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Jewish-Owned Art Sold in Nazi Era at Center of SCOTUS Case (2)

Dec. 7, 2020, 9:50 AM; Updated: Dec. 7, 2020, 9:40 PM

The Supreme Court on Monday will consider whether heirs of Jewish art dealers purportedly made to sell a collection of medieval relics to the Nazis can sue the German government in the U.S. for their return.

The families, including some Americans, claim Nazi leader Hermann Goering forced the dealers to sell the Guelph Treasure in the 1930s for 35% of its value. Goering later presented the collection to Adolf Hitler as a “surprise gift,” the Baltimore Sun reported in 1935. The Prussian Cultural Heritage Foundation (SPK) “maintains that the collection was never given as a gift to Adolf Hitler, as the documents in its archives clearly show that the treasure was acquired for the museum in 1935, and SPK has retained ownership,” according to a U.S. spokesperson for SPK.

The issue for the justices is technical and revolves around the meaning of “expropriation” for purposes of sovereign immunity. More specifically, the German agency that’s the focus of the dispute says German courts should resolve the it.

Potential foreign policy implications associated with the legal question of where these kinds of disputes should be resolved prompted the U.S. government to discourage federal courts from getting involved, saying they should steer clear of foreign policy matters. The Trump administration supported Germany in a friend-of-the-court brief.

There’s a real tension for the justices in this case, said M.C. Sungaila, who filed a similar case last year that the justices refused to consider.

“We can all agree that this was bad and something should be done about it, but should it be done here?” said Sungaila, a shareholder with Buchalter.

Linked to Genocide?

Under the Foreign Sovereign Immunities Act, foreign governments and their agencies typically can’t be sued in the U.S.

But there are exceptions. The so-called expropriation exception allows foreign governments to be sued in the U.S. if they violated international law and there is some commercial nexus to the U.S.

Here, the plaintiffs claim that taking the art was part and parcel with the genocide of European Jews that clearly falls within the definition of a violation of international law. But Germany says taking art—as opposed to necessities like food, medicine, clothing, or housing—isn’t the same.

The U.S. Court of Appeals for the District of Columbia Circuit sided with the plaintiffs, saying that the Nazi policy of looting art was critical to dehumanize the Jewish population.

Open the Floodgates

During Supreme Court oral arguments, the focus will be on those technical questions—at least on the surface, said Dean Nicyper who practices art law at Withers. He said there’s no telling what silent factors might come into play.

Sungaila notes that about a third of Europe’s art changed hands during World War II. So seven decades later, she noted that there’s still a lot of disputed art in the world.

The justices may be concerned that they are going to open the floodgates for bringing similar claims in the U.S.

Nicyper noted that the U.S. has generally been more receptive to these kinds of claims than other countries.

The potential for broad foreign policy implications is why the federal government often sides with foreign nations, Sungaila said.

The U.S. doesn’t “want to be too heavy handed with their allies so they have to do a diplomatic dance,” she said.

Hungary, Too

The U.S. has also sided with Hungary in a similar looted-property case that, too, will be heard by the justices on Monday.

There, the issue isn’t art but property stolen by Hungary prior to forcing its Jewish population onto state-owned railways to be sent to concentration camps.

The U.S. Court of Appeals for the Seventh Circuit said there wasn’t a strong enough commercial connection to the U.S. for the expropriation exception to apply. Hungary says background rules of international comity keep U.S. courts at bay.

The plaintiffs successfully argued that the passage of FSIA eliminated background notions and that immunity rests on that statute alone.

Going “forward, ‘any sort of immunity defense made by a foreign sovereign in an American court must stand on the Act’s text. Or it must fall,’” the lower court said, quoting the Supreme Court.

The cases are Federal Republic of Germany v. Philipp, U.S., No. 19-351 and Republic of Hungary v. Simon, U.S., No. 18-1447.

(Updates Nicyper's comment on receptivity of U.S. courts in 14th paragraph.)

To contact the reporter on this story: Kimberly Strawbridge Robinson in Washington at krobinson@bloomberglaw.com

To contact the editors responsible for this story: Seth Stern at sstern@bloomberglaw.com; John Crawley at jcrawley@bloomberglaw.com

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