Aryanization in the Third Reich and Its Way to Swedish Courts

The term “Aryanization” in its broad sense encompasses not only the transfer of property from Jewish possession, but the Nazi politics of excluding Jews from the all areas of the economy.Footnote ⁸ Of the many measures taken to implement this policy, one is of particular interest here: placing Jewish firms under the guardianship of Nazi-appointed trustees or administrators.

The imposition of forced administration of Jewish-controlled enterprises was based on various legal measures, and sometimes occurred without a legal basis. Following the annexation of Austria—which is of particular interest as several of the would-be claimants before Swedish courts were Austrian residents before war—so-called “wild commissars” (wilde Kommissare) seized control of Jewish businesses without legal entitlement; their self-ascertained de facto positions were legalized only in retrospect.Footnote ⁹ The decree of April 13, 1938, put in place to deal with these chaotic developments, ordered the appointment of “commissary administrators” (kommissarische Verwalter) for enterprises based in Austria, in order to safeguard “important public interests.”Footnote ¹⁰ In the case of Nazi-controlled territory in its entirety, the defining legal measure—the decree of December 3, 1938 on the “utilization of Jewish property” (Verordnung über den Einsatz des jüdischen Vermögens)—was put in place following the November pogroms; it provided the legal basis to force Jewish owners of businesses to sell or liquidate their companies and to appoint trustees (Treuhänder) to oversee the continued operation or liquidation of such businesses.Footnote ¹¹ Like commissary administrators, the trustees were authorized to take any action—“legal or extra-legal”—on behalf of the enterprise.Footnote ¹²

Some of the enterprises thus placed under forced administration had assets abroad. As Jewish business owners fled across the expanding borders of the Third Reich, they made claims in the names of their companies to these assets. Simultaneously, however, the debtor or possessor of the property in question was also approached by the commissary administrator of the enterprise, making an identical claim. According to a contemporary news report, such disputes, euphemistically said to be caused by the “changes of management for commercial enterprises” in the Third Reich, arose in “large numbers” before Swedish courts.Footnote ¹³

Of those cases, nine were appealed all the way to the Supreme Court.Footnote ¹⁴ At the time, the Swedish Supreme Court was neither a court of cassation (nor is it today), nor even a court of precedent, but functioned instead as a second court of appeal.Footnote ¹⁵ It had general jurisdiction in civil and criminal matters and the competence to hear appeals on issues of fact or law (or both). Access to the Supreme Court was, in principle, considered a right, and as such was relatively uncurtailed, the main exception being cases concerning smaller claims (disputes over values lower than SEK 1,500, roughly equivalent to SEK 38,500, € 3,700, or USD 4,600 in today's value), where admissibility was conditional on the appeal being of particular importance.Footnote ¹⁶ The Supreme Court, therefore, had little discretion to control its case load or single out cases or issues of particular interest.

The nine cases were decided in two batches, the first four on June 11, 1941, all by the same bench consisting of five justices, and the subsequent five on June 10, 1942, again by one bench of five justices.Footnote ¹⁷ The nine justices involved had, without exception, followed the traditional career path for the higher judiciary: they had obtained a law degree, qualified at a court of appeal, and, thereafter, worked as government civil servants or in official inquiry committees before being appointed to the Supreme Court. Two of them counted former Supreme Court justices among their close relatives.Footnote ¹⁸ Their political outlooks remain largely unknown—recruitment was based solely on professional merit—but some of the justices were loosely associated with moderate conservative camps.Footnote ¹⁹ Two of them had taken a particular interest in matters of private international law: Einar Stenbeck was the Swedish delegate to the fifth Hague Conference on Private International Law in 1925,Footnote ²⁰ and Algot Bagge gained national and international recognition, as evidenced inter alia by two honorary doctorates awarded by the Universities of Uppsala and Paris respectively, for his legislative and academic endeavors in private international law.Footnote ²¹

The Supreme Court's Position on Applying Nazi Law in Sweden

When the Stockholm district court delivered its judgment in Trostli v. Koci and Hanselmann on January 31, 1939, it was probably the first time a Swedish court had taken a position on the Aryanization laws of the Third Reich and their applicability in Sweden.Footnote ²² Following appeals, the Trostli case was to set the precedent for the Supreme Court's further adjudication on Nazi forced administration of Jewish enterprises.

Karl Trostli was an Austrian Jew and sole owner of Kartro-Werke Karl Trostli, a Vienna-based company engaged in the manufacture and trade of office supplies. He was also the founder of two companies in Sweden and the Netherlands, respectively. Trostli himself was the majority shareholder in the Dutch company, while he and the Viennese company together owned 98% of the shares in the Swedish company. The majority of the stock certificates in Trostli's Swedish company were deposited in Stockholm with a Swedish solicitor (of Austrian birth), Rudolf Koci.Footnote ²³

Trostli left Vienna for Paris in March 1938, a few days before the annexation of Austria. In Paris, he signed over his own and his Viennese company's shares in the Swedish company to the Dutch company, which proceeded to request the handover of the stock certificates. Koci refused. The Dutch company, therefore, filed an action against Koci at the Stockholm district court, demanding that he be ordered to release the stock certificates.

Before the district court delivered its judgment, another claim to the stocks was filed against Koci, this time by Karl Hanselmann, acting as commissary administrator of Trostli's Viennese company. Hanselmann, with whom Koci essentially agreed, argued that the law of the Third Reich forbade Trostli both to act as representative of the Viennese company and to dispose of his personal property. Consequently, the transfers were invalid and the Viennese company was, according to Hanselmann, the only entity legally entitled to the shares.

The district court ruled that the Nazi regulations that Koci and Hanselmann relied on could not be applied insofar as they concerned Trostli's right to dispose of stocks that were kept in Sweden and pertained to a Swedish company. As no other grounds had been brought forward to preclude the validity of the conferral of the stocks from Trostli and the Viennese company to the Dutch company, the court granted the latter's claim. The judgment was upheld by the Court of Appeal. One of the Court of Appeal's judges added in a concurring opinion that the Nazi provisions “did not enact the kind of limitation to Trostli's legal rights that…should be taken into account…by a Swedish court; but the provisions concerned…must, considering their nature…be considered to be of a kind that were not to be applied by a Swedish court to property in Sweden.”

The Supreme Court, in the parts of the judgment that are relevant to this article, held—in agreement with the concurring Court of Appeal judge—that “the forced administration to which the [Viennese company] has been subjected since 29 July 1938 cannot, given its meaning and purpose, be considered to include property which already at the time of the establishment of the administration was located in Sweden—following what is generally the case concerning territorial limitations in international legal relations.”

The reasoning of the court, brief as it is, appears to contain two points of interest: first, the allusion to the “meaning and purpose” of the Nazi rules, and second, the reference to existing theories of private international law. These two points reappear in almost all of the subsequent judgments and, therefore, form a core part of the Supreme Court's doctrine on the application of Nazi Aryanization law in Sweden. I will return to them in the following sections. However, the Supreme Court's reasoning also hints at a third point; namely, the location of the property at the time that administration was imposed. This point came to the fore in the judgment in Weiss v. Simon, delivered on the same day.

The claimants in that case were two Jewish brothers who had owned a company engaged in the production of and trade in woollen goods. The Weiss brothers had emigrated from Reichenberg in the Sudetenland to Zürich in September 1938. Their company was placed under administration on October 25 of the same year.

During the autumn of 1938, the Weiss brothers’ enterprise exported goods to a Swedish buyer. Payment was requested in seven different invoices sent out between October 20 and December 24. The first invoice was the only one dated before the company was placed under administration.

When the case reached the Supreme Court, the court reiterated its statement from Trostli, holding that the forced administration, with reference to its meaning and purpose and in conformity with general practices in international relations, could not extend to property in Sweden. However, the court went on to hold that “the right to demand payments for goods which have been delivered by the business after the establishment of the administration…cannot however be denied to the commissary administrator.” Disregarding the Weiss brothers’ observation, that the production and delivery of goods even after that date had been possible only “in their factory, with their machines, by their materials and assisted by all the supplies they had had to leave behind,”Footnote ²⁴ the Supreme Court granted them only the debt owed on the first delivery. The right to collect the debts incurred by the debtor after October 25, 1938 was awarded to the commissary administrator.

The Supreme Court's stance on forced administration can be summarized as follows: the Nazi laws had no effect on property in Sweden, as long as the Jewish enterprises had had claims to that property already at the time of the establishment of forced administration. Where claims had arisen after that time, however, the Swedish court relied on Nazi law to identify the person competent to represent the company. This shows that the forced administration of Jewish companies in the Third Reich was, in principle, recognized in Sweden.

Although the reasoning in these cases referred specifically to forced administration, the principles relied on had a broader scope. This is evidenced by the judgment of the following year in the case of Salomon v. Deutsche Bank, where the circumstances were somewhat different.

The Salomon case concerned an agreement concluded between two Jewish businessmen of German nationality residing in England, whereby one of them, who owned a company in Königsberg, transferred his company's claims against its Swedish debtors to the other. However, the Nazi authorities had simultaneously ordered that company to transfer its assets to an Aryan bank; in this case the Deutsche Bank.Footnote ²⁵ As in the other cases discussed here, the Swedish debtors were thus approached by two persons, both claiming a right to collect the debts. Unlike in the other cases, however, the Jewish company does not appear to have been placed under any kind of guardianship (or, if it was, that fact was not considered relevant by the Swedish courts). The decisive question was, instead, whether or not the agreement between the two Jewish businessmen was valid; a question that would be answered in the negative pursuant to German law, but in the positive according to Swedish law.

The majority in the Supreme Court held that according to principles of Swedish private international law, Swedish law was applicable in the dispute, given that the agreement had been concluded in Sweden and concerned property located in Sweden. This excluded the application of German law, “regardless of the limitations on the applicability of the provisions in question that, given their nature, may otherwise follow.”

Justice Bagge dissented, arguing that the German provisions in question should be considered measures of public, rather than private, law, and that, therefore, the majority had erred when basing its conclusion on principles of private international law. The correct approach, in his opinion, was to rely on the general principle stating that foreign measures of public law could not be applied without express legislative support. Although his conclusion—that German law was not applicable—conformed to that of his colleagues, his line of reasoning provides an insight into the discussions that took place between the members of the bench, as well as a possible clue as to what those “other limitations” alluded to by the majority might have been.Footnote ²⁶

The Payment Procedure: A Mere Technicality?

Several of the Supreme Court judgments were concluded with an instruction that payment be made “in accordance with what may be legally stipulated concerning the fulfilment of payments in relation to the German Reich.” This referred to the Swedish–German clearing agreement, implemented in Swedish law by the Royal Order of August 28, 1934.Footnote ²⁷ The order stipulated that Swedish debtors with German creditors were not to fulfil their obligations through direct payments to those creditors, but to make their payments in Swedish currency to a Swedish bank. The Swedish bank would, in turn, transfer the money to the Central Bank of Sweden, where it would be deposited into an account earmarked for German clearing.Footnote ²⁸ The Central Bank would then notify its German counterpart, who would in turn effect the disbursement in German Reichmark to the creditor from its own Swedish clearing account.Footnote ²⁹ Disbursements made by the German clearing board could be transferred only to bank accounts in Germany; this was inter alia conceded by the Treuhänder in the Weiss case.Footnote ³⁰

Although exchange controls had already been introduced by the Weimar regime as a means to combat the depression of the early 1930s, the measures were subsequently adapted by the Nazi regime as a tool for the totalitarian control of the economy and the economic persecution of Jews.Footnote ³¹ For the claimants in the Aryanization cases, the introduction of government control of the payment of private debts came to take on a particular significance.

For a number of reasons, ranging from exchange control regulation to limitations in the legal capacity of Jews, money deposited in German bank accounts, even if nominally in their names, was inaccessible to exiled Jews. This was pointed out to the Supreme Court by the applicants in Böhm v. Czerny, who argued that their rights would be “entirely illusionary” if the debt was to be settled through the clearing procedure.Footnote ³² The counterargument offered by the defendant rather underlined their point; he contended that the claimants, if the disputed amount were to be paid into the clearing account, would be in possession of “assets in Germany,” which, although “partially blocked,” could be “to a certain extent disposable in Germany.”Footnote ³³

Only in one circumstance did the Supreme Court allow debts to be settled outside the clearing procedure. In close proximity to the position taken in the abovementioned Weiss case concerning the recognition of the administrator's claim, the reasoning was formal and hinged on a critical date. Where the disputed sums had been deposited before November 15, 1938, when the Swedish-German clearing procedure was extended to include Sudetenland, the payment was exempted from that procedure and could be paid directly to the exiled Jewish business owners.Footnote ³⁴ In all other cases, however, the Supreme Court was consistent in upholding the clearing procedure.

The effect of the clearing procedure, and the Supreme Court's refusal to allow the settlement of debts outside it, was that the Jewish claimants would rarely see their money, despite having successfully defended their claims. This effect was all the more devastating as the assets held abroad were likely to have been all that the Jewish refugees had left; the limitations on currency transfers, as well an increasingly heavy Reichsfluchtsteuer, Footnote ³⁵ meant that virtually all of the refugees’ domestic assets were confiscated when they exited the Third Reich, or else had to be left behind.

It has been argued that the rulings nevertheless benefitted the Jewish claimants, as they also prevented the commissary administrators from laying their hands on the assets. According to these commentators, once it was clear that administrators had lost (or would lose, should the case come to court), the Nazi agents would be willing to enter into negotiations whereby the Jews would be able to secure at least part of their property.Footnote ³⁶ However, such advantages are likely to have been limited. First, even the transfer to a blocked account in the Third Reich would have been preferable, from a Nazi perspective, to the assets being handed over to the Jewish claimants or even kept in Sweden.Footnote ³⁷ This point is confirmed by a letter from a Dr. Jur. Rudolf Schichetanz in Reichenberg to his colleague Koci in Stockholm (who, as was mentioned, had appeared against the Jewish claimant in Trostli v. Koci and Hanselmann), which acknowledges that the Swedish debtors could make payments through the clearing only to the benefit of the Jewish claimants, but nevertheless charges its recipient with urging the debtors to fulfil the payment, noting that the money “thereby at least will come to Germany.”Footnote ³⁸ Second, as noted by a Swiss inquiry, out of court settlements of these disputes would be of advantage to the Jewish parties only provided that they were not “otherwise pressurized,” “for instance by the imprisonment of relatives.”Footnote ³⁹

The Aryanization Laws as Ordre Public Violations?

It has been established in the foregoing that the Supreme Court in Sweden upheld the claims of Jewish business owners to their companies’ assets in Sweden, as long as their claims had arisen prior to the imposition of forced administration of the enterprise in question. After that time, the assets were instead awarded to the Nazi-appointed administrators. It has also been established that the obstacles to Jewish entitlement presented by the Swedish–German clearing procedure were, in principle, kept in place by the Supreme Court. I will now move on to discuss the possible rationales for these conclusions.

In Swedish historical scholarship, the Aryanization judgments, to the extent that they went in favor of the Jewish claimants, have been interpreted as being based on the principle of ordre public. Footnote ⁴⁰ Ordre public is a principle of private international law declaring that courts can refuse to apply foreign legislation that should otherwise have been applicable, or to uphold a foreign judgment that should otherwise have been recognized and enforced, if the foreign rule or judgment contravenes fundamental moral or legal norms of the court state.Footnote ⁴¹ A judgment based on ordre public, therefore, contains an ethical appraisal of the qualities of a foreign legal act. If the principle served as the basis for the Supreme Court's Aryanization judgments, this would entail a strong condemnation of the Nazi Aryanization laws on the part of the court.

The ordre public-based interpretation has given rise to both praise and criticism. Sven Nordlund contends that Swedish courts “relied on ordre public to defend the principles of the rule of law against the Nazi dictatorship's abuse and injustices against Jews and their property.”Footnote ⁴² However, he also denounces the judgments in the parts where they entailed recognition of the claims of the commissary administrators after the establishment of administration, arguing that the courts’ “decisions as to when the ordre public weaponry should be used seem to have been selective and guided by consequentialism” and that “concerns related to trade and politics apparently outweighed Swedish principles of law.”Footnote ⁴³

The ordre public interpretation of the Supreme Court's judgments may have been inspired by the approach previously taken by Swiss courts, which appear to have been faced with Nazi legislation earlier than their Swedish counterparts, and which consistently rejected the administrators’ claims with reference to ordre public.Footnote ⁴⁴ Swiss courts, like their French counterparts, had, however, previously proven themselves open to a relatively extensive application of the ordre public principle,Footnote ⁴⁵ whereas Swedish reliance on the principle was notoriously restrictive.Footnote ⁴⁶

Furthermore, where the Swiss courts relied on the ordre public principle, they did so explicitly, holding, for example, that Nazi Aryanization law “blatantly conflict[ed] with the fundamental bases of Swiss law,” including “the principle of legal equality, which does not permit any intervention in an individual's proprietary rights solely on grounds of race.”Footnote ⁴⁷ In comparison, the Supreme Court judgments, as has been discussed, contain no trace of such fiery language. Nor, more crucially, do they contain any reference to the “basic principles of the Swedish legal system,” which was (and remains) the established term for ordre public in Swedish legal language. Proponents of the ordre public interpretation would perhaps argue that the “nature” and “purpose” of the Nazi measures, which was referred to in some of the judgments, may refer to their discriminatory or anti-Semitic nature and purpose. However, it seems inconceivable that the Supreme Court should have used such obscure and indeed misleading language, where an established term existed. The fact is that there is no textual support in the judgments for the assumption that they were based on the principle of ordre public. On the contrary, the Supreme Court referred to usual practice in international legal relations, whereas reliance on ordre public, particularly in Sweden, was quite exceptional.

Indeed, the ordre public interpretation was almost universally dismissed in contemporary legal scholarship.Footnote ⁴⁸ Discussions on ordre public were more concerned with the possible foreign policy implications of invoking the principle than with the injustices suffered by individual claimants. Several authors noted, apparently approvingly or at least without reproach, that courts would “for obvious reasons be reluctant to [invoke the ordre public exception] as regards the legislation in a so-called friendly state, since it may result in difficulties in foreign relations for their own country.”Footnote ⁴⁹

These discussions also illustrate that although there is clearly an ethical aspect of the ordre public principle, it does not necessarily belong to the ethical approach that previous interpretations have assumed and that was invoked by the Swiss courts. The legal scholars who entertained the idea that the Aryanization laws might be considered contrary to Swedish ordre public cited not principles of equality before the law, but property rights—“that property is taken from somebody without reasonable compensation”—in favor of such an argument,Footnote ⁵⁰ even where the anti-Semitic purpose of the legislation was explicitly recognized.Footnote ⁵¹ It is also noteworthy that although several of the Jewish parties relied on ordre public in their submissions, they rarely or never did so as their only or even their first grounds.Footnote ⁵²

In sum, legal scholarship prescribed a cautious approach to the ordre public principle and did not consider it a means for protecting Jews from Nazi persecution. Therefore, the threshold for invoking ordre public in defense of individual Jewish claimants must have been high, even for the Supreme Court. Furthermore, there is no explicit reference to that principle in any of the judgments. As will be discussed in the following section, interpretations based on other legal grounds are available and more easy to reconcile with the wording of the judgments, and these grounds were favored by contemporary legal scholarship.

A Consistent Case Law on Foreign Confiscations

As has been discussed, the reasoning provided by the Supreme Court in support of its conclusions is scanty and offers little insight into which considerations persuaded the justices to rule as they did. This, in itself, is not surprising; as already noted, the Supreme Court at the time did not function as a court of precedent, and consequently, the pedagogical expectations of its judgments were significantly lower than they are today. The brevity of the judgments is typical of the period.

However, the Aryanization cases did not appear in a vacuum and, more importantly, they were not perceived to do so. There were similar previous cases to draw on, most recently those that had arisen from the dissolutions and nationalizations of banks and insurance companies, in particular, in the aftermath of the Russian Revolution.Footnote ⁵³ In those cases, the Supreme Court consistently held that although the dissolution of a foreign association must preclude the continued operations of that association in Sweden as well, the effects of the liquidation regarding the allocation of the association's assets must be subject to lex rei sitae. Whereas the Supreme Court did not cite this prior case law in its Aryanization judgments, the conclusions are very similar, both as to the recognition, in principle, of confiscations carried out within the territory of the confiscation state (Soviet Russia and Nazi Germany, respectively), and the limited effects of the confiscations.

In contemporary literature, all these judgments—not only those originating in the Third Reich—were generally explained as expressions of either one (or in some cases a combination) of two competing but interrelated theories.Footnote ⁵⁴ First, some commentators relied on a principle stating that only foreign private law could be applied in Swedish courts, whereas public law was always territorially limited to the promulgating state.Footnote ⁵⁵ The underlying rationale was the closer connection between public law and national policy; no state should impose its own policy choices on another state's territory. On the other hand, when an act of public law had been enacted within the territory of the issuing state, respect for that state's sovereignty would prohibit other states, including their courts, from reviewing that measure. This theory had an ardent proponent in Supreme Court Justice Bagge, who wrote the dissenting opinion in Salomon. Footnote ⁵⁶

A second interpretation concerned itself specifically with the applicability of foreign confiscatory laws.Footnote ⁵⁷ According to this principle, such laws are recognized as valid in principle, with the consequence that the confiscator, once the confiscation has taken place, is accepted as the owner of the confiscated property; that the confiscator's subsequent disposal of the property is valid; and that compensation claims made by the previous proprietor will be dismissed. However, like the public/private law divide principle described above, the confiscation law theory limits the territorial effects of the confiscation to property within the territory of the confiscation state, whereas property in other states should be handled in accordance with lex rei sitae. Footnote ⁵⁸

For the purposes of this article it is not necessary to give priority to one of the theories over the other. Suffice it to note that both theories are capable of providing a satisfactory basis for the Supreme Court's reasoning and conclusions. However, it can be noted that the existence of two competing theories within mainstream legal scholarship provides a probable explanation for the disagreement within the bench in the Salomon case. As it is clear from his extrajudicial writings that Justice Bagge based his dissent on the first theory mentioned, it is likely that the majority favored the second, and perhaps also interpreted the previous judgments in this manner.Footnote ⁵⁹

These debates show that the legal questions raised by the Aryanization cases were not unfamiliar to legal practice or doctrine, and that legal scholars saw no significant difference or break between the previous rulings related to Soviet confiscations and those concerning Nazi administration. Both issues fell within the scope of the main principles of private international law.Footnote ⁶⁰ That the continuity was perceived even by the Supreme Court is evident in its consistent remarks on its conclusions being in conformity with what is “generally the case concerning territorial limitations in international legal relations.”

Furthermore, virtually the same conclusion was reached in a subsequent case concerning the forced administration of German assets in England during the war. The administration, as such, was not questioned, but it “could not be considered to include assets which, before the imposition of forced administration, were located in [Sweden].”Footnote ⁶¹ This later case is particularly significant, for two reasons. First, it shows that the introduction of a critical date after which the administrator's claims would be recognized was not a wartime concession to a potential aggressor but a generalizable rule. Second, as the actions of a belligerent state toward enemy aliens lack the ideological dimensions present in both the Soviet and the Nazi measures,Footnote ⁶² it suggests that the ideological underpinnings of the foreign confiscations did not play a decisive role in the Supreme Court's reasoning.

Indeed, even with the benefit of hindsight, the Aryanization judgments are not considered to belong to those hard cases that make bad law. On the contrary, they are still cited in modern legal literature in support of conclusions concerning the present-day Rechtslage. Footnote ⁶³ This confirms the conclusion that the judgments conformed to previous and, therefore, informed subsequent case law, whereas an approach more closely tailored to the situation and development in the Third Reich—such as one based on ordre public—would have rendered them less generally applicable.

The Late Arrival of the Property Asylum Theory

From the perspective of a modern-day observer, the problem presented by the Aryanization cases may seem to belong more to the realm of human rights than to private international law. For example, in recent cases concerning the freezing of individuals’ assets based on suspicions of terrorist connections, so-called targeted or smart sanctions, courts have relied on human rights law.Footnote ⁶⁴ Such an approach would inevitably have caused the courts to change their perspective from that of the state, which informed the conflict of laws perspective examined previously, to that of the concerned individuals.

A pioneering effort in this regard, inspired by the long-standing right of asylum, was made by Folke Schmidt, who in 1944 launched the property asylum theory.Footnote ⁶⁵ Taking a broad outlook on judicial practice in questions related to the applicability of foreign law under “revolutionary” circumstances in Europe during the first half of the twentieth century, Schmidt argued that the dominant principles of private international law were inconclusive in most cases. Instead, he proposed—at least partially normatively in the de sententia ferenda sense, but also with explicit explanatory ambitions—a principle based on an analogy with asylum, to the effect that the court (or asylum) state should “protect political refugees against all measures taken by a foreign legislature based on their political views and with the purpose of depriving them of their property in the asylum state.”Footnote ⁶⁶

The main innovation of Schmidt's contribution lay in the arguments it invoked. Of the theories attempting to explain the Soviet/Nazi confiscation case law in the 1940s, only the property asylum theory took humanitarian perspectives into account, holding that “Sweden has no reason to protect the property of war criminals by applying without modifications the same principles that we have applied when German and Austrian Jews were subject to persecutions.”Footnote ⁶⁷

However, despite a contemporary critic's dismissal of the theory as one that yielded few solutions that could not be arrived at by reference to theories already established in private international law at the time,Footnote ⁶⁸ one of its consequences is worthy of further consideration. Schmidt argued that, for the application of his theory, it was immaterial when and how the disputed property had been brought to Sweden.Footnote ⁶⁹ Established theories required that once a confiscation had been realized in the confiscation state, the refugee's claim to the property was forfeited. This was why the Jewish claimants were successful only as regards claims that predated the imposition of forced administration on their enterprises. Schmidt, however, argued that the refugee “ought to be protected from all coercive measures aimed at depriving him of property in [Sweden], regardless of the way in which and time at which the property had been brought here.”Footnote ⁷⁰ Arguably, such reasoning could have salvaged all of the assets in Sweden of the Jewish claimants, regardless of when the claim had arisen. However, Schmidt also proposed an exception for property that had been confiscated and subsequently transferred abroad.Footnote ⁷¹ As the delimitation between this exception and the main rule was not clarified, the possible impact of his theory on the Aryanization cases remains uncertain.

The property asylum theory appears to have stood the test of time. Although the theory of the public/private law divide discussed previously has been largely discarded, the asylum theory has its place in one of the most renowned private international law textbooks in Sweden.Footnote ⁷² Despite this subsequent recognition, however, the value of the property asylum theory is rather limited as an explanation of what persuaded the Supreme Court justices to rule as they did in the Aryanization cases. First, the theory was introduced as a novelty in legal scholarship only after the delivery of the judgments.Footnote ⁷³ Second, the reference in the judgments to established practice speaks strongly against the idea that the they were in fact based on a theory not yet formulated either in legislation, case law, or even published scholarship. Third, the restrictive Swedish refugee policy and legislation during the last years before and the first years of the war,Footnote ⁷⁴ which was in parts aimed specifically at Jewish refugees,Footnote ⁷⁵ was hardly conducive to extensive analogies. Although the asylum policy was gradually relaxed during the course of the war,Footnote ⁷⁶ it is doubtful whether this shift came early enough to lay the groundwork for extensive legal interpretations in the summer of 1941, especially considering that the Supreme Court upheld lower court judgments delivered already in early 1939.

In sum, although Schmidt's property law asylum theory was introduced during the war and remains a valid principle, it is uncertain whether it would actually have affected the outcome of the cases, and it is highly improbable that it was developed early enough to be taken into consideration by the Supreme Court.

An Unanswered Plea for Judicial Review

Another solution arguably available to the Supreme Court, had it wished to avoid upholding the Nazi appropriation measures, would have been to engage in judicial review. One such opportunity was presented to it in the Böhm v. Czerny case, in which the applicants opposed the application of the Swedish clearing regulations (which, as already discussed, constituted one of the main stumbling blocks for the Jewish parties). In brief, they argued that because they had operated their business from Bohemia, which had been part of Czechoslovakia prior to its annexation by Germany, and as Sweden did not have a clearing agreement with Czechoslovakia, the Swedish–German clearing agreement and the implementing Royal Order of August 28, 1934 was not applicable to their case. The Royal LetterFootnote ⁷⁷ that extended the clearing procedure to payments to Austria and the Sudetenland did not, in the claimants’ view, constitute a valid legal amendment, but should be considered a mere interpretation without legal force of its own. They also produced an amicus curia brief, authored by a professor of constitutional law, to that effect. The claimants thus disputed the executive's right to amend legal acts through Royal Letters and demanded that the court assess whether the letter was not in fact in contradiction to the higher-ranking order.

Although not explicitly provided for in the then-applicable constitution of 1809, it appears to have been established at the time that courts had the right, at least in theory, to set aside legal acts, either for failure to comply with proper legislative procedure or for being manifestly incompatible with a substantive constitutional requirement.Footnote ⁷⁸ Nevertheless, the Böhm brothers were unsuccessful in their argument; the Supreme Court did not even addressed it. It is however clear from the judgment that the court accepted the Royal Letter as an amendment to the law: the letter stipulated an extension of the clearing procedure to the Sudetenland effective from November 15, 1938, and one payment deposited prior to that day was exempted from the clearing procedure. Overall, there is no indication that the Supreme Court at any point questioned the constitutionality of the law it applied in the Aryanization cases.

The Bigger Picture: Largely Unseen?

The issue at stake in the Aryanization cases had geopolitical as well as ethical implications. That geopolitical concerns could become entangled with the judicial procedure is illustrated by the highly controversial case Application by Dampskipsinteressentskapet Garonne.Footnote ⁷⁹ In that case, the German occupation force in Norway applied for the provisional attachment of ten Norwegian ships anchored in the Gothenburg harbor and under the command of the British government, acting on an agreement with the Norwegian government in exile. The Swedish government, fearing an angry reaction from Germany, made it known to the judges involved that an outcome detrimental to Germany might threaten Sweden's neutrality and peace.Footnote ⁸⁰ When it became clear that the first-instance judge would not give in to pressure, the government also took the highly unusual measure of rushing a new piece of legislation through Parliament, providing for the appeal of first-instance decisions.Footnote ⁸¹ Despite this, however, the British claim to immunity, having been upheld in the first instance but turned down on appeal, was finally restored in a lengthy Supreme Court judgment on March 17, 1942, with the effect that the German request for attachment was denied.

The case shows that the Swedish government was prepared to interfere with judicial proceedings, but it also shows that the Supreme Court justices had the requisite independence and courage to resist such pressure. As the Aryanization cases discussed here were, in comparison, insignificant in the war effort and of little diplomatic importance, it is unlikely that the Supreme Court would have succumbed to political pressure in these cases, even if such pressure had been applied, of which there are no indications.

Likewise, media and public opinion are unlikely to have contributed to the court's reasoning. Although the government may have been weary of risking its relations with the Third Reich, public opinion was consistently anti-Nazi and, particularly following reports of German brutality in Norway in the autumn of 1941, increasingly anti-German.Footnote ⁸² However, the Aryanization cases received only limited attention in mass media and the general aversion toward the Third Reich does not appear to have translated into any specific support for the Aryanization claimants.

As for the ethical aspects of the Aryanization issue, it should be acknowledged that the most extreme aspects of the Nazi persecution may not have been known at the time of the judgments. However, it was certainly no secret that Jews were systematically harassed and discriminated against. For example, the November progroms of 1938 were well covered in daily press, with headlines announcing an “annihilating blow against Germany's Jews.”Footnote ⁸³ Furthermore, and more importantly, the leading Swedish law journal had continuously published updates on the legal developments in Germany since 1933, including an early account of the authoritarian measures put in place directly following the Nazi seizure of power,Footnote ⁸⁴ the 1935 Nuremberg laws,Footnote ⁸⁵ racial marriage laws and their application before German courts,Footnote ⁸⁶ various anti-Jewish measures put in place following the assassination of German diplomat vom Rath in 1938,Footnote ⁸⁷ and even the practice of forced administration of Jewish companiesFootnote ⁸⁸; a report on the latter, however, appeared only in late 1941. The same journal also published reports of Nazi policy in other forms, such as an account of the strongly anti-Semitic statements of a 1936 meeting of the law professors’ section of the Nazi Lawyers Association, and another of the German presence at the first International Congress of Criminology in 1938.Footnote ⁸⁹

Although most of these reports are, to the modern-day reader, remarkably neutral toward the developments they depict,Footnote ⁹⁰ the last-mentioned contribution constitutes a noteworthy exception, containing inter alia a passage where the author, a propos of a reported “significant decrease in criminal activity in Germany,” drily observes that criminal activity requires “a certain quantum of freedom of movement,” which in Germany had been eliminated through “more or less impounding the youth in semi- or wholly military institutions,” and further that the “uncountable instances of violence and theft against Jews and other undesirable persons…would undoubtedly, if they were reported, show an increase, rather than a decrease, in crime.”Footnote ⁹¹ Ignorance of the anti-Semitic developments in the Third Reich can consequently not be cited as an explanation for the absence of ethical considerations.

In the face of this knowledge, one might argue that the Supreme Court ought to have explored alternative lines of reasoning that would have allowed it to disapply Nazi legislation and uphold the Jewish claims to a larger extent. As has been discussed in the foregoing, there were conceivable legal alternatives. However, these alternatives were highly unconventional, especially if they were to be applied in a way as to more completely shield the Jewish refugees from their Nazi oppressors. For example, it is debatable whether the newly launched property asylum theory would have yielded other results than those arrived at by the Supreme Court,Footnote ⁹² and even the Swiss courts, which consistently relied on ordre public to uphold the Jewish claims, found it necessary to turn them down when the Nazi takeovers were presented as faits accomplis. Footnote ⁹³ Circumventing these obstacles would have required significant legal innovation, and the Nazi measures, it seems, were not considered exceptional enough to warrant a radical break from established practice.

Concluding Remarks

It has been argued throughout this article that the outcome of the Aryanization cases before the Swedish Supreme Court in 1941 and 1942 was reached on the basis of established principles and precedent in private international law. These principles were applied in a rule-based manner that was consistent with recognized legal methods and with little or no reference to the consequences for the individuals concerned. In particular, nothing in the judgments suggests that the plight of the exiled Jews was considered a relevant factor in the adjudication. However, there is equally nothing to support the hypothesis that the justices were guided by trade or foreign policy considerations.

This is not to say that the Supreme Court was uniquely compliant or receptive to Nazi legislation. On the contrary, previous studies point to a willingness of the courts, even in liberal democracies, to apply authoritarian measures even without the threat of war,Footnote ⁹⁴ and observe that Nazi legislation was received in other unoccupied countries as legitimate and sometimes even progressive.Footnote ⁹⁵ Nor did its stance deviate significantly from that taken by other legal actors in Sweden. For example, despite the explicit public condemnation by the foreign minister, Swedish employers, including courts and respected law firms, voluntarily adapted to German pressure to rid their managements or even staffs of Jews.Footnote ⁹⁶ Contemporary scholarship, as we have seen, was mostly without condemnation in its treatment of Nazi legal developments.

If we find the outcome of the Swedish Aryanization cases unsatisfactory—and on that I believe that we can agree—the responsibility cannot be placed solely on the judiciary. The problem of law and morality allows no such simple answers. Although the judgments show no signs of ethical considerations, they should not be criticized for political opportunism either. Of the nine men that handed down the judgments perhaps nothing worse should be said than that they missed an opportunity to be heroes; that they saw only a conventional legal problem in a situation that was horrifically unusual; that they treated as any other day the day when they were invited to make history.