:13] Speaker 01:
In the context here, Your Honor, we have to look at the situation in Hungary.

[00:05:17] Speaker 01:
Hungary is a former communist country.

[00:05:20] Speaker 01:
Under the communist era, from 1947 to 1989, all property was state property.

[00:05:25] Speaker 01:
There were no private property rights.

[00:05:28] Speaker 01:
So contextually, this property, this artwork is not owned by M&V.

[00:05:33] Speaker 01:
M&V solely manages this property.

[00:05:35] Speaker 01:
This property is owned and always has been owned by the Hungarian state.

[00:05:39] Speaker 01:
That's not in dispute here.

[00:05:41] Speaker 05:
And so what I thought that was doing underlying issue in dispute, actually.

[00:05:47] Speaker 01:
Well, yes, your honor.

[00:05:48] Speaker 01:
The underlying issue in dispute is who owns the property.

[00:05:52] Speaker 01:
Is it Hungary, the Hungarian state?

[00:05:54] Speaker 01:
Is it?

[00:05:55] Speaker 01:
the plaintiffs.

[00:05:57] Speaker 01:
It's indisputable that the museum do not own the artwork.

[00:06:01] Speaker 05:
And if the plaintiffs properly own it, then the holders, the museum, and the Asset Management Corp are illegally holding it, right?

[00:06:13] Speaker 01:
Yes, but in order to do that analysis, Your Honor, the Rule 19 tells us that you have to have the Hungarian state, the owner in interest

[00:06:24] Speaker 01:
in the case.

[00:06:25] Speaker 01:
They are immune.

[00:06:26] Speaker 01:
They are no longer in the case.

[00:06:29] Speaker 04:
What confuses me about this entire thing is your suggestion that somehow rule 19 can override what the FSIA says about who gets immunity, who is an agency, who is a proper defendant in this way.

[00:06:50] Speaker 04:
I don't understand what you mean.

[00:06:52] Speaker 04:
I know we have this world of rule 19 in terms of who is considered to be a defendant.

[00:07:00] Speaker 04:
The court has held that Hungary is immune, but the FSAA, I thought, has a definition of agency or instrumentality that MNB satisfies.

[00:07:12] Speaker 04:
And so for the purpose of figuring this out, why isn't it enough to say,

[00:07:18] Speaker 04:
MNV is an agency or instrumentality within the meaning of the statutory provision in the FSIA.

[00:07:26] Speaker 04:
And we can, I guess, figure that out with the help of the core functions test as well, but I'm just confused about why rule 19 is somehow taking precedence over the FSIA.

[00:07:37] Speaker 01:
Sure, Your Honor.

[00:07:38] Speaker 01:
Let me try to address that for you.

[00:07:40] Speaker 01:
We're not saying that Rule 19 is taking precedence over the Foreign Sovereign Immunity Act.

[00:07:44] Speaker 01:
In fact, what we contend is that they are symbiotic, that they actually speak in consistently with each other.

[00:07:51] Speaker 01:
What Pemintel and this court in Kickapoo tells us is when you have a foreign sovereign that has been found immune and is not subject to the jurisdiction of this court, right, then we do a much more circumscribed task to determine if their interests are protected.

[00:08:07] Speaker 01:
Under the Foreign Sovereign Immunity Act, working with Judge Tatel's assumption that MNV is subject to the jurisdiction of this court, what the lower court found was that it was a juridically separate and distinct entity from the Hungarian state.

[00:08:24] Speaker 01:
Therefore, it could be in the case.

[00:08:26] Speaker 01:
But now the question is under the Rule 19 analysis, even if you have M&B in the case, we still have to be concerned about the interests of the immune sovereign.

[00:08:38] Speaker 01:
And in this particular case, M&B is not accused or alleged in the claim to have done anything.

[00:08:45] Speaker 01:
not to have injured the parties, not to have owned the property, the same as with the museums.

[00:08:51] Speaker 01:
So the substantive question, the underlying question we have to analyze is who owns the property?

[00:08:56] Speaker 01:
And M&V- But that's the merits.

[00:08:58] Speaker 05:
That's the merits, Mr. Stauber.

[00:08:59] Speaker 05:
And the question is who's in the case till we get there?

[00:09:03] Speaker 05:
And so under Rule 19, I guess the question is, yes, Hungary has interests that may be impaired under the first inquiry.

[00:09:13] Speaker 05:
But then we move to the second inquiry and we ask, as the district court did, in equity and good conscience, can the case proceed?

[00:09:21] Speaker 05:
And given that, as I think everybody agrees,

[00:09:27] Speaker 05:
the Asset Management Corporation is at least an agency and instrumentality of Hungary.

[00:09:32] Speaker 05:
Given what the district court held about the alignment of its interests in litigation with those of Hungary, why isn't that a virtue rather than a vice in that it'll be there, the case can proceed, and Hungary's interests are fully represented through MNV?

[00:09:50] Speaker 01:
I'm glad you brought that up, Your Honor.

[00:09:52] Speaker 01:
The question of interest, as Rule 19 tells us, is not an interest in the outcome.

[00:09:57] Speaker 01:
Yes, we would agree with the court that MNV, the Hungarian state, and the museums all have a shared interest.

[00:10:04] Speaker 01:
They all want to see this case dismissed.

[00:10:06] Speaker 01:
They all want to see Hungary's ownership affirmed.

[00:10:10] Speaker 01:
Rule 19 doesn't tell us to look at the shared interest in the outcome.

[00:10:14] Speaker 01:
It tells us to look at the interest in the subject of the case.

[00:10:18] Speaker 01:
And the subject of the case is ownership.

[00:10:20] Speaker 01:
And the only party on the defendant's side, and even conceded by the lower court and the plaintiffs, is that Hungary is the owner.

[00:10:28] Speaker 01:
That is the interest that is dispute here.

[00:10:30] Speaker 01:
Not whether you get to manage the property, nor whether you get to display the property.

[00:10:34] Speaker 01:
So when the court did that analysis, it by definition

[00:10:39] Speaker 01:
and this is subject to de novo review, applied the wrong law so that it was able to then construct a situation where M&V, perhaps no different than the Department of Justice, where the Solicitor General is substituted for the United States government in a property dispute and says, well, since we can take jurisdiction over you, you've got to now sit in the place of the substantive property owner claiming it.

[00:11:07] Speaker 04:
That analysis seems to not really acknowledge the extent to which Hungary created MNV to hold its assets in this way.

[00:11:19] Speaker 04:
It's not like the Justice Department, you know, that it's a totally separate thing doing something that has nothing to do with Hungary in this sense.

[00:11:28] Speaker 04:
So maybe you can tell us

[00:11:31] Speaker 04:
First of all, your understanding of why Hungary opted in the 1990s to create an independent corporate structure to manage its assets.

[00:11:41] Speaker 04:
And let me just say before you answer that question, I mean, the thing that troubles me about the way that you've just described it is that you're suggesting that MNB is sort of not a real party and interest in any meaningful sense because it never did anything or it, but it was created

[00:11:58] Speaker 04:
by the party that you concede would be the right defendant for this purpose to hold the assets and to manage the assets that are in dispute in this case.

[00:12:10] Speaker 04:
So I don't think it's sort of an innocent bystander and oh my goodness, what is it doing here?

[00:12:14] Speaker 04:
So tell me, why was it created?

[00:12:17] Speaker 01:
The MNV, as we understand it, was created for the purpose of managing

[00:12:24] Speaker 01:
the Hungarian state holdings in an efficient and effective way to fulfill the objectives and the priorities of the Hungarian state.

[00:12:33] Speaker 01:
It acts at the direction of the Hungarian state.

[00:12:36] Speaker 01:
It takes its orders from the Hungarian state, which is why we submit back to Judge Tatel's question that MNV and the Hungarian state are one in the same.

[00:12:47] Speaker 04:
Okay, so given that, why isn't

[00:12:49] Speaker 04:
Judge Pillard's point about the equities which play into rule 19, right?

[00:12:56] Speaker 04:
Why doesn't that answer our question?

[00:12:59] Speaker 04:
You want to then use rule 19 to cleave them and suggest that M&B is not properly in this because it's not the Hungarian state, but you've just admitted with respect to this question that they're one in the same, so fine.

[00:13:16] Speaker 04:
then the equities would say, as long as we have MNV, regardless of the immunity of the Hungarian state, we should go forward, right?

[00:13:24] Speaker 01:
But Your Honor, we concede that question for purposes of the FSIA analysis.

[00:13:30] Speaker 01:
We don't otherwise concede that question.

[00:13:32] Speaker 01:
But in the context of Rule 19, MNV cannot provide the relief that is requested.

[00:13:39] Speaker 01:
If this case were to proceed and there was a decision against

[00:13:44] Speaker 01:
MNV and against the museums.

[00:13:47] Speaker 01:
MNV does not have the authority to turn over the property.

[00:13:51] Speaker 04:
But I thought you said the Hungarian state.

[00:13:54] Speaker 04:
Wait, hold on.

[00:13:56] Speaker 02:
Could you just finish that sentence completely?

[00:13:59] Speaker 02:
I'd like to hear the complete end of that sentence.

[00:14:02] Speaker 02:
MNV does not what?

[00:14:03] Speaker 01:
MNV does not have the authority absent the direction of the Hungarian state

[00:14:12] Speaker 01:
to turn over or alienate the property according to Hungarian statutes.

[00:14:18] Speaker 01:
MNV does not have its own budget.

[00:14:21] Speaker 01:
All of the funding from MNV comes from the Hungarian treasury.

[00:14:25] Speaker 02:
Can I just drill down on this?

[00:14:26] Speaker 02:
Yes, Your Honor.

[00:14:26] Speaker 02:
So there could be two kinds of judgments.

[00:14:29] Speaker 02:
One judgment could be return the property.

[00:14:32] Speaker 02:
And your point there is that the property belongs to Hungary, not MNV, correct?

[00:14:38] Speaker 01:
Yes.

[00:14:39] Speaker 02:
Okay.

[00:14:40] Speaker 02:
Number two, suppose it's a money judgment.

[00:14:43] Speaker 02:
Doesn't MND have, I mean, MND is a huge operation.

[00:14:48] Speaker 02:
It's got hundreds of employees, it operates many businesses.

[00:14:51] Speaker 02:
Are you saying it could not pay a money judgment?

[00:14:54] Speaker 01:
It could not, Your Honor.

[00:14:57] Speaker 02:
How do we know that in this record?

[00:15:00] Speaker 01:
We know that in this record from the declaration of the legal director of M&V, Dr. David Cratchwell, that was submitted to this court, which states that M&V

[00:15:13] Speaker 01:
All of the funding for MNV comes from the Hungarian state treasury, the Hungarian state budget.

[00:15:18] Speaker 01:
It does not have its own budget.

[00:15:19] Speaker 01:
It's part of the national budget.

[00:15:22] Speaker 01:
So if there is a money judgment of $100 million against MNV, it will be paid out of the Hungarian treasury.

[00:15:29] Speaker 02:
The same applies to the museum.

[00:15:32] Speaker 02:
Okay, well, while we're on this subject of rule 19, I wanna ask you about your interpretation of Pimentel.

[00:15:42] Speaker 02:
You say in your brief that the district court, and this is a quote, quote, ignored Pimentel's mandate, close quote, when it examined the 19B factors.

[00:15:56] Speaker 02:
So is it your position that under Pimentel, if you have

[00:16:01] Speaker 02:
a foreign sovereign that enjoys immunity and its claims are not frivolous, that the court has to dismiss the case?

[00:16:15] Speaker 02:
Is that your reading of Pimentel?

[00:16:18] Speaker 01:
No, Your Honor, it's not.

[00:16:19] Speaker 01:
But our reading of it is that foreign sovereign immunity is a sacrosanct principle.

[00:16:26] Speaker 01:
of dignity and comedy.

[00:16:28] Speaker 01:
And so that when the court then proceeds to do an analysis.

[00:16:31] Speaker 02:
I'm asking you specifically about, I'm quoting from your brief.

[00:16:37] Speaker 02:
You said they ignored the mandate when it examined the rule of 19B factors.

[00:16:42] Speaker 02:
That tells me that you think that Pimentel holds that once you have a foreign sovereign with a non-trivialist case claim, that that's the end of things.

[00:16:53] Speaker 02:
And I want to know whether that's in fact the way you read Pimentel.

[00:16:56] Speaker 02:
Or does the district court still have an obligation to look at the 19b factors, even though that examination might be, as you said, circumscribed?

[00:17:09] Speaker 02:
Which is it?

[00:17:11] Speaker 01:
We think that the district court

[00:17:15] Speaker 01:
must apply a more circumscribed approach.

[00:17:18] Speaker 01:
When we say the mandate, we are saying that the Supreme Court is stating that sovereign immunity in and of itself can be enough, and that can be the full stop in this case, which we submit it should have been.

[00:17:31] Speaker 01:
But when you then go look at the factors in equity and good conscience,

[00:17:34] Speaker 01:
You have to weigh and provide greater weight to that sovereign immunity, which was not done in this particular case.

[00:17:41] Speaker 02:
See, but can I just finish my line of questions.

[00:17:44] Speaker 02:
Absolutely.

[00:17:45] Speaker 02:
He's just the court, the court goes on and says that what's wrong here.

[00:17:52] Speaker 02:
He says it has to be dismissed where there is a potential for injury to the absent sovereign.

[00:17:59] Speaker 02:
That tells me that just because there's an absent sovereign with a non-frivolous argument, the court still has to focus on whether there's a potential injury to the absent sovereign, correct?

[00:18:13] Speaker 01:
Correct, Your Honor.

[00:18:14] Speaker 01:
And in this particular case, it's not a potential injury, it's an immediate injury, and it's a real injury.

[00:18:20] Speaker 02:
Okay, so you agree you agree that the court does have to look at the question of whether there's a there's a potential injury right.

[00:18:29] Speaker 01:
Yes, your honor.

[00:18:30] Speaker 01:
So potential non frivolous injury.

[00:18:33] Speaker 01:
And in this particular case, the injury is immediate, the injury is real.

[00:18:37] Speaker 01:
Another factor that the courts can look at, which was not looked at in this particular case below, is inconsistent judgments or the risk of inconsistent results.

[00:18:46] Speaker 01:
In this particular case, we can't forget that we have a 2008 Nuremberg decision out of the Hungarian court.

[00:18:53] Speaker 01:
which found the Hungarian state to be the rightful owner of 11 of the artworks that are in dispute here today.

[00:18:58] Speaker 02:
If this case goes... That's not an issue.

[00:19:02] Speaker 02:
I have some other questions, but I think Judge Pillard has some questions about this subject.

[00:19:06] Speaker 02:
So I'm going to change the subject again when she's done.

[00:19:09] Speaker 05:
I think you largely clarified it in the last colloquy.

[00:19:14] Speaker 05:
My only question was really along the same lines as what Judge Tatel was asking.

[00:19:21] Speaker 05:
In Pimentel and Kickapoo, the absent sovereign's interests were not precisely aligned with any defendant remaining in the case.

[00:19:30] Speaker 05:
So those cases only take you so far, right?

[00:19:33] Speaker 05:
They don't answer the question.

[00:19:35] Speaker 05:
What is the effect of the sovereign status?

[00:19:39] Speaker 05:
of a defendant that's immune on the ability of the case to go forward if and when there is a remaining defendant who, by hypothesis, if we're reaching the Rule 19 question, the remaining defendant who is not immune, if those interests are aligned, then I'm just wondering what your position is of what the

[00:20:03] Speaker 05:
immunity, what role the immunity could play there given as just Judge Jackson pointed out, the FSIA contemplates a situation in which an agency or instrumentality of a sovereign state may be an appropriate defendant.

[00:20:17] Speaker 01:
Yes, so there is no question that an agency or instrumentality may be the proper defendant of a case in which the sovereign has been found immune.

[00:20:26] Speaker 01:
In fact, we are litigating that very case involving the Spanish government in Casir versus Ticin-Bornemisa, where the kingdom of Spain was dismissed.

[00:20:34] Speaker 01:
But the foundation, which is an agency or instrumentality, owns the artwork.

[00:20:38] Speaker 01:
And therefore, the case is proceeding against the Ticin-Bornemisa museum.

[00:20:43] Speaker 01:
In fact, CERT was just granted to look at this particular case.

[00:20:47] Speaker 01:
But here, the Hungarian state has retained ownership.

[00:20:52] Speaker 01:
So we're not asking this court to eviscerate the situation in the Foreign Society Immunity Act where an agency or its mentality is properly before the court for acts that it committed or property that it owns when it can give relief in connection with that case.

[00:21:08] Speaker 01:
But in this particular circumstances, these historical facts all derive from acts of the Hungarian state

[00:21:15] Speaker 01:
under Hungarian state statutes, under violations of international law, which only the Hungarian state can undertake, MNV did not exist at the time that this case proceeded.

[00:21:27] Speaker 01:
By plaintiff's own expert's contentions, the Treasury Asset Department, which was involved before, was a state entity, was AKA the Hungarian state.

[00:21:37] Speaker 01:
You can't ping pong between one, finding hungry, immune,

[00:21:41] Speaker 01:
and the MNV, a non-Hungarian actor or non-Hungarian government entity, and now it's an agency instrumentality so that you can then bootstrap the sovereign immune entity back in.

[00:21:56] Speaker 05:
clear case, it's helpful, but it sounds to me like a case on the merits.

[00:22:00] Speaker 05:
It sounds to me what you're saying is Mrs. Benanati is barking up an empty tree, and at the end of the day, she's not going to be able to get any relief.

[00:22:10] Speaker 05:
But I guess the question is under, I think I understand their theory, is that under at least the conversion and contract claims that there is a way to get relief against the current holders.

[00:22:24] Speaker 05:
even if they aren't the title owners of property.

[00:22:27] Speaker 05:
But isn't that a merits issue?

[00:22:29] Speaker 05:
We can't decide this question based on a merits determination that has yet to be reached in the district court.

[00:22:39] Speaker 01:
Can we?

[00:22:39] Speaker 01:
Rule 19 instructs us that you can only go so far into the merits before you have trampled on the immunity of the foreign sovereign.

[00:22:48] Speaker 01:
I'm trying to avoid the merits.

[00:22:50] Speaker 01:
Well, I am too, quite honestly, Your Honor, because what adds that issue at this point is whether or not the Hungarian state can be in the case.

[00:22:59] Speaker 01:
Now, we submit on the merits the Hungarian state is the owner of the property under Hungarian law, but you can't go to do that analysis.

[00:23:07] Speaker 01:
Furthermore, the court in doing the analysis was factually incorrect.

[00:23:12] Speaker 01:
When they looked at the context of a bailment, the court cited to one document

[00:23:17] Speaker 01:
One document in which the party to that document was the Hungarian state and that particular document which formed the basis of her bailman or contract arguments dealt initially with leaves only five cases, five artworks that are in this case.

[00:23:35] Speaker 01:
We have 41 artworks in this case.

[00:23:37] Speaker 01:
We have three particular lines of defendants or of plaintiffs, your honor, only one of which is US based.

[00:23:45] Speaker 01:
So what the court did was did a merits, a premature merits analysis that was factually incorrect to find a conceivable bailment over five artworks and then utilizes that to allow a case to go forward over 41 artworks.

[00:24:02] Speaker 01:
11 of which have already been addressed at the Hungarian courts, which will leave us with inconsistent decisions.

[00:24:08] Speaker 04:
Mr. Stauber, can I just ask you before Judge Tatel shifts us to a different line of questions.

[00:24:14] Speaker 04:
I'm struggling to understand if you're right about how this works and the fact that M&V is not the owner of the property and that's relevant in your view to whether or not we can proceed.

[00:24:29] Speaker 04:
Why isn't it the case then that foreign states can't always just sort of set up these corporations and retain the ownership of the assets for the purpose of evading the responsibility in this way?

[00:24:45] Speaker 04:
I thought that the expropriation exception to the FSIA was Congress's clear intention to allow for actions concerning the ownership of property by foreign

[00:24:58] Speaker 04:
states and their instrumentalities to go forward so we can get to the bottom of this kind of situation.

[00:25:08] Speaker 04:
And what you're doing, I think, and you can tell me I'm wrong about this, but your argument is constructed to prevent, I think, the very thing that Congress intended by creating this exception to immunity.

[00:25:23] Speaker 04:
And it ultimately reduces to as long as

[00:25:28] Speaker 04:
immunity exists in some form, none of these cases can go forward.

[00:25:33] Speaker 04:
We're not allowed to look at the circumstances under which the other elements of rule 19 might allow for the case to go forward, you say, because to allow it to go forward, it injures Hungary because it has immunity.

[00:25:50] Speaker 04:
And I just don't, I don't understand how, how that is.

[00:25:53] Speaker 04:
So am I wrong about the fact that under your conception will never have another case like this again?

[00:26:01] Speaker 01:
Yes, your honor.

[00:26:01] Speaker 01:
I submit you are wrong, but I don't think that I understand your struggle here.

[00:26:06] Speaker 01:
I understand your thought process, if I might.

[00:26:10] Speaker 01:
What we are not saying is that the Foreign Sovereign Immunity Act is a full stop whenever you find that the foreign sovereign is immune.

[00:26:18] Speaker 01:
But what we are saying is that as the lower court itself conceded,

[00:26:23] Speaker 01:
MNV was not set up for some nefarious purpose.

[00:26:27] Speaker 01:
MNV was not set up to hide assets of the Hungarian state.

[00:26:31] Speaker 01:
It was not put together to conduct unlawful business on the Hungarian state's behalf so that it could do that and then flee back behind its borders.

[00:26:39] Speaker 01:
That's not at all where this happened here.

[00:26:41] Speaker 01:
Under this, you have to look at the facts of this particular case.

[00:26:45] Speaker 01:
These are artworks, property that have been in the Hungarian states

[00:26:51] Speaker 01:
ownership since after World War II.

[00:26:57] Speaker 01:
M&V didn't even exist at the time.

[00:27:00] Speaker 01:
M&V exists post-1989.

[00:27:03] Speaker 01:
M&V has not done anything in connection with this case.

[00:27:08] Speaker 01:
If they had, we might have a different analysis here, Your Honor.

[00:27:11] Speaker 01:
And as I point out, if the agency or instrumentality is itself conducting the commercial activity, which is the hook for the Foreign Sovereignty Act, which it's not here because we know it has no direct effect in the United States, or if the foreign sovereign which owns the property itself is subject to jurisdiction under the violation of international law,

[00:27:32] Speaker 01:
point, then you would properly have this case going before the US courts with hungry in it.

[00:27:37] Speaker 01:
But in this particular situation, as Judge Tatel authored in this court's opinion, the Foreign Sovereign Immunity Act, as the Solicitor General has also told us, recognizes when the property is not outside, when the property is in the Foreign Sovereign,

[00:27:55] Speaker 01:
and the foreign sovereign is the party, they are immune from this particular case.

[00:28:01] Speaker 01:
So like I mentioned, it's not a full stop, but here you have a situation where unlike the other cases that have been cited in mind safety, where you said with the court, this court says, the Supreme Court says you can't use

[00:28:17] Speaker 01:
a stand-up party to get at the United States governments, or in this case, the Hungarian government's national treasury.

[00:28:26] Speaker 01:
You can't risk having inconsistent decisions over property ownership.

[00:28:31] Speaker 01:
And you have to look at the subject.

[00:28:34] Speaker 01:
We're not saying it's a full stop, Your Honor.

[00:28:38] Speaker 02:
All right.

[00:28:38] Speaker 02:
Judge Jackson, does that answer your question?

[00:28:41] Speaker 04:
Yes, thank you.

[00:28:42] Speaker 02:
OK, so I just have two kind of unrelated questions.

[00:28:46] Speaker 02:
One, I want to take you back to an intriguing point you made about a half an hour ago about whether this property is commercial.

[00:28:55] Speaker 02:
And you said we need to take account of the fact that this is a former communist country.

[00:29:02] Speaker 02:
And I haven't heard that argument before.

[00:29:07] Speaker 02:
Are there any, first of all, do you know any cases which say that how we define commercial property or commercial activity depends on the structure of the government involved in the case, whether it is or was a communist country?

[00:29:25] Speaker 02:
Do you know of any case that says that?

[00:29:26] Speaker 01:
No, Your Honor, what I'm providing here is some historical context, which I think is important.

[00:29:31] Speaker 02:
I'm trying to figure out whether your historical context is relevant.

[00:29:40] Speaker 02:
And my question is, why would the American courts, I mean, your point is that

[00:29:55] Speaker 02:
A commercial activity in something that's a commercial activity in the United Kingdom might not be a commercial activity in the same thing, operating a bowling alley might not be the same thing in Hungary.

[00:30:10] Speaker 02:
Hungary communist government might want to operate all over the country's bowling alleys, right?

[00:30:14] Speaker 02:
That's your point.

[00:30:16] Speaker 01:
So we have different governance systems.

[00:30:19] Speaker 02:
We have different economic stick with my stick with the facts.

[00:30:22] Speaker 02:
Okay.

[00:30:23] Speaker 02:
Is that what you're telling us, that if a Hungarian, if a communist country decides to operate the country's bowling alleys, which may in fact be the case, that when an American court is looking at the core government function, we have to say, well, that's a core government activity, whereas it's not in the United Kingdom?

[00:30:43] Speaker 02:
Is that your point?

[00:30:45] Speaker 01:
My point is that we have to take into consideration the historical context of each country, its legal system, and its political background.

[00:30:53] Speaker 01:
And that is being ignored here.

[00:30:54] Speaker 01:
And in fact, Pemintill tells us when the claims arise from historically and politically significant events, in this case in Hungary and its people,

[00:31:03] Speaker 01:
while the plaintiffs, yes, in this particular case, have a unique interest in resolving the matters of the ownership.

[00:31:10] Speaker 01:
It's a specific affront to the Hungarian state to proceed with respect to addressing historical issues only it can be handled.

[00:31:20] Speaker 02:
That doesn't answer my question.

[00:31:22] Speaker 02:
But my last question is, so the Supreme Court's decision in Republic of Germany v. Phillips, that came down during the briefing of this case.

[00:31:33] Speaker 02:
Does that have any effect on this court's jurisdiction in its current posture, this case?

[00:31:40] Speaker 01:
Your honor, we would submit that in this particular case, what that decision did was it also vacated the underlying decision of international comedy.

[00:31:52] Speaker 01:
So now international comedy is back on the table in connection with this case.

[00:31:56] Speaker 01:
So yes, it has to do with the jurisdiction.

[00:31:58] Speaker 01:
And in fact, when you look at the Rule 19 factors, one of the factors to consider is an alternative forum.

[00:32:05] Speaker 01:
A judge who vowed herself submitted that in the context of a foreign sovereign, whether it is an alternative forum for Rule 19 may or may not be a factor is quite de minimis.

[00:32:15] Speaker 02:
We would submit.

[00:32:17] Speaker 02:
What about the court's interpretation of rights and property taken in violation of international law?

[00:32:23] Speaker 01:
Well, Your Honor.

[00:32:24] Speaker 02:
Does that have an effect on this case?

[00:32:26] Speaker 01:
We would submit that it does have an effect on this case, Your Honor.

[00:32:29] Speaker 01:
And that'd be an issue we'd be happy to further brief or have addressed further on remand.

[00:32:33] Speaker 02:
No, no, no.

[00:32:34] Speaker 02:
You don't argue anywhere in your brief that it does, right?

[00:32:38] Speaker 01:
We don't argue anywhere because it does at this point in time, Your Honor.

[00:32:41] Speaker 02:
Correct.

[00:32:41] Speaker 02:
So the position of the Hungarian government at this point in this case is that that case is not relevant to the fundamental jurisdiction of the courts here, right?

[00:32:53] Speaker 01:
Yes, Your Honor.

[00:32:54] Speaker 02:
All right, fine.

[00:32:55] Speaker 02:
Thank you.

[00:32:56] Speaker 02:
Unless either of my colleagues have a question, we'll hear from counsel for the families, okay?

[00:33:05] Speaker 06:
Good morning, your honors.

[00:33:06] Speaker 06:
Alicia Benanati from Casablanca Benson for plaintiff David De Cepel, Angela Herzog, and Julia Herzog.

[00:33:15] Speaker 06:
I think your honors have touched upon the critical issues here, which are that

[00:33:23] Speaker 06:
M&V, as explained in the declaration of our expert, Dr. Shomadi, is most certainly an entity whose core functions are commercial in nature.

[00:33:38] Speaker 06:
Now, defendants purposefully created M&V as a joint stock company in order to

[00:33:49] Speaker 06:
take advantage of commercial law in Hungary in order to be able to operate in the marketplace in the post-communist era.

[00:33:58] Speaker 06:
And now they seek to declare that M&V is still part and parcel of the state itself while their own courts have found that as a joint stock company, M&V

[00:34:13] Speaker 06:
operates in the same way as other joint stock companies in Hungary and does not get any favorable treatment.

[00:34:24] Speaker 06:
The defendants never raised Rule 19 as an argument when they asked this court to dismiss Hungary from this case four years ago.

[00:34:33] Speaker 06:
Instead, when we went back to the district court on remand, they brought up Rule 19 for the first time and said that now that Hungary was out of the case,

[00:34:42] Speaker 06:
the entire case should be dismissed.

[00:34:44] Speaker 06:
The district court correctly rejected that argument, finding that the museums not only as joint tort feesers, but as parties to express and implied bailment agreements can be held responsible on their own for their possession and control of these artworks over the last 50 years and be liable at the very least for damages.

[00:35:07] Speaker 06:
So

[00:35:09] Speaker 04:
Well, how do you, how do you respond to Mr. Stauber's argument that in this case, the artworks at issue are still owned by the Hungarian government so that the remedy that you're seeking really cannot come from MNB.

[00:35:29] Speaker 06:
We have two points on that, Your Honor.

[00:35:31] Speaker 06:
Hungary claims to be the owner of the artworks.

[00:35:34] Speaker 06:
Obviously, we do dispute that they ever validly acquired an ownership interest as opposed to a possessory interest.

[00:35:42] Speaker 06:
They seized the artworks during World War II.

[00:35:45] Speaker 06:
As this court found on the last appeal, at least 25 of them were never returned in any way, shape, or form to the family.

[00:35:51] Speaker 06:
And then, as the district court found, even as to a handful that were supposedly returned, they weren't really returned.

[00:35:58] Speaker 06:
So Hungary's been holding the bulk of these artworks since the Holocaust.

[00:36:02] Speaker 06:
They claim to have acquired ownership in one form or another.

[00:36:06] Speaker 06:
We would say they never did.

[00:36:08] Speaker 06:
And at best, there's an implied bailment relationship here.

[00:36:12] Speaker 06:
All right, well, that's one of the facts.

[00:36:13] Speaker 04:
Assuming they did, is he right about assuming that Hungary owns the artworks?

[00:36:20] Speaker 04:
for present purposes.

[00:36:23] Speaker 04:
Is he right about the legal point in terms of what that means concerning MNV being the proper defendant or a defendant that can give you relief.

[00:36:36] Speaker 06:
manages the artworks on behalf of Hungary.

[00:36:39] Speaker 06:
Hungary is the owner.

[00:36:40] Speaker 06:
However, Hungary has delegated to MNB the right to make decisions with respect to artworks that they own.

[00:36:48] Speaker 06:
As we cite in both the declaration of Dr. Petu and it's mentioned also in the Chalmody Declaration that

[00:36:56] Speaker 06:
MNV has the authority to make decisions with respect to certain state assets.

[00:37:01] Speaker 06:
They have in this case.

[00:37:03] Speaker 06:
It is MNV who was responsible for returning, MNV's legal predecessor, but essentially MNV was responsible for returning works of art to Martha Nierenberg back in 2000 when the Nierenberg litigation was ongoing.

[00:37:20] Speaker 05:
When defendants put forward their own- Without the involvement of the sovereign state of Hungary?

[00:37:26] Speaker 06:
Hungary was involved in the case, but according to the 30B6 witnesses of defendants who appeared in this case, specifically Dr. Molnar, he was the one and he is an employee currently of MNV who was responsible for that decision.

[00:37:45] Speaker 05:
So it's your position that were you to succeed against the museums and against MNV that MNV would not need any

[00:37:55] Speaker 05:
authority or assistance from Hungary in order to comply with the judgment.

[00:38:01] Speaker 05:
that you would hope to attain?

[00:38:03] Speaker 06:
That is our position, Your Honor.

[00:38:04] Speaker 06:
And at the very least, you know, we have not conducted expert discovery yet in this case.

[00:38:10] Speaker 06:
And if expert discovery shows otherwise in that regard, at the very least, the museums and MMV can be held liable for monetary damages, even if they are not ultimately able to return possession of the artworks.

[00:38:25] Speaker 06:
And that is enough.

[00:38:29] Speaker 02:
I think

[00:38:30] Speaker 02:
I have a couple of questions.

[00:38:31] Speaker 02:
To me, this case turns on what Penn and Tell means, which is not easy to figure out, to be honest, but let's try here.

[00:38:39] Speaker 02:
I want to read you a sentence from Penn and Tell and then ask you a couple of questions about it.

[00:38:46] Speaker 02:
The court says, where sovereign immunity is asserted and the claims of the sovereign are not frivolous.

[00:38:54] Speaker 02:
Dismissal of the action must be ordered where there is a potential for injury to the absent sovereign.

[00:39:02] Speaker 02:
Now, two questions.

[00:39:04] Speaker 02:
You're not saying Hungary's claims to this artwork are frivolous, right?

[00:39:09] Speaker 02:
You think they're wrong, but they're not frivolous, right?

[00:39:13] Speaker 02:
Okay.

[00:39:14] Speaker 02:
So this case then turned, and I'm just looking at Pentel, nothing else now.

[00:39:19] Speaker 02:
So this case turns on whether there's potential

[00:39:24] Speaker 02:
for injury to the interests of hungry, potential for injury, right?

[00:39:31] Speaker 02:
That's the standard.

[00:39:31] Speaker 02:
That's what we have to ask for this case, correct?

[00:39:35] Speaker 02:
Yes, you are, but.

[00:39:37] Speaker 02:
Yeah, and what the, we'll go ahead, finish your sentence.

[00:39:41] Speaker 03:
I didn't, I don't want to interrupt you.

[00:39:42] Speaker 02:
What's wrong with that?

[00:39:43] Speaker 02:
That's the question we have to decide.

[00:39:45] Speaker 02:
Is there potential for injury?

[00:39:48] Speaker 02:
Potential, not for sure, but potential, right?

[00:39:52] Speaker 06:
The Pimentel court made that statement, but then went on to analyze the Rule 19B factors, because that is how you determine whether.

[00:40:09] Speaker 02:
Well, as I read it, you know, as I said, it's a fairly difficult opinion to understand.

[00:40:14] Speaker 02:
But as I read what it said in the paragraph or two after that,

[00:40:19] Speaker 02:
What it was really focusing on was whether or not the claim was frivolous.

[00:40:23] Speaker 02:
Remember, it said the district court was wrong about the statute, or it could have been wrong about the statute of limitations in New York.

[00:40:31] Speaker 02:
Case might have come out differently if the Philippine government brought a different kind of case.

[00:40:36] Speaker 02:
Basically, they were saying that it wasn't frivolous.

[00:40:40] Speaker 02:
But I agree with you.

[00:40:42] Speaker 02:
You do look at the other factors.

[00:40:44] Speaker 02:
But given Hungary's argument here that these paintings belong to it, and I can see that that's an argument, they may be wrong, and you say it's not frivolous, and that MNV cannot on its own satisfy a judgment, how could we say

[00:41:09] Speaker 02:
that there's no potential injury to the absent sovereign.

[00:41:13] Speaker 02:
No potential injury to the absent sovereign.

[00:41:16] Speaker 06:
I don't think the cases that have followed Pimentel in the years since have interpreted sovereign immunity that narrow.

[00:41:26] Speaker 06:
I mean, it's basically what Mr. Stauber is effectively arguing for is an almost absolute rule that if a foreign sovereign has

[00:41:38] Speaker 06:
a non-frivolous interest, the case has to be dismissed.

[00:41:41] Speaker 06:
You don't even know.

[00:41:42] Speaker 02:
No, no, no.

[00:41:42] Speaker 02:
I asked him that question, remember?

[00:41:44] Speaker 02:
I asked him that question, because that's what he says in his brief.

[00:41:47] Speaker 02:
But he says, no, no, he's not really saying that.

[00:41:50] Speaker 02:
He's saying courts are free to look at these other factors.

[00:41:53] Speaker 02:
But so let me ask you the question this way.

[00:42:00] Speaker 02:
Hungary says in its brief that there is no reported case

[00:42:05] Speaker 02:
where an absent, there's no important, there's no case that has allowed to be, that has continued, where there's an absent sovereign without, with a non-frivolous argument.

[00:42:23] Speaker 02:
Is he right about, do you know of any case, I haven't found it, but maybe you know of one, where

[00:42:28] Speaker 02:
Other than the district court here, do you know of any case where a court of appeals or the Supreme Court allowed a case to go forward under 19B when there was an absent sovereign with a non-frivolous claim to the property?

[00:42:48] Speaker 02:
Do you know of any case like that?

[00:42:50] Speaker 06:
I don't, but I'd like to points on that in that there have been a number of cases involving sovereigns of one form or another the Indian tribe cases being the most common of the cases where the courts have.

[00:43:09] Speaker 06:
clearly examined the rule 19 B factors and have focused on whether there is another party aligned with the interests of the sovereign who can represent their interests, or whether alternative remedies are proposed that can be used

[00:43:25] Speaker 06:
to shape the judgment in such a way and in fact the Pimentel court noted that in their decision they said that in that case, they expressly noted that no alternative remedies had been or forms of relief had been proposed but then they went on to cite a paragraph from Wright and Miller collecting

[00:43:43] Speaker 06:
a number of cases in which the granting of money damages rather than specific performance or the use of declaratory judgment and other other available remedies could be used to overcome a situation where you know otherwise the action might not be able to proceed.

[00:44:04] Speaker 06:
The second thing I would like to note and this kind of turn this goes to the

[00:44:10] Speaker 02:
the point on the expropriation exception itself is that- Before we go to the expropriation exception, let's just continue on Penn and Tell here because I hear what you're saying and I take your point about all of this, but I read Penn and Tell.

[00:44:32] Speaker 02:
It's not just one point where it says,

[00:44:39] Speaker 02:
potential to the injury.

[00:44:41] Speaker 02:
It says, at another point, it says, it talks about an injury that, quote, could result to the sovereign.

[00:44:50] Speaker 02:
And then it says, the lower courts in that case,

[00:44:58] Speaker 02:
ignored the substantial prejudice those entities would likely to incur.

[00:45:06] Speaker 02:
In other words, I read, and the court used those conditional words at least three times in its decision.

[00:45:15] Speaker 02:
And it says, I mean, the court starts by saying case may not proceed

[00:45:29] Speaker 02:
when a required sovereign is not amenable to suit me.

[00:45:33] Speaker 02:
The whole tone of Penn and Tell is if you've got an absent sovereign, the case can't proceed if there's any reasonable likelihood that its interests could be harmed.

[00:45:47] Speaker 02:
Now, we may agree or not agree with that, but that's the Supreme Court.

[00:45:51] Speaker 02:
And given that approach the court has taken, I need to hear from you how we could conclude

[00:46:00] Speaker 02:
that there isn't any potential injury to hungry.

[00:46:05] Speaker 02:
I mean, you could say, well, there might be other remedies.

[00:46:08] Speaker 02:
Okay.

[00:46:09] Speaker 02:
And you might be right about that.

[00:46:10] Speaker 02:
But what the court went on to do in Pimentel is tell us, we just can't explore that in any depth.

[00:46:19] Speaker 02:
We're getting too much into the case if we do that.

[00:46:22] Speaker 02:
See my point?

[00:46:23] Speaker 02:
So I'm really troubled by Pimentel.

[00:46:25] Speaker 06:
I see your point, Your Honor, but the court did say you can touch upon the merits necessary, to the extent necessary to resolve the rule-making issues.

[00:46:35] Speaker 06:
And in this case, let's suppose that the case proceeds against the museums and M&E.

[00:46:44] Speaker 06:
And if the district court concludes in the end that it cannot order the return of artworks without Hungary's involvement,

[00:46:55] Speaker 06:
There is no evidence that Hungary will be prejudiced if the museums are simply asked to pay damages for their own roles as separate independent agencies and instrumentalities of Hungary who have by their own conduct impacted and impaired plaintiffs for decades by having the use and benefit of these artworks to draw tourists into the museums, to

[00:47:23] Speaker 06:
take these artworks on the road to elevate their international profiles.

[00:47:29] Speaker 06:
If the museums can be held liable for damages in their own right, there is no prejudice to Hungary because they are being held responsible for their own conduct.

[00:47:39] Speaker 05:
Ms.

[00:47:39] Speaker 05:
Benennati, their own conduct, though, is only wrongful if

[00:47:45] Speaker 05:
if something that Hungary did in the past was wrongful.

[00:47:49] Speaker 05:
And that's more of a perhaps dignitary or reputational injury that I actually don't think the brief has separately, Mr. Stauber's brief doesn't separately isolate it, but

[00:48:04] Speaker 05:
the implication of damages holding against the museums and MMV does pass some shade, as the kids would say, on Hungary.

[00:48:17] Speaker 05:
Do you have any case that says that that is not the kind of interest that would defeat the case proceeding under rule 19b based on alignment of interest?

[00:48:29] Speaker 05:
Is there any case that assures us that

[00:48:33] Speaker 05:
doesn't matter, that there's plenty of energy in the defense of the defense interests here.

[00:48:41] Speaker 05:
We shouldn't worry about that.

[00:48:43] Speaker 06:
I don't have a specific case on that point, Your Honor, but I would note that outside of the sovereign context, this circuit

[00:48:52] Speaker 06:
for many decades now has recognized that even where there is a claim involving the owner of property, if there are joint tort feesers involved, those joint tort feesers can be held liable for their own conduct.

[00:49:11] Speaker 06:
I'd point to

[00:49:13] Speaker 06:
It's an old case, 1953 Ward v. Devers, 203F, second 721, where the owner of a building was found to be a required party for a rescission suit, but a fraud claim for damages was allowed to proceed against other defendants, even though that party was unavailable.

[00:49:34] Speaker 06:
This comes up in the context, again, of where in Pimentel, the court pointed to the fact that in that case,

[00:49:41] Speaker 06:
There was no alternative remedy proposed.

[00:49:48] Speaker 06:
In all of these other cases as well, we have a very unique situation here where Hungary's interests have been represented by MNB in this litigation from day one.

[00:49:59] Speaker 06:
MNB is the only entity that has provided, you know, 30 P6 witnesses for deposition in this case.

[00:50:06] Speaker 06:
They've hired Mr. Stauber's firm.

[00:50:08] Speaker 06:
They've been paying the bills.

[00:50:09] Speaker 06:
They've made every decision in this litigation from day one.

[00:50:13] Speaker 06:
So Hungary's interests,

[00:50:15] Speaker 06:
are represented by their agent in this case in a way that we don't have in any of these other litigations that have arisen in the really not so many cases that involve rule 19 and sovereign immunity.

[00:50:29] Speaker 06:
And just to turn briefly to the statutory language of 1605, I'm not trying to get away from Pimentel, but I just want to emphasize that the expropriation exception

[00:50:40] Speaker 06:
refers to property being owned or operated by an agency or instrumentality of a foreign state as a basis for jurisdiction.

[00:50:50] Speaker 06:
So the statute itself that Congress enacted clearly contemplates a situation where you may have property that is owned by the foreign state, but operated by an agency or instrumentality, and that therefore the agency or instrumentality as the operator can still

[00:51:09] Speaker 06:
be subject to jurisdiction in the United States.

[00:51:12] Speaker 06:
I think if Congress had believed that every time property is owned by a foreign state, it has to be present in the US or there's no claim, they would not have worded 1605A3 the way that they did.

[00:51:27] Speaker 06:
And that plays into the Rule 19 arguments here because Rule 19 does not preempt the FSIA.

[00:51:37] Speaker 06:
It works in conjunction with

[00:51:39] Speaker 02:
Well, but you must concede Pimentel tells us how to interpret rule 19A and B in the context in a case where you have an absent poor and sovereign, right?

[00:51:51] Speaker 02:
Yes.

[00:51:52] Speaker 02:
That's why I keep coming back to Pemindale.

[00:51:55] Speaker 02:
I mean, when I started looking at this case, I was focused like a laser on, like you, on Rule 19 and on the FSA, FSIA.

[00:52:04] Speaker 02:
But the more I dug into the case and the more I read Pemindale, I just kept coming back to its language because it's the Supreme Court and it's telling us how we would interpret these two statutes, these two provisions, and read them together, right?

[00:52:20] Speaker 06:
Yes.

[00:52:23] Speaker 06:
Right.

[00:52:23] Speaker 06:
But I would also note that in Pimentel where the court made those comments, it was uncontested in that case that

[00:52:39] Speaker 06:
that the entity was a required party under Rule 19A.

[00:52:43] Speaker 06:
There was no dispute about that in that case.

[00:52:46] Speaker 06:
So the court was under a slightly different set of facts, whereas here the district court assumed that to be the case, but we have disputed that.

[00:52:55] Speaker 02:
All right, okay.

[00:53:00] Speaker 02:
Anything else you'd like to say?

[00:53:03] Speaker 02:
I don't think so.

[00:53:09] Speaker 02:
Thank you.

[00:53:11] Speaker 02:
Mr. Staubert, you can take one minute.

[00:53:16] Speaker 01:
The Pemintel focus, Your Honor, and you're a judge who's uniquely positioned in this case, having been with us for now, I guess a third oral argument.

[00:53:27] Speaker 01:
Pimentel is a 2008 case, Your Honor, which as you point out is the one and only case which weaves in both the foreign sub immunity act and rule 19.

[00:53:42] Speaker 01:
And it states consideration of the merits of plaintiffs claims, namely in this case, whether Hungary owns the artwork quote from Pimentel is itself an infringement of sovereign immunity.

[00:53:52] Speaker 01:
That's a pretty strong argument, Your Honor, focusing on Pemintill.

[00:53:55] Speaker 01:
But we'd also like to point out that the argument that the Hungarian MNV is delegated and is able to make decisions with respect to alienation of this property is factually not correct, and it's not consistent with the record, and it's not consistent with prior practice.

[00:54:13] Speaker 01:
The joint appendix at 228 references and cites the February 3rd, 2000 letter in which

[00:54:21] Speaker 01:
the work bust of Christ was returned in fact to the family.

[00:54:25] Speaker 01:
At the time, it was the treasury asset agency in that seat.

[00:54:30] Speaker 01:
It was the treasury asset agency that made that action, which the lower court and everybody else seems to have conceded was in fact the Hungarian state.

[00:54:40] Speaker 01:
But even then, even then,

[00:54:43] Speaker 01:
the Dr. Molnar testified that in fact he had to check with, and the letter references, the Ministry of National Culture, Heritage, and the Assets Treasury Agency.

[00:54:55] Speaker 01:
So that, as an example, tells us anything, that it's the Hungarian state that has to make that decision.

[00:55:01] Speaker 04:
Furthermore- Robert, can I ask you a question?

[00:55:03] Speaker 04:
Yes.

[00:55:03] Speaker 04:
Because I know that, and I appreciate Judge Tatel's lines of questions about Pimentel, but I just want to clarify, Pimentel

[00:55:12] Speaker 04:
did not involve the expropriation exception, did it?

[00:55:18] Speaker 01:
No, it did not, but that's not in any way relevant or inconsistent to the argument here.

[00:55:26] Speaker 04:
Let me help, or maybe you can help me to understand why that's not relevant, because I thought that part of the reason why we're in this scenario is because the claim of immunity is bound up with the

[00:55:42] Speaker 04:
expropriation exception in this case.

[00:55:45] Speaker 04:
So this court has previously held that Hungary is not in, Hungary retains its immunity per that exception.

[00:55:58] Speaker 04:
And we're focused now on the second clause of that exception.

[00:56:01] Speaker 04:
So it seems to me that that exception is always relevant because it provides the backdrop against which we are evaluating

[00:56:12] Speaker 04:
It's sort of the starting point for the Pimentel analysis in a sense, right?

[00:56:19] Speaker 04:
The sovereign immunity is coming in the context of this expropriation exception.

[00:56:26] Speaker 04:
Am I wrong about that?

[00:56:27] Speaker 04:
Like we can't set that completely aside, can we?

[00:56:30] Speaker 01:
Well, but if you look at the context or the purpose of that particular provision, which says that

[00:56:37] Speaker 01:
and the Solicitor General supported this point is that when the property is in the boundaries in the sovereign state's territory, and it involves a violation of international law, you cannot take jurisdiction over the foreign sovereign for an expropriation exception.

[00:56:59] Speaker 01:
If, as is argued here,

[00:57:02] Speaker 01:
because you have an agency or instrumentality that doesn't own the property, only manages the property, or only displays the property, is allowed to pull the sovereign back in, then immunity is eviscerated.

[00:57:15] Speaker 04:
What I'm worried about is that the reason why I'm focused on this and saying we can't take this exception completely out of it is because this exception of

[00:57:27] Speaker 04:
to understand the circumstance that you're worried about and account for it.

[00:57:34] Speaker 04:
So there is a second clause in this exception, which completely, as Ms.

[00:57:39] Speaker 04:
Benennati points out, foresees a circumstance in which you have an agency or instrumentality that operates the property at issue.

[00:57:50] Speaker 04:
And it appears that Congress is still allowing for suit under those circumstances.

[00:57:57] Speaker 04:
So what worries me is the reading of Pimentel in a context that does not involve this exception to essentially undermine the second clause that in this world is allowing for a suit of this nature.

[00:58:15] Speaker 01:
So allowing for the suit for jurisdictional purposes and allowing the suit to proceed or not to proceed under rule 19 are two separate and distinct things.

[00:58:25] Speaker 01:
Foreign sovereigns are not the only parties that have access to rule 19.

[00:58:30] Speaker 01:
Rule 19 applies in any context.

[00:58:33] Speaker 01:
What Pimentel informs us is that when you have foreign sovereign immunity,

[00:58:37] Speaker 01:
you have a more circumscribed approach to Rule 19.

[00:58:43] Speaker 05:
What you're saying is that, I think, is that Rule 19 operated, as you interpret it, under Pimentel, would eliminate the category of cases under 1605A3 Second Clause

[00:59:02] Speaker 05:
in which an instrumentality or agency of a sovereign immune state operated property

[00:59:14] Speaker 05:
in a commercial way, why would rule 19 in your reading not always apply in a case like that, where the sovereign is immune because the first clause doesn't apply, but an agency or instrumentality is still in the case, operating property, and on your reading, sorry, sovereign interest trumps, case goes away under rule 19.

[00:59:42] Speaker 05:
I can't think of a situation in which

[00:59:46] Speaker 05:
That wouldn't be the case, but I'm sure you've thought about it longer and harder than we have, so.

[00:59:50] Speaker 01:
Your honor, so we're not saying that it's a full stop stop, okay?

[00:59:55] Speaker 01:
In the facts at hand though, because the Hungarian state treasury is the one that will be not only potentially injured, but directly injured, then rule 19 counsels for dismissal.

[01:00:11] Speaker 01:
In this particular case, the museum... Why isn't that just Rule 19A?

[01:00:15] Speaker 05:
I mean, the first part of it, it just seems like, and that's hardly disputed.

[01:00:19] Speaker 05:
I mean, the district court just assumed that, yes, Hungary's interests would be impaired.

[01:00:28] Speaker 01:
Yes.

[01:00:29] Speaker 05:
Yes, so that's honored.

[01:00:30] Speaker 05:
And that's as far as Pimentel gets.

[01:00:32] Speaker 05:
And there isn't a claim in Pimentel that, oh, wait, under the second inquiry, under Rule 19, is there a party that's persisting in the case that protects its interests?

[01:00:42] Speaker 05:
That just, I mean, that's just beyond what Pimentel decided because there was no such entity in that case within a line of interest as there is here.

[01:00:52] Speaker 05:
So we're just in territory that Pimentel doesn't chart, are we not?

[01:00:56] Speaker 01:
No, I don't think we are, Your Honor.

[01:00:57] Speaker 01:
The reason we're not in that territory is because, in fact, what the Foreign Sovereignty Act was not set up to do was to drag foreign sovereigns into our courts simply because they have agencies or instrumentalities that may be out in the commercial world acting or managing their property.

[01:01:17] Speaker 04:
Isn't that exactly what this provision says?

[01:01:24] Speaker 01:
It says that you can take...

[01:01:26] Speaker 01:
It says you can take jurisdiction over the agency or instrumentality.

[01:01:31] Speaker 01:
We're not here disputing that you can't or cannot take jurisdiction over the museums.

[01:01:35] Speaker 01:
We dispute you can't take jurisdiction over M&B, but you can take jurisdiction over the museums.

[01:01:39] Speaker 01:
But that in and of itself is not the stop.

[01:01:42] Speaker 01:
You then have to do the analysis under Rule 19, which tells us that because of the facts and circumstances here, unlike American trucking, which the court cited,

[01:01:54] Speaker 01:
where you had a sovereign.

[01:01:56] Speaker 01:
It wasn't a foreign sovereign immunity, but you had a sovereign.

[01:02:00] Speaker 01:
And the court looked at, well, the New York attorney general is in the case.

[01:02:05] Speaker 01:
The impact is downstream at best.

[01:02:10] Speaker 01:
There is an independent budget that the New York thruway has through which any potential penalties could or could not be paid.

[01:02:17] Speaker 01:
So ultimately you won't injure the state.

[01:02:20] Speaker 01:
I would agree with the court's struggle that it seems like a harsh outcome in a case that has gone on for 10 years, which is then remanded.

[01:02:30] Speaker 01:
and you later add an agency or instrumentality that's not alleged to do anything, and you bring the case back alive, ultimately having to render a judgment against the Hungarian MNV, which can't fulfill it, or the museums, which can't fulfill it.

[01:02:44] Speaker 01:
If the museums can't display the artwork, that harms Hungary.

[01:02:48] Speaker 01:
Hungary will have nowhere to put these artworks if its agency or instrumentality can't display the artworks.

[01:02:55] Speaker 05:
The other point is that Hungary loses and that probably is what justice requires and by hypothesis we're in a situation in which MNV and the museums have lost.

[01:03:07] Speaker 01:
But we also have to reflect and look at Hungarian law itself here.

[01:03:12] Speaker 01:
How does, in the Shegri case, which was cited by the district court and by the plaintiff, which was a lower court case under a Hungarian statutory system, which does not have precedential value, in which the Hungarian state, we don't have an interest in the particular artwork.

[01:03:27] Speaker 01:
So the case proceeded without it.

[01:03:29] Speaker 01:
But in this very case in 2002, when it was first brought in Hungary, the Hungarian court stopped it and said, wait a minute, two of the interested plaintiffs are not in the case.

[01:03:38] Speaker 01:
You have to have everybody in the case.

[01:03:40] Speaker 01:
You have to have the required parties so that we can provide full relief.

[01:03:44] Speaker 01:
The case stopped.

[01:03:45] Speaker 01:
The parties were brought in.

[01:03:47] Speaker 01:
Then you have an appellate court decision from the Hungarian higher court in 2012, which says directly on the point we're discussing here, which is MNV cannot substitute for Hungary, the owner.

[01:04:00] Speaker 01:
It is only a manager of the property.

[01:04:02] Speaker 01:
You have to have the Hungarian state in it.

[01:04:05] Speaker 01:
Hungarian statutory code 130 dovetails along with rule 19.

[01:04:12] Speaker 01:
It's not a happy result.

[01:04:14] Speaker 01:
We understand that the US courts, but they're not here to take and manage and hear cases over foreign sovereigns when the property is in their state and has not been in the United States.

[01:04:29] Speaker 01:
It's a tough outcome.

[01:04:31] Speaker 01:
But there is an alternative form in this case, Your Honors.

[01:04:34] Speaker 01:
There is the Hungarian courts.

[01:04:36] Speaker 02:
And in the case of the 41-hour works, 29 have never been pursued.

[01:04:41] Speaker 02:
I think you're completely out of time.

[01:04:43] Speaker 02:
Unless either of my colleagues has a question, we will thank you both for your excellent arguments this morning and take the case under submission.

[01:04:51] Speaker 02:
Thank you.