In case of art appropriation by agent of Nazi government
in 1939, Ninth Circuit finds in matter of first impression that FSIA
expropriation exception applies even where foreign sovereign defendant is not
entity alleged to have expropriated property at issue
Claude Cassirer (Plaintiff) claims that, in 1939, an agent
of the Nazi regime unlawfully seized a painting by French impressionist painter
Camille Pissaro [1830‑93] from his grandmother Lilly Cassirer. It is entitled
“Rue Saint‑Honore, Apres‑midi, Effet de Pluie.” Mme Cassirer’s great‑grandfather,
Julius, a German citizen, had bought the painting in 1898.
Eventually, Cassirer’s grandmother inherited the painting.
As the persecution of Jews in Germany increased, Lilly sought permission to
leave Germany with her possessions. A government appraiser forced her to sell
the painting for about $360. She agreed only because she was afraid that,
otherwise, they would not let her leave the country. Decades later, Baron Hans‑Heinrich
Thyssen‑Bornemisza, a private art collector, bought the work.
The Museum of the Thyssen‑Bornemisza Collection Foundation
(Foundation) in Madrid, Spain is now displaying the Pissaro painting. At some
point, the Kingdom of Spain (Spain) agreed to acquire the painting as well as
the rest of the Foundation’s collection. Cassirer first unsuccessfully
petitioned the Spanish Minister for Education, Culture and Sports, the Chair of
the Foundation’s Board, to return the painting. Cassirer did not file any
further claims in Spain.
Instead Plaintiff brought suit in a California federal
court, naming the Foundation and Spain as Defendants. The district court denied
the Defendants’ challenges to personal jurisdiction, standing, and the
existence of a justiciable case or controversy, and this interlocutory appeal
ensued. The U.S. Court of Appeals for the Ninth Circuit dismisses the appeal as
to these rulings.
As to the collateral order doctrine, however, the Court does
find jurisdiction to review the sovereign immunity question. In a matter of
first impression, the Court considers whether the expropriation exception of
the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. § 1605(a)(3) applies
when the foreign state defendant is not the entity that originally expropriated
the property in violation of international law. In a two to one vote, the Court
concludes that it does.
Plaintiff argued that neither the Foundation nor Spain are
immune because of the “expropriations exception” of § 1605(a)(3); it provides
that a “foreign state shall not be immune ... in any case .... in which rights
in property taken in violation of international law are in issue ...” Its
language does not literally limit the class of Defendants to the very sovereign
entity that seized the property in violation of international law. In this
case, both sides agree that it was Germany that originally expropriated the
painting. The Defendants urged the Court to avoid reading such a requirement
into § 1605(a)(3). The Court agrees with the Plaintiff.
“We find § 1605(a)(3) to be unambiguous. Where ‘the intent of
Congress is clear and unambiguously expressed by the statutory language,’ that
is normally the end of the statutory analysis. Zuni Pub. Sch. Dist. No. 89 v.
Dep’t of Educ., 550 U.S. 81, 93 (2007). We hold that the plain language of §
1605(a)(3) does not require that the foreign state (against whom the claim is
made) be the entity who expropriated the property in violation of international
law.”
“Our holding is consistent with the legislative history ...
In reviewing Congress’s intent in enacting the FSIA, we consider§ 1602, which
sets forth Congress’s findings and purpose. This section expresses Congress’s
understanding that foreign states are not immune from suit ‘insofar as their
commercial activities are concerned.’... In explaining § 1602, the House Report
states that Congress is adopting the restrictive theory of sovereign immunity,
that is, ‘[T]he sovereign immunity of foreign states should be ‘restricted’ to
cases involving acts of a foreign state which are sovereign or governmental in
nature, as opposed to acts which are either commercial in nature or those which
private persons normally perform.’ H.R. Rep. No. 94‑1487 at 14 (1976),
reprinted in 1976 U.S.C.C.A.N. 6604, 6613.” [Slip op. 12‑13]
“Because nothing in the plain language of the FSIA or the
legislative history requires us to read additional language into the statute,
we hold that the expropriation exception to sovereign immunity found in §
1605(a)(3) does not require that the foreign state against whom the [federal]
claim is made be the [same] foreign state that took property in violation of
international law.” [Slip op. 15]
The Court then turns to the “commercial activity” exception
of the FSIA. It removes immunity where “property or any property exchanged for
such property is owned or operated by an agency or instrumentality of the of
the foreign state and that agency or instrumentality is engaged in a commercial
activity in the United States.” 28 U.S.C. § 1605(a)(2). The district court had
reviewed the Foundation’s activities in the U.S., which included buying books
and other materials from U.S. sources; selling posters and books to U.S.
purchasers; and contracting with U.S. museums for the lending of art works. The
district court concluded that the Foundation had in fact engaged in such
commercial activity.
The Appellate Court agrees. It remands the matter to the
district court to consider, in light of Sarei, whether the circumstances of
this case require an exhaustion of other available local remedies.
The Court then turns to the question of whether Plaintiff
should have exhausted his remedies elsewhere. Spain claims that Section
1605(a)(3) does not apply because Plaintiff failed to pursue legal remedies in
either Spain or Germany. Whether § 1605(a)(3) requires such exhaustion is also
a matter of first impression. The FSIA’s language and its legislative history
give no indication whether it demands preliminary exhaustion of local remedies.
“Neither Congress nor this court have imposed an absolute
exhaustion of remedies requirement in cases brought against foreign states
under an exception to the FSIA. Yet, where principles of international comity
and rules of customary international law require exhaustion, we exercise sound
judicial discretion and consider exhaustion on a prudential, case‑by‑case
basis. See Sarei v. Rio Tinto, PLC, 550 F.3d 822, 828 (9th Cir. 2008) (en banc)
(plurality opinion) [see 2008 International Law Update 190].”
“In Sarei, we held that domestic prudential standards and
core principles of international law require a district court to consider
exhaustion in appropriate cases. Id. at 824 ... Under our prudential approach,
when a defendant affirmatively pleads failure to exhaust remedies, the district
court must, as a discretionary matter, determine in the first instance whether
to impose such a requirement on a plaintiff. Id. at 832.”
“Although Sarei addressed exhaustion in the context of the
[ACTA], where Congress has not clearly adopted or rejected exhaustion as a
jurisdictional prerequisite, our formulation of prudential exhaustion applies
equally to cases brought against foreign states (and their instrumentalities)
under the FSIA ... In this case, Appellants have asserted that Plaintiff failed
to exhaust available remedies in Spain or Germany. Although the district court
correctly concluded that the FSIA does not [explicitly] require exhaustion of
remedies, the court erred by failing to conduct a prudential exhaustion
analysis.”
“On remand, the district court should be guided by the
principles we outlined in Sarei. Summarizing the Sarei framework generally, we
first note that the district court need only consider exhaustion to the extent
the defendant has affirmatively pleaded Plaintiff’s failure to exhaust local
remedies. See Sarei, supra at 832 (‘The defendant bears the burden to plead and
justify an exhaustion requirement, including the availability of local
remedies.’) ...”
“Second, the court must consider whether Congress has
clearly required exhaustion for the specific claims asserted in the complaint. If,
as in this case, Congress has not imposed or rejected such a requirement, the
court must then determine whether the applicable substantive law would require
exhaustion. ...”
“Third, the court must consider whether the defendant has
met its burden to show the availability of local remedies and that such
remedies have not been exhausted. Id. The plaintiff may rebut a showing of
unexhausted remedies abroad by demonstrating the futility of exhaustion (‘by
showing that the local remedies were ineffective, unobtainable, unduly
prolonged, inadequate, or obviously futile.’). Id. ...”
“Finally, the court
may, in its sound discretion, impose or waive exhaustion after assessing the
availability, effectiveness, and possible futility of any unexhausted remedies
in light of various prudential factors, including but not limited to: (1) the
need to safeguard and respect the principles of international comity and
sovereignty, (2) the existence or lack of a significant United States ‘nexus,’
... (3) the nature of the allegations and the gravity of the potential
violations of international law, and (4) whether the allegations implicate
matters of ‘universal concern’ for which a state has jurisdiction to adjudicate
the claims without regard to territoriality or the nationality of the parties.
See id. at 830‑31.” [Slip op. 22‑26]
Citation: Cassirer v. Kingdom of Spain, 580 F.3d 1048
(9th Cir. 2009).
**** Mr. William B. Blanchard (“Bill Blanchard”) is a Real Estate Attorney with offices in St. Charles and Oakbrook Terrace, Illinois. Bill specializes in representing real estate clients for purchases and sales as well as home owner real estate tax assessment appeals. Mr. Blanchard is General Counsel for Gaia Title, Inc. a title insurance agency and settlement services provider. The Company is owned by real estate attorneys who demand exemplary title insurance services and accurate and efficient settlement services. As General Counsel he is responsible for title examination, commitment and policy review, escrow settlement supervision and regulatory review. - Attorney Profile: https://solomonlawguild.com/william-b-blanchard%2C-esq - Attorney News: https://attorneygazette.com/william-blanchard%2C-esq#40b43d7b-94b2-48d3-b055-1979a636f1e7
