Claims for the recovery of art (and other property) looted by repressive régimes are frequently thwarted by the doctrine of sovereign immunity (which shields foreign governments from being sued in other jurisdictions, subject to exceptions for expropriation or commercial activity) or by treaties signed after World War II which require the restitution of looted property but limit private rights of action. The lawyers for the heirs of Baron Mór Lipót Herzog successfully sidestepped these obstacles in De Csepel v Republic of Hungary (DC Cir, 19 April 2013), a claim for the recovery of a collection of paintings seized by the Nazi-allied government of Hungary and its German Nazi helpers in the 1940s, and held in Hungarian national museums ever since.

The DC Circuit thought the expropriation exception to sovereign immunity applied: although a government may expropriate the property of its citizens without violating international law, the Herzog family had, as Jews, been deprived of their Hungarian citizenship by virtue of anti-Semitic legislation, making the seizure an expropriation which did violate international law. (And the seizure was not the sovereign act of the Hungarian government alone because it had assistance from Berlin.) The heirs relied primarily, however, on the exception from sovereign immunity that relates to commercial activity by a foreign state. They alleged that the possession or re-possession of the collection after the War constituted an express or implied agreement to hold it temporarily on their behalf for safekeeping; this constituted bailment, a commercial activity to which sovereign immunity does not apply. Breach of the bailment agreements had a direct effect on US residents. The bailment argument also took the claims out of the ambit of the treaties that limited recourse for wrongful takings during the War. Limitations defences also failed (often not the case with art-restitution claims.) The claims of the Herzog heirs for restitution of the paintings could therefore proceed in the US courts.

http://www.cadc.uscourts.gov/internet/opinions.nsf/282E5D56D1426D3F85257B52004EB9DC/$file/11-7096-1431629.pdf