In a resounding unanimous decision, the US Supreme Court on 21 April vacated Spain’s lower court victory in a dispute over a painting stolen by a Nazi from a German Jew, and remanded the case back to court in California for more proceedings.
The Court did not decide who owns the work, Rue St Honoré, apres-midi, effet de pluie (1897) by Camille Pissarro, which the owner, Lilly Cassirer Neubauer, to get exit visas so she and her husband could flee Germany, sold to a Nazi appraiser in 1939 for a small sum that, as a Jew, she was then barred from accessing. The circumstances of the transfer meant that the lawsuit acknowledged it as a theft or unlawful forced sale. The work is held by the Thyssen-Bornemisza Collection Foundation (TBF), an instrumentality of the government of Spain that manages the Museo Nacional Thyssen-Bornemisza in Madrid.
At issue for the Supreme Court was which “choice of law” rule should be used in the rare cases when a foreign government can be sued in US courts. While the Foreign Sovereign Immunities Act (FSIA) generally bars US courts from taking up lawsuits against foreign states, in 2005 the Neubauer heirs squeezed through the FSIA’s “expropriation” exception to bring suit against Spain in California because Neubauer lost her rights in the painting to the Nazis in violation of international law.
In Thursday’s short decision written by Justice Elena Kagan, the Supreme Court agreed with the heirs that the 9th Circuit federal appeals court should not have tried to divine a “federal common law” rule to choose which law—Spain’s or California’s—would apply to adjudicate the claim. The Supreme Court agreed to hear the question because of a conflict among the federal appeals courts as to which choice-of-law rule to apply in FSIA cases.
“It is a great day for the Cassirer family and for all who care about justice,” David Boies, a New York-based lawyer for the heirs at Boies Schiller Flexner who argued the case at the Supreme Court, told The Art Newspaper in a statement. Scott Grant, also a lawyer for the heirs, based in Washington, DC, said that “the Supreme Court corrected the legal error of the lower courts, and [we] look forward to resuming litigation to secure the return of this Cassirer family treasure”. He added, “I hope the Foundation and Spain will reflect and conclude it should return the painting rather than maintain its longstanding refusal to do what is just.”
A lawyer for TBF did not immediately respond to a request for comment.
In the decision, the Supreme Court Justices all lined up to say California’s choice of law rule applies, and that there is no federal common law choice of law rule in FSIA cases. Calling the 9th Circuit’s decision “minimally reasoned” and “alone” among the circuits in its approach to the choice-of-law rule for an FSIA case, Justice Kagan wrote that once a foreign state is found to be not immune under the FSIA from suit, it is subject to the same rules of liability as a private party. As a result, the court hearing the case should use the same choice-of-law rule—meaning the state’s rule, not a federal one—as in a lawsuit against a private party.
Using a stolen art scenario as an example, Justice Kagan hypothesised “two suits seeking recovery of a painting—one suit against a foreign-state-controlled museum (as here), the other against a private museum. If the choice-of law rules in the two suits differed”, then the substantive law chosen to adjudicate the facts might differ. “And if the substantive law differed, so might the suits’ outcomes. In one case, say, the plaintiff would recover the art, and in the other not.” Under the plain text of the FSIA, Kagan wrote, a government that is not immune from suit is “liable in the same manner and to the same extent as a private individual under like circumstances.” The two museums would not be “‘liable in the same manner and to the same extent’ if a different choice-of-law rule applied to the state-owned museum”, she wrote. If California’s choice-of-law rule applies “in the private-museum suit, so too it must apply in the suit here, against the Foundation”, which is “the only way to ensure… that the Foundation, although a Spanish instrumentality, will be liable in the same way as a private party”.
Justice Kagan outlined the impact on the heirs’ lawsuit of the 9th Circuit’s use of a federal choice-of-law rule, which chose Spanish law to decide the case. The use of Spanish law “made everything depend on whether, at the time of acquisition, the Foundation knew the painting was stolen: If the Foundation did not know—as the [lower] courts in fact found—then it owned the painting”, by virtue of the Spanish doctrine of acquisitive possession. “But now consider the possible result if the courts below had instead applied California’s choice-of-law rule,” Justice Kagan wrote, as it would have in a suit against a private museum. According to the heirs, the California rule would lead to using California law to decide the case, under which the pre-theft owner still has title to the painting. If the heirs “are right”, Justice Kagan wrote, the use of a federal choice-of-law rule “stopped [the FSIA] from working: That rule led to the Foundation keeping the painting when a private museum would have had to give it back”.
In the lower court proceedings, the federal district court determined that the TBF owned the painting under Spanish prescription, which vests ownership after six years if the possessor did not actually know the property was stolen, finding that the TBF met the six-year test and did not have “actual knowledge” of the work’s theft so as to defeat its title.
It appears that the heirs’ next step will be to try to undo the federal district court’s prior finding that even under California’s choice of law rule, Spain’s law decides the claim. As Justice Kagan pointed out, if the heirs can convince the court that under California’s choice of law rule California’s law should apply to the case, they will argue that the TBF has no title, because under California law a thief cannot convey title to a later possessor.
The case is unlikely to have a broad impact for the art world, or even for many other claimants, because few lawsuits against foreign governments are allowed to proceed.