Aboutaam v. L'Office Federale de la Culture de la Confederation Suisse, No. 1:18-cv-08248 (S.D.N.Y. Sep. 24, 2019) [click for opinion]
Plaintiff Hicham Aboutaam, a New York resident and international ancient art dealer, co-owns and manages art galleries in Geneva, Switzerland, and New York, New York. Plaintiffs Lynda and William Beierwaltes are Colorado-based art collectors. In 2006, the Beierwaltes granted Aboutaam's art gallery, Phoenix Ancient Art S.A. ("Phoenix") the exclusive right to sell their ancient art collection. Seven years later, the Beierwaltes filed for Chapter 11 bankruptcy and designated Phoenix as the estate's antiquities dealer. Though Phoenix sold some of the Beierwaltes' art, eighteen antiquities remained unsold in Phoenix's Geneva warehouse at the time of events giving rise to this dispute.
On February 28, 2017, Swiss authorities seized approximately 1,200 of Hicham's antiquities, including the eighteen owned by the Beierwaltes, in a larger seizure of 12,000 objects in the Geneva warehouse. The seizures were effected pursuant to two search and seizure orders, one issued by the Geneva Prosecutor and one issued by the Federal Customs Administration of the Swiss Confederation (the "FCA"). The FCA and the Federal Office of Culture of the Swiss Confederation (the "FOC") has been investigating suspicious movements of antiquities of suspicious provenance, or chain of title, being imported and exported potentially in violation of Swiss law governing cultural property. Plaintiffs attempted to secure release of their property from the authorities in Geneva, but had failed.
Plaintiffs subsequently sought relief for declaratory judgment and conversion against the FOC, the FCA, and the Republic and Canton of Geneva, arguing that Defendants had unlawfully frozen their artifacts in the Geneva warehouse pending the outcome of the Swiss government's investigation into the artifacts' origins. Defendants moved to dismiss, arguing that they were immune to suit pursuant to the Foreign Sovereign Immunities Act (the "FSIA") which provides that "a foreign state shall be immune from the jurisdiction of the courts of the United States" unless the foreign state was subject to an exception codified in the Act. Plaintiffs argued that Defendants were not immune to suit pursuant to the "expropriation exception."
The district court explained that "in order to establish jurisdiction pursuant to the FSIA expropriation exception, a plaintiff must show that: (1) rights in property are in issue; (2) that the property was 'taken'; (3) that the taking was in violation of international law; and (4) that one of the two nexus requirements is satisfied." The district court agreed with Defendants and rejected that the "expropriation exception" of the FSIA applied because it was not taken "in violation of international law." The Second Circuit had previous explained that "taken in violation of international law" means that the property was taken not for a public purpose, in an arbitrary or discriminatory way, or without just compensation.
Here, none of these requirements are met. The Swiss government had seized the property "for a public purpose" in connection with an ongoing criminal investigation, and not for commercial or private use. The seizure was not discriminatory because it was seized pursuant to validly executed search and seizure orders articulating a non-discriminatory investigation based on specific allegations of violations of Swiss law. Finally, since the seizure is temporary, rather than for an "extended or indefinite period", Plaintiffs are not owed just compensation.
Plaintiffs argued that the seizure was arbitrary because Defendants' warrants did not articulate specific reasons to seize all 12,000 objects, but had only identified seven items of suspicious provenance. Plaintiffs also noted that the release of 5,000 objects in August 2018 showed the investigation was proceeding arbitrarily. The court disagreed. Relying on principles of international comity, the court found insufficient basis to scrutinize the criminal investigation and that Plaintiffs' criticism did not rise to the level of an international wrong. The release of objects showed the investigation remained ongoing and that objects were being released as authorities determined there was no longer cause for detaining them. The court also rejected Plaintiffs' request for jurisdictional discovery to determine whether the seizure was arbitrary on the same basis—nothing suggested the seizure was arbitrary, international comity strongly militated against approving Plaintiffs' request, and so Plaintiffs failed to "articulate a reasonable basis" for the Court's jurisdiction over the parties.
Plaintiffs also tried to argue the seizure violated international law because it did not follow the procedures in the UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property Transfer Act and the Swiss law implementing the convention, but the court held that these did not apply to property temporarily seized by a foreign sovereign within its own territory in violation of its laws. Since the court held that the property was not taken in violation of international law, it did not consider the other requirements of the FSIA exception or Defendants' alternative arguments related to the Act of State Doctrine and principles of comity.