The Holocaust Expropriated Art Recovery (HEAR) Act of 2016 has been pending for several monthsnow, and was recently recommended favorably by the Senate Judiciary Committee in September. The bill would create a uniform six-year statute of limitations for Nazi-looted art claims, harmonizing an otherwise patchwork state by state system. While that consistency was laudable, our concern was that the bill as proposed would overrule New York’s important demand and refusal approach to statutes of limitations, with the effect that many otherwise timely claims in New York might become barred. The bill’s text has been quietly amended to correct that, and in other interesting ways as well. With the Presidential election just two weeks away, however, it remains anyone’s guess if the bill will become law before the new Congress is seated in January.

As discussed previously, many looted art claims in U.S. courts have turned on whether they were brought in time. Most such claims rely on state property law, which it turn typically have three-year statutes of limitations. Even where the events were long ago (like the Holocaust), most states will “toll,” or suspend, the statute of limitations until a claimant knows or reasonably could have known the facts (and whereabouts) necessary to assert a claim. New York is a notable exception, which does not begin its statute of limitations for personal property acquired in good faith until the claimant demands its return and the possessor unequivocally refuses to return it. That is subject to some other equitable defenses as well, but it is the general New York rule.

The initial version of the HEAR Act had a bright line six-year rule. As written, it would have aided claims whose discovery was more than three but less than six years ago, but in so doing would have eliminated the New York rule. That would be a bad result. The New York rule is the superior one, which encourages discussions without prejudicing anyone.

Happily, the HEAR Act as pending has been revised to address this problem. A document we prepared showing the changes between the versions is available here. The new draft creates a legal fiction that the date of “discovery” will be deemed to be the date of enactment of the law if:

(A)before the date of enactment of this Act, a claimant had knowledge of the elements set forth in subsection (a); and

(B)on the date of enactment of this Act, the civil claim or cause of action was not barred by a Federal or State statute of limitations.

In other words, a claim of which someone has knowledge today but has not made demand and refusal, or did so fewer than three years ago, would not have “discovered” it and be subject to the new six year limitations until the law is passed. If three years from demand and refusal runs (or ran) before the law is enacted, however, the statute will not revive it.

Other than some wording changes, the only other notable addition was this paragraph:

(8)While litigation may be used to resolve claims to recover Nazi-confiscated art, it is the sense of Congress that the private resolution of claims by parties involved, on the merits and through the use of alternative dispute resolution such as mediation panels established for this purpose with the aid of experts in provenance research and history, will yield just and fair resolutions in a more efficient and predictable manner.

This is interesting, because first and foremost it inserts into a proposed law that is entirely about litigation an endorsement of methods other than litigation. As a “sense of the Congress” statement that stands apart from the function of the law it is probably legally meaningless, but curious nonetheless.

Regardless, with the important change to the fundamental statute of limitations questions resolved, any reservations we had about the law is removed even if adopting New York’s rule as the new standard would have been better. It is not a panacea that will put everything back where it came from and any claims that it will should be regarded with skepticism, but it is a big step in the right direction for all involved.