Case Review: Federal Republic of Germany v. Philipp (2021)

May 3, 2021

By Laura Michiko Kaiser.

A high-profile Nazi-era restitution claim has been making waves since the United States Supreme Court issued its decision on February 3, 2021.^[1] Known commonly as the Guelph Treasure or Welfenschatz case, Federal Republic of Germany v. Philipp has been reported on extensively as scholars and attorneys predict what it means for Nazi-era looted art restitution claims going forward.^[2] This article will provide an overview of the case, including the facts, procedural history, and the Supreme Court’s decision, as well as key takeaways for the art law community.

Facts

The important collection of medieval relics at the center of the Guelph Treasure case date back to the Holy Roman Empire, but the history relevant to this case starts in the 20th century.^[3] In 1929, the collection consisted of 82 objects.^[4] At the end of the Weimar Republic, three German Jewish art firms created a consortium to purchase the Welfenschatz from the Duke of Brunswick and subsequently sold many of the pieces to museums and private collectors in Europe and the United States.^[5] When the Nazis came to power, Hermann Goering took a special interest in the remaining number of pieces in the collection.^[6] As argued by the heirs of the dealers, in a 1935 sham transaction orchestrated by Goering, the dealers were forced to sell the precious collection under duress (and far under market value) to the Nazi-controlled State of Prussia.^[7]

At the end of the war, the United States took possession of the Welfenschatz and eventually turned the collection over to Germany.^[8] Germany and the Stiftung Preussischer Kulturbesitz (“SPK”), the Prussian Cultural Heritage Foundation, an instrumentality of Germany, assert ownership over the treasure, which is currently on display at the Museum of Decorative Arts (“Kunstgewerbemuseum”) in Berlin.^[9] In 2014, the heirs to the art dealers brought their claim to the German Advisory Commission for the Return of Cultural Property Seized as a Result of Nazi Persecution, Especially Jewish Property (“the Commission”).^[10] The Commission ultimately concluded that there was no duress and that the treasure was sold at a fair price.^[11] Subsequently, the heirs brought a lawsuit seeking restitution of the Guelph Treasure in the United States District Court for the District of Columbia on February 23, 2015.^[12]

Arguments

At the United States District Court for the District of Columbia (“DDC”), the heirs alleged that the 1935 sale was a “taking of property in violation of international law.”^[13] The language in the complaint references the Foreign Sovereign Immunities Act (“FSIA”) which allows lawsuits against foreign states to proceed in United States courts if “property is taken in violation of international law”—referred to as the FSIA’s “expropriation exception.”^[14] In short, the heirs claimed they may sue Germany in a U.S. court because the forced sale of the Welfenschatz violated the international law of genocide. The heirs seek $250 million in damages and return of the Welfenschatz.^[15]

In reply, Germany and the SPK argued that the expropriation exception does not apply here because there is no violation of international law when a sovereign takes property from its own nationals.^[16] Therefore, because Germany took the Welfenschatz from German nationals, they did not violate international law in a way that would open them up to suit in the U.S, a position with which the U.S. Supreme Court sided with in its February 3, 2021 decision.^[17]

Procedural History

On March 31, 2017, the DDC ruled that because the taking of the Welfenschatz “bears a sufficient connection to genocide,” the forced sale could fall under the expropriation exception as a taking in violation of international law.^[18] On appeal, the Court of Appeals for the District of Columbia Circuit agreed with the DDC and sided with the heirs stating that a foreign state’s genocidal acts against its own nationals is a violation of international law.^[19] Germany appealed and the United States Supreme Court granted certiorari. Oral arguments were held by teleconference on December 7, 2020.^[20]

The Supreme Court’s Decision

During oral arguments, the Justices questioned the scope of plaintiffs’ claim and where the line might be drawn between property taken during the Holocaust and worldwide violations of international law past and present.^[21] Justice Stephen G. Breyer, for example, expressed concern that siding with the plaintiffs would open U.S. district courts to lawsuits from other countries for human rights violations involving property confiscation.^[22] Plaintiffs argued that the limiting principle comes from the text of the FSIA—that foreign states can only be sued when the international law violation causes the “taking” of property.^[23] Put another way, the Holocaust is unique because the Nazis sought to destroy the Jewish people by taking their property.^[24]

Ultimately, the Court disagreed and Chief Justice John G. Roberts wrote the opinion for a unanimous court. To reiterate, the question before the court was whether a foreign country’s taking of property from its own nationals falls under the expropriation exception of the FSIA, thus allowing the foreign country to be sued in U.S. courts.^[25] The Court first held that the expropriation exception references property law (and the international law of expropriation), not the law of genocide or human rights.^[26] Following that logic, the Court noted that a taking of property is only a violation of international law when the foreign country takes from a non-citizen.^[27]

The court restated the line-drawing issue raised in oral arguments and found that the heirs’ interpretation of the FSIA would extend to any human rights abuse and impermissibly allow lawsuits against foreign countries for human rights violations.^[28] Before concluding, the Court reinforced its decision by aligning the opinion with other FSIA provisions and refuting other statutes the heirs rely on—including the 2016 Foreign Cultural Exchange Jurisdictional Immunity Clarification Act and the Holocaust Expropriate Art Recovery (HEAR) Act of 2016.^[29]

Notably, the Court agreed with the heirs that claims could be brought against a foreign state under the expropriation exception when the claim alleges the taking of an alien’s, or a non-national’s, property.^[30] The Court directed the District Court to consider (on remand) the heirs’ alternative argument that the German-Jewish art dealers were not German nationals at the time of the sale.^[31] On April 22, 2021, the heirs requested permission from the District Court to amend their complaint to add additional information regarding Nazi views on nationality.^[32] The heirs additionally allege that two of the dealers were residents of Amsterdam prior to the transaction and that they were Dutch nationals under international law at that time.^[33]

Takeaways

In light of the recent Supreme Court’s decision, what does the Philipp ruling mean for future Nazi-era looted art restitution claims in the United States and beyond? The answer is uncertain.^[34] Given the holding in Philipp, other cases that have been pending may be reaching a resolution. Specifically, in Toren v. Federal Republic of Germany—which has been on hold for three years pending the outcome of Philipp— Peter Toren proposed a new schedule in February 2021 to continue the case, but there are no further updates.^[35]

Philipp is proceeding in the District Court of DC, and it remains to be seen how the court treats plaintiffs’ alternative argument that the dealers were not considered German nationals at the time of the Welfenschatz transaction. Plaintiffs, and groups who support them, were disappointed with the Supreme Court’s decision, but the legal battle, most assuredly, goes on.^[36]

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Additional Reading Materials:

Cases:

• Simon v. Republic of Hungary, 812 F.3d 127 (D.C. Cir. 2016).
• Reif v. Nagy, 175 A.D.3d 107 (N.Y. App. Div. 2019).
• Zuckerman v. Metropolitan Museum of Art, 928 F.3d 186 (2d Cir. 2019).
• de Csepel v. Republic of Hungary, 859 F.3d 1094 (D.C. Cir. 2017).
• Von Saher v. Norton Simon Museum of Art at Pasadena, 754 F.3d 712 (9th Cir. 2014).
• Republic of Austria v. Altmann, 514 U.S. 677 (2004).

Articles:

• Maximilíano Durón, Supreme Court Rules in Favor of Germany in Dispute Over Nazi-Era Guelph Treasure, Artnews (Feb. 3, 2021, 4:05 PM).
• Guelph Treasure Art Restitution Case – Media Coverage, Sullivan & Worcester (last visited Apr. 2, 2021).
• Talia Berniker & Sabrina Soffer, Art Law in the Supreme Court, Center for Art Law (Dec. 29, 2020).
• Timothy Chung, Two for the Price of One: Recent US Legal Developments in Nazi-Looted Art, Center for Art Law (Oct. 8, 2019).
• Timothy Chung, Case Review: Cassirer v. Thyssen-Bornemisza Collection Foundation, Center for Art Law (June 12, 2019).
• Mia Guttmann, Case Review: de Csepel v. Republic of Hungary, Center for Art Law (May 3, 2019).

Podcasts:

• Recent New York Holocaust-Era Art Cases Come Out Differently, The Art Law Podcast (Aug. 5, 2019).

Endnotes:

1. Federal Republic of Germany v. Philipp, No. 19-351, slip op. at 1 (U.S. Feb. 3, 2021). ↑
2. See e.g., Sarah Cascone, In a Precedent-Setting Move, the Supreme Court Denies Jewish Heirs’ Attempt to Reclaim the $250 Million Guelph Treasure, Artnet News (Feb. 3, 2021). ↑
3. See Philipp, slip op. at 1. ↑
4. Stiftung Preußischer Kulturbesitz, What is the Guelph Treasure? (last visited Apr. 29, 2021). ↑
5. See Philipp, slip op. at 2. ↑
6. Id. ↑
7. Complaint at 2, Philipp v. Federal Republic of Germany (D. D.C. Feb. 23, 2015) (No. 1:15-cv-00266). ↑
8. See Philipp, slip op. at 2. ↑
9. Id. at 2; Complaint at 9, Philipp v. Federal Republic of Germany (D. D.C. Feb. 23, 2015) (No. 1:15-cv-00266); Stiftung Preußischer Kulturbesitz, What is the Guelph Treasure? (last visited Apr. 2, 2021); Staatliche Museen zu Berlin Preußischer Kulturbesitz, Kunstgewerbemuseum (last visited Apr. 2, 2021). ↑
10. See Philipp, slip op. at 3. ↑
11. Id. ↑
12. Id. at 3; Complaint, Philipp v. Federal Republic of Germany (D. D.C. Feb. 23, 2015) (No. 1:15-cv-00266). ↑
13. Complaint at 49, Philipp v. Federal Republic of Germany (D. D.C. Feb. 23, 2015) (No. 1:15-cv-00266). Among other claims, plaintiffs also argue that the Advisory Commission’s refusal to accept their argument constituted a “second taking.” Id. at 51. ↑
14. 28 U.S.C. § 1605(a)(3). ↑
15. Complaint at 70, Philipp v. Federal Republic of Germany (D. D.C. Feb. 23, 2015) (No. 1:15-cv-00266). ↑
16. Defendant’s Motion to Dismiss and Incorporated Memorandum of Law at 17, Philipp v. Federal Republic of Germany (D. D.C. Oct. 29, 2015) (No. 1:15-cv-00266). ↑
17. See id. ↑
18. Philipp v. Federal Republic of Germany, 248 F.Supp.3d 59, 71 (D. D.C. Mar. 31, 2017). ↑
19. See Philipp, slip op. at 3. ↑
20. See Federal Republic of Germany v. Philipp, Oyez (last visited Apr. 2, 2021) (If you would like to listen to the oral argument recording, click on the link in this footnote or in the article and navigate to the left hand side of the page, under “Media.”) ↑
21. Id. ↑
22. Id. ↑
23. Id. ↑
24. Id. ↑
25. See Philipp, slip op. at 1. ↑
26. Id. at 9. ↑
27. Id. (relying on the historical and legal context of the Hickenlooper Amendment outlined earlier in the Court’s opinion). ↑
28. Id. at 10, 11. ↑
29. Id. at 12-15. ↑
30. Id. at 14. ↑
31. Id. at 16. ↑
32. Memorandum in Support of Plaintiffs’ Motion for Leave to Amend at 8-9, Philipp v. Federal Republic of Germany (D. D.C. Apr. 22, 2021) (No. 1:15-cv-00266). ↑
33. Memorandum in Support of Plaintiffs’ Motion for Leave to Amend at 9-10, Philipp v. Federal Republic of Germany (D. D.C. Apr. 22, 2021) (No. 1:15-cv-00266). Note also that on the same day Philipp was decided, the Court also remanded a similar case, Republic of Hungary v. Simon, to proceed consistent with the Philipp decision. Republic of Hungary v. Simon, No. 18-1447, slip op. at 1 (U.S. Feb. 3, 2021). ↑
34. The Fralin Museum of Art at the University of Virginia, Nazi Era Restitution Talk with UVA Alumna and Attorney Eden Burgess, COLL’96 (presented Feb. 23, 2021) (viewed via Youtube recording Feb. 27, 2021). ↑
35. Brief for Peter Toren as Amicus Curiae Supporting Respondents at 2, Federal Republic of Germany v. Philipp, No. 19-351, slip op. at 1 (U.S. Feb. 3, 2021); Notice of Recent Decisions and Request for Entry of Briefing Schedule at 2, Toren v. Federal Republic of Germany, (D. D.C. Feb. 8, 2021) (No. 16-cv-1885). ↑
36. See The Fralin Museum of Art at the University of Virginia, supra note 34; Nicholas O’Donnell, LinkedIn (last visited Apr. 2, 2021). ↑

About the Author: Laura Michiko Kaiser is a third-year law student at The George Washington University Law School and legal intern at the Center for Art Law. Prior to law school, she worked as a paralegal in New York City. Laura earned her B.A. in Comparative Literature from New York University and completed course work in studio art, film, international literature, and cultural heritage. She is passionate about the art law field and hopes to be an attorney and advocate for artists and designers.