8 April 2004

http://www.theartnewspaper.com/artlaw/artlaw.asp

US Supreme Court hears the Austria Klimt case

The Bush administration argues that Austria cannot be sued in a US court because it would interfere with foreign relations

By Martha Lufkin

On 25 February, the US Supreme Court heard oral arguments in the case of Maria V. Altmann who is attempting to sue Austria and the Austrian National Gallery (ANG) in the US for the return of six paintings by Gustav Klimt which Nazis stole from her uncle in Vienna. The court will issue a ruling by the end of June.

A yes vote from the court is vital to the continuation of the lawsuit, which Austria has unsuccessfully sought to dismiss as impermissible in two lower federal courts. If the Supreme Court accepts Austriaís final appeal, Mrs Altmannís claim, which has focused an international spotlight on Austria and the Klimt paintings, will be over forever in US courts.

The justices will not decide who owns the Klimt paintings. Indeed, it was almost 53 minutes into the one-hour argument before the words ìproperty taken from a Jewish familyî were even heard in the courtroom. Instead, the question is whether Austria, a sovereign nation, can be sued in US courts over events that predate 1976, when the Foreign Sovereign Immunities Act (FSIA) was enacted, newly permitting lawsuits against foreign nations in certain specified cases.

Austria says the statute cannot be ìretroactively appliedî to permit lawsuits based on pre-1976 events. The actions surrounding the paintings took place in and before 1948 (see below). However, the plaintiff, Maria V. Altmann, says that the suit is permitted because the paintings have been wrongly withheld by the ANG ìin violation of international law,î one of the exceptions to immunity contained in the FSIA. The statute, she says, does apply to pre-1976 events.

Altmannís attorney convinced two lower federal courts to let the suit proceed despite Austriaís immunity protest.

The ANG and Austria are represented by the major US law firm Proskauer Rose in Los Angeles. The Bush Administration has filed a brief supporting Austria.

In a packed courtroom on 25 February, Mrs Altmann (88) was present with her four children. Austrian officials, including the Ambassador to the US Eva Nowotny, also attended. Proskauer partner Scott P. Cooper argued Austriaís case.

Applying the FSIA in this case would unfairly create new ìlegal consequencesî to Austria for 1948 events, Mr Cooper argued, and the ìretroactiveî application of a new law was not permitted.

Before 1976 ìthere was complete immunity in this country for claims of expropriation,î Mr Cooper said, and foreign sovereigns had an expectation that they would not be sued in the US for their internal sovereign activities.

But Justice Antonin Scalia questioned whether such expectations were protected. Suppose, Justice Scalia said, ìI expected not to be able to be sued in Virginia,î and Virginia changed its law allowing a suit. ìI canít believe that Austria when it took this action had in mind, ëI canít be sued for this in the United States,íí he said. ìWho cares?î

But Mr Cooper argued that Austria ìabsolutelyî could not have been sued in any country over expropriations before 1976.

Arguing for the Bush Administration, Deputy Solicitor General Thomas G. Hungar of the Department of Justice said the government has always maintained that sovereign immunity bars US courts from adjudicating pre-1976 expropriation claims. Suits against foreign sovereigns ìare frequently sources of friction,î Mr Hungar said, and should be addressed diplomatically.

But while some of the justices raised issues of international reciprocity, Justice Stephen G. Breyer asked whether the FSIA could still permit a lawsuit despite foreign policy issues. ìWhere am I wrong in thinking there is no real foreign policy concern here?î he said. He asked why the State Department could not just file a ìstatement of interestî telling courts to ìstay outî of a case where there was a ìbig foreign policy matterî being worked out in other forums rather than barring such lawsuits as a jurisdictional matter.

Mr Hungar said that this course of action could lead to claims against ìcountless foreign countries,î citing current lawsuits in the US against Japan and Poland.

But Mrs Altmannís lawyer, E. Randol Schoenberg of Burris & Schoenberg, Los Angeles, told the court his case would not open US courts to such suits.

Justice David H. Souter cited the government's concern about foreign relations embarrassment. Chief Justice William H. Rehnquist asked Mr Schoenberg if those foreign relations concerns were not ìconclusive.î Justice Breyer asked if US courts should adjudicate expropriation claims from ìall over the world.î

But Mr Schoenberg said other suits would be barred, by time limits, defenses of inconvenient forum and interference with treaties, and the ìAct of Stateî doctrine, under which US courts cannot rule on actions taken by foreign sovereigns within their own territory. Austria has not claimed the Act of State defense in this case. Under the Austrian State Treaty, Schoenberg added, ìAustria must return property taken from Jewish families in the Nazi era.î

By the argumentís close, it appeared to some that while the justices had asked close questions of Austriaís lawyer, and listened respectfully to the attorney for the US, some of the justices seemed to be collaborating with Mr Schoenberg in addressing the thorny problem of how to balance foreign relations concerns with allowing such a lawsuit.
Others flatly predict that the Court will never allow the case to go forward given US executive branch concerns.

When the justices rose, Ruth Bader Ginsberg led the way out the left rear door, followed by Justices Souter and Scalia, neither talking to the other. The nine justices will now meet in closed session to deliberate.

Case history
The art: Six paintings by Gustav Klimt now on view at the Austrian National Gallery (ANG). Their value: Said to be more than $100 million. Former owner: Ferdinand Bloch-Bauer, wealthy Jewish sugar magnate in Vienna. His wife: Adele Bloch-Bauer, famously portrayed in two of the paintings. The will: Adele died in 1923, leaving a will ìkindlyî asking Ferdinand to give the six Klimts to the ANG on his death. This was not a bequest, Altmann says. The Nazis: Stole the paintings from Ferdinandís home after Austrian annexation in 1938. Ferdinand escaped to Switzerland. And then: Nazis gave two paintings to the ANG, purportedly following Adeleís will. Four others were kept or given to Austrian museums. In 1945: Ferdinand died penniless in Switzerland, leaving his property to his heirs. After the war: The ANG cited Adeleís will to keep the paintings, despite allegedly possessing an internal letter saying it had no legitimate claim to own them. Austria used export control laws to force emigrating Jews to ìdonateî art to the nation when they sought the official permits required to take the rest of their collections with them. The lawyer for Ferdinandís heirs, allegedly without authorisation, and anticipating Austrian delay tactics to keep the Klimt paintings, gave all six paintings to the ANG to obtain the permits the family needed to export the rest of Ferdinandís collection.