THE WELFENSCHATZ TREASURE

In 1929, three firms of Jewish art dealers based in Frankfurt joined to form a consortium in order to purchase what has since been described as “a unique collection of medieval relics and devotional art,” known as the Welfenschatz.^{Footnote 3} The majority of the artifacts in this collection dated from the eleventh to the fifteenth centuries. Following their purchase, the collection was displayed throughout Europe and the United States and a few dozen of the pieces were sold, with the remaining pieces being placed into storage by the consortium in Amsterdam.^{Footnote 4}

The claimants in Philipp v. Federal Republic of Germany alleged that after the Nazi takeover of Germany, the members of the consortium, by virtue of being Jewish, faced economic hardship and that in 1935, following two years of persecution and physical peril to both themselves and their families, the consortium sold the Welfenschatz collection to the Nazi-controlled State of Prussia for 4.25 million Reichsmarks, which purportedly represented less than 35 percent of the collection’s value at the time.^{Footnote 5} It was further alleged that behind the sale of the Welfenschatz to Prussia was Hermann Goering, who at the time was acting as prime minister of Prussia. Following the sale, the collection was shipped from Amsterdam to Berlin where Goering purportedly gifted it to Adolf Hitler.^{Footnote 6}

As for the members of the consortium, all but one fled Germany, and the member who remained died shortly afterwards.^{Footnote 7} Following the war, the collection was seized by United States’ troops and, in time, was turned over to the Stiftung Preußischer Kulturbesitz (the “SPK”), a German governmental-agency formed for the purpose of “succeeding to all of Prussia’s rights in cultural property.”^{Footnote 8} Accordingly, the Welfenschatz collection is now exhibited in an SPK-administered museum in Berlin.^{Footnote 9}

The relatives of the members of the consortium––Alan Philipp, Gerald Stiebel, and Jed Leiber––sought to recover the collection from the SPK and, by extension, the German state. The parties agreed to submit their dispute to a commission in Germany that had been created pursuant to the Washington Conference Principles on Nazi-Confiscated Art.^{Footnote 10} After hearing the case, the Advisory Commission ruled that the sale of the Welfenschatz collection was not a compulsory sale arising out of persecution and that it could therefore not recommend the return of the Welfenschatz to the heirs of the art consortium.^{Footnote 11} Following the Advisory Committee’s ruling, the relatives of the consortium sought no further relief within Germany and, instead, filed a claim in the United States District Court for the District of Columbia against both Germany and the SPK, asserting numerous common law causes of action.^{Footnote 12} By way of redress, the claimants sought the return of the Welfenschatz collection and/or approximately US $250 million.

JURISDICTION AND STATE IMMUNITY

In response to the proceedings brought in the United States, Germany and the SPK moved to have the claims dismissed on the basis that they: (1) have immunity from such claims under the Foreign Sovereign Immunities Act (FSIA) under US law; and (2) that under private international law, comity requires the US courts to decline jurisdiction until the claimants have exhausted the legal processes and remedies available within the German courts. Under the FSIA, the general rule is that foreign states and their agencies have immunity from claims brought in the courts of the United States unless one of the exceptions set out in the statute applies.^{Footnote 13} The relatives of the consortium sought to bring their claims under the exception created for the expropriation of property. This exception has two limbs, both of which must be fulfilled. The first is that the property must have been taken in violation of international law, and the second is that there must be an adequate commercial nexus between the United States and the defendants.^{Footnote 14} The burden of proving that the claim fails to come within the ambit of the exception falls to the respondent state as a matter of law.^{Footnote 15}

The two limbs of the exception have been drafted in order to create a limit upon the ability of claimants to file claims against sovereign states in the US courts in circumstances where there is an insufficient jurisdictional connection. To establish a sufficient link, the US legislature requires there to be a violation of international law. This criterion seeks to apply the act of state doctrine and the principle of non-interference, by which the US courts will only hear issues pertaining to other states where there has been a breach of a communal law—that is, the law applicable to all nations. Through this requirement, the United States is seeking to adjudicate only violations that any state would be entitled to police.^{Footnote 16} This requirement ensures that the courts of the United States do not infringe upon the sovereignty of nations to resolve disputes that are strictly domestic and which are best placed in their domestic context. The second requirement, whilst relatively vague in its drafting, seeks to establish a jurisdictional link with the United States. It is not sufficient that there has merely been a breach of international law, but that the party being brought before the courts of the United States must already have an adequate commercial nexus to justify the courts exercising jurisdiction over the defendant. These are relatively common requirements, which, at their base level, seek to enact wider principles of private international law in delimiting the confines of a state’s ability to try claims against fellow states and to exercise what would otherwise be an exorbitant jurisdiction.

Despite the well-natured intent behind the FSIA, the US courts in recent years have been minded to chart a different path and, in doing so, have greatly expanded the scope for claims against sovereign states concerning the expropriation of cultural property. This can be seen in Philipp where the Court of Appeals held that, whilst intrastate taking—that is, a foreign state taking property from its own citizens—does not amount to a violation of international law, the same intrastate expropriation can amount to a violation for the purposes of the FSIA where the expropriation constitutes the commission of genocide.^{Footnote 17} In Philipp, the Court ruled that the expropriation of property within the context of the atrocities committed against the Jewish people amounts to genocide based upon the decisions of prior courts.^{Footnote 18}

Of particular relevance was the case of Simon v. Republic of Hungary,^{Footnote 19} in which the Court of Appeals held that the “systematic, wholesale plunder of Jewish property … aimed to deprive Hungarian Jews of the resources needed to survive as a people … [amounted to] takings of property that are themselves genocide within the legal definition of the term” and thus falls “squarely within the terms of the expropriation exception.”^{Footnote 20} Subsequently, the US courts proceeded to apply the ruling in Simon to the facts of De Csepel v. Republic of Hungary.^{Footnote 21} The claim was brought by the relatives of a Jewish art collector whose property had purportedly been seized by the Hungarian government and Nazi collaborators. The court ruled that “[j]ust like in Simon … here, as there, Hungary seized Jewish property during the Holocaust. Here, as there, the plaintiffs bring ‘garden-variety common law’ claims to recover for that taking.”^{Footnote 22} The claimants were therefore permitted to reply upon the legal premise that expropriation of property can be tantamount to genocide and thereby satisfy a breach of international law for the purposes of overcoming state immunity.^{Footnote 23}

However, the circumstances in Philipp were different to those of both Simon and De Csepel. In Philipp, the art collection in question had been sold, whereas in the previous cases the property had been seized.^{Footnote 24} It may be that the sale of the artwork was as a result of events impacting upon the finances of the consortium, but they ultimately chose to sell the property rather than let it remain in Amsterdam or move it to an Allied nation where it would have been more secure.^{Footnote 25} Therefore, whilst there is precedent stating that expropriation can amount to genocide in certain circumstances, the Court of Appeals in Philipp was not compelled to reach this conclusion on the basis of stare decisis as the case presented the Court with a distinct set of circumstances to which the prior decisions could not have applied as a matter of default.

However, the Court of Appeals opted not to take this course and, instead, held that the facts in Philipp were suitably analogous to the cases heard in the two previous years. The Court reasoned that the consortium had purchased the Welfenschatz collection “not for pleasure or display, but as business inventory to re-sell for profit.”^{Footnote 26} It held that by seizing business inventories, like other economic pressures, the Nazis drove Jewish citizens out of their ability to make a living.^{Footnote 27} Other examples cited were the boycotting of Jewish-owned businesses and the exclusion of Jews from certain professions. The Court therefore concluded that such acts “inflicted … conditions of life calculated to bring about [a group’s] physical destruction in whole or in part,” which falls within the definition of genocide set out in Article 2 of the Genocide Convention.^{Footnote 28}

The looting of Jewish possessions, be it art, real estate, or anything else, was a heinous crime and one that demands compensation or restitution. However, the Court of Appeals’s reasoning that the sale of art in Philipp amounts to genocide is unconvincing. The consortium sold the art collection for 4.25 million Reichsmarks, and whilst this may have been significantly below market value, the evidence in the case did not suggest that they had been deprived of their assets or were in financial destitution so as to constitute a finding of genocide regarding this particular sale.^{Footnote 29} It was submitted that the Nazis made it impossible for Jewish art dealers to sell their art on the open market, meaning that the ability of art dealers to sustain their income was diminished. In these circumstances, economic duress, which is what such actions amount to in practice, should not be conflated with the definition of genocide. A situation in which a party sells personal property at under-value constitutes a tort or gives rise to claims under contract or restitution for redress within most systems of private law, but it does not amount to genocide. If feeling compelled to waive state immunity on the basis of achieving justice for the claimants, the Court could have premised its reasoning upon a causative analysis by which economic duress could be said to have formed part of the chain that led to genocide being committed and that such acts were so inextricably linked to the series of events that took place, building incrementally in severity, that they were causatively connected to the extent that it would be unreasonable to separate them. But the Court did not seek to substantiate its reasoning on such grounds.^{Footnote 30} Instead, it found that the conditions facilitating the sale of a collection of art at undervalue constituted genocide. Such a heavy-handed approach to establishing jurisdiction over a sovereign state required a significant contortion of the exceptions found in the FSIA.

The law ought to provide for the recovery and compensation of property expropriated by the Nazis; however, it should do so upon a sound legal basis. Instead, the Washington courts in recent years, culminating in the ruling in Philipp, appear to have taken it upon themselves to provide justice by riding rough shod over the requirements put in place in the FSIA that exist to limit the scope of claims that can be brought in the courts of the United States against other sovereign nations. These requirements represent valid limitations upon the courts’ jurisdiction and were formulated to comply with the norms of private international law so as not to permit the United States to exercise exorbitant jurisdiction over other states.

If the expropriated property is to be returned, this should be done by engaging with the German legal system––as will be discussed below––or the US legislature should grant the courts the express power to exercise jurisdiction over such disputes, which have no link to the United States and thus would not, under the ordinarily principles governing jurisdiction, be triable in the US courts. However, it is wrong for the courts to seek to expand the definitions of violations under international law so as to shoehorn them into the wording of the FSIA’s exceptions in order to achieve an end result that strikes the court as just. The principles of international law must be upheld by the courts of all states so as to not infringe upon the comity of other nations. If this blunt approach to establishing jurisdiction continues, states may be minded, in retaliation, or when reasoning by analogy, to extend their own courts’ jurisdiction to hear claims brought against states for which there is no justifiable connection. Whilst being careful not to overstate the point, an erosion of the rules governing jurisdiction over foreign states in domestic courts should be avoided at all cost.

The Court of Appeals understood that its expansive approach to establishing jurisdiction required a legislative foothold and thus sought to enforce its analysis by citing various acts of Congress. The Court explained that “congress provided jurisdictional immunity for certain art exhibition activities [under] the FSIA § 1605(h)(2)(A), but created an exception for art taken during the Nazi era defined as beginning in January 1933.”^{Footnote 31} However, the Court is quoting a different provision of the Act than the one in dispute. The statute does grant immunity to art exhibits, and it does create a carve-out for claims relating to the taking of works during the Nazi era, but, crucially, the statute requires as a condition that the art must be as described in section 1605(h)(1), which means that the art must be in the United States, that the president or president’s designee has determined that the art is of cultural significance and its display is in the national interest and that a governmental notice has been given stating that the display of such art is not a commercial activity.^{Footnote 32} These requirements place the subject matter squarely within the physical jurisdiction of the United States. If these requirements are met, and the art was taken “in violation of international law” during the Nazi era, then an exception from immunity is created. The fact that this carve-out is permitted only in circumstances where the requirements are satisfied—that is, the art being present in the United States and there being a violation of international law—is telling. The absence of these criteria from the section under review in Philipp—namely, section 1605(a)(3) or elsewhere in the statute, provides a strong indication that the US government did not intend for immunity to be waived in other contexts merely by virtue of the fact that the subject matter involves cultural property expropriated by the Nazis.

Indeed, Germany recognized the fact that “allowing this suit to go forward will dramatically enlarge US courts’ jurisdiction over foreign countries’ domestic affairs.”^{Footnote 33} Whilst it could be argued that the US courts’ rulings will be limited to a rare subset of claims and will largely be confined to the acts of Nazi Germany, this position downplays the scope of the Court’s judgment. In light of the pace at which the Court in Philipp sought to expand the definition of genocide under international law from what had been decided in Simon and De Csepel, there exists a real possibility that the US courts will continue to shoehorn the expropriation of property into a range of other breaches of international law. The courts will be unlikely to change track given the clear guidance that the higher courts have issued with respect to engaging the exception found in section 1605(a)(3). This is buttressed by the fact that the Court’s ruling is by no means confined to genocide. Section 1605(a)(3) itself has no regard to genocide or Nazi-era claims. It merely creates an exception for instances where property has been taken in violation of international law more generally. It is likely that when going forward the US courts will be minded to build upon the rulings in Philipp, Simon, and De Csepel to justify linking the expropriation of property to other breaches of international law in order to establish jurisdiction over foreign states.

The second limb of the exception found in section 1605(a)(3) requires a “commercial nexus” between the United States and the defendant.^{Footnote 34} The courts in previous rulings have found that this is only satisfied vis-à-vis states where the property is present within the United States.^{Footnote 35} This makes sense and aligns with the jurisdictional rules adopted by the majority of states. Namely, if the subject matter of a claim is within the physical jurisdiction of a state, then the courts are accordingly justified in exercising jurisdiction over it.^{Footnote 36} In Philipp, the art collection remains housed in Berlin, and, thus, on any reading, the claim fails to satisfy the exception to sovereign immunity. As a result of this, the court dismissed the claimants’ case against Germany on the basis that it had immunity from suit. However, the test is different for “instrumentalities of the State” for which the “commercial-nexus requirement can be satisfied without the presence of the Welfenschatz in the United States.”^{Footnote 37} Instead, a state agency or instrumentality loses its immunity from claims if it owns or operates the property at issue and is engaged in commercial activity in the United States.^{Footnote 38}

This requirement vis-à-vis state agencies represents a significant inroad into the protection of sovereign immunity. The condition would make sense if the agency owns and operates the property in issue in the case and is engaged in commercial activity in the United States relative to that same property. However, to have the requirement be that the agency is merely engaged in commercial activity in the United States more generally with no connection needed to the property in issue creates significant scope for establishing jurisdiction over the agencies of foreign states. This is particularly so in the industry of cultural heritage where state agencies will undoubtedly have exhibitions and museums in other jurisdictions or may regularly loan and sell pieces to museums and galleries based in the United States.^{Footnote 39} Exercising jurisdiction over state entities could be justified if the case concerned particular commercial transactions in respect of the property in dispute. However, in Philipp, the SPK simply hosts the museum in Berlin where the collection is housed and, on the facts, has no commercial dealings in the United States in relation to the Welfenschatz collection whatsoever. In light of this, by exercising jurisdiction under the second limb of the exception contained in section 1605 (a)(3), it could be argued that the United States’ courts are asserting an exorbitant jurisdiction over the agencies of other states in circumstances which have no connection to the claims filed within the US. In applying the statute, the court in Philipp found that the SPK is not entitled to immunity under the FSIA and that the claimants can therefore proceed in their claims for the return of the Welfenschatz or damages in lieu in the US courts.

The second criterion for establishing jurisdiction over governmental agencies, whilst broad in scope, must be viewed within the framework of the statute as a whole. The two limbs of the exception are intended to work in tandem and, when doing so, represent a significant bar to establishing jurisdiction over a state. The reason why this two-lock system failed in Philipp is that the Court first opted to interpret the sale of the Welfenschatz as constituting genocide, thereby satisfying a breach of international law and then applied the liberal second limb of the test to establish jurisdiction over the SPK. These two findings together have the effect of permitting the US courts to adjudicate disputes concerning a governmental agency based in Berlin in circumstances where the art in question, and all transactions and seizures pertaining to it, have no connection with the US—a result that no doubt appears startling to those practicing outside of the United States.

INTERNATIONAL COMITY

In Philipp, Germany argued that irrespective of the issue of state immunity, the US courts should decline to hear the case on the basis that the claimants had failed to exhaust the remedies available to them in the German courts—that is to say, that Germany sought to rely upon the principle of comity recognized in private international law and well established in US law.^{Footnote 40}

The Advisory Commission that first ruled on the claim between Germany and the claimants found that the sale of the Welfenschatz collection was not a compulsory sale brought about by persecution and could therefore not recommend its return.^{Footnote 41} Whilst this result was undoubtedly disappointing, the claimants made no attempts to challenge the ruling, be it through an appellate tribunal of the Advisory Commission or the German courts or via any governmental route. There was no doubt scope to challenge the Advisory Commission’s ruling, and the claimants may––and, no doubt, still could–– have succeed via the domestic route. The fact that during the hearing in the United States, the German government did not contest that the transfer of property at undervalue amounted to a “taking of property” for the purposes of the FSIA is in itself telling.^{Footnote 42} However, to launch proceedings in the United States when the dispute bears no connection to the jurisdiction, and in circumstances where no challenges or appeals have been attempted in the domestic courts, is regrettable. Against this backdrop, for the US courts to proceed in hearing the case creates a risk of infringing upon the principle of comity recognized between states. In such circumstances, the sensible option would have been for the courts to order a stay of proceedings and explain to the parties that domestic remedies must first be attempted and only if those fail will the US courts consider lifting the stay to examine the issues of substantive jurisdiction. This is precisely the approach which the English courts adopted in Mengiste v. Endowment Fund for the Rehabilitation of Tigray, where the Court refused to hear an appeal involving a dispute arising in Ethiopia. On this point, Lord Justice Davis emphasized that the “English courts do not sit on appeal from the Ethiopian courts,” especially in circumstances where the case “has every connection with Ethiopia and none whatsoever with England and Wales.”^{Footnote 43}

Comity requires the judicial systems of states to grant one another equal respect, meaning that the courts of one state will not seize jurisdiction over claims concerning domestic issues pertaining to another state.^{Footnote 44} This is because the courts of that particular state have the natural jurisdiction and are undoubtedly better placed to resolve the dispute. Further, it provides for a recognition of the systems of governance between states and, in doing so, grants respect to the relevant appellate mechanisms and modes of challenge. Simply put, common sense dictates that the courts of the United States should not seek to rule over a dispute taking place between German citizens and the German state, that concerns matters which are inextricably linked to Germany and where the property in question is located in Germany. If the judicial organs of states take it upon themselves to seize jurisdiction and rule on such clearly rooted domestic issues, then the international system of cooperation between judiciaries will begin to break down. Comity exists as a bulwark to ensure that this does not occur. As Germany submitted in Philipp, by bypassing its domestic judicial processes, it “undermines its dignity as a foreign State.”^{Footnote 45}

In an attempt to bolster its argument that comity was not infringed, the US Court held that the FSIA governs the determination of whether a state is entitled to immunity to the exclusion of all other common law principles. In advancing this reasoning, the Court conflated two issues that should have remained distinct. It is correct to state that the FSIA governs state immunity and, to some extent, codifies and otherwise overrides conflicting common law rules. However, the question of comity logically arises prior to this.

The courts of the United States would be entitled to require the claimants to first exhaust the remedies in the domestic courts before being permitted to bring claims in the United States. Any claims would be stayed until this came to fruition. Only then, once comity had been satisfied, would the courts be required to consider the substantive issues of jurisdiction concerning whether Germany is immune from suit under the FSIA. In this regard, the FSIA does not seek to exclude the common law doctrines which embody the principles of private international law within domestic law. This was admitted by the Court when it recognized that the FSIA does not affect the application of forum conveniens. To hold that because Congress passed legislation concerning sovereign immunity, there can subsequently no longer be any examination of the principle of comity or the exhaustion of domestic remedies is misguided. The FSIA is not a wholesale instrument that seeks to set out the United States’ approach to jurisdiction generally, as can be found elsewhere—in the European Union, for example.^{Footnote 46} Instead, it deals with a narrow subset of issues pertaining solely to state immunity, akin to the English State Immunity Act 1978, which serves the same purpose whilst leaving the wider principles of private international law intact.

Recognizing that the above argument was not fool proof, the Court reasoned in the alternative that the FSIA is itself “a matter of grace and comity”^{Footnote 47} and, thus, that to apply the principles of comity would be to grant the principle too much weight. However, this argument does not withstand scrutiny. The statute provides immunity from claims on the basis that states should not adjudicate on issues concerning other states by virtue of them being equals on the international stage. Only in exceptional circumstances where there is a sufficient nexus between the claim and the state will the courts be justified in establishing jurisdiction over another state. Sovereignty, whilst admittedly related to the values underpinning comity, is nevertheless distinct from comity, which is understood as demonstrating mutual respect for the judicial processes of foreign states. Comity requires that the domestic processes should be seen through to completion before the courts of a foreign state can consider whether to exercise jurisdiction over the dispute. Why the FSIA is not a sufficient substitute for the principle of comity is in many ways linked to what has been set out above, that the question of exhausting domestic remedies is a fortiori prior to the question of whether, having exhausted those remedies, the state then has immunity from claims abroad. As the questions of immunity and the exhaustion of domestic remedies are both logically and doctrinally distinct, there is no possibility of comity being applied twice if it is permitted to be considered in disputes where the FSIA is engaged. Regrettably, any nuanced discussion of these distinctions was overlooked in the Court of Appeals’ judgment, which held only that the FSIA provides a one-stop solution to jurisdictional issues arising between individuals and states. By granting no weight to the domestic remedies available and proceeding to hear the claim, the Court in Philipp has served to render comity largely redundant, with the effect that the dignity of foreign states will be undermined and the processes of judicial and governmental redress will not be granted respect in the manner to which they have become accustomed.

COULD ARBITRATION BE THE WAY FORWARD?

Going forward, the current position for both claimants and states alike is that sovereign powers and their agencies can be brought before the courts of the United States for the expropriation of property in circumstances where the property in dispute and the parties involved have no connection to the jurisdiction. All that is needed is for there to be a violation of international law, a test that the US courts have interpreted liberally, and that the property in question is controlled by a state entity that has some commercial activity within the United States, albeit unrelated to the property in dispute. This is further compounded by the US Supreme Court’s ruling in the case of Republic of Austria v. Altmann,^{Footnote 48} in which it held that claims against sovereign powers for the expropriation of property can utilize the exceptions found in the FSIA retrospectively.^{Footnote 49} That is to say, a claim can be brought even in circumstances where the expropriation took place years before the FSIA was enacted or before the particular exception was created. The merits or demerits of retroactively applying state immunity are beyond the scope of this article.^{Footnote 50} However, it remains important to note that when permitting historic claims is coupled with the US courts’ recent approach to waiving state immunity in cases of expropriation, the jurisdiction of the US courts to hear claims against states becomes extremely wide. The effects of this are numerous; however, of peak concern is the fact that the US courts have lent their support to an approach of establishing jurisdiction which erodes the norms of private international law and sets precedent for other states to do the same, either in retaliation or through reasoning by analogy. In either case, it is disconcerting that states may consider it right to take upon themselves the task of policing purely domestic issues in circumstances where none of the domestic processes of that state have been attempted. It is hoped that courts around the world will recognize the danger of this approach and accordingly will continue to apply the norms of international law for establishing jurisdiction with respect to comity and the immunity of states from claims.

In future, and with reference to the parties in Philipp, litigants may wish to consider the benefits of arbitration in resolving disputes concerning the expropriation of property, be it art or anything else. Arbitration presents a number of advantages for both states and private actors alike. By drafting an arbitration agreement, the parties will ordinarily avoid any complex jurisdictional issues, and the state will free itself from having claims adjudicated by foreign courts, avoiding all of the diplomatic and political ramifications that such actions entail. Any prospective claimants also stand to gain heavily as they would avoid the significant expense of having to fund the legal costs of complex interlocutory hearings pertaining to jurisdiction and state immunity—hearings that whilst a state is well placed to afford, individuals are not. Even in the event that the claimants succeed in establishing an exception to state immunity, as in the case of Philipp and Altmann, there still remains a lengthy trial process with all of the expenses which that entails.

If the claimants emerge from the substantive trial triumphant, they are then faced with the process of recognition and enforcement of the judgment, which will not necessarily be straightforward. For instance, in Philipp, the assets are located in Berlin, and the German state could therefore seek to argue that the US courts did not have bona fide jurisdiction to hear the claims in the first place and therefore that the courts should not permit enforcement of the judgment against state assets in Germany. In such circumstances, the claimants would be unable to actually take possession of the expropriated property and would instead need to look elsewhere in the world for enforcement of the judgment against assets owned by the German state but held in foreign countries. This would again raise a series of complex conflict-of-laws issues, and the domestic courts of the places of enforcement would apply their own laws governing immunity of sovereign property within the respective jurisdictions. The enforcement action would therefore likely prove prohibitively expensive. So, whilst prospective claimants may view the US courts’ expansive approach to permitting claims against states positively, the practical necessities following a judgment are likely to prove problematic.

All of these concerns regarding jurisdiction and enforcement could be avoided by means of arbitration.^{Footnote 51} Further, claimants could be reassured in respect of any concerns they may have that the courts of the state against which they are advancing a claim may fail to be impartial. In most cases, this is unlikely to be well founded as courts frequently hear claims against their domestic home state and rule against the governments of those states.^{Footnote 52} But, nevertheless, if potential bias is on the claimants’ minds, as it may well have been in Philipp to explain why they failed to explore domestic remedies, then arbitration provides a solution. This is enhanced by the fact that the parties will be able to take an active role in the choosing of arbitrators which may put them at ease and could provide for tailoring to the specific issues at hand vis-à-vis questions of expropriation and cultural property. Tangential to this is the fact that the parties could also select a third party choice of law, although how likely they are to reach consensus after the dispute has arisen is open to debate.

A potential drawback of arbitration, however, for both claimants and states alike is that any award will prove difficult to appeal since the cornerstone of international arbitration is finality.^{Footnote 53} This is not to say that appeals are impossible but, merely, that the scope for appeals is limited, which presents a double-edged sword for parties considering arbitration. Lastly, an arbitration agreement, even in circumstances where the claimants have succeeded in overcoming state immunity in a foreign court, may nevertheless be advantageous to both parties. Altmann offers a prime example, in which the claimant had succeeded in establishing jurisdiction to bring a claim against Austria in the US courts; however, Austria agreed to pay all of the legal costs for both itself and the claimant if the claimant agreed to arbitration.^{Footnote 54} This was the trade-off needed in order to remove the case from the US courts. Such an approach allows one to bypass many, if not all, of the difficulties raised by individual versus state litigation brought in a foreign court. The cost is born by the state, questions of immunity vis-à-vis a foreign court trying domestic issues are removed, the process is entirely neutral, and, in the event of victory, the claimants do not face the same enforcement issues as they otherwise would with a court judgment, as in most instances they will be able to rely upon the New York Convention, which provides for the reciprocal enforcement of arbitral awards in the jurisdictions of 159 signatory states.^{Footnote 55} As a result, and when going forward, arbitration is likely to provide a very attractive option for claimants who are considering bringing expropriation claims against states, particularly when set against the backdrop of the US courts’ willingness to allow such claims to trial.^{Footnote 56}