(WASHINGTON-July 10, 2018) The U.S. Court of Appeals for the D.C. Circuit has affirmed the right of the heirs to the so-called Guelph Treasure (known in German as the Welfenschatz) to seek restitution in U.S. courts for the value of the treasured art collection. The appellate court rejected Defendants’ arguments that U.S. courts lack jurisdiction, or that Germany’s treatment of its Jews in the 1930s should be immune from judicial scrutiny. While the Federal Republic of Germany itself was dismissed as a defendant, the actual possessor and key party in interest (the Stiftung Preussischer Kulturbesitz, or SPK) must now prove that a 1935 transfer of the collection by a consortium of Jewish art dealers to Hermann Goering’s minions was a legitimate transaction if they are to retain the collection.
Sullivan & Worcester LLP partner Nicholas M. O’Donnell said, “The Court of Appeals confirmed that Germany’s persecution of Jews is the quintessential crime against international law. Germany stands shamed today for its effort to revise the history of early Nazi repression and pretend that it takes this question seriously. The broken and self-serving restitution policies of Germany are worthy of no deference or respect, and our courts have seen that.”
In 2017, the United States District Court for the District of Columbia rejected the Defendants’ arguments that they are immune from suit and held that the Plaintiffs’ claims can be considered a taking of property in violation of international law for the purpose of evaluating the court’s jurisdiction over Germany and the SPK. On appeal, Germany took the startling position that Germany’s persecution of Jews in the 1930s was not a crime against international law (one of the requirements for the jurisdictional law in question, the Foreign Sovereign Immunities Act or FSIA). The Court of Appeals rejected this argument in its opinion:
“In this case, moreover, the Welfenschatz was more than just art. As Germany acknowledges, ‘the Consortium bought [the Welfenschatz] not for pleasure or display, but as business inventory, to re-sell for profit.’  By seizing businesses’ inventory—like the other economic pressures alleged in the complaint, such as the ‘boycott of Jewish-owned businesses,’  and ‘exclu[sion]’ of Jews from certain professions, —the Nazis ‘dr[ove] Jews out of their ability to make a living,’  and thereby, in the words of the Genocide Convention, ‘inflict[ed] . . . conditions of life calculated to bring about [a group’s] physical destruction in whole or’—at the very least—’in part,’ Genocide Convention art. 2(c).”
Further, the D.C. Circuit rejected Germany’s incremental revisionism with regard to the beginning of Germany’s terrorizing of its Jews, holding that “Congress has expressly found that the Holocaust began in 1933.”
Moreover, Germany had argued that even if Plaintiffs’ claims met the requirements of the FSIA, the Court should abstain from the case out of respect for “international comity” or until the heir goes through the fruitless exercise of pursuing court action in Germany that is doomed to fail. This too did not persuade the D.C. Circuit: “the heirs have no obligation to exhaust their remedies in Germany.”
Lastly, the Court of Appeals upheld the importance of the Washington Principles on Nazi Confiscated Art and the availability of private claims like these. From the opinion: “Indeed, far from adopting  an ‘express federal policy’  of disfavoring domestic litigation of Nazi-era art-looting claims, the United States has repeatedly made clear that it favors such litigation.”
The Court of Appeals did dismiss Germany itself as a Defendant, holding that a distinction under the law exists between the manner in which the SPK and Germany, respectively, have to engage in commercial activity to be subject to U.S. court jurisdiction. The Court held that the SPK can be sued because it is an “instrumentality” and thus needs only engage in some minimal kind of (not necessarily related) commercial acts, whereas it held that Germany would have to have used the Guelph Treasure itself within the U.S. to be sued. With respect to this dismissal, O’Donnell said, “the dismissal of Germany as defendant is inconsequential. The SPK is the wrongful possessor of the Guelph Treasure and it must now answer for its defense of Hermann Goering’s crimes.”
Today’s ruling affirmed several of the District Court’s 2017 important findings. First, it confirmed the building consensus among U.S. courts that technicalities about whether Jews were oppressed by their own government or by international actors (a distinction that the German Defendants argued should bar the case) are no defense to restitution claims. Second, the District Court rejected the German Defendants’ contention that the non-binding German Advisory Committee—little more than a formal mediation forum that issues recommendations that the parties are free to reject or accept—is not an adjudication of any property rights that bars later litigation in U.S. court. Lastly, the District Court embraced the ability of the federal courts to hear and to resolve complicated questions of domestic and foreign law.
The Guelph Treasure, also known in Germany as the Welfenschatz, includes dozens of gilded and jeweled reliquary art from the 11th to 15th centuries that long belonged to Prussian aristocrats from the House of Brunswick (Braunschweig)-Lüneberg. In 1929, the Duke of Brunswick sold off the collection, with part of it going to a consortium of art dealers owned by the plaintiffs' ancestors and predecessors: J.&S. Goldschmidt, I. Rosenbaum, and Z.M. Hackenbroch.
In the 1930s the Jewish ethnicity of those dealers brought them to the attention of Hermann Goering, whose titles as one of Adolf Hitler’s top Nazi deputies included not only Commander of the Luftwaffe and President of the Reichstag, but also Prime Minister of Prussia.
The works were obtained by Goering’s emissaries through a pressured transaction at a fraction of their worth, paid into blocked accounts to the members of the art owners’ consortium. Some of the owners had already begun preparations to flee Germany, others followed soon after. Fees demanded by Nazi authorities as the escapees fled were then stripped from the accounts through harsh “flight taxes,” as described in a Gestapo document.
Coerced selling of property was a common tactic of the Third Reich during the period historians are now calling Early Nazi Terror. Germany's SPK has claimed that the transaction was done at the owners “free disposal.” But so pleased with the Guelph acquisition was Goering that, according to a 1935 report in the Baltimore Sun, he personally presented the collection as a “Surprise Gift” to Hitler.
Other documents show the then-Mayor of Frankfurt, shortly after the Nazi takeover, boasting in a letter to his “most revered” leader, “Reichskanzler (Chancellor Hitler),” about the potential to take advantage of the Welfenschatz’s owners and seeking Hitler’s personal assistance in setting the stage for the forced transaction. Another letter, concerning how to obtain the Welfenschatz from the Jews, is addressed to Paul Körner, a Nazi leader who later participated in the infamous Wannsee Conference in which Hitler's "Final Solution" was formalized to oversee the extermination of all remaining Jews in Europe.
Sullivan & Worcester LLP is assisted in this matter by co-counsel Markus Stoetzel and Mel Urbach, not affiliated with the firm.