Friday, September 2, 2011

Hungary Is Subject to Suit in US Court in Case involving Artwork Confiscated by Nazis

A U.S. District Court judge ruled yesterday that a case against Hungary to reclaim certain artwork confiscated during World War II may proceed.  The suit was brought by the grandchildren of Baron Mor Lipot Herzog, a wealthy Jewish Hungarian art collector whose collection was seized by the Nazis during WWII despite attempts to hide it.  The complaint alleges that at least 40 pieces of the Herzog collection remain in the wrongful possession of Hungarian government museums and universities.  Hungary moved to dismiss the lawsuit on several grounds, including foreign sovereign immunity, that these matters had been resolved by international agreements between Hungary and the United States; forum non conveniens and Act of State.

U.S. District Court Judge Ellen Segal Huvelle found that because it is substantially likely that the property was taken in violation of international law, Hungary is not entitled to immunity from suit.  More specifically, the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. sec. 1605, creates a presumption that States are immune from suit in U.S. courts unless one of several enumerated exceptions applies.  In this case, plaintiffs relied on Section 1605(a)(3), which states in pertinent part:

According to the court, "a taking violates international law if: (1) it was not for a public purpose; (2) it was discriminatory; or (3) no just compensation was provided for the property taken."   In this case, the Court stated the allegations of the complaint are sufficient to show a likelihood that the property was taken without compensation and for a discriminary purpose.  With respect to the requirement of commercial activity, the Court was satisfied with plaintiffs' allegations that Hungary and its museums and universities have been engaged in commercial activity in the United States through lending and borrowing artwork, selling tickets and books to U.S persons on line and at the museum using U.S. credit cards. 

The Court also found that plaintiffs had made out a prima facie case alleging bailment that negated the effect of the prior international agreements; that Hungary did not carry its burden to have the case dismissed on the grounds of forum non conviens; and that the Act of State Doctrine does not preclude the case.  However, the court did dismiss the complaint with respect to eleven pieces of artwork that had been subject to a previous judgment by a Hungarian court in the Nierenberg litigation out of respect for international comity.

 The case is Csepel v. Hungary, No. 10-1261 (DDC Sept. 1, 2011).


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