Wednesday, September 9, 2009
Panel Rejects Sovereign Immunity Defense in Artwork Suit
By a MetNews Staff Writer
A foreign governmental entity may be sued in U.S. courts for possession of expropriated property, even if that entity is not the expropriator, the Ninth U.S. Circuit Court of Appeals ruled yesterday.
The court affirmed, in part, the denial of a motion by the Spanish government to dismiss a suit by a descendant of a wealthy German Jewish family. Claude Cassirer claims that a painting housed at Madrid’s Thyssen-Bornemisza Museum was stolen from his grandmother by a representative of the Nazi government of Germany in 1939.
The panel did, however, direct U.S. District Judge Gary Feess of the Central District of California to reconsider his ruling that Cassirer was not required to exhaust remedies that might exist in German or Spanish courts before suing in this country.
The painting in question is “Rue Saint-Honoré, après-midi, effet de pluie,” by Camille Pissarro. Cassirer alleges that his grandmother, Lilly Cassirer, who inherited the work after the deaths of her father-in-law and later her husband, was forced to relinquish the painting without payment in order to leave the country.
The painting was sold several times, winding up in one of the world’s major private art collections, that of Baron Hans-Heinrich Thyssen-Bornemisza. The baron, who died in 2002, sold the entire collection to the Spanish government in 1988 for more than $325 million.
The kingdom and the Thyssen-Bornemisza Collection Foundation, whose board is dominated by representatives of the government, moved to dismiss the suit under the Foreign Sovereign Immunities Act. The act provides that a foreign government, or an entity over which a foreign government exerts majority ownership or control, may not be sued in this country’s courts unless an exception applies.
Feess ruled that the expropriation exception—which allows a suit over “rights in property taken in violation of international law” if the property is located in the United States or if the foreign “agency or instrumentality” which owns the property “is engaged in commercial activity” in this country—does not require a showing that the foreign sovereign defendant violated international law.
He also ruled that various activities conducted by the foundation, such as the purchase of books and souvenirs from U.S.-based businesses, and the sale of such items to U.S. residents, the hiring of Americans to write for its exhibit catalogs, the shipment of gift shop items to the United States, the sale of a poster in the United States depicting the Pissarro painting, and advertising in U.S. media constituted sufficient commercial activity to bring the foundation and the Spanish government under the exception.
Judge N. Randy Smith, writing for the Ninth Circuit, said the district judge’s legal analysis was consistent with U.S. and Supreme Court precedent, and that the plain language of the FSIA compels rejection of the claim that only the expropriator is subject to U.S. jurisdiction.
He added that Feess’s factual findings with regard to commercial activity were supported by substantial evidence.
But the jurist went on to explain that while the FSIA itself contains no exhaustion-of-foreign-remedies requirement, cases in which U.S. jurisdiction is predicated on the act must still be decided based on principles of customary international law.
One such requirement, Smith said—citing a 1959 decision of the International Court of Justice—is “that a state is not required to consider a claim, made by a person against a foreign state, and alleging a violation of international law ‘until that person has exhausted domestic remedies, unless such remedies are clearly sham or inadequate, or their application is unreasonably prolonged.’”
While the rule is not absolute, the judge reasoned, courts must “exercise sound judicial discretion and consider exhaustion on a prudential, case-by-case basis.” On remand, Smith said, the judge should consider, among other factors, what remedies were available to the plaintiff, whether they were exhausted, whether exhaustion would have been futile, and whether the nexus between the subject matter and the United States and “the nature of the allegations and the gravity of the potential violations of international law” render an exhaustion requirement inappropriate.
Senior Judge Thomas G. Nelson concurred. Judge Sandra Ikuta dissented from the ruling on exhaustion, saying the court “should not take should not take it upon ourselves to write an exhaustion requirement into the Foreign Sovereign Immunities Act...when Congress has chosen not to.”
The case is Cassirer v. Thyssen-Bornemisza Collection Foundation, 06-56325.
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