HEIRS OF PILFERED WELFENSCHATZ PERSIST IN BATTLE AGAINST GERMAN FOUNDATION.
Heirs of German Jewish dealers who seek restitution of a collection of Christian reliquaries known as the Welfenschatz (or Guelph Treasure) have received a stinging dismissal of their suit from a Washington DC District Court. The case made headlines in 2021 after it was remanded by the US Supreme Court to the DC Circuit for consideration of an alternative argument by the heirs that centres on the nationality of those dealers. (1) This recent ruling in favour of Germany's Stiftung Preussischer Kulturbesitz (SPK) (manager of the Welfenschatz) has been described as a victory that "affirms SPK's long-held assessment that this lawsuit seeking the restitution of the Guelph Treasure should not be heard in a US court". (2)
In its opinion last year, the Supreme Court ruled that the 'expropriation exception' of the Foreign Sovereign Immunities Act (FSIA) that offers foreign States a "baseline presumption of immunity from suit" applied only in instances when property was taken "in violation [...] of the international law of expropriation". (3) Importantly, expropriation law incorporates the 'domestic takings rule' under which a foreign State's taking of its own citizens' property does not interfere with relations between foreign States. The mandate issued by the Supreme Court to the DC Circuit was therefore to consider whether:
sale of the Welfenschatz is not subject to the domestic takings rule because the consortium members [the dealers] were not German nationals at the time of the transaction [and] whether [that argument] was adequately preserved below. (4) After receiving this directive from the DC Circuit, District Judge Colleen Kollar-Kotelly ruled on the briefs submitted without oral argument, resolving both these issues against the heirs: the Consortium members were held to be German nationals, making the Welfenschatz sale fall within the domestic takings rule; and the heirs failed to preserve this argument below. (5) While this is yet another adverse ruling for the heirs who have pursued return of the Welfenschatz since 2008 when they first requested and were denied return by Germany, this is not the end. The Welfenschatz heirs have filed a notice of appeal to the DC Circuit Court.
HISTORY OF THE WELFENSCHATZ AND THIS LITIGATION
While a more complete background of the Welfenshatz and this seven-year suit can be found in an earlier Art Antiquity and Law, (6) a few key points are offered here.
* Sale of the Welfenschatz took place in the summer of 1935 in Nazi Germany--a time when it might be difficult to imagine the German Jewish 'sellers' enjoying equal bargaining power with the Welfenschatz 'buyer' (the Nazi State of Prussia led by future war criminal Hermann Goring). After the acquisition, the Welfenschatz was gifted to Goring's antisemitic Fuhrer (Hitler). Since the late 1950s, the Welfenschatz has been in the possession of SPK, which "was created for the purpose of succeeding all of Prussia's rights in cultural property".7 In the 1960s, the Welfenschatz went on display in Berlin, and it is currently estimated at approximately $200 million in value. (8)
* Initially, heirs to the Welfenschatz sought restitution by using avenues of recourse available in Germany. After receiving the German Advisory Commission's denial of their request (based on a finding that this "was not a compulsory sale due to persecution"), (9) the consortium's descendants sought a fair ruling in the US justice system and filed suit in 2015 against SPK (as well as Germany though the case against the foreign State was dismissed). The heirs alleged the 1935 sale "was made under duress for less than market value as part of the Nazi persecution of the Jewish sellers of the Welfenschatz". (10)
* In 2017, the District Court ruled that the heirs' claims for declaratory relief, replevin, conversion, unjust enrichment and bailment could proceed. (11) An interlocutory appeal ensued; this resulted in the DC Circuit's resolution of a new issue before it in favour of the heirs--that art seizures could constitute "takings of property that are themselves genocide". (12) Notably relying on the now vacated Simon I decision, (13) the Circuit Court thus "affirmed the application of the expropriation exception to sovereign immunity as well as the Court's exercise of subject matter jurisdiction." (14)
* After being denied its request for a rehearing en banc, (15) SPK appealed to the Supreme Court and seemingly emerged the victor. As the DC District Court summarised, the Supreme Court's 3 February 2021 ruling (Philipp III) held that:
the FSIA's expropriation exception invoked only the narrow doctrine of international law governing property rights, rather than broadly incorporating international human-rights norms like the law of genocide. (16) Precedent Created Under Philipp III
A line of DC District Court decisions quickly emerged that applied Philipp III, several of which were cited on remand by SPK in its motion to dismiss reply and subsequent supplemental authority filings. (17) These decisions deal with facts similar to Philipp in that a foreign sovereign had been sued and fought back by challenging the court's subject-matter jurisdiction based on sovereign immunity. A theme throughout these decisions is the emphasis placed on the Nazi German legal landscape at the time of each of the takings. Only once did that landscape support the heirs (due to a Nazi decree that explicitly rescinded nationality for German Jewish nationals living abroad).
Simon v. Republic of Hungary
In 2016, the DC Circuit held that heirs who had filed suit over property seized from their ancestors by Hungary and the Hungarian national railway (Magyar Allamvasutak Zrt. 'MAV') could proceed under a 'genocidal takings doctrine':
[T]he Circuit found that "[e]xpropriations undertaken for the purpose of bringing about a protected group's physical destruction qualify as genocide." [Simon I, 812 F.3d at 143]. In other words, the Circuit saw "the expropriations as themselves genocide," id. at 142 (emphasis in original), based on "[t]he legal definition of genocide" set out in the Convention on the Prevention and Punishment of the Crime of Genocide (Genocide Convention) art. 2, Dec. 9, 1948, 78 U.N.T.S. 277, and other international treaties, Simon I, 812 F.3d at 143. See also id. at 144 ("[T]he complaint describes takings of property that are themselves genocide within the legal definition of the term." (emphasis in original)). The relevant international law violated by defendants' actions was therefore, in the Circuit's view, not that of expropriations of property but rather that of genocide-where "[t]he domestic takings rule has no application." Id. "Genocidal expropriations of the property of a sovereign's own nationals thus are 'tak[ings] in violation of international law' for purposes of the FSIA's expropriation exception." Id. at 145 (alteration in original) (quoting 28 U.S.C. [section] 1605(a)(3)). (18) Withal, this very powerful pronouncement in Simon I was annihilated by Philipp III, which disagreed with Simon I's genocide-focused analysis and remanded the case for a ruling consistent with its newly-narrowed interpretation of the FSIA.
Calling out the import of this new precedent...
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