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Restitution Legislation: HEAR Act and Foreign Cultural Exchange Jurisdictional Clarification Act Move Forward

Posted by Nicholas O'Donnell on September 18, 2016 at 5:13 PM


Two restitution related bills have advanced past the Judiciary Committee of the United States Senate: the Holocaust Expropriated Art Act (S.B. 2763, the HEAR Act), and the Foreign Cultural Exchange Jurisdictional Clarification Act, S.B. 3155.  Their advancement for consideration by the full Senate is interesting since in many ways they are at cross purposes with each other.  The analytical coverage of each has also been somewhat frustrating insofar as much of the reasons expounded by their proponents do not really describe what the bills would do.  The HEAR Act would not restitute any Nazi looted art, rather, it would harmonize as federal law the statute of limitations on such claims.  The Foreign Cultural Exchange Jurisdictional Clarification Act would not “reward” Russia or other foreign museums with art claimed by others, it would eliminate a jurisdictional scenario that has only happened once.  The fact is that both bills are of dubious merit because they are of limited effect, and may cause more harm than good.

The HEAR Act is a bit of a conundrum.  It would create a federal statute of limitations for Nazi-looted clams at six years from the discovery of facts that would warrant a claim.  That federal law would expand on state laws that typically set the deadline at three years.  State-level attempts to abolish or lengthen those deadlines have been struck down on preemption grounds.  And there is certainly something to be said for uniformity.  But in practical terms, adding three years does very little good.  Obviously decades have passed since the war ended, and the application of any statute of limitations, whether three or six years, without allowing for the greater context and understanding that has developed in recent years, does claimants few favors.  It would not have changed the recent result in Von Saher, for example.

The bill is an interesting idea that deserves be discussed on its merits.  That is why the self-congratulatory rhetoric around the proposed bill and headlines that the bill would “ensure” restitution are disappointing.  This bill would not oblige American museums to live up to the AAMD guidelines on Nazi looted art, which are often flouted.  It would not require any foreign signatory to the Washington Principles to refrain from asserting the statute of limitations, as they often do despite their commitments to the contrary.  Worse, it would affirmatively eliminate certain claims in New York.  In New York, the statute of limitations against a good faith possessor does not begin to run until the claimant demands the object’s return, and the possessor unequivocally refuses.  This bill would put an irrevocable deadline on those cases. 

For its part, the Foreign Cultural Exchange Jurisdictional Clarification Act has been proposed multiple times in recent years, as we have discussed before.  It would amend the Foreign Sovereign Immunities Act, 28 U.S.C. § 1605 (the FSIA).  The FSIA is the statute that provides federal court jurisdiction over foreign sovereign defendants, and provides a number of exceptions to sovereign immunity such that the otherwise immune defendant may be sued.  The expropriation exception embodied in § 1605(a)(3) of the FSIA states that where the claim concerns rights in property taken in violation of international law, and the foreign sovereign defendant is engaged presently in commercial activity in the United States, it may be sued. 

This is of relevance in the context of restitution because when the possessor of a contested painting is a European museum, it will be entitled to sovereign immunity absent an exception.  So, most notably in Altmann v. Republic of Austria concerning the paintings owned by Ferdinand Bloch Bauer and Maria Altmann that were taken after the Anschluss and held by the Belvedere in Vienna, or the Camille Pissarro painting owned by Lily Cassirer that found its way to the Thyssen Bornemisza Museum in Madrid, the plaintiffs successfully argued that the circumstances of Nazi plunder (or at least opportunism created by Nazi persecution) meant that the claims concerned rights in property taken in violation of international law.  Less difficult was their equally successful argument that Austria and Spain, respectfully, were engaged in commercial activity in the U.S., and both cases survived dismissal (Altmann later prevailed in arbitration, while Cassirer’s case was dismissed on summary judgment applying the Spanish law of adverse possession last year).

Sometimes a foreign defendant’s activity in the U.S. is harder to gauge, however.  When the Stedelijk Museum loaned several paintings by Kazimir Malevicz to the United States, the painter’s heirs sued and argued that that loan constituted commercial activity, even though the paintings themselves had been granted immunity from seizure under a different law, the Immunity from Seizure Act, 22 U.S.C. § 2459 (IFSA).  That law provides that when a cultural object is loaned and the borrower applies prospectively to the State Department, it can protected from seizure while it is in the United States for any reason.  Otherwise, they might be attached as collateral to satisfy judgments or other debts.  The Malevicz court held that even a single loan of an otherwise immune object could satisfy the commercial activity prong of the expropriation exception. 

This has only happened once.  And the Foreign Cultural Exchange Jurisdictional Clarification Act would do only one thing, overrule that outcome statutorily, while still allowing it in the case of claims for Nazi-looted art.  It is entirely defensible in the purest sense of consistency, but it is more of a solution in search of a problem.  More puzzling is the vocal advocacy for it by American museums.  The Museum of Modern Art was famously embarrassed when it turned out that Portrait of Wally was not immune from seizure, spawning nearly fifteen years of litigation, and the Association of Art Museum Directors argued that Wally should be returned to Austria notwithstanding its past.  The AAMD has strongly supported the Foreign Cultural Exchange Jurisdictional Clarification Act in each of its past iterations, yet is largely silent about claims against its own members, of which there have been many.  It said in response to the committee vote, “[the bill] will help ensure that foreign governments are not discouraged from loaning works,” something that IFSA has actually done since 1965. 

This bill is not about Russia, despite much of the coverage.  Russia litigated, and lost, the question of commercial activity when it was sued by the Chabad movement.  Russia’s embargo on loans of cultural objects to the United States is both unwarranted (because of IFSA), and a retaliatory stance (Russia has been in contempt of the U.S. District Court in Washington for years and owes tens of millions of dollars in fines).  It certainly deserves no favors, but this bill isn’t one. 

It is still very had to predict the future of these bills.  Both enjoy bipartisan support, but the Foreign Cultural Exchange Jurisdictional Clarification Act has passed the House of Representatives twice before, only to languish in the Senate.  What outcome faces either bill in the full Senate or the House is anyone’s guess, and eight weeks before a Presidential election Congress effectively stops doing business. 

Topics: Legislation, Nazi-looted art, FSIA, Restitution, World War II, IFSA, HEAR Act, Ted Cruz, S.B. 2763, S.B. 3155, Foreign Cultural Exchange, Jurisdictional Clarification Act

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The Art Law Report provides timely updates and commentary on legal issues in the museum and visual arts communities. It is authored by Nicholas M. O'Donnell, partner in our Art & Museum Law Practice.

The material on this site is for general information only and is not legal advice. No liability is accepted for any loss or damage which may result from reliance on it. Always consult a qualified lawyer about a specific legal problem.

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