No. 12-­--3269 ELFRIEDE KORBER and CHRISTOPHER MARK v. Bundesrepublik Deutschland

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 12-­‐‑3269
ELFRIEDE KORBER and CHRISTOPHER MARK,
Plaintiffs-­‐‑Appellants,
v.
BUNDESREPUBLIK DEUTSCHLAND, et al.,
Defendants-­‐‑Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 08 C 6254 — Edmond E. Chang, Judge.
____________________
ARGUED JANUARY 6, 2014 — DECIDED JANUARY 9, 2014
____________________
Before EASTERBROOK, WILLIAMS, and TINDER, Circuit Judg-­‐‑
es.
EASTERBROOK, Circuit Judge. After Germany surrendered
in May 1945, holders of bonds issued by public and private
entities in that nation demanded repayment. Germany had
suspended payment on many foreign-­‐‑held bonds during the
1930s, but some pre-­‐‑war bonds were not due until the 1950s
or 1960s. A multinational agreement among 21 creditor na-­‐‑
tions and the Federal Republic of Germany—which at the

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No. 12-­‐‑3269 2
time meant the Länder that had been occupied by the United
States, United Kingdom, and France—specified that Germa-­‐‑
ny would pay valid debts outstanding on May 8, 1945. This
pact, called the London Debt Agreement, gives priority to
creditors who accept diminished payoffs. The Soviet Union
and the German Democratic Republic (the Länder constitut-­‐‑
ing East Germany) did not participate.
Contemporaneously with negotiation of the London Debt
Agreement, West Germany enacted a Validation Law requir-­‐‑
ing holders of foreign debt instruments to submit them to
panels that would determine whether the claims were genu-­‐‑
ine. Some bonds had been bought back in the markets but
stolen toward the end of the war; West Germany sought to
ensure that these retired debt instruments were not paid a
second time and that no counterfeit instruments would be
paid.
In April 1953 the United States and West Germany
agreed by treaty that foreign debts contracted before the end
of World War II would be paid only if found by a validation
panel to be legitimate. 4 U.S.T. 885 (1953). The parties agree
that this treaty applies to Germany as reconstituted by the
merger of East and West Germany in 1990. Holders had five
years to submit their documents for validation by a panel in
New York City. Any later claim for validation goes to an Ex-­‐‑
amining Agency in Germany. The claimant must show a
good reason for the delay and establish the instruments’
provenance. Decisions adverse to claimants are subject to
judicial review in German courts. Article II of the Treaty
adds that no instrument within the scope of the Treaty and
Validation Law may be enforced unless it has first been vali-­‐‑
dated by a panel in New York or Germany.

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3 No. 12-­‐‑3269
Plaintiffs filed this suit in 2008 under the international
diversity jurisdiction, 28 U.S.C. §1332(a)(2), seeking to recov-­‐‑
er on bearer bonds that Germany had issued or guaranteed
before World War II began. One holder has never submitted
the bonds to a validation panel. The other submitted them to
a panel in Germany, which found them ineligible, and did
not seek judicial review of that decision.
In response to defendants’ request for the suit’s dismis-­‐‑
sal, both plaintiffs contend that the Treaty is invalid because
it takes their property without just compensation. The dis-­‐‑
trict court held that the Treaty is binding and that the suit,
which seeks to collect on un-­‐‑validated instruments, must be
dismissed. The court added that the suit is barred by the
statute of limitations, which the judge deemed to be a ten-­‐‑
year period drawn from Illinois law. (Illinois is the state in
which the district court sits.) The court’s opinions cover
some other issues, such as whether payment of the bonds is
a commercial activity for the purpose of the Foreign Sover-­‐‑
eign Immunities Act, 28 U.S.C. §§ 1602–11, and whether par-­‐‑
ticular defendants were served with process, but those ques-­‐‑
tions have dropped out. Appellees’ brief does not contend
that the defendants are immune under the FSIA or that ser-­‐‑
vice on any defendant was improper.
Despite the passage of time since the 1953 Treaty speci-­‐‑
fied how bonds could be enforced, recent years have seen an
uptick in claims seeking to recover in federal courts. Some
holders have argued that their claims did not accrue until
2010, when Germany made the final payments on bonds
processed under the Agreement. These suits have been uni-­‐‑
formly unsuccessful. See Fulwood v. Germany, 734 F.3d 72 (1st
Cir. 2013); World Holdings, LLC v. Germany, 701 F.3d 641 (11th

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No. 12-­‐‑3269 4
Cir. 2012); Mortimer Off Shore Services, Ltd. v. Germany, 615
F.3d 97 (2d Cir. 2010). The first, second, and eleventh circuits
have held that bondholders lose either because of the Trea-­‐‑
ty’s language or because the claims are time-­‐‑barred. Our
plaintiffs have raised constitutional arguments in an effort to
circumvent the obstacles created by the Treaty and the other
circuits’ decisions. The attempt to get around this sixty-­‐‑year-­‐‑
old treaty is unavailing.
The Constitution’s fifth amendment does not forbid the
taking of private property. Instead it requires just compensa-­‐‑
tion for taken property. The Tucker Act, 28 U.S.C.
§1491(a)(1), authorizes the Court of Federal Claims to award
whatever compensation the Constitution requires. It follows
that the 1953 Treaty cannot be unconstitutional as a prohib-­‐‑
ited taking. A person who thinks that the 1953 Treaty takes
private property should use the Tucker Act remedy. See,
e.g., Preseault v. ICC, 494 U.S. 1, 12–16 (1990); Ruckelshaus v.
Monsanto Co., 467 U.S. 986, 1017–19 (1984); Regional Rail Re-­‐‑
organization Act Cases, 419 U.S. 102, 126–36 (1974).
It is tempting to end the opinion here, but in Dames &
Moore v. Regan, 453 U.S. 654 (1981), the Supreme Court,
while observing that claimants could resort to the Tucker
Act, id. at 688–90, also stated that there is no constitutional
obstacle to an international property settlement. The agree-­‐‑
ment contested in Dames & Moore, among the United States,
Iran, and Algeria, resolved the dispute that began when dip-­‐‑
lomats and their families were taken hostage at the United
States Embassy in Tehran. The agreement established the
Iran–United States Claims Tribunal in The Hague. All claims
(including contract claims that predated Iran’s 1979 revolu-­‐‑
tion) must be submitted to the Tribunal, whose dispositions

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5 No. 12-­‐‑3269
are final. Litigation of claims outside the Tribunal is forbid-­‐‑
den. The Court observed that settlements of private claims
are a traditional, and valid, part of peacemaking, see 453 U.S.
at 679–80, and added that the United States’ power to strike
such bargains with other nations may be exercised by execu-­‐‑
tive agreement as well as by treaty.
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 Germa-­‐‑
ny’s refusal to pay claims based on bonds it issued or guar-­‐‑
anteed 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 diplomat-­‐‑
ic dispositions of private financial claims against other sov-­‐‑
ereigns, designed to facilitate the establishment of peaceful
relations among nations, have occurred throughout Ameri-­‐‑
can history. We cannot see any basis for a constitutional dis-­‐‑
tinction between the diplomatic resolution of private claims
against Iran and those against Germany.
Plaintiffs maintain that Germany has not carried out all
its obligations under the 1953 Treaty. That contention should
be made to the Department of State rather than to a district

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No. 12-­‐‑3269 6
judge. The 1953 Treaty is not self-­‐‑executing; the United
States and West Germany made promises to each other, not
directly to private citizens. Decisions such as Medellín v. Tex-­‐‑
as, 552 U.S. 491 (2008), show that private parties can be the
intended beneficiaries of treaties without having a right to
enforce them in court. Plaintiffs do not point to any language
in the 1953 Treaty conferring enforcement rights on private
parties; to the contrary, the Treaty forbids private suits based
on non-­‐‑validated claims. It is far from clear to us that Ger-­‐‑
many has fallen short of its commitments; Examining Agen-­‐‑
cies still exist in Germany, and judicial review of adverse de-­‐‑
cisions is available. But because this treaty is not self-­‐‑
executing, diplomatic rather than judicial channels are the
appropriate ones for consideration of plaintiffs’ grievances.
According to plaintiffs, a judicial order requiring Germa-­‐‑
ny to improve its validation process may issue under the Al-­‐‑
ien Tort Statute, 28 U.S.C. §1350, even if not directly under
the 1953 Treaty. That contention did not survive Kiobel v.
Royal Dutch Petroleum Co., 133 S. Ct. 1659 (2013), which holds
that §1350 cannot be used to contest the acts of foreign na-­‐‑
tions taken within their own borders. How Germany admin-­‐‑
isters the validation process is for diplomats or German
courts to consider.
Because plaintiffs lack validated claims, their suits must
be dismissed. Lest silence invite suits on claims validated in
coming years, we add that we agree with World Holdings, 701
F.3d at 653–54, and the district court that the statute of limi-­‐‑
tations independently bars a judicial role in collection. Hold-­‐‑
ers could have submitted their bonds for validation decades
ago, whether or not they accepted the speed-­‐‑for-­‐‑amount
tradeoff under the London Debt Agreement; those who de-­‐‑

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7 No. 12-­‐‑3269
layed have only themselves to blame. Plaintiffs tell us that
international law lacks a statute of limitations for the en-­‐‑
forcement of sovereign debt—which is true but irrelevant.
These bonds were issued under German law, and perhaps
under U.S. law or other nations’ law too (they were designed
for sale to non-­‐‑German investors, and some of the instru-­‐‑
ments covered by the 1953 Treaty were traded on U.S. ex-­‐‑
changes). The applicable periods of limitations are those
provided by Germany, by jurisdictions in which the bonds
were sold, and by agreement of the parties reflected in the
instruments themselves. Litigation in the 2010s is far too late
under any of those sources of law.
AFFIRMED

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