The Altmann Case

The first case to apply the FSIA to a claim of Nazi-looted artwork was Altmann. Altmann involved a collection of six Gustav Klimt paintings that had a worth of approximately $150 million and had been stolen by the Nazis in the 1940s, ending up in the collection of the state-run Austrian Gallery. The plaintiff, Maria Altmann, is the niece and heir of a Jewish woman, Adele Bloch-Bauer, who as an arts patron, sat for Gustav Klimt and owned many of Klimt's paintings. Adele died in 1925, and by her will the paintings became the rightful possession of her husband, Ferdinand. Adele had expressed in her will that her husband consider donating the paintings to the Austrian Gallery. However, Ferdinand did not donate the paintings; and when he fled Austria in 1938 to escape Nazi persecution, the Nazis confiscated all of his artwork. When the will was probated, it was found that Ferdinand, not Adele, was the rightful owner of the paintings. The paintings, through different ownership paths, ended up in the collection of the Austrian Gallery.¹⁸

In 1946 it looked like Altmann would be able to recover the paintings, because the Republic of Austria declared that all transactions that were motivated by discriminatory Nazi ideology were to be deemed null and void. However, a countervailing Austrian law prohibited the export of artworks that were deemed important to Austria's cultural heritage. Altmann, living in the United States at the time, was coerced by a lawyer into donating some of the Klimt paintings to the Austrian Gallery in exchange for export permits for other items in her heir's collection. Then, in 1998, a new restitution law was enacted in Austria, designed to return artworks that had been donated to federal museums under duress in exchange for export permits. However, the Austrian Gallery voted not to return to Altmann the Klimt paintings, claiming (falsely) that Adele's will made the gallery the rightful owner. Because the costs for bringing a lawsuit in Austria are determined by the amount in controversy, Maria Altmann did not have the necessary 2 million Austrian Schillings to sue the Austrian Gallery for the paintings.¹⁹

Then, in 2001, Altmann found an affordable way to sue the Austrian Gallery in U.S. federal court when the Austrian Gallery advertised in the United States an exhibition of the paintings taking place at the Gallery in Austria.²⁰

The Altmann court analyzed §1605(a)(3), which is commonly known as the expropriation exception as having three required elements:

1. There must be property taken in violation of international law, (i.e. an expropriation).
2. The property must be owned or operated by an agency or instrumentality of a foreign state.
3. The agency or instrumentality must be engaged in commercial activity in the United States.

For the first element, the court determined that an expropriation had occurred because the paintings were stolen from Altmann's heirs by the Nazis, the Austrian government had not yet returned the paintings to Altmann and her family, and the Austrian government did not justly compensate the heirs for the value of the paintings.²²

The third element involved the last clause of §1605(a)(3): “property or any such property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States” (emphasis added). To determine what constituted commercial activity under this clause, the court looked to the plain text of the FSIA definition of commercial activity in §1603(d) and asserted that it was the nature of the activity and not the purpose that counts. The court found further guidance in a prior U.S. Supreme Court case, Republic of Argentina v. Weltover, Inc., which had ruled that activities of the foreign sovereign are commercial with respect to the FSIA when the foreign sovereign acts in a manner of a private player in the market. Furthermore, what is important is not the motive (or profit motive) of the foreign sovereign, but “the type of actions by which a private party engages in trade and traffic or commerce.”²⁴

Using the previous criteria, the court assessed the Austrian government's activities in the United States in relation to the Klimt paintings: publishing a museum guidebook, publishing photographs of the Klimt paintings in controversy, and advertising Austrian Gallery exhibitions relating to the Klimt paintings. Also, the gallery loaned one of the Klimt paintings to the United States in the past. The court concluded that these activities were the types of actions private parties readily engaged in; and through them the Austrian Gallery was acting as a private player in the market and conducting commercial activities in the United States as defined in the FSIA. More generally, the court asserted that operating a museum is an activity in which private parties engage.²⁵

The Altmann case went up (in part) to the U.S. Supreme Court, which ruled that the FSIA could be applied retroactively to cover events that occurred before the 1976 enactment of the FSIA, and thus Nazi-era looting.²⁷

A critical part of the lower-court Altmann decision involved awarding jurisdiction over the Republic of Austria. The court asserted that, when the second clause of §1605(a)(3) was invoked, which starts after the semicolon (“or that the property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States”), the clause is to be read “in the disjunctive” so that the requirement that the property be present in the United States, as required in the first clause before the semicolon, did not apply to the second clause.³⁰

It is also interesting to note that the Altmann court dismissed the Austrian Gallery's forum non conveniens claim because it did not consider Austria to be an adequate alternative forum for this lawsuit. First, the filing fee that Altmann would have to pay to bring the suit in Austria would be oppressively burdensome; second, a statute of limitations law in Austria might bar her from bringing the suit there altogether.³¹

The Altmann ruling alerted the international art community that state-run museums and galleries can be subject to U.S. lawsuits when their activities extend over to U.S. soil. Moreover, what were formerly viewed as educational and cultural promotions for international art exhibitions now can take the form of commercial activities capable of stripping foreign sovereigns of their immunity.

The blow to international cultural and art exchanges made by Altmann is arguably outweighed by the justice served. After Altmann, the Austrian Government announced it would restitute a total of 6,292 works of art stolen by the Nazis.³²

However, the Altmann ruling cast a wide net to deny immunity under the FSIA and set in motion a string of U.S. court decisions that are further chiseling away at foreign sovereign immunity when it comes to state-run museums and educational exchanges of artwork and cultural property. The Malewicz case went beyond Altmann and attacked foreign sovereign immunity in the context of a cross-border museum loan.

The Malewicz Case

A second art case using the FSIA §1605(a)(3) expropriation exception for a Nazi-looting claim is Malewicz. In this case the Russian abstract artist Kazimir Malewicz entrusted some of his paintings before World War II to a Dr. Dorner in Berlin for safekeeping against Stalinist condemnation. In 1935 Dr. Dorner shipped some of the paintings on loan to the Museum of Modern Art (MoMA) in New York, and kept the rest in Berlin. In 1937 when Dr. Dorner fled Germany in fear of Nazi persecution he took two of the Malewicz paintings with him, which ended up by bequest at the Busch-Reisinger Museum at Harvard University in Cambridge, Massachusetts, to be held on loan and for the benefit of “the rightful owners.” Dr. Dorner passed the rest of the paintings on to a Mr. Häring in Berlin for safekeeping. To date, MoMA has returned one, and the Busch-Reisinger Museum returned both of its Malewicz paintings to the rightful heirs.³⁴

During the years 1951 through 1956, Mr. Häring was approached by the Stedelijk Museum in Amsterdam to lend the paintings to the Stedelijk for restoration and exhibition. Mr. Häring refused, insisting that he did not own the paintings and therefore did not possess the right to lend the paintings to the Stedelijk. On his deathbed, Mr. Häring repeated that he did not own the paintings and could not sell them, but after much goading he agreed to give temporary possession of the works to the Stedelijk. Suspiciously, a letter signed on behalf of Mr. Häring later appeared, which asserted his rightful ownership of the paintings. It also explained how the Stedelijk loan agreement was really an option to purchase the paintings, which the Stedelijk exercised.³⁵

After the fall of the Soviet Union, heirs of Malewicz collectively sought restitution of the paintings from the Stedelijk, arguing that the letter was a fabrication. Their request was denied by the Stedelijk in 2001, because the Museum claimed it rightfully owned the paintings. Then, in 2003, 14 of the Malewicz paintings were sent on loan to the United States for exhibition at the Guggenheim in New York and the Menil Collection in Houston. Two days before the paintings were sent back to Amsterdam, the plaintiffs commenced an action in U.S. federal court.³⁶

The plaintiffs commenced the action without seizing the paintings, because Amsterdam had received immunity from seizure protection for the paintings by the State Department under the IFSA. Amsterdam argued that this immunity undoubtedly meant that the paintings could not be subject to lawsuit. The State Department in amicus curiae supported Amsterdam, arguing that the IFSA immunity was meant to ensure protection against cases like this being brought against the foreign sovereign. The State Department also reminded the court that the purpose of 22 U.S.C. §2459 [the IFSA] was “to encourage the exhibition in the United States of objects of cultural significance, which in the absence of such assurances … would not be made available.” Amsterdam also asserted that had it known the paintings could be subject to a lawsuit, it would have never loaned them to the U.S. museums.³⁷

Nevertheless, the court allowed the claim without seizure. Referring to House Report 94-1487 on the FSIA, the court stated that the “FSIA intentionally overrode the common-law requirement that a plaintiff obtain in rem jurisdiction over property before suit could be filed against a foreign sovereign.” The Malewicz court held that the paintings only had to be present in the United States at the moment when the suit was filed, not during the proceedings. Thus, a filing two days before the paintings were returned to Amsterdam was in fact timely.³⁸

This part of the Malewicz ruling stripped the IFSA of its power to promote international cultural loans to U.S. museums and institutions. Previously, there was the assumption that IFSA immunity kept the objects away from all judicial interference. Malewicz has put foreign sovereigns on alert that the IFSA only protects the property from being seized; a U.S. lawsuit is still a possibility.

Having established the legality of the claim, the Malewicz court considered the elements of §1605(a)(3) and invoked its first commercial activity clause, which requires property “present in the United States in connection with a commercial activity carried on in the United States by the foreign sovereign” (emphasis added). Thus, unlike in Altmann, the property had to be present in the United States. However, as discussed earlier, the Malewicz court read this requirement loosely by requiring that the property be present in the United States only at the very commencement of the lawsuit.

To define commercial, the court repeated Altmann that profit motive or purpose should not be considered, but rather, the type of actions. The court also added, “Commercial means only ‘not sovereign,’ as long as there is some example of private action of a similar type connected with ‘trade and traffic or commerce.’” The court found that a museum loan fit the bill, because public and private museum loans occur around the world and are connected with commerce regularly.³⁹

In its findings, the court did not take into account how museum loans are generally perceived in society as noncommercial activities that allow for cultural and educational exchanges. Although this point was recognized by Congress in adopting the IFSA, it held no weight against the court's textual interpretation of the FSIA's commercial activity nexus.

However, Malewicz stopped short of ruling for the plaintiffs, and showed some deference to the State Department. In its brief the State Department warned, “Foreign states are unlikely to expect that this [commercial activity] standard is satisfied by a loan of artwork for a U.S. Government-immunized exhibit that must be carried out by a borrowing on a non-profit basis.” Furthermore, “The possibility that such a minimum level of contact will necessarily suffice to provide jurisdiction threatens to chill the willingness of sovereign leaders to participate in the section 2459 [IFSA] program.” The Malewicz court reserved judgment to consider whether the City of Amsterdam's commercial activities and contacts with the United States were sufficient enough to satisfy the §1603(3)(e) substantial contacts requirement. Under §1603(3)(e), “A ‘commercial activity carried on in the United States by a foreign state’ means commercial activity carried on by such state and having substantial contact with the United States.” The City of Amsterdam's limited museum-related activities might force a ruling that Amsterdam lacked substantial contact with the United States and thus cannot support the required §1603(3)(e) substantial contact requirement in the FSIA definition of commercial activity.⁴⁰

But even if the Malewicz court ultimately dismisses this claim, the lasting signal is not positive for foreign states who must decide in the future whether to loan artwork to U.S. museums and galleries, especially when the artwork is priced in the millions of dollars. Art loans that provide educational and cultural opportunities to the U.S. population may be significantly decreased because of Malewicz. In addition, foreign countries in response to the lack of comity offered to Dutch laws regarding this claim may expose U.S. art loans to burdensome overseas litigation risks.⁴¹

The Rubin Case

The plaintiffs in Rubin have invoked the FSIA to assert a private claim against cultural property owned by a foreign sovereign. The facts of Rubin are distinct from the Nazi-era looting cases, Altmann and Malewicz, and the FSIA provisions relied upon are §§ 1609 and 1610, which concern attachment of a foreign sovereign's property located in the United States. Also, Rubin, in dealing with antiquities rather than artwork, poses separate issues pertaining to the nature and ownership of cultural heritage property.

In Rubin, the plaintiffs are seeking execution of a judgment that they were awarded in a prior U.S. lawsuit against Iran for Iran's support of a Hamas-organized 1997 suicide bombing in Jerusalem, Israel. The Rubin plaintiffs brought the prior lawsuit under FSIA §1605(a)(7), which allows money damages to be awarded against a foreign sovereign for personal injury or death caused by, inter alia, the foreign sovereign supporting an ‘extrajudicial killing’ whose definition includes a deadly terrorist attack. The plaintiffs are either the actual victims of the bombing or their family members. The monetary judgment against Iran, totaling more than $71.5 million in compensatory damages, was entered in default in 2003, because Iran did not make an appearance in the lawsuit.⁴²

After winning the lawsuit, the plaintiffs faced the challenge of getting Iran to pay the default judgment. If the FSIA allowed a monetary award without providing a way to actually collect against the foreign sovereign, it essentially was creating a right without a remedy. But the FSIA solves this problem (for the issues relevant to this case) by allowing plaintiffs under §1610(a) to attach property that is both owned by the foreign sovereign and being used for a commercial activity in the United States. Such an attachment forces the foreign sovereign to either pay the default judgment or forfeit its ownership of the attached property.

In searching for property owned by Iran and located in the United States, the plaintiffs discovered that the University of Chicago has in its possession Persian antiquities belonging to Iran, namely, “two collections of ancient Persian seal impressions and cuneiform writings found on clay tablets and table fragments that were recovered in excavations in Iran in the 1930s and 1960s.” The collections are known as the Persepolis Fortification Texts and the Chogha Mish collection, both dating to antiquity. The first collection includes tablets and tablet fragments from the reign of Darius I (500 b.c.). They provide information on the language and daily life in the Persian Empire.⁴³

The collections were loaned to the University of Chicago in the 1930s and 1960s following their excavations by the university “for philological and archaeological purposes with the understanding that the collections would be returned to Iran when [the University of Chicago's] studies were complete.” Over the ensuing decades, much research and publication was generated by the collections. Many studies are complete and most of the collection is due to be returned to Iran.⁴⁴

The plaintiffs invoked §§ 1609 and 1610(a) to try to attach the artifacts. The FSIA §1609 grants immunity from attachment of property, except when an exception applies such as §1610(a): “The property in the United States of a foreign state, as defined in section 1603(a) of this chapter, used for a commercial activity in the United States, shall not be immune from attachment in aid of execution, or from execution” (emphasis added). The plaintiffs argued that the Persian artifacts fall under §1610(a) because they have been used for publishing and selling books in the United States. (This claim bears a striking resemblance to Altmann.) To investigate their claim, the plaintiffs demanded from the university “information on the printing costs and sales of any scholarly publications concerning the Iranian collection.” However, the university refused to surrender this information and sought a protective order. The court granted the protective order on grounds that in accordance with §1610(a) only the actions of the foreign sovereign and not the university matter when determining whether immunity should be waived. The university's activities, whether commercial or not, were beyond the purview of discovery in this case.⁴⁵

After the protective order ruling, the plaintiffs moved for partial summary judgment to declare that the university did not have standing to assert an exemption from immunity §1609 claim on behalf of Iran. The magistrate judge agreed and held, “an exemption from attachment must be affirmatively raised by the judgment debtor, and it is the judgment debtor who bears the burden of proof.” The magistrate judge also asserted that a threshold presumption of immunity is not given to the foreign sovereign; rather, the foreign sovereign must appear in court and argue an affirmative defense under §§ 1609 and 1610 to establish immunity and prevent the attachment from occurring.⁴⁶

The State Department aggressively opposed the magistrate judge's ruling, arguing, “the baseline presumption adopted by the FSIA is that the sovereign is immune.” Second, the State Department argued that §1610 is not an affirmative defense of the sort claimed by the magistrate judge, and the plaintiffs should have the burden to demonstrate “that one of the statutory exemptions to that presumption applies, regardless of the presence of the foreign sovereign in this litigation.” Furthermore, the court can raise any affirmative defense sua sponte for the defendant. The State Department also reminded the court that foreign sovereign immunity is a matter of “grace and comity” and “reflects the practical knowledge that U.S. property located abroad will be subject to reciprocal treatment.”⁴⁷

The plaintiffs argued, in response, that prior case law shows “qualified immunity is an affirmative defense that can be asserted only by the defendant government official” and only after it is properly invoked by the foreign sovereign does it create a “presumption of immunity.”⁴⁸

One June 22, 2006, a federal judge surprisingly affirmed the magistrate judge's ruling that foreign sovereign immunity under §1609 is an affirmative defense that must be asserted by the foreign sovereign.⁴⁹

The judge's opinion in Rubin is a good pedagogical example of statutory and legislative interpretation. The judge looked at the plain wording of §1609, “the property in the United States of a foreign sovereign shall be immune from attachment arrest and execution except as provided in sections 1610 and 1611 of this chapter” (emphasis added) and did not to believe that that the phrase shall be immune means that a foreign sovereign is necessarily granted immunity unless an exception is found to apply. The judge based his analysis on how Congress used the verb shall in other parts of the FSIA, and also in other places in the United States Code, arguing that shall was used in other places to create affirmative defenses.⁵⁰

The judge based his analysis heavily on House Report 94-1487, which stated that foreign sovereign immunity was an affirmative defense under §1604 and, according to the judge, used language to imply that it was also an affirmative defense under §1610.⁵¹

In response to the ruling, Iran has appeared in court and asserted an affirmative defense of foreign sovereign immunity to the plaintiffs' claims. We should remember that the magistrate judge in Rubin stated, “Iran has not been shown to have engaged in commercial activity as to the items in question.”⁵³

Assuming for a moment that the special nature of the artifacts will not bar an attachment, the plaintiffs must show, in accordance with §1610(a), that the artifacts owned by Iran were “used for a commercial activity in the United States.” The phrase “used for” in the statute is intended to narrow the type of property owned by the foreign sovereign that can be attached. This is in contrast to §1610(b), which does not have a “used for commercial activity” requirement when the property in issue is owned by an agency or instrumentality of the foreign sovereign.

A good example of the §1610(a) “used for” distinction was made in the 2002 case, Connecticut Bank of Commerce v. Republic of Congo:

Thus, the Persian artifacts, whether or not they theoretically can be used for commercial trade or a commercial publication, must have served such a commercial purpose while in the United States. Such a determination may depend on how deeply the plaintiffs are allowed to dig into the records of the University of Chicago and if any proceeds given to Iran for the research publications can prove “used for a commercial activity.” In Altmann, art publications and advertisements of the property in dispute rose to the level of commercial activity, but in Altmann the foreign sovereign was clearly actively involved in the publications for the Austrian Gallery. In Malewicz the museum loans constituted commercial activity, but again, the activities of the foreign sovereign were the ones under scrutiny. Another question to ask is what level of commercial activity does there need to be? For example, if Iran were to receive only $100 in total from the publications, is this amount sufficient to prove commercial activity and attach the artifacts?

Nevertheless, a ruling adverse to Iran may spark a shopping spree around the country. The Rubin plaintiffs already “are attempting to take custody of a number of antiquities held in Harvard University's museums.”⁵⁶

Even if commercial activity is found under §1610(a), the question of §1603(3)(e) substantial contact still must be addressed, as in Malewicz. Although the tablets have been on loan to the University for decades, the interaction between the Iranian government and the University throughout the years should be found insufficient to satisfy the substantial contact requirement of commercial activity in accordance with §1603(3)(e).

Can the Persian Artifacts Ever Be Attachable?

A critical issue in this case, which did not reach the attention of the courts, is whether the Persian artifacts could, given their inherent nature, ever be attached under §§ 1609 and 1610. The very nature and character of the Persian artifacts, Iran's ownership rights over them, and the United States' public policy concerns for the protection of cultural heritage property should all preclude an attachment. These issues are discussed in detail in the following text.

Public Policy Issues

The court should also protect Iran's ownership of the Persian artifacts for the interests of the public, the study of archeology, and the international preservation of cultural heritage. The preamble of the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property put forward as an important consideration:

An attachment of the Iranian collections seriously contravenes the spirit of the UNESCO Convention. For, although the University of Chicago's research terminates soon, the university has had the tablets in its possession since excavation and no other archaeological groups have had access to them to conduct further observations or research on them. Iran may wish to use the tablets in further academic publications and research, or hold them as important research displays, in situ, at their excavated sites. Also, the science of archeology is far from stagnant; new techniques may develop to further the research done on the tablets.

To consider on a public policy level how a U.S. courts should treat the Persian artifacts in question, we can also take a brief look into how the United States has protected cultural heritage ownership of certain groups within its own borders. Take NAGPRA as an example. Congress adopted NAGPRA to ensure respect for Native American cultural heritage property and to facilitate repatriations for Native American tribes of their funeral objects and cultural heritage property that either fell into the collections of state or federal museums or have not yet been excavated, possessed or sold off. The United States National Parks web site boasts, “NAGPRA has a place within the global movement towards recognition of the cultural property rights of indigenous peoples.”⁶⁹

Among the objects protected under NAGPRA (and most relevant to this discussion) are those of “cultural patrimony” defined as:

Under NAGPRA, cultural patrimony objects linked to a Native American tribe are considered inalienable. The Native American Graves Protection and Repatriation Act has sparked repatriations of cultural patrimony objects to Native American tribes on a wide scale. To give just one example, “In 1999, the Robert S. Peabody Museum at Phillips-Andover in 1999 returned the bones of two thousand Pecos Indians and more than five hundred funerary items to the pueblo of Jamez, New Mexico.”⁷⁰

However, the recent controversy over Kennewick Man has shown that what is in the ground is not necessarily part of the cultural heritage of a later population that occupies the same land. Kennewick Man is a well-preserved skeleton discovered on July 28, 1996, in the Columbia River in Kennewick, Washington. The skeleton dates to about 9,000 years old. The Ninth Circuit Court held that “human remains must bear some relationship to a presently existing tribe, people, or culture to be ‘Native American’ within meaning of NAGPRA.”⁷¹

Should we apply Kennewick Man to the case of the Persian artifacts and argue that Iran owns the tablets not with any special inalienable rights based on its cultural heritage lineage? That is, does Iran only possess the same ownership rights over the Persian artifacts as any other non-Iranian entity would because the artifacts are not just part of Iran's cultural heritage, but part of the world's cultural heritage? I do not believe that this argument holds water. For, in contrast to Kennewick Man, the Persian artifacts date to a much more recent period in history and Iran has continually treated Persian culture as part of its direct cultural lineage.

Moreover, the United States has on many occasions recognized the patrimony rights of modern cultures over early periods of antiquity buried in their lands. Such examples include the bilateral agreements in the CPIA, which prohibit the import of cultural property that is considered stolen according to a foreign country's patrimony laws, as long as that foreign country is a signatory of CPIA. Going further, U.S. courts have recognized patrimony laws of non-CPIA signatory countries as well. U.S. v. Schultz (Schultz) is a well-known example.⁷³

In Schultz, a federal court convicted a reputable New York art dealer, Frederick Schultz, under the National Stolen Property Act for his involvement in an international ring dealing in Egyptian antiquities. The Schultz decision demonstrated that the U.S. could look to a foreign patrimony law to determine if an object should be considered stolen.⁷⁴

On an international scale, the U.S. has engaged in what has been a global trend of voluntary repatriations to return cultural heritage objects to their countries of origin. Examples of U.S. involvement include the National Museum of the American Indian returning objects to Peru, Cuba, and Canada; The Metropolitan Museum of Art returning the Euphronios krater to Italy; the Museum of Fine Arts, Boston also returning ancient works to Italy; and the Getty Museum returning Greek and Italian artifacts to their origin countries. The nature of these issues relate to the common understanding that present-day source countries possess an important right over the cultural heritage property associated with their lands. An attachment of the Persian artifacts in Rubin grossly denies this relationship and goes against the spirit of all the U.S. legislation that endeavors to respect and promote national ownership of cultural heritage property.

The interests of archeology and anthropology should also be considered. The U.S. archaeological field will most likely contract if the Rubin court allows an attachment of the Persian artifacts. Foreign state-run institutions are likely to refuse lending valuable and often irreplaceable cultural items to U.S. institutions for research. Yet, the studies of archeology and anthropology in our universities depend on such loans. Mr. Stein expressed this concern: “Scholarship depends on the ability to trust each other to work above the level of politics and infighting. The whole structure of scholarly collaboration would fall apart, and the whole world would be very much the poorer for it.”⁷⁵

Rubin is still being tried to see if an FSIA attachment over the Persian artifacts will be granted. But the irreparable harms that an attachment will cause should outweigh the justice that the individuals are seeking in this case.