Prospect of Forum Shopping in Nazi-Era Looted Art Litigation

September 10, 2024

By Damla Karabay

The complex provenance histories of stolen and looted art, often spanning multiple locations and competing ownership claims, frequently lead to conflicts of law and competing jurisdictions when disputes enter litigation. Consequently, choosing the most favorable court for the plaintiff becomes a crucial aspect of the looted art litigation process. While justice is meant to be impartial, not all courts yield equal results or offer the same remedies. So, the most ideal court for the plaintiff might not be the right court for the defendant, or for resolving the dispute.

This article examines select cases involving Nazi-era looted artwork to evaluate the permissibility and prevalence of forum shopping – a litigation strategy meant to generate a competitive edge through forum selection. It will be argued that while attorneys do need to be creative in seeking the best results for their clients, justice in the outcomes of art (and other) disputes should ultimately be reached with the proper application of law.

An Introduction to Forum Shopping

The outcomes of private international law cases can vary drastically depending on what law is applied to resolve the dispute and where a complaint is adjudicated. Bringing a case, the plaintiff needs to decide the right court for their complaint. In cases involving multiple jurisdictions (related to plaintiff(s), defendant(s), location of property, place where the event took place), a strategy known as forum shopping often arises, where litigants select a specific jurisdiction to take advantage of differing laws, rules, and tendencies of the courts that could hear the case.^[1] Forum shopping can occur between courts in different states, between federal and state courts within the same state, or between courts in different countries.^[2]

There exists a long-standing discourse around the ethics of forum shopping: is it a sound legal strategy or a manipulation of the law?^[3] Markus Petsche, Associate Professor at the Central European University, explains that “either forum shopping is different from forum selection, or it does not exist at all.”^[4] Unfairness is the element that distinguishes forum shopping from forum selection: “forum shopping is the taking of an unfair advantage of a party in litigation.”^[5] In Gulf Oil Corp. v. Gilbert, the U.S. Supreme Court explains this unfairness such that a plaintiff’s forum election “may not… ‘vex’, ‘harass’, or ‘oppress’ the defendant by inflicting… expense or trouble not necessary to his own right to pursue his remedy.”^[6] Some argue that forum shopping is not unethical, and even go to the extent to suggest that if attorneys fail to seek the most advantageous forum for their client’s claim, they could face a malpractice claim.^[7]

Nazi-looted art litigation provides useful context for better understanding the intricacy and impact of forum shopping. The legal questions that arise in such litigation have a large variety, impacting the outcome in different ways. A key legal question is common and civil law’s differing approaches to prominent legal principles. For example, while common law jurisdictions protect the owner of stolen art, civil law jurisdictions protect the good-faith purchaser. The impact of the (possibly exploitative) choice between the two types of jurisdiction will be further explained through the Cassier case in the upcoming section. Furthermore, common law and civil law approach the determination of jurisdiction differently, creating confusion in the forum selection process and possibly paving the way for “forum shopping.”^[8] Namely, civil law has strict rules governing the allocation of jurisdiction whereas common law courts always accept jurisdiction while giving judges the discretion to declare forum non conveniens.^[9] Another legal question is the possible application of the statute of limitations (governing the maximum time after an event within which legal proceedings may be initiated). A further barricade is the lack of evidence to prove a work’s provenance due to the multiplicity in the chain of ownership, complicating the forum selection process. Lastly, according to the choice of forum, claimants will inevitably be faced with different burdens of proof that they would need to satisfy in order to win their case.^[10]

Hence, if there is any uncertainty as to the law applicable to the dispute, the case is essentially subject to possible manipulation and swaying. Any single one of the aforementioned legal questions can have a decisive impact on the result of a case. But there is a thin line between the natural consequences of mere forum selection and unfair consequences of exploitative forum “shopping.” The following section will accordingly demonstrate how different forums can lead to drastically different results, and explore where the line between forum selection and shopping lies in practice.

Practical Application in Art Litigation

Active litigation related to claims for Nazi-looted art started in the 1990s, half a decade after the end of the Second World War. According to art lawyer Katie Wilson-Milne, this movement came about so late as a result of the end of the Cold War, the development of the internet, and the birth of a new generation that are relatively more distant from the trauma of the Holocaust.^[11] With the disappearance of the data and history freezing effects of the Cold War, more information becomes available as to the origins of artwork. With the rise of the internet and publicizing of the archives East of the Berlin Wall, the public achieved more transparent and easy access to developments in museums and auction houses. Lastly, the new generation had the “comfort and safety” of some distance from the Holocaust, hence attaining the psychological strength to look backwards and re-approach their family’s heritage.^[12]

The patterns exhibited in Nazi-era looted art litigation, an heir seeking to recover works from an institution that has had the work in its collection for some time, coupled with New York’s place within the art world means many, if not most, American Nazi art recovery claims are brought within the New York forum.^[13] This section elaborates on the practical complications of forum selection and shopping, basing the discussion on three representative Nazi-era looted art restitution cases tried in New York courts.

The first case is a testament as to the variety of legal issues that can arise in cases featuring complicated patterns of relocation. The second case is a demonstration of how the New York courts take into account the interest held by jurisdictions while selecting the most appropriate jurisdiction for the case. The third case addresses which choice-of-law rule is applicable. These cases tie together to lead to the conclusion that although certain disadvantages may be sustained by the respondent as a result of forum selection, there are adequate mechanisms in place within New York courts to halt the factor of unconscionability that would tilt the narrative towards forum ‘shopping.’

The case U.S. v. Portrait Of Wally concerns a painting by Egon Schiele.^[14] Lia Bondi-Jaray (an Austrian Jewish gallery owner) acquired the painting in 1925. Though she occasionally displayed it professionally, the painting hung in her living room. In 1938, antisemitic Nazi legislation ordered the closure of Jewish-owned businesses and the disclosure of all valuable assets.^[15] Accordingly, the painting and the gallery were confiscated by the Nazis as Bondi fled Vienna for London. After the war ended, Mrs. Bondi sought to recover Wally and the rest of her property. She managed to recover her gallery property via the Austrian restitution commission, but she could not locate Wally. After the War, American restitutionary forces seized the painting, which was restituted to the wrong family. The painting was then acquired by art collector Rudolph Leopold, who sold his collection to the Leopold Museum in 1994.^[16]

In 1997, the Leopold Museum lent their Schiele collection to MoMA. After the exhibition, the Federal Government instituted forfeiture action, stating that the Leopold knowingly imported stolen art into the US, in violation of the National Stolen Property Act.^[17] At this point, the provenance history of the artwork highly complicated the case.

After more than a decade of litigation, it was established that Wally was stolen, but it wasn’t clear if it remained stolen when it crossed international lines. MoMA argued that it ceased to be stolen as the American forces’ repossession of the artwork fit within the recovery doctrine.^[18] However, the Court held that this doctrine did not apply as the American restitutionary forces had no legal duty to return the property to the rightful owner. MoMA alternatively argued that the museum had acquired good title to Wally by holding it beyond the statutory period. The case was settled before trial, but it is still an effective demonstration of how different jurisdictions take different approaches to stolen artwork, and how the law (and hence the doctrines) applicable changes the course of the case. This case alone features a range of legal issues arising from the provenance history of the piece: choice of law, consideration of laches, jurisdictions’ varying approaches to the legal status of looted art.

Another crucial case is Zuckerman v. Metropolitan Museum of Art, concerning Picasso’s “the Actor.”^[19] In 1912, Paul Friedrick Leffman purchased the Actor and lent the painting to various exhibitions. Per Nazi laws stripping Jews of their right to hold property, Leffman sold his belongings for minimal compensation. In 1937, the Leffmans fled from Germany to Italy, arranging for the painting (one of their few remaining assets) to be held in Switzerland. By 1938, they left Italy for Switzerland on temporary visas. Later, partially funded by the sale of the Actor, the Leffmans fled to Brazil, where they resided for the next 6 years until after the war, when they returned to Switzerland. There, they made a series of successful claims to reclaim their property from the Nazi-era deprivation. But these claims were limited to the property that had been seized from them in Germany, and did not include the Actor. In the meantime, after a long series of transactions, the Actor ended up at the MET, where it has resided ever since.^[20]

Years later, in September 2010, Leffman’s great great grand-niece demanded the return of the painting, claiming that the painting was sold under duress, and violated public morals and Holocaust laws under Italian law (where the Leffmans were at the time).^[21] There were also suggestions of applying Swiss law. It was not clear what law was applicable for the situation at hand. Within such diversity, the jurisdiction with the greatest interest in the controversy has a controlling effect. In the motion, both parties submitted extensive affidavits of foreign law. Precedent held that where there is a conflict of law, the jurisdiction with “the greatest concern with the specific issue raised” had controlling effect.^[22] Hence, New York law prevailed: the painting had been exhibited for 60 years in MoMA and applying New York law would have incentivized New York art-purchasers to take greater care to ensure the legitimacy of their purchases. Such choice of law limitations bar the prospect of exploitative forum shopping.

Another relevant case is Cassirer v. Thyssen-Bornemisza Foundation.^[23] Since 1993, Camille Pissarro’s Rue Saint-Honoré has been hanging at the Thyssen-Bornemisza National Museum in Spain. A member of a wealthy Jewish family of Germany, Julius Cassirer originally purchased the work in 1898. For over 40 years, the Rue Saint-Honoré remained in the Cassirer family. However, in 1939, while trying to flee Germany, out of fear of being unable to leave the country, Lilly Cassier sold the painting to the Nazis. She never received the funds that the Nazis promised her in exchange.

The painting was eventually smuggled into the U.S. after the war and subsequently sold a number of times before ending up at the Thyssen-Bornemisza. Upon her death, Lilly Cassirer left the rights of the painting to her grandson Claude Cassirer. Claude Cassirer had been searching for the painting “that [once] hung on the wall of his grandmother Lilly’s apartment in Berlin” for decades.^[24] In 2000, Cassirer received a phone call from an acquaintance that the painting that he and his wife had been searching for had finally been found hanging in a Spanish museum. He then petitioned Spain’s Minister for Education, Culture and Sports (who was also the chair of the Thyssen-Bornemisza Foundation’s Board), requesting the return of the painting. His request was denied. In 2005, he then filed a suit in a federal court in Los Angeles to recover the painting, now valued at $30 million. The lawsuit spanned almost 20 years, finding its way to the highest court in the United States. On January 18, 2022, the Supreme Court heard a last-chance appeal from the Cassirer family to have the painting returned to them from Spain.^[25]

On April 22nd, 2022, in a unanimous ruling on procedural issues, the Supreme Court ruled in favor of Cassier’s heirs. The final opinion from Supreme Court Justice Elena Kegan stated that “a court should determine the substantive law by using the same choice-of-law rule applicable in a similar suit against a private party.”^[26] This decision established that in an ownership dispute between two separate countries, the applicable choice-of-law rule is not of the foreign-state actor’s jurisdiction, but of the private party’s. Crucially, it demonstrates the changes to outcome the difference between common and civil law can make.

Deliberation

Although it has been 75 years since the end of the Nazi regime, restitution of Nazi-looted art is an unresolved issue, and is still a prominent concern of the art law world.

At times, alternatives to litigation could be considered. With media coverage of art law litigation, such cases with intricate historical and personal nuances can become media trials, with the public’s opinions having the capacity to sway the result. Not only does this have the effect of exhausting the heirs trying to access their family heritage, who are presumably already under pressure, it also has the effect of impeding the honesty of the trial. This is not to say that litigation is not, at times, a handy resource in repatriation of stolen or looted artwork (especially when those currently in possession of the art are wholly uncooperative). However, there is a point to be made that in this specific context, Alternative Dispute Resolution (ADR) can be a more private, personal, and (arguably) just dispute resolution mechanism. Arbitration is an especially useful mechanism as it can be enforced almost globally (as per the New York Convention) and since the panels consist of cross-jurisdictional as well as cross-sectoral experts.^[27] It is notable that one of the leading cases on Nazi looted art, Maria Altmann’s recovery of Klimt works from the Austrian Gallery, was finally resolved through arbitration.^[28]

Where litigation is the appropriate outlet, this article has demonstrated that exploitative forum selection might not be as readily available as might seem at first glance. Most civil law systems exhibit allocative rules that ‘rigidly and substantially’ limit party choice among forums.^[29] Where there is a choice between civil and common law jurisdictions, conflict of law rules (like that in Zuckerman) and the common law doctrine of forum non conveniens makes it hard for parties to arbitrarily resort to more favorable jurisdictions.

Lastly, it is important that art restitution is perceived in the grander scheme of efforts to address the injustices of the Holocaust. In this context, forum selection opportunities can be advantageous to the claimants, as different jurisdictions allow for different extents of recovery. In that respect, claimants should be able to take advantage of their choice of forum, selecting jurisdictions that award higher compensation or have more favorable rules. However, there must be a carefully crafted boundary of gaining a competitive advantage through different forums, making for a clearer distinction between forum selection and forum shopping. Hence, ethical forum selection should not be defined as forum shopping that is “allowed as long as it is done within procedural and ethical rules”.^[30] Instead, it should simply be defined as forum selection, differentiating it from the term and concept of forum shopping, which bears negative connotations.

Conclusion

Different legal jurisdictions employ different preventative measures against forum shopping. In practice, these rules seem to have halted exploitative forum selection known as forum shopping, in Nazi-era looted art litigation. A necessary move in academic discourse is to draw a comprehensive distinction between forum selection and forum shopping, allowing practicing lawyers to better understand the ethical boundaries. It is important to remember that be it claimants in Nazi-era looted art litigations or other court proceedings, even if a forum selected appears to be favorable to the matter at hand, choice of law issue may still allow for the less favorable precedent or controlling law to be applied to hear matters. Claimants who are able to find beneficial courts to hear their claims should still make use of their choice of jurisdiction to a careful extent, without exploiting their position and by honoring the delicacy of the history that comes with Nazi-era looted art. 

PS

The Center for Art Law had the honor to host Judge Preska at the Art Law Conference 2024. Judge Preska is a senior district judge of the United States District Court for the Southern District of New York with extensive experience adjudicating art disputes. Specifically, she decided the cases concerning “the Portrait of Wally” and “the Actor”, which were mentioned in this article. Those who are interested in hearing Judge Preska’s remarks on these two cases can access the recording of the Conference at: https://youtu.be/KWsAbkT_xZY.

About the Author

Damla Karabay is a final year LLB student at the LSE. She is an undergraduate legal intern (Summer 2024) at the Center for Art Law.

Bibliography:

1. Jan-Peter Ewert and David Weslow, Forum Shopping in Europe and the United States, International Trademark Association Bulletin (May 1, 2011). ↑
2. Cornell Law School Legal Information Institute, Forum Shopping (December 2022), https://www.law.cornell.edu/wex/forum_shopping#:~:text=Forum%20shopping%20refers%20to%20the,treat%20the%20claim%20most%20favorably. ↑
3. Mary Garvey Algero, In Defense of Forum Shopping: A Realistic Look at Selecting a Venue, 78(1) Neb. L. Rev 79 (1999). ↑
4. Markus Petsche, What’s Wrong with Forum Shopping – An Attempt to Identify and Assess the Real Issues of a Controversial Practice, 45(4) International Lawyer 1005, 1008 (2011). ↑
5. Richard Maloy, Forum Shopping? What’s Wrong With That?, 24 QLR 25, 25 (2005). ↑
6. Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947). ↑
7. Supra note 3. ↑
8. Cornell Law School Legal Information Institute, ‘Forum Shopping’ (December 2022), https://www.law.cornell.edu/wex/forum_shopping. ↑
9. James J. Fawcett, Declining Jurisdiction in Private International Law (1995). ↑
10. Withersworldwide, Art Restitution: ADR mechanisms to solve Nazi-looted art cases (July 17, 2023), https://www.withersworldwide.com/en-gb/insight/read/art-restitution-adr-mechanisms-to-solve-nazi-looted-art-cases. ↑
11. Steve Schindler and Katie Wilson-Milne, The 25th Anniversary of the Washington Conference Principles and Where We are on Nazi-Looted Art, The Art Law Podcast, 11:30-12:30 (May 13, 2024), https://artlawpodcast.com/2024/05/13/the-25th-anniversary-of-the-washington-conference-principles-and-where-we-are-on-nazi-looted-art/. ↑
12. Supra note 11 ↑
13. Harvard Law Review Recent Cases Section, Zuckerman v. Metropolitan Museum of Art, 133(6) Harv. L. Rev. 2196 (2020). ↑
14. U.S. v. Portrait of Wally, A Painting By Egon Schiele, 99 Civ. 9940 (MBM) (S.D.N.Y. Apr. 11, 2002). ↑
15. United States Holocaust Memorial Museum, Antisemitic Legislation 1933-1939, The Holocaust Encyclopedia, https://encyclopedia.ushmm.org/content/en/article/antisemitic-legislation-1933-1939. ↑
16. Supra note 14. ↑
17. Supra note 14, para 2. ↑
18. Supra note 14. ↑
19. Zuckerman v. Metro. Museum of Art, 928 F.3d 186 (S.D.N.Y. 2019). ↑
20. Katharine J. Namon, The Restitution of Nazi-Looted Art in the United States: A Legal and Policy Analysis Trinity College (2022). ↑
21. Supra note 19. ↑
22. Loebig v Larucci, 572 F. 2d 81, 84 (2d Cir. 1978). ↑
23. Cassirer v. Thyssen-Bornemisza Collection Foundation, 596 U.S. (9th Cir. 2022). ↑
24. David D. Savage, Supreme Court hears Californians’ claim to painting taken by Nazis, sold to museum, (January 18, 2022) https://www.latimes.com/politics/story/2022-01-18/supreme-court-hears-california-familys-claim-to-painting-taken-by-nazis-sold-to-museum. ↑
25. Anissa Patel, Case Review: Cassirer et. al. v. Thyssen Bornemisza Collection Foundation, Center for Art Law (May 27, 2022), https://itsartlaw.org/2022/05/27/case-review-cassirer-et-al-v-thyssen-bornemisza-collection-foundation-2022-2/. ↑
26. David D. Savage, Supreme Court hears Californians’ claim to painting taken by Nazis, sold to museum, (January 18, 2022) https://www.latimes.com/politics/story/2022-01-18/supreme-court-hears-california-familys-claim-to-painting-taken-by-nazis-sold-to-museum ↑
27. Supra note 10. ↑
28. Supra note 10. ↑
29. Scott William Dodson, The Culture of Forum Shopping in the United States, 57(2) The International Lawyer (2024). ↑
30. Supra note 3. ↑