Mady Marieluise Schubarth v. Bvvg Bodenverwertungs - Und -Verwaltungs Gmb H

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 3, 2024 Decided June 13, 2025
No. 24-7047
M ADY M ARIELUISE S CHUBARTH,
APPELLEE
v.
BVVG B ODENVERWERTUNGS - UND -VERWALTUNGS GMB H,
APPELLANT
Appeal from the United States District Court
for the District of Columbia
(No. 1:14-cv-02140)
Walter E. Diercks argued the cause for appellant. With
him on the briefs was Jeffrey Harris.
Theresa B. Bowman argued the cause for appellee. With
her on the brief was Mark N. Bravin.
Before: S RINIVASAN, Chief Judge, HENDERSON and
P ILLARD, Circuit Judges.
Opinion for the Court filed by Circuit Judge HENDERSON.

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KAREN LEC RAFT HENDERSON, Circuit Judge: This case is
the latest chapter in Mady Marieluise Schubarth’s pursuit of
compensation for land allegedly seized from her family in
Soviet-occupied Germany in the immediate aftermath of World
War II. She sued BVVG Bodenverwertungs-und-Verwaltungs
GmbH (BVVG), an agent or instrumentality of Germany which
might otherwise be subject to foreign sovereign immunity,
under the expropriation exception to the Foreign Sovereign
Immunities Act (FSIA). BVVG argues that U.S. courts lack
subject matter jurisdiction because, despite the taking of
Schubarth’s family property constituting part of a broader land-
reform policy imposed upon East Germany by the Soviets, it
was nevertheless a domestic taking and not therefore subject to
the expropriation exception; the district court disagreed and
denied BVVG’s motion to dismiss. We agree with the district
court, affirm its denial of dismissal and remand for further
proceedings.
I. BACKGROUND
The facts of this case are fully set forth in our earlier
decision, Schubarth v. Federal Republic of Germany, 891 F.3d
392 (D.C. Cir. 2018). Only those facts critical to the domestic
takings rule are addressed here.
After the fall of the Nazi regime in 1945, the three western
allies (the United States, United Kingdom and France) together
with the Soviet Union established the Inter-Allied Control
Authority (“ACC”) “in lieu of the non-existing central German
government.” Karl Loewenstein, Law and the Legislative
Process in Occupied Germany, 57 Yale L. J. 724, 725 (1948);
see also Clark v. Allen, 331 U.S. 503, 514 (1947) (“The [ACC]
has, indeed, assumed control of Germany’s foreign affairs and
treaty obligations.”). The ACC divided Germany into four
sectors, each of which was occupied and administered by a

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separate Allied power. See Charles Fahy, Legal Problems of
German Occupation, 47 Mich. L. Rev. 11, 15–16 (1948).
Within the Soviet sector, referred to as “East Germany,”
the Soviet authorities ordered the expropriation of all
agricultural real property of a certain size. This policy was
carried out by local German provisional governing bodies,
acting pursuant to orders of the Soviet military authorities. The
seized properties were then redistributed to landless Germans
and others.
One of the East German properties expropriated in 1945
under the policy was a large estate owned by Schubarth’s
parents (“Estate”). In 1963, Schubarth became an American
citizen and, in 1973, she inherited her parents’ interest—if any
remained—in the Estate. Following Germany’s 1990
reunification, the unified German government established a
trust to oversee the sale of various properties acquired from
East Germany, including properties expropriated during the
Soviet occupation. See Schubarth, 891 F.3d at 395–96. BVVG
is the successor to that trust. Id.
Since reunification, Schubarth has sought through the
German legal system to recover full compensation for the 1945
expropriation of the Estate but the proposed compensation
offered to date amounts to only a fraction of what she estimated
to be the Estate’s market value. Id. at 396–97. In 2014, she
sued Germany and BVVG in the District of Columbia district
court. That court dismissed the action for lack of subject matter
jurisdiction under the FSIA. Id. at 394. On appeal, we affirmed
the district court’s dismissal of Germany but reversed and
remanded as to BVVG, concluding that the complaint plausibly
alleged that BVVG was subject to the FSIA’s expropriation
exception. Id. at 394–95. Given the procedural posture, our
decision assumed the truth of Schubarth’s allegations and left

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the development of the factual record to the district court. Id.
at 401.
On remand, the district court directed the parties to
conduct jurisdictional discovery. After delays caused by the
COVID-19 pandemic, the parties agreed to stipulate that, at all
relevant times, BVVG is and has been an agent or
instrumentality of Germany engaged in commercial activity in
the United States. BVVG maintained, however, that legal
issues remained but declined to elaborate. Shortly thereafter,
BVVG moved to dismiss, this time alleging that the
expropriation of the Estate was a “domestic taking” and thus
not within the FSIA’s expropriation exception. J.A. 284 (citing
Fed. Republic of Germany v. Philipp, 592 U.S. 169 (2021)).
The district court denied the motion to dismiss and BVVG
timely appealed.1
II. ANALYSIS
“We review the district court’s jurisdictional rulings on
questions of law de novo, and factual determinations for clear
error.” Simon v. Republic of Hungary, 77 F.4th 1077, 1094
(D.C. Cir. 2023) (citations omitted), rev’d on other grounds,
145 S. Ct. 480 (2025)). Here, no facts regarding the
expropriation itself are disputed but the legal import of those
facts is.2
1 Schubarth’s amended complaint asserted two jurisdictional
bases: the expropriation exception and the waiver exception. J.A.
141–42 (citing 28 U.S.C. § 1605(a)(1), (a)(3)). The district court
granted the motion to dismiss as to the waiver exception but that
claim is not before us on appeal.
2 We have held that a defendant asserting foreign sovereign
immunity “bears the burden of proving [it] qualif[ies] for it.” Broidy
Cap. Mgmt. LLC v. Muzin, 12 F.4th 789, 796 (D.C. Cir. 2021)

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FSIA “supplies the ground rules for ‘obtaining jurisdiction
over a foreign state in the courts of this country.’” Philipp, 592
U.S. at 175–76 (quoting Argentine Republic v. Amerada Hess
Shipping Corp., 488 U.S. 428, 443 (1989)). “The Act creates
a baseline presumption of immunity from suit” for foreign
sovereigns and their agents unless a specified exception
applies. Id. One exception is the “expropriation exception,”
which provides:
(a) A foreign state shall not be immune from the
jurisdiction of courts of the United States or of
the States in any case –
. . . .
(3) in which 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; or
that 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.
28 U.S.C. § 1605(a)(3) (emphasis added). The phrase “rights
in property taken in violation of international law” incorporates
the “domestic takings rule” and “assumes that what a country
does to property belonging to its own citizens within its own
borders is not the subject of international law” and thus not
(internal quotations omitted). That standard was recently challenged
before the Supreme Court, Brief of the United States as Amicus
Curiae Supporting Petitioners at 32, Republic of Hungary v. Simon,
145 S. Ct. 480 (2025) (No. 23-867), but the Court declined to reach
the issue. See generally Simon, 145 S. Ct. 480.

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subject to the expropriation exception. Philipp, 592 U.S. at
176, 187.
We conclude that the 1945 expropriation of the Estate was
not a domestic taking. Whereas a domestic taking does “not
interfere with relations among states,” a taking “implicate[s]
the international legal system” if it “concerns relations among
sovereign states.” Philipp¸ 592 U.S. at 176–77. Here, the
expropriation was not a domestic taking because it necessarily
implicated both Germany and the Soviet Union.
The parties agree that at no point during the occupation did
Germany, as a sovereign entity, cease to exist. Cf. Guar. Tr.
Co. of N.Y. v. United States, 304 U.S. 126, 137 (1938) (“[T]he
rights of a sovereign state are vested in the state rather than in
any particular government which may purport to represent it.”).
Therefore, even during the occupation, German citizens
retained their German nationality; and they possessed an alien
nationality in relation to the occupying power. When the
Soviet occupiers performed domestic government functions in
East Germany, those functions were, according to the
Thuringia State Agency, “carried out on the basis of the
sovereignty of [the Soviets as an] occupying power[].” J.A.
217–18. When those functions included taking property owned
by German citizens, the takings necessarily “constituted an
injury to the [German] state.” Philipp, 592 U.S. at 176
(citations omitted). It follows that the expropriation of the
Estate implicated the separate sovereignties of both Germany
and the Soviet Union, necessarily “interfere[d] with relations
among states” and therefore could not constitute a domestic
taking. Id. at 177.
Even if, as BVVG urges, we were to agree with the Second
Circuit that the “default” rule is “that a regime’s governmental
conduct redounds to the sovereign,” Republic of Iraq v. ABB

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AG, 768 F.3d 145, 157–58 (2d Cir. 2014), we do not conclude
that it extends to a sovereign that is under the control of an
occupying power. “[I]t is generally agreed that the occupant
does not succeed to sovereignty over the occupied territory, but
has only limited administrative authority.” State of the
Netherlands v. Fed. Rsrv. Bank, 201 F.2d 455, 461 (2d Cir.
1953). It follows that the occupier’s actions cannot be
attributed to the separate sovereignty of the occupied state but
instead the sovereignty of the occupied state exists separately
during the occupation. Cf. F. E. Oppenheimer, Governments
and Authorities in Exile, 36 Am. J. Int'l L. 568, 569 (1942)
(“The local authorities established in the territories under
belligerent occupation and exercising administrative activities
under the control of the occupying Power do not enjoy
sovereignty.”). International law holds the occupying power
responsible for actions taken in the occupied territory precisely
because an occupation assumes a clash between sovereigns.
See, e.g., Convention Respecting the Laws & Customs of War
on Land (Hague IV), Oct. 18, 1907, 36 Stat. 2277 (“Hague
Convention”), Annex Art. 42–56.3 That the actual seizure of
the property was carried out by local German administrators
matters not. During an occupation, “[t]he authority of the
legitimate power ha[s] in fact passed into the hands of the
occupant.” Hague Convention, Annex Art. 43. As the
controlling authority in East Germany at the time of the
expropriation, the Soviet Union could not deny responsibility
3 According to the Hague Convention, “[t]erritory is considered
occupied when it is actually placed under the authority of the hostile
army.” Id. at Annex Art. 42. The Hague Convention restricts an
occupier from confiscating or pillaging private property, id. at Annex
Art. 46, 47, and limits the amount and purpose of taxes an occupier
can impose, id. at Annex Art. 48, 49. Violators are “liable to pay
compensation . . . for all acts committed by persons forming part of
its armed forces.” Id. at Art. 3.

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for its acts merely by relying on local agents to carry out its
orders.
It also matters not that the Soviet Union redistributed the
expropriated land largely (or even entirely) to Germans. The
Soviet Union was no less implicated in the expropriation
merely because it did not retain the property. Cf. Restatement
(Second) of Foreign Relations Law § 192 (Am. L. Inst. 1965)
(“Conduct attributable to a state that is intended to, and does,
effectively deprive an alien of substantially all the benefit of
his interest in property, constitutes a taking of the
property . . . .”). And because the Soviet occupiers directed the
taking of the Estate from German citizens, the Soviet Union
and Germany were both implicated in the expropriation. See
Philipp, 592 U.S. at 176–77 (“[A] sovereign’s taking of a
foreigner’s property . . . implicate[s] the international legal
system” and, unlike a domestic taking, “interfere[s] with
relations among states.”). The after-the-fact disposition of the
property does not change the nature of the original seizure.
Our decision is a narrow one. BVVG moved to dismiss
because, it argued, the expropriation of the Estate was a
domestic taking not subject to the FSIA’s expropriation
exception. The district court held, and we affirm, that the
expropriation was not a domestic taking. We need not
determine at this stage of the litigation whether the
expropriation in fact constituted a taking in violation of
international law. We instead leave it for the district court to
determine, in the first instance, whether “the relevant factual
allegations [] make out a legally valid claim” that the Estate
was taken “in violation of international law.” Bolivarian Rep.
of Venezuela v. Helmerich & Payne Int’l Drilling Co., 581 U.S.
170, 174 (2017).

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For the foregoing reasons, we affirm the district court’s
denial of BVVG’s motion to dismiss and remand for
proceedings consistent with this opinion.
So ordered.

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