Friday, December 17, 2010

Spain and Thyssen-Bornemisza seek review of jurisdictional question by US Supreme Court

Defendants in the Cassirer lawsuit to recover Pisarro's Rue Saint Honoré- après-midi, effet de pluie (1897) have filed a petition to the US Supreme Court to review the Ninth Circuit Court of Appeals decision ruling that Spain and the Thyssen-Bornemisza Collection Foundation, an instrumentality of the state, are not immune from civil suit in US courts under the "expropriation" exception to the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1605(a)(3). Claude Cassirer sued defendants in 2005 to recover the painting which his grandmother, the late Lilly Cassirer Neubauer, was allegedly forced to hand over to the Nazis in exchange for the right to flee Germany.

Camille Pissarro Rue Saint-Honoré, après-midi, effet de pluie 

The question of immunity is central to the lawsuit moving forward since case law dictates that the sole basis for invoking jurisdiction over a foreign state in federal court is the existence of an exception to the FSIA. The "expropriation" exception provides that "a foreign state shall not be immune ... in any case... (3) in which rights in property taken in violation of international law are in issue..." Defendants argue that they are immune because they were not party to the expropriation -- Nazi Germany was -- and that they merely bought the painting years later. However, on a plain reading of the statutory language, there is no express requirement that the defendant nation be the entity that took the property in violation of international law. All parties are in agreement that neither Spain or the Thyssen-Bornemisza are responsible for the looting of the painting but rather Nazi Germany is solely to blame. But the question for purposes of determining the jurisdictional question, is whether the property the subject of the litigation was taken in violation of international law and the answer to that seems to be a resounding yes. The only other requirement under the "expropriation" exception is that either (i) the property be located in the US in connection with commercial activity (which it is not for the painting is on display at the Thyssen in Madrid) or (ii) the defendant be an instrumentality of the state (which the Thyssen is, with several government officials serving on its board as required by law) engaged in commercial activity in the US. Further to the limited discovery allowed by the court, plaintiff was able to amply demonstrate this with reference to the museum "transacting business as a purchaser and seller of goods and services and as an advertiser in distributing marketing and other commercial promotional materials" (see complex litigation post).

Regarding the defendants' other argument based on the purported requirement that plaintiff exhaust all foreign remedies, again they are reading words into a statute that is unambiguous. If Congress had intended the exhaustion of foreign remedies to be a condition precedent to invoking the jurisdiction of US federal courts, it would have drafted the statute to that effect. A fundamental principle of statutory interpretation is that courts, in giving effect to Congress' intent, must give statutory legislation its plain meaning and it would be a flagrant violation of the separation of powers if a court, including the highest court in the country, were to effectively re-write an unambiguous piece of federal legislation (or state legislation for that matter). Yet, where legislation is silent as the "expropriation" exception is with respect to exhaustion of remedies, the Ninth Circuit Court of Appeals cited the Sarei case (550 F.3d at 828) which established that "where principles of international comity and rules of customary law require exhaustion," court should exercise "sound judicial discretion and consider exhaustion on a prudential, case-by-case basis." The district court had failed to engage in such prudential analysis and the Court of Appeals remanded the case instructing the district court to consider exhaustion of remedies to the extent affirmatively pleaded by the defendants. Instead, the Supreme Court will have the final word on the jurisdictional question following defendants' filing of a petition on December 14.

But what do we make of the merits of the case and the very fact that this case is being litigated in the first place? On the former, the Art Newspaper reports that "Spain and the Foundation commented publicly for the first time on the factual background of the claim, saying that historical evidence shows that in 1958, Lilly Cassirer received full payment for the work at its then fair market value, under a legally binding, court-approved final settlement of a lawsuit over the painting in Germany. The settlement barred her from any future restitution claims to the Pissarro, they say, and also resolved a competing claim made by another German Jewish family to the same Pissarro painting." But if that's the case, surely Spain and/or the Thyssen would have informed Claude Cassirer of the settlement and he would not pursued expensive and lengthy litigation? And if the evidence did not sufficiently support the existence and substance of the 1958 settlement, I would have expected Spain, a country known for its commitment to the restitution of Nazi-looted art and a signatory to the Washington Principles on Nazi-Confiscated Art, to have returned the painting without the plaintiff having to resort to litigation. Assuming the US Supreme Court resolves the jurisdictional question, as I believe it will, in favor of the plaintiff, it'll be interesting to see what evidence is presented by each side when the case finally gets to the merits stage of the proceedings.

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