Supreme Court Declines Certiorari in the Jewish Religious Texts Case, Cementing Narrow View of Foreign Sovereign Immunity Act’s Expropriation Exception

Introduction

People come to U.S. courts for redress for wrongs suffered around the world. Sometimes U.S. courts hear these claims.  Sometimes they don’t.  Earlier this year, the U.S. Supreme Court issued a little-noted decision that makes claims against for sovereigns that appropriate property more difficult.

Specifically, in January, the Supreme Court declined to hear Agudas Chasidei Chabad v. Russian Federation, a case that wound its way through the U.S. court system for over two decades. The Court’s decision left in place a D.C. Circuit ruling that narrows U.S. courts’ ability to hear claims against foreign governments. This outcome not only marked a pivotal moment in this high-profile case, but also carries significant implications for future litigation under the Foreign Sovereign Immunities Act’s (FSIA) expropriation exception.

Background

The FSIA provides immunity to foreign governments and their agents or instrumentalities from litigation in the United States unless a statutory exception applies. The expropriation exception, codified at 28 U.S.C. § 1605(a)(3), strips a foreign state of its immunity in cases where “rights in property taken in violation of international law are in issue.” The exception also requires some nexus between the United States, the foreign government, and the property. The property must either be (1) “present in the United States in connection with a commercial activity carried on in the United States by the foreign state,” or (2) “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.”

The Chabad dispute centered on a library and archive of Jewish religious texts central to the Chabad-Lubavitch movement. This collection, which was expropriated in two parts by Soviet authorities, is currently held by the Russian State Library and Russian State Military Archive. In 2004, after years of failed diplomatic efforts and unsuccessful litigation in Russia, Chabad sued the Russian Federation and its agencies in federal court in the District of Columbia, arguing that the religious texts were expropriated in violation of international law.

In 2008, the D.C. Circuit held that the U.S. courts have jurisdiction over claims against the Russian defendants, concluding their contracts with U.S. entities to publish and sell the Russian State Military Archive’s material constituted qualifying commercial activity. The district court then entered a default judgment against Russia in 2010, and in 2013 imposed daily civil contempt sanctions of $50,000 for failure to return the collection. These sanctions have since accrued to over $175 million. 

To enforce these judgments, Chabad sought information from Tenex-USA (Tenex), a Maryland-based corporation it alleged was a Russian instrumentality. Tenex resisted these efforts and, as part of its litigation strategy, challenged the initial judgments against Russia. 

Tenex’s claims made their way to the D.C. Circuit. In August 2024, the D.C. Circuit effectively reversed its 2008 position. It held that the FSIA’s expropriation exception must be read narrowly to include two separate bases for subject matter jurisdiction: one for the foreign governments and the other for their agencies and instrumentalities. This means that the litigation against foreign government may proceed if the expropriated property is physically “present in the United States.”  According to the D.C. Circuit, the second basis for the expropriation jurisdiction, when the expropriated 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,” creates jurisdiction over the agencies/instrumentalities only.  Foreign government may not be sued in the United States based on this provision.

Based on this narrow reading of the FSIA, the D.C. Circuit found that because the Chabad’s collection was located in Russia, the district court did not have jurisdiction over Russia and the judgments against Russia were void. 

In February 2025, Chabad asked the Supreme Court to review the D.C. Circuit’s interpretation of the FSIA’s expropriation exception. It argued that the D.C. Circuit’s ruling contradicted the FSIA’s plain text and created a circuit split. According to Chabad, the FSIA does not create “one exception to immunity for the foreign state itself (exclusive of agencies and instrumentalities) and another exception for only agencies and instrumentalities.” Chabad also contended that the August 2024 decision created a circuit split among the U.S. Courts of Appeals: the Fifth, Ninth, and Eleventh Circuits have previously held the second nexus requirement allows for jurisdiction over foreign states, whereas the Second and Fourth Circuits have followed the D.C. Circuit’s lead. 

In January 2026, the Supreme Court declined to take up the case. The denial was issued without comment, leaving the D.C. Circuit’s decision as the final word.

Implications

The Supreme Court’s refusal to engage with the Chabad case has far-reaching implications for the future of transnational litigation and sovereign immunity in the United States. The decision solidified the D.C. Circuit’s narrow interpretation of the FSIA’s expropriation exception and entrenched the aforementioned circuit split. The ruling is particularly problematic for claims involving real property, such as factories, mines, or land, which by their nature can never be brought into the United States.

The decision also created an easy solution for foreign governments to shield themselves from U.S. litigation by transferring the property to state-owned enterprises.  Although such enterprises may still be sued in the United States if they are engaging in qualifying commercial activities, in the absence of assets in the United States, enforcement of monetary judgments against them is very difficult.

Ultimately, the Chabad decision places a higher burden on U.S. citizens and corporations seeking redress for expropriations, making it more difficult to hold foreign sovereigns responsible for their public acts in U.S. courts. 

The Holocaust Expropriated Art Recovery (HEAR) Act of 2025

In April 2026, President Trump signed the HEAR Act of 2025, which lowers the burden for plaintiffs seeking to sue foreign sovereigns for expropriating art taken by the Nazis between 1933 and 1945. Specifically, the HEAR Act:

• Abrogates the Supreme Court’s decision in Federal Republic of Germany v. Philipp (2021), which held that a violation of international law does not occur (for purposes of the FSIA exception) if a foreign sovereign expropriates its own nationals’ property;
• Extends the statute of limitations for claims to six years; and
• Limits dismissal based on certain defenses, including laches, adverse possession, the act of state doctrine, forum non conveniens, international comity, and prudential exhaustion.

While the HEAR Act is significant for plaintiffs in pending and future cases, its passage does not rectify the aforementioned circuit split or provide any new path to relief for the plaintiffs in Chabad.

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