In a case that has tested the principles of how a defiant sovereign defendant can be compelled to comply with a court order, the U.S. District Court for the District of Columbia has taken an emphatic step in an order issued today. The Russian Federation, the Russian Ministry of Culture and Mass Communications, the Russian State Library, and the Russian State Military Archive will be fined collectively $50,000 per day until they comply with a 2010 judgment to return the library of Menachem Schneerson, the late charismatic leader of the worldwide Chabad Lubavitch movement, to the movement in Brooklyn, New York. Whereas the court lacked any power to compel the seizure of the library itself overseas, the plaintiffs will now be armed with a very real financial bludgeon against the defendants that have thumbed their noses at the U.S. courts for more than three years. In any case where the defendant refuses to obey a court order that court has a wide array of tools to compel compliance, but this case has been an awkward example of the limits on a court of law faced with an uncooperative party overseas. Particularly where the Foreign Sovereign Immunities Act, 28 U.S.C. § 1603 (the FSIA) was the basis for jurisdiction, as it is in so many wartime art restitution cases, and the fact that the 2010 judgment led to a still-ongoing embargo of art and cultural artifact loans to the United States, the decision is a significant one for the realm of art law.
The history of the case is complex. In 2005, Agudas Chasei Chabad (a constituent institution in Brooklyn, New York of the worldwide movement) sued the defendants in Washington, DC seeking the return of the collection of books and other objects of interest to the Chabad Lubavitch movement and teachings (the Library). By the early twentieth century, the Library included thousands of religious books, manuscripts and other documents. One portion of the Library was seized in 1917 by the emerging Bolshevik government from a warehouse in which the Fifth Rebbe had placed it for safekeeping in the face of the advancing German army during the First World War as the Tsarist regime collapsed. The Russian State Library (where those objects ended up after the dust settled) rejected the Fifth, and then the Sixth Rebbe’s pleas for their return in the 1920s. Over the next twenty years, the Sixth Rebbe moved from Russian/Soviet territory to Latvia to Poland, from which he fled upon the invasion by Germany in 1939. The remaining portions of the Library still in his possession were left behind, collected by the German army, and ultimately captured by the Soviet Union at the end of the war. That portion is currently held by the Russian State Military Archive. The Sixth Rebbe survived the war and settled in the United States, where he and his followers have been attempting to retrieve the Library ever since. They, and the then-Seventh Rebbe (who died in 1994 without an official successor) achieved initial success in 1991-92 as the Soviet Union collapsed, but political forces in the nascent Russian Federation apparently thwarted their early judicial victories.
The defendants argued that they were entitled to sovereign immunity, that is, the right for nations and states or their “instrumentalities” to be free from judicial suit without their consent, regardless of their underlying conduct. The plaintiffs countered that the FSIA abrogates that immunity. Specifically, the FSIA mandates that a foreign state is not immune from suit in any case “in which rights in property taken in violation of international law are in issue” when the property is claimed by a foreign instrumentality that is also engaged in commercial activity within the United States.
The Court of Appeals for the D.C. Circuit affirmed (in 2010) that the Russian defendants are not immune from suit because the Library was taken in violation of international law (particularly with respect to the initial victory in Russian court in 1991 that was overruled by executive action).
Thereafter, things got even more interesting. Rather than defend the case back in the trial court, the Russian defendants filed a “Statement with Respect to Further Participation,” informing the Court that they simply would not participate further in proceedings in a court that they claimed had no jurisdiction over them. The District Court promptly entered a default judgment against them, ordering the immediate return of the Library to the plaintiffs on July 30, 2010. Having simply terminated their participation, however, the Russian defendants neither did so, nor even responded to the judgment. For the remainder of that year, the plaintiffs provided the District Court with various updates, mostly relating to their efforts to serve the default judgment on the Russian defendants in compliance with applicable international procedure. The Russian defendants did sent a letter directly to the Court in January, 2011 (in Russian), reiterating that they did not consider themselves bound by the judgment.
Since then, the plaintiffs have repeatedly asked the Court to sanction the defendants. On the eve of a hearing on that request, the Court invited the views of the United States, which asked the Court not to sanction the defendants, claiming it could hurt diplomatic relations and upset efforts at a diplomatic resolution, efforts that were, frankly, difficult to perceive (an argument of which we have been critical here before). News reports after last week’s hearing rightly indicated that the judge was skeptical of the U.S.’s position. As the decision today points out, the U.S. confuses the entering of sanctions with their enforcement. The Court also pointed out that it could not await sanctions to defer to Russian’s legally unfounded fear of seizure of artifacts loaned, since the Immunity from Seizure Act (and the plaintiffs’ promises) ruled out that possibility.
This is a dramatic remedy. The fine will accumulate rapidly and, presumably, the plaintiffs will be able to pursue any assets held by the Russian Federation within the United States to satisfy the judgment. In a month the fine will be over $1.5 million, and will keep growing. That may well get the defendants’ attention—since nothing else has to date. Whether it provides a positive or negative effect on the loan embargo that Russia instituted in retaliation (for the judgment it has failed to contest) remains to be seen. Contempt sanctions as an FSIA enforcement remedy are not without controversy, either. But what is clear is that after almost two years of waiting, the District Court had clearly had enough. This story, as it has for nearly eight years, is far from over.