In 1926, Lilly Cassirer Neubauer inherited a painting by Camille Pissaro, Rue St. Honore, apres midi, effet de pluie (1897).  As German Jews, Lilly and her husband were subjected to the discriminatory racial laws of the Third Reich.  They fled Germany in 1939, but as a condition of their receiving exit visas to leave the country, Lilly was required to “sell” the painting to a Nazi art appraiser for payment of ca. $350, which was deposited in a blocked bank account to which Lilly was not given access.

After the war, the painting was purchased by a Los Angeles collector, then by a St. Louis collector, and, in 1976, by Baron Hans-Heinrich Thyssen-Bornemisza of Lugano, Switzerland (the Baron).   The Baron displayed the painting there, as part of the Thyssen-Bornemisza Collection (the Collection).  In 1988, the Baron and the Kingdom of Spain entered into an agreement for the Baron to loan the Collection to Spain.  Spain established a private, non-profit foundation to “maintain, conserve, publicly exhibit, and promote artwork from the Collection,” of the Thyssen-Bornemisza Collection Foundation (the Foundation), and also restored the Villahermosa Palace in Madrid to house the Collection. Ultimately, in 1993, Spain purchased the Collection from the Foundation.

Lilly’s heirs discovered the painting at the Foundation in 2001, and petitioned Spain and the Foundation to return the painting.  Spain’s Minister of Education, Culture and Sports denied that request.  Subsequently, five members of the U.S. Congress wrote to the Minister, asking Spain and the Foundation to return the painting to Lilly’s heirs, which request was likewise refused.

On May 10, 2005, Lilly’s heir, Claude Cassirer, a resident of Los Angeles, filed suit against the Foundation and Spain in the Central District of California.  In the decade since then, the case has been litigated, chiefly on questions of jurisdiction – whether the Foreign Sovereign Immunities Act (FSIA) permits a federal court to hear the case.  A number of important clarifications of the FSIA expropriation exception have emerged from this litigation, including the principle that the state against whom the suit is brought (the current possessor of the object) does not need to be the same state that expropriated the object originally (not all courts agree on this point); and the FSIA does not require a plaintiff to exhaust local remedies before filing suit.  See Cassirer v. Kingdom of Spain, 616 F.3d 1019 (9th Cir. 2010); Cassirer v. Kingdom of Spain, 580 F.3d 1048 (9th Cir. 2009).  Most of the prior decisions have held in favor of allowing the heirs’ suit to proceed.

This changed, however, with the U.S. District Court for the Central District of California’s most recent decision,[1] issued on June 4th, when the court granted the Foundation’s motion for summary judgment, holding that Spanish law, not California law, governs the issue of whether the Foundation obtained title to the painting by adverse possession.

The Foundation and the heirs filed cross-motions for summary judgment on the question of what law applies to the question of the painting’s ownership.  The Foundation asserted that either Swiss or Spanish law should apply, and the heirs asserted that California law should apply.

Differences in Laws

This case highlights the sharp distinction between the common law rule that a stolen object remains stolen, and not even a good-faith purchaser can obtain good title to that stolen object, and the civil law rule that after a period of time, title to the stolen object affirmatively vests in the current possessor, and the original owner no longer has any claim to it.

California applies the common law rule.  The rights of a good-faith purchaser of a stolen object are subordinate to the rights of the original owner.  But even the common law rule applies limitations to encourage prompt action on the part of original owners.  As I have discussed at length previously here, California provides for a six-year statute of limitations for claims for the return of stolen art, which period begins to run upon the original owner’s actual discovery of the location of the stolen property and the identity of its current possessor.  Under California law, since the heirs discovered the location and current possessor of the painting in 2001, and the six-year statute of limitations had not yet run at the time the heirs filed suit for the return of the painting in 2005.  Notably, California law also explicitly prohibits the application of the law of any foreign state that would cut off the right of a California resident from bringing suit.  The relevant statute provides: “[w]hen a cause of action has arisen in another state, or in a foreign country, and by the laws thereof an action thereon cannot there be maintained against a person by reason of the lapse of time, an action thereon shall not be maintained against him in this State, except in favor of one who has been a citizen of this State, and who has held the cause of action from the time it accrued.”  Cal. Civ. Proc. Code § 361.  The District Court noted this provision without discussion. [Cassirer, at *8, n. 8]

Spain, by contrast, applies the civil law rule of prescription or adverse possession, which focuses instead on the rights of the good faith purchaser.  Spanish Civil Code Article 1955 provides in relevant part: “Ownership of movable property prescribes by three years uninterrupted possession in good faith.  Ownership of movable property also prescribed by six years of uninterrupted possession, without any other condition.”  Under Spanish law, since the Foundation purchased the Collection, including the painting, from the Baron in 1993, the Foundation would obtain title to the painting in either 1996 (if acquired in good faith) or 1999 (if not acquired in good faith).

Which Law to Apply?

Generally, when (as in this case) jurisdiction is predicated on the Foreign Sovereign Immunities Act, federal courts apply federal common law choice-of-law rules (which follow the Restatement (Second) of Conflict of Laws (the Restatement)).  However, since the U.S. Court of Appeals for the Ninth Circuit has held that it may be permissible to apply the forum state’s choice-of-law rules, the District Court in Cassirer analyzed the question under both the Restatement and the California rules.

The Restatement

The Restatement § 222 states that the law of the state having the “most significant relationship to the thing and the parties” should govern.  In evaluating the different states’ interests, the Restatement requires courts to look to the following factors:

  1. the needs of the interstate and international systems,
  2. the relevant policies of the forum,
  3. the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,
  4. the protection of justified expectations,
  5. the basic policies underlying the particular field of law,
  6. certainty, predictability and uniformity of result, and
  7. ease in the determination and application of the law to be applied.

However, the Restatement, in § 246, provides a specific rule for questions of acquisition of title by prescription or adverse possession.  That section states that  “[w]hether there has been a transfer of an interest in a chattel by adverse possession or by prescription and the nature of the interest transferred are determined by the local law of the state where the chattel was at the time the transfer is claimed to have taken place.”  The court therefore concludes that “[a]pplying the Restatement’s principles of rules, the court concludes that, under federal common law, the law of Spain governs the Foundation’s claim that it acquired ownership of the painting by adverse possession.” [Id. at *6] The court states that “[a]lthough Plaintiffs’ relationship to California is significant, the painting’s relationship to California is not.” [Id.]

California Choice-of-law Rules

California applies a three-step ‘governmental interest’ choice-of-law test.  A court must (i) determine whether the laws of the applicable jurisdictions are different; (ii) if they are different, determine if a true conflict between the laws exists; and (iii) if a true conflict does exist, compare “the nature and strength of the interest of each jurisdiction in the application of its own law to determine which state’s interest would be more impaired if its policy were subordinated to the policy of the other state.”  The court must then apply the law of the state whose law would be more impaired by being subordinated to the law of the other state. [Id. at *7]

The court found that a true conflict between the laws of Spain and California exists, and that each jurisdiction has an interest in having its law applied to the question of the ownership of the painting. “Generally,” the court noted, “laws relating to adverse possession of personal property serve the important interests of certainty of title, protecting defendants from stale claims, and encouraging plaintiffs not to sleep on their rights. . . . Spain unquestionably has an interest in serving these policy goals and applying its law of adverse possession to the Foundation’s claim of ownership, especially given that the Foundation is an instrumentality of the Kingdom of Spain and the painting has been located within its borders for more than 20 years.” [Id. at *8]

Moreover, the court reasoned that California, likewise, “unquestionably has an interest in applying its law to this action.  California’s decision not to extend the doctrine of adverse possession to personal property recognizes the difficulties faced by owners in discovering the whereabouts of personal property even when held openly and notoriously, and serves to protect the interests of the ‘rightful owner’ over subsequent possessors.  It only serves to encourage subsequent purchasers to determine the true owner before purchasing that property.” [Id]

The court acknowledged that California’s interest in “serving these policy goals is especially strong in the context of stolen art.”[ Id]  In support of this position, the court observed that when California amended its statute of limitations for stolen art, the legislature made several specific findings:  (i) “California’s interest in determining the rightful ownership of fine art is a matter of traditional state competence, responsibility, and concern;” (2) “Because objects of fine art often circulate in the private marketplace for many years before entering the collections of museums or galleries, existing statutes of limitation, which are solely the creatures of the Legislature, often present an inequitable procedural obstacle to recovery of these objects by parties that claim to be their rightful owner;” and (3) “The application of statutes of limitations and any affirmative defenses to actions for the recovery of works of fine art . . . should provide incentives for research and publication of provenance information about these works, in order to encourage the prompt and fair resolution of claims.” [Id. at *8-9]

The court then concluded that Spanish law should apply, since Spain’s interest in seeing its law applied would be more impaired by the application of California law than the reverse.  “If Spain’s interest in the application of its law were subordinated to California’s interest,” the court reasoned, “it would rest solely on the fortuitous decision of Lilly’s successor-in-interest to move to California long after the painting was unlawfully taken by the Nazis and the fact that he happened to reside there at the time the Foundation took possession of the painting.  Subjecting a defendant within Spain to a different rule of law based on the unpredictable choice of residence of a successor-in-interest would significantly undermine Spain’s interest in certainty of title.” [Id. at *10]  By contrast, the court noted, “California’s interest in the application of its laws related to adverse possession of personal property (or lack thereof) is not as strong as Spain’s interest, given that neither a California statute nor case law expressly prohibits a party from obtaining ownership of personal property through adverse possession.” [Id. at *11]

The Decision in Context

While the court’s workmanlike application of the Restatement and California choice-of-law rules would be unexceptional in many contexts, in the context of a suit for the restitution of Nazi-confiscated art, however, the decision surprisingly leaves a number of issues unaddressed.  While the court briefly mentions § 361 of California’s amended statute, which explicitly prohibits the application of the law of any foreign state that would cut off the right of a California resident from bringing suit “by reason of the lapse of time,” it fails to analyze the applicability (or inapplicability) of that provision here, where the lapse of time results not in the expiration of a limitations period, but in the vesting of title in a current possessor by prescription or adverse possession.  Instead, the court merely states that no statute of case law prohibits adverse possession.

Far more problematic, though, is the court’s silence on the question of Spain’s inconsistent positions concerning stolen art, and more particularly Nazi-confiscated art.  Spain was a participant not only to the 1998 Washington Conference on Holocaust Era Assets, but also the Vilnius International Forum on Holocaust-Era Looted Cultural Assets (2000), and the Holocaust Era Assets Conference, held in Prague and Terezin (2009).  The states participating in those conferences produced, first, the Washington Conference Principles, a set of non-binding principles, reflecting the consensus of the 44 states participating in the conference.  Those principles were intended to serve as guidelines for states to incorporate into their national laws and legal and ethical approaches for the just handling of Nazi-era claims.  The Washington Conference Principles state, in part, that “[i]f the pre-War owners of art that is found to have been confiscated by the Nazis and not subsequently restituted, or their heirs, can be identified, steps should be taken expeditiously to achieve a just and fair solution, recognizing that this may vary according to the facts and circumstances surrounding a specific case.”  The Washington Conference Principles were affirmed in the Declaration of the Vilnius International Forum on Holocaust-Era Looted Cultural Assets, and theTerezin Declaration on Holocaust Era Assets and Related Issues.  The Foundation is also a member of the International Council of Museums (ICOM), which issued its own Recommendations concerning the Return of Works of Art Belonging to Jewish Owners.

In September 2014, the Conference on Jewish Material Claims against Germany and the World Jewish Restitution Organization issued a report, Holocaust-Era Looted Art: A Current World-Wide Overview, which provides a 50-country survey of restitution efforts.  I have previously discussed that report in greater detail here.  The report was critical of Spain, not least for failing to implement any national legislation covering cultural property spoliated during the Second World War.  The Foundation, which is a state-funded and affiliated entity, has elected to claim rights in the painting by prescription.  It is unclear how this position is consistent with the Washington Conference Principles.

In a prominent case that has litigated many issues involving the restitution of Nazi-confiscated art, the court’s silence on this larger context is surprising.  Perhaps the 9th Circuit, on appeal, will address these and other issues.

 

 

 

 

 

 

 

 

In 1926, Lilly Cassirer Neubauer inherited a painting by Camille Pissaro, Rue St. Honore, apres midi, effet de pluie (1897).  As German Jews, Lilly and her husband were subjected to the discriminatory racial laws of the Third Reich.  They fled Germany in 1939, but as a condition of their receiving exit visas to leave the country, Lilly was required to “sell” the painting to a Nazi art appraiser for payment of ca. $350, which was deposited in a blocked bank account to which Lilly was not given access.

After the war, the painting was purchased by a Los Angeles collector, then by a St. Louis collector, and, in 1976, by Baron Hans-Heinrich Thyssen-Bornemisza of Lugano, Switzerland (the Baron).   The Baron displayed the painting there, as part of the Thyssen-Bornemisza Collection (the Collection).  In 1988, the Baron and the Kingdom of Spain entered into an agreement for the Baron to loan the Collection to Spain.  Spain established a private, non-profit foundation to “maintain, conserve, publicly exhibit, and promote artwork from the Collection,” of the Thyssen-Bornemisza Collection Foundation (the Foundation), and also restored the Villahermosa Palace in Madrid to house the Collection. Ultimately, in 1993, Spain purchased the Collection from the Foundation.

Lilly’s heirs discovered the painting at the Foundation in 2001, and petitioned Spain and the Foundation to return the painting.  Spain’s Minister of Education, Culture and Sports denied that request.  Subsequently, five members of the U.S. Congress wrote to the Minister, asking Spain and the Foundation to return the painting to Lilly’s heirs, which request was likewise refused.

On May 10, 2005, Lilly’s heir, Claude Cassirer, a resident of Los Angeles, filed suit against the Foundation and Spain in the Central District of California.  In the decade since then, the case has been litigated, chiefly on questions of jurisdiction – whether the Foreign Sovereign Immunities Act (FSIA) permits a federal court to hear the case.  A number of important clarifications of the FSIA expropriation exception have emerged from this litigation, including the principle that the state against whom the suit is brought (the current possessor of the object) does not need to be the same state that expropriated the object originally (not all courts agree on this point); and the FSIA does not require a plaintiff to exhaust local remedies before filing suit.  See Cassirer v. Kingdom of Spain, 616 F.3d 1019 (9th Cir. 2010); Cassirer v. Kingdom of Spain, 580 F.3d 1048 (9th Cir. 2009).  Most of the prior decisions have held in favor of allowing the heirs’ suit to proceed.

This changed, however, with the U.S. District Court for the Central District of California’s most recent decision,[1] issued on June 4th, when the court granted the Foundation’s motion for summary judgment, holding that Spanish law, not California law, governs the issue of whether the Foundation obtained title to the painting by adverse possession.

The Foundation and the heirs filed cross-motions for summary judgment on the question of what law applies to the question of the painting’s ownership.  The Foundation asserted that either Swiss or Spanish law should apply, and the heirs asserted that California law should apply.

Differences in Laws

This case highlights the sharp distinction between the common law rule that a stolen object remains stolen, and not even a good-faith purchaser can obtain good title to that stolen object, and the civil law rule that after a period of time, title to the stolen object affirmatively vests in the current possessor, and the original owner no longer has any claim to it.

California applies the common law rule.  The rights of a good-faith purchaser of a stolen object are subordinate to the rights of the original owner.  But even the common law rule applies limitations to encourage prompt action on the part of original owners.  As I have discussed at length previously here, California provides for a six-year statute of limitations for claims for the return of stolen art, which period begins to run upon the original owner’s actual discovery of the location of the stolen property and the identity of its current possessor.  Under California law, since the heirs discovered the location and current possessor of the painting in 2001, and the six-year statute of limitations had not yet run at the time the heirs filed suit for the return of the painting in 2005.  Notably, California law also explicitly prohibits the application of the law of any foreign state that would cut off the right of a California resident from bringing suit.  The relevant statute provides: “[w]hen a cause of action has arisen in another state, or in a foreign country, and by the laws thereof an action thereon cannot there be maintained against a person by reason of the lapse of time, an action thereon shall not be maintained against him in this State, except in favor of one who has been a citizen of this State, and who has held the cause of action from the time it accrued.”  Cal. Civ. Proc. Code § 361.  The District Court noted this provision without discussion. [Cassirer, at *8, n. 8]

Spain, by contrast, applies the civil law rule of prescription or adverse possession, which focuses instead on the rights of the good faith purchaser.  Spanish Civil Code Article 1955 provides in relevant part: “Ownership of movable property prescribes by three years uninterrupted possession in good faith.  Ownership of movable property also prescribed by six years of uninterrupted possession, without any other condition.”  Under Spanish law, since the Foundation purchased the Collection, including the painting, from the Baron in 1993, the Foundation would obtain title to the painting in either 1996 (if acquired in good faith) or 1999 (if not acquired in good faith).

Which Law to Apply?

Generally, when (as in this case) jurisdiction is predicated on the Foreign Sovereign Immunities Act, federal courts apply federal common law choice-of-law rules (which follow the Restatement (Second) of Conflict of Laws (the Restatement)).  However, since the U.S. Court of Appeals for the Ninth Circuit has held that it may be permissible to apply the forum state’s choice-of-law rules, the District Court in Cassirer analyzed the question under both the Restatement and the California rules.

The Restatement

The Restatement § 222 states that the law of the state having the “most significant relationship to the thing and the parties” should govern.  In evaluating the different states’ interests, the Restatement requires courts to look to the following factors:

(a)  the needs of the interstate and international systems, (b)  the relevant policies of the forum, (c)  the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue, (d)  the protection of justified expectations, (e)  the basic policies underlying the particular field of law, (f)  certainty, predictability and uniformity of result, and (g)  ease in the determination and application of the law to be applied.

However, the Restatement, in § 246, provides a specific rule for questions of acquisition of title by prescription or adverse possession.  That section states that  “[w]hether there has been a transfer of an interest in a chattel by adverse possession or by prescription and the nature of the interest transferred are determined by the local law of the state where the chattel was at the time the transfer is claimed to have taken place.”  The court therefore concludes that “[a]pplying the Restatement’s principles of rules, the court concludes that, under federal common law, the law of Spain governs the Foundation’s claim that it acquired ownership of the painting by adverse possession.” [Id. at *6] The court states that “[a]lthough Plaintiffs’ relationship to California is significant, the painting’s relationship to California is not.” [Id.]

California Choice-of-law Rules

California applies a three-step ‘governmental interest’ choice-of-law test.  A court must (i) determine whether the laws of the applicable jurisdictions are different; (ii) if they are different, determine if a true conflict between the laws exists; and (iii) if a true conflict does exist, compare “the nature and strength of the interest of each jurisdiction in the application of its own law to determine which state’s interest would be more impaired if its policy were subordinated to the policy of the other state.”  The court must then apply the law of the state whose law would be more impaired by being subordinated to the law of the other state. [Id. at *7]

The court found that a true conflict between the laws of Spain and California exists, and that each jurisdiction has an interest in having its law applied to the question of the ownership of the painting. “Generally,” the court noted, “laws relating to adverse possession of personal property serve the important interests of certainty of title, protecting defendants from stale claims, and encouraging plaintiffs not to sleep on their rights. . . . Spain unquestionably has an interest in serving these policy goals and applying its law of adverse possession to the Foundation’s claim of ownership, especially given that the Foundation is an instrumentality of the Kingdom of Spain and the painting has been located within its borders for more than 20 years.” [Id. at *8]

Moreover, the court reasoned that California, likewise, “unquestionably has an interest in applying its law to this action.  California’s decision not to extend the doctrine of adverse possession to personal property recognizes the difficulties faced by owners in discovering the whereabouts of personal property even when held openly and notoriously, and serves to protect the interests of the ‘rightful owner’ over subsequent possessors.  It only serves to encourage subsequent purchasers to determine the true owner before purchasing that property.” [Id]

The court acknowledged that California’s interest in “serving these policy goals is especially strong in the context of stolen art.”[ Id]  In support of this position, the court observed that when California amended its statute of limitations for stolen art, the legislature made several specific findings:  (i) “California’s interest in determining the rightful ownership of fine art is a matter of traditional state competence, responsibility, and concern;” (2) “Because objects of fine art often circulate in the private marketplace for many years before entering the collections of museums or galleries, existing statutes of limitation, which are solely the creatures of the Legislature, often present an inequitable procedural obstacle to recovery of these objects by parties that claim to be their rightful owner;” and (3) “The application of statutes of limitations and any affirmative defenses to actions for the recovery of works of fine art . . . should provide incentives for research and publication of provenance information about these works, in order to encourage the prompt and fair resolution of claims.” [Id. at *8-9]

The court then concluded that Spanish law should apply, since Spain’s interest in seeing its law applied would be more impaired by the application of California law than the reverse.  “If Spain’s interest in the application of its law were subordinated to California’s interest,” the court reasoned, “it would rest solely on the fortuitous decision of Lilly’s successor-in-interest to move to California long after the painting was unlawfully taken by the Nazis and the fact that he happened to reside there at the time the Foundation took possession of the painting.  Subjecting a defendant within Spain to a different rule of law based on the unpredictable choice of residence of a successor-in-interest would significantly undermine Spain’s interest in certainty of title.” [Id. at *10]  By contrast, the court noted, “California’s interest in the application of its laws related to adverse possession of personal property (or lack thereof) is not as strong as Spain’s interest, given that neither a California statute nor case law expressly prohibits a party from obtaining ownership of personal property through adverse possession.” [Id. at *11]

The Decision in Context While the court’s workmanlike application of the Restatement and California choice-of-law rules would be unexceptional in many contexts, in the context of a suit for the restitution of Nazi-confiscated art, however, the decision surprisingly leaves a number of issues unaddressed.  While the court briefly mentions § 361 of California’s amended statute, which explicitly prohibits the application of the law of any foreign state that would cut off the right of a California resident from bringing suit “by reason of the lapse of time,” it fails to analyze the applicability (or inapplicability) of that provision here, where the lapse of time results not in the expiration of a limitations period, but in the vesting of title in a current possessor by prescription or adverse possession.  Instead, the court merely states that no statute of case law prohibits adverse possession.

Far more problematic, though, is the court’s silence on the question of Spain’s inconsistent positions concerning stolen art, and more particularly Nazi-confiscated art.  Spain was a participant not only to the 1998 Washington Conference on Holocaust Era Assets, but also the Vilnius International Forum on Holocaust-Era Looted Cultural Assets (2000), and the Holocaust Era Assets Conference, held in Prague and Terezin (2009).  The states participating in those conferences produced, first, the Washington Conference Principles, a set of non-binding principles, reflecting the consensus of the 44 states participating in the conference.  Those principles were intended to serve as guidelines for states to incorporate into their national laws and legal and ethical approaches for the just handling of Nazi-era claims.  The Washington Conference Principles state, in part, that “[i]f the pre-War owners of art that is found to have been confiscated by the Nazis and not subsequently restituted, or their heirs, can be identified, steps should be taken expeditiously to achieve a just and fair solution, recognizing that this may vary according to the facts and circumstances surrounding a specific case.”  The Washington Conference Principles were affirmed in the Declaration of the Vilnius International Forum on Holocaust-Era Looted Cultural Assets, and the Terezin Declaration on Holocaust Era Assets and Related Issues.  The Foundation is also a member of the International Council of Museums (ICOM), which issued its own Recommendations concerning the Return of Works of Art Belonging to Jewish Owners.

In September 2014, the Conference on Jewish Material Claims against Germany and the World Jewish Restitution Organization issued a report, Holocaust-Era Looted Art: A Current World-Wide Overview, which provides a 50-country survey of restitution efforts.  I have previously discussed that report in greater detail here.  The report was critical of Spain, not least for failing to implement any national legislation covering cultural property spoliated during the Second World War.  The Foundation, which is a state-funded and affiliated entity, has elected to claim rights in the painting by prescription.  It is unclear how this position is consistent with the Washington Conference Principles.

In a prominent case that has litigated many issues involving the restitution of Nazi-confiscated art, the court’s silence on this larger context is surprising.  Perhaps the 9th Circuit, on appeal, will address these and other issues.

[1] Cassirer v. Thyssen-Bornemisza Collection Foundation, Case No. CV 05-3459-JFW-E (C.D. Cal. June 4, 2015) [Docket No. 315]. up