US federal appeals court orders Austria to take part in mediation over claim to Klimt

01/05/2002

But Austria claims immunity from US lawsuit
los angeles. A federal appeals court has taken the unexpected step of ordering Austria and an opposing claimant to enter into mediation in California in a claim seeking six Klimt paintings said to have been stolen from a Jewish owner by Nazis. The action appears to be the first time that a federal court has ordered a foreign nation to take part in mediation in a case before its defense of sovereign immunity from lawsuit is resolved. The works of art are claimed by an heir of Ferdinand Bloch-Bauer, a prominent Viennese Jew whose monumental collection was stolen by Nazis when Germany annexed Austria in 1938. The Klimts are being "wrongfully withheld" by Austria and the Austrian National Gallery (ANG), the plaintiff says.

Austria's key defense in this California lawsuit over the paintings, which are prized national treasures at the ANG, is its claim to immunity from US lawsuit as a foreign sovereign. Austria says that a foreign nation cannot be sued under any circumstance in the US over pre-1952 events, which, it adds, occurred on its home territory where the claim should be resolved. The plaintiff, 86-year-old Maria V. Altmann, says that Austria can be sued in the US because the works of art were taken in violation of international law, and because Austria has engaged in a "commercial activity" here, including the encouraging of US tourists to visit the ANG. The lower federal court agreed with Ms Altmann, and Austria appealed.

But on 20 March, a three-judge panel of the Ninth Circuit Court of Appeals said it thought that "mediation could bring a resolution that would serve the parties better than results achieved through litigation." The court referred the case to its mediation unit and said that the mediator should report back to it "every 30 days as to the status of the mediation." The first meeting between the attorneys and mediator was scheduled for late April. It is not yet clear whether mediation would involve the substantive dispute over who owns the Klimts, or start with the immunity question. A mediator has no authority to force the parties to settle any aspect of a case or even to settle what topics would be discussed.

Since the entire appeal was over the question of whether Austria can be sued in the US at all, the court's order seems to beg the question of whether Austria is subject to the jurisdiction of US courts. Legally, however, mediation does not rob either party of its arguments if settlement attempts fail, in which case the dispute will presumably go back to the appeals court for a decision on jurisdiction.

Austria has indicated that it will comply with the court's order and participate in good faith. Randol Schoenberg, Ms Altmann's attorney, told The Art Newspaper, "There are about a million ways this could be resolved outside the court, but you have to have two willing parties to do that. I've always been open to talking about settlement with them. But my client is 86 years old. We can't let this drag on forever." The plaintiff had sought an expedited appeal because of her advanced age.

Meanwhile, Ms Altmann's expert witness, Professor Welser, Chairman of the Institute of Civil Law at the University of Vienna, has issued a lengthy opinion to the effect that Austria never gained ownership of the disputed Klimts under the Will of Ferdinand's wife, Adele Bloch-Bauer, as Austria says. Instead, Professor Welser says, the only way the Republic obtained a claim to the paintings was through a forced post-war donation by Bloch-Bauer's heirs. That donation was a "prerequisite" required by Austria in exchange for granting export licenses to let the family remove other paintings from Austria, Professor Welser says. At least half if not more of the Klimts qualify to go back to Altmann, Professorr Welser says, under a 1998 Austrian law authorising the return of uncompensated, post-war "gifts" of art that Austria required of persons who wanted to get works of art out of the country. Professor Welser's opinion is not, however, before the California court

M.L.