Deciphering the Foreign Sovereign Immunities Act and Its Effects on Reclaiming Looted Art

December 6, 2023

By Madeline Halgren

What really happens when a resident of the United States discovers their art or their ancestor’s art was stolen by a foreign country and wants to take action for its return?

The first course of action one might take is to simply ask for the work’s return.

In stolen art cases within the United States, if met with difficulty, the rightful owner may bring an action for replevin (a claim for the return of unlawfully taken property) in the state the work is in.

However, there is no set legal framework for restitution claims for looted art abroad. This is due to the intersectional nature of the claims with international, local, and foreign law which make it more difficult for individuals to exert their restitution rights.

Though a party may be able to establish that the work was unlawfully taken and that they are the true owner entitled to the return of the work, there may be procedural hurdles to overcome. A common hurdle in claims for the return of looted art brought in the United States against a foreign nation is the question of a court’s jurisdiction over a foreign country – whether or not a United States Court can even take on the case. This question is often answered under the Foreign Sovereign Immunities Act.

What is the Foreign Sovereign Immunities Act?

The Foreign Sovereign Immunities Act (“FSIA”) limits the role of the United States Executive branch in suits against foreign governments and government entities, leaving deference to the judicial system to decide whether a foreign state is immune from a lawsuit brought in America^[1]

A foreign party to a suit is required to present the defense of immunity to the court where the case is brought, and the decision of whether immunity applies is left to the court.^[2]

The exceptions to immunity include any claims that arise out of actions taken by the foreign government that could be carried out by private persons.^[3] This means foreign governments are immune from jurisdiction in claims that arise from public government actions but not from private activities.

A list of exceptions is provided in 28 U.S.C. 1605.^[4] In terms of cases involving looted art, we are concerned with the provision 1605(a)(3) – the expropriation exception. This exception states that a foreign government is not immune to the jurisdiction of U.S. Courts where:

1. They have taken property in violation of international law;
2. and that property is present in the U.S. in connection with a commercial activity;
3. carried on in the U.S. by the foreign state;
4. or the property is owned by an entity or agent of the foreign state that engages in commercial activities in the U.S.

A commercial activity in this statute is an activity conducted in the regular course of commercial conduct or a particular commercial transaction or act.^[5] The exception not only requires the action by a foreign government to be a commercial activity but for the property to be taken from a foreign national, not one of their own citizens.^[6]

This issue came to light in a significant and recent Supreme Court decision: Federal Republic of Germany v. Philipp, 171 S. Ct. 703, 2021, described below.^[7]

The FSIA and Looted Art: Supreme Court Setbacks

Philipp involved heirs of Jewish art dealers who sold medieval relics and artifacts to Prussia in the 1930s. The heirs brought suit against Germany and its state museum-administering agency in the U.S. District Court for the District of Columbia.

Plaintiffs asserted that the sale took place under duress and thus fell within the expropriation exception since Germany’s taking of property from Jewish persons was an “act of genocide and violated the international law of genocide.”^[8]

Germany argued it was not an unlawful taking because the exception does not apply to takings from a nation’s own citizens.^[9] The district court denied Germany’s motion to dismiss and accepted Plaintiff’s reading that the taking had a “sufficient connection to genocide” and that was a violation of international law.^[10]

The Court of Appeals affirmed this ruling, stating that though taking one’s own citizens’ property does not violate the international law of expropriation, such a taking can fall within the exception since the taking was a part of the commission of genocide, which violates international law.^[11] Germany then petitioned the Supreme Court for certiorari.^[12]

The Supreme Court accepted Germany’s narrow view of the expropriation exception. The narrow view of the FSIA does not allow jurisdiction over a state’s taking of property from its citizens because the statute is meant to protect foreigners and not another country’s citizens from takings.^[13] Further, the violation of international law is in regards to a violation of property rights and not human rights abuses.^[14]

This holding limits the scope of the FSIA and the expropriation exception only to cases where there is a violation of property rights by a foreign state on a foreign national, limiting claims that can be brought in the United States for citizens of that foreign state for the return of stolen property by that state.

Expansion of Immunity: The Foreign Cultural Exchange Jurisdictional Immunity Clarification Act

Immunity was further expanded to foreign nations engaging in relations with the U.S. under the Foreign Cultural Exchange Jurisdictional Immunity Clarification Act (FCEJCA), nicknamed the Art Museum Amendment to the FSIA.

This bill was passed in late 2016 by President Obama.^[15] The goal of the FCEJCA was to provide greater immunity for foreign states who send art to the United States on loan for temporary exhibition.^[16] This protection comes from excluding art loans as a form of commercial activity carried out by the United States by a foreign state.^[17]

Since art loans are not considered a commercial activity in the United States under the FSIA, if a nation loans a work to a museum in the United States and a rightful owner realizes that the work belongs to them, there is no recourse in U.S. courts against a foreign state who stole the work even though the work is temporarily here.^[18] Thus, the person seeking the return of the work under these circumstances cannot look to the United States justice system for recourse.

This amendment to the FSIA was partially due to the decision in Malewicz v. City of Amersterdam 517 F. Supp. 2d 322 (D.D.C. 2007). This case involved the heirs of Russian painter Kazimir Malevich, who sued the City of Amsterdam to recover art acquired illegally after World War II.^[19] Amsterdam had loaned the art to U.S. museums, and the U.S. District Court for the District of Columbia found the loan of artwork to U.S. museums was a commercial activity under the FSIA.^[20]

However, the court’s holding had an effect on the art world – foreign states began to rescind or refuse to temporarily loan art to U.S. museums for fear of being sued.^[21] Thus the FCEJCA was born.

Though this limits the claims that can be made in a very specific circumstance, the FCEJCA offers two provisions that may alleviate some of the jurisdictional issues in the cases relating to Nazi-Era Claims and works taken from “targeted and vulnerable groups.”

The first exception for cases involving art loans is for Nazi-Claims. Essentially, this allows claims to go forward under the expropriation exception, where the artwork was allegedly taken in violation of international law by the German government between 1933 and 1945.^[22] The Malevich case would not have come under this exception, as the works were taken in 1958. However, many cases could use this provision in reclaiming Nazi-looted art.^[23]

The next exception allows claims to go forward where they allege that a “work was taken in connection with the acts of a foreign government as part of a systematic campaign of coercive confiscation or misappropriation of works from members of a targeted or vulnerable group.”^[24]

This is an undefined standard and is very broad in scope. However, this provision may prove useful in cases of stolen art that fall outside the bounds of the Nazi-Era exception to the Art Museum Amendment.

Now What?

The United States court system is limited in its ability to hear cases regarding stolen art against a foreign nation because of the limiting language of the FSIA and the subsequent Supreme Court holding in Philipp.

Further, Congress has also limited the scope of the expropriation exception by excluding art loans by foreign nations from being a commercial activity. Limiting the exception to commercial activities limits a potential claimant’s ability to recover stolen art by an action in the United States.

With these limitations on U.S. jurisdiction, is there any way for these aggrieved rightful owners and heirs to be made whole? One course of action is to bring their claim in the country that engaged in the alleged theft, or a party may decide to utilize alternative dispute resolution (“ADR”) methods to reobtain what is rightfully their work.

ADR may be an efficient and tailored approach to resolving looted art cases. Arbitration-style proceedings are conducted in not only a confidential manner but outside of national courts. Further, looted art cases are complicated – involving multiple countries’ standards and laws. Arbitration may be a better route to handle these complicated cases, as arbitrators can be chosen who have expertise in specific areas.^[25] Further, the arbitrators are chosen by the parties to a dispute which can be advantageous to an equitable solution. Moreover, awards are binding and can be enforced worldwide, which is important if a party is seeking a return of the work as the opposition would be required to give it back or face a lawsuit.

Further, arbitration may be more cost-effective as found in Republic of Austria v. Altmann, 541 S. Ct. 677, 2004. In this case, the Plaintiff commenced a restitution action against Austria for six Klimt paintings.^[26] The court in this case dealt with the sovereign immunity issue, but ultimately the case was arbitrated in favor of the Plaintiff to return the paintings. Arbitration was selected on purpose by both parties to avoid litigation costs.^[27]

For these reasons, ADR may be a more efficient, economical, and potentially successful approach for those seeking to reclaim stolen art when and where a United States court fails to have jurisdiction over a claim under the FSIA. This method would also relieve a heavily backed-up judicial system of claims that may be better suited to alternative dispute resolutions.

Though the FSIA significantly limits the United States jurisdiction in looted art cases against foreign countries, small nuances have been carved out through the FCEJCA in the form of the Nazi-Era exception for art loans and the “targeted and vulnerable group” exception, which may allow U.S. Courts to grant some relief against foreign nations.

However, as the quest continues to return looted art to their rightful owners, alternative methods may be an effective approach, as illustrated by Altmann, to ensure the return of looted art where the U.S. court system can no longer act.

Resources:

Cases:

• Federal Republic of Germany v. Philipp, 171 S. Ct. 703, 2021, https://www.supremecourt.gov/opinions/20pdf/19-351_o7jp.pdf
• Malewicz v. City of Amersterdam 517 F.Supp.2d 322, 2007, https://scholar.google.com/scholar_case?case=18213435335536066321&q=malewicz+v.+city+of+amsterdam+2007&hl=en&as_sdt=6,33
• Republic of Austria v. Altmann, 541 S. Ct. 677, 2004, https://supreme.justia.com/cases/federal/us/541/677/#tab-opinion-1961576

Law:

• Foreign Sovereign Immunities Act, https://travel.state.gov/content/travel/en/legal/travel-legal-considerations/internl-judicial-asst/Service-of-Process/Foreign-Sovereign-Immunities-Act.html
• Foreign Cultural Exchange Jurisdictional Clarification Immunity Act, https://www.gpo.gov/fdsys/pkg/BILLS-112hr4086ih/pdf/BILLS-112hr4086ih.pdf

About the Author:

Madeline Halgren is a third-year law student at Loyola University Chicago School of Law. She studied Foreign Affairs and Public Policy at the University of Virginia and has developed a legal interest in how international law interacts with art and other intellectual property issues.

Sources:

1. Foreign Sovereign Immunities Act – travel, https://travel.state.gov/content/travel/en/legal/travel-legal-considerations/internl-judicial-asst/Service-of-Process/Foreign-Sovereign-Immunities-Act.html (last visited Nov 8, 2023). ↑
2. Id. ↑
3. Id. ↑
4. 28 U.S. Code § 1605 – general exceptions to the jurisdictional immunity of a foreign state, Legal Information Institute, https://www.law.cornell.edu/uscode/text/28/1605 (last visited Nov 8, 2023). ↑
5. Id. ↑
6. U.S. Supreme Court defines contours of FSIA’s expropriation exception, Cleary Gottlieb, https://www.clearygottlieb.com/news-and-insights/publication-listing/us-supreme-court-defines-contours-of-fsias-expropriation-exception (last visited Nov 8, 2023). ↑
7. Supreme Court of the United States (2021), https://www.supremecourt.gov/opinions/20pdf/19-351_o7jp.pdf (last visited Nov 8, 2023). ↑
8. U.S. Supreme Court defines contours of FSIA’s expropriation exception, Cleary Gottlieb, https://www.clearygottlieb.com/news-and-insights/publication-listing/us-supreme-court-defines-contours-of-fsias-eexpropriation-exception (last visited Nov 8, 2023). ↑
9. Supreme Court of the United States (2021), https://www.supremecourt.gov/opinions/20pdf/19-351_o7jp.pdf (last visited Nov 8, 2023). ↑
10. Id. ↑
11. Id. ↑
12. A petition for certiorari is a request for a higher court to hear and review a decision of a lower court. ↑
13. Supreme Court of the United States (2021), https://www.supremecourt.gov/opinions/20pdf/19-351_o7jp.pdf (last visited Nov 8, 2023). ↑
14. Id. ↑
15. Ingrid (Wuerth) Brunk, An art museum amendment to the foreign sovereign immunities act Law Fare Media (2017), https://www.lawfaremedia.org/article/art-museum-amendment-foreign-sovereign-immunities-act (last visited Nov 8, 2023). ↑
16. Id. ↑
17. Id. ↑
18. Though not the scope of this article: Foreign states are not immune from U.S. jurisdiction where the stolen property is used in a commercial activity in connection with the U.S.. ↑
19. Rosemary Collyer, Malewicz v. City of Amsterdam Google Scholar (2007), https://scholar.google.com/scholar_case?case=18213435335536066321&q=malewicz+v.+city+of+amsterdam+2007&hl=en&as_sdt=6,33 (last visited 2023). ↑
20. Id. ↑
21. Ingrid (Wuerth) Brunk, An art museum amendment to the foreign sovereign immunities act Law Fare Media (2017), https://www.lawfaremedia.org/article/art-museum-amendment-foreign-sovereign-immunities-act (last visited Nov 8, 2023). ↑
22. Foreign Cultural Exchange Jurisdictional Immunity Clarification Act, Congress.gov (2016), https://www.congress.gov/114/plaws/publ319/PLAW-114publ319.pdf (last visited 2023). ↑
23. Id. ↑
24. Foreign Cultural Exchange Jurisdictional Immunity Clarification Act, Congress.gov (2016), https://www.congress.gov/114/plaws/publ319/PLAW-114publ319.pdf (last visited 2023). ↑
25. Art restitution: ADR mechanisms to solve Nazi-looted art cases, Withers Worldwide (2023), https://www.withersworldwide.com/en-gb/insight/read/art-restitution-adr-mechanisms-to-solve-nazi-looted-art-cases (last visited Nov 8, 2023). ↑
26. Id. ↑
27. Id. ↑