United States Court of Appeals For the Seventh Circuit
Constitutional Law – takings — treaties
The treaty with Germany after World War II resolving Germany’s debts does not violate the Takings Clause.
“Iran’s refusal to pay claims made by foreign nationals was not a taking by the United States; this nation does not guarantee other nations’ sovereign debt. Likewise Germany’s refusal to pay claims based on bonds it issued or guaranteed before the end of World War II cannot be thought a taking by the United States of America. That the United States and Germany agreed in 1953 to a process that will lead to payment of some but not all claims is an ordinary part of peacemaking and not an affront to the Constitution.”
“Diplomacy requires compromise. Many governments are reluctant to pay debts incurred by predecessors that have been overthrown in revolution (e.g., Iran) or lost a war (e.g., the Nazi regime in Germany). Indeed, the United States itself did not ensure payment of debts incurred within its own borders by the states that attempted to secede in 1861. The history summarized in Dames & Moore shows that diplomatic dispositions of private financial claims against other sovereigns, designed to facilitate the establishment of peaceful relations among nations, have occurred throughout American history. We cannot see any basis for a constitutional distinction between the diplomatic resolution of private claims against Iran and those against Germany.”
12-3269 Korber v. Dundesrepublik Deutschland
Appeal from the United States District Court for the Northern District of Illinois, Chang, J., Easterbrook, J.