Art Law, International Law

Where Will the Guelph Treasure End Up?

The Guelph Cross

An interesting case of allegedly looted art, with profound implications for German museum-goers, may be headed for the United States Supreme Court. The subject is the Guelph Treasure (Welfenschatz), a collection of ecclesiastical art created between the 11th and 15th centuries:

The Treasure takes its name from the princely House of Guelph of Brunswick-Lüneburg.

The Guelph Treasure passed from Brunswick Cathedral into the hands of John Frederick, Duke of Brunswick-Lüneburg, in 1671, and remained in the Court Chapel at Hannover until 1803.

In 1929 Ernest Augustus, Duke of Brunswick, sold 82 items to a consortium of Frankfurt art dealers Saemy Rosenberg, Isaak Rosenbaum, Julius Falk Goldschmidt and Zacharias Hackenbroch. Items from the Treasure were exhibited in the United States in 1930–31. Cleveland Museum of Art purchased nine pieces and more were sold to other museums and private collectors.

In 1934 the remaining 40 pieces of the collection, which had been retained by [the consortium], were purchased for 4.25 million Reichsmarks via Wilhelm Stuckart by the Prussian State under its Prime Minister Hermann Göring and displayed in Berlin.

The Berlin portion of the Guelph Treasure is now exhibited at the Bode Museum in Berlin.

Heirs of the Jewish art dealers living in the United States filed suit there in 2008, claiming that the sale of the treasure to the German government was an illegal forced sale. An appeals court summarized their allegations:

The heirs allege that “[a]fter the [1933] Nazi-takeover of power in Germany, . . . the members of the Consortium faced catastrophic economic hardship,” and in 1935, following “two years of direct persecution” and “physical peril to themselves and their family members,”, the Consortium sold the Welfenschatz to the Nazi-controlled State of Prussia for 4.25 million Reichsmarks (the German currency at the time), “barely 35% of its actual value”. “Standing behind all of this was [Hermann] Goering, Prime Minister of Prussia at that time,” a “notorious racist and anti-Semite,” and “legendary” art plunderer. Goering “seldom if ever” seized outright the art he desired, preferring “the bizarre pretense of ‘negotiations’ with and ‘purchase’ from counterparties with little or no ability to push back without risking their property or their lives.” The Welfenschatz was then shipped from Amsterdam to Berlin, where Goering presented it to Adolf Hitler as a “surprise gift,” (quoting Hitler Will Receive $2,500,000 Treasure, Balt. Sun, Oct. 31, 1935, at 2). All but one of the Consortium members then fled the country. The remaining member died shortly after, officially of “cardiac insufficiency,” but “rumors” circulated that he was “dragged to his death through the streets of Frankfurt by a Nazi mob.”

The case raises many fascinating issues, the first of which is whether the sale was genuinely “forced”. 4.25 million Reichsmarks was a staggering sum at the time, but then again it was less than what the consortium had paid, and the treasures themselves are incredibly valuable.

Yet we’re nowhere near a ruling on the merits of the case. The only question so far is whether the court case should proceed in the United States. Most Germans are quite startled to see a case involving the sale of German art by Germans to other Germans ending up in the American court system. The reason it’s there is because of American laws which extend the jurisdiction of American courts to all sorts of questions. The U.S. Congress has passed many of these controversial laws, which — as to certain specific issues — let foreigners sue other foreigners in U.S. courts for actions which occurred on the other side of the planet. The law in this case is the Foreign Sovereign Immunities Act, FSIA which, ironically, was intended to prevent foreign sovereign governments from being sued in U.S. courts. And in fact the Government of Germany was dismissed from the lawsuit under this law.

But the Guelph Treasure is technically owned by a semi-private foundation, the Stiftung Preußischer Kulturbesitz (SPK, Prussian Foundation for Cultural Heritage), so it doesn’t enjoy the same protection. Yet there are other problems filing suit in the USA. The FSIA generally says you cannot sue foreign states and their agencies in U.S. courts. However, it contains one exception, the “expropriation exception”, which says you can sue if the subject of the lawsuit is a taking of property “in violation of international law” and there is a “commercial nexus” between the U.S. and the defendant — here, the SPK. But wait — how can the sale of German art from Germans to other Germans be a violation of international law?

Here’s where the plaintiffs got creative: the sale violated international law because it was part of the Holocaust, which violated international law. The heirs argued that the Holocaust started in 1933, and proceeded by stages: economic boycotts, restrictive laws, expropriation and forced sale, resettlement, and finally extermination. The forced sale of the Guelph Treasure was part of this overall plan. The last court to consider this argument, the Court of Appeals for the District of Washington, D.C., agreed. As for the “commercial nexus”, well, the SPK, a huge foundation which runs many museums and controls thousands of artworks, of course has ties all over the world.

German commentators have generally been harshly critical of this lawsuit. They point out that a German official commission which carefully examined the circumstances of the sale concluded, in 2014:

Although the commission is aware of the difficult fate of the art dealers and of their persecution during the Nazi period, there is no indication in the case under consideration by the Advisory Commission that points to the art dealers and their business partners having been pressured during negotiations, for instance by
Göring. Furthermore, the effects of the world economic crisis were still being felt in 1934/1935. In the end, both sides agreed on a purchase price that was below the 1929 purchase price, but which reflected the situation on the art market after the world economic crisis. The art dealers used the proceeds primarily to repay the financial contributions of their domestic and foreign business partners. Moreover, there is no evidence to suggest that the art dealers and their business partners were not free to dispose of the proceeds.

The Advisory Commission, in accordance with its findings on the course of the purchase negotiations, is of the opinion that the sale of the Welfenschatz was not a compulsory sale due to persecution. It cannot therefore recommend the return of the Welfenschatz to the heirs of the four art dealers and any other previous co-owners.

Further, critics note, the heirs never filed a lawsuit in the German courts. Ordinarily, before you file suit before an international court or a foreign court, you must prove you “exhausted remedies” in the country which has the strongest ties to the lawsuit. That is, before filing suit in the USA, the heirs should have been required to pursue their claims before all German courts without success. Only after giving the “native” court system a chance to fix the problem can you turn to another country’s courts. This is a basic rule of mutual respect between countries — “comity”. But, as the U.S. Court held, the American laws simply don’t contain this customary provision, for whatever reason, so they are permitted to file suit in the USA without consulting the German courts first. The American court sympathized with the German side, but noted the Germans should address their complaints to Congress, not the courts.

German critics also reject the notion that a negotiated sale of artworks in 1935 was “part of” the Holocaust. Here, a German newspaper editor denounces (g, paywall) the theory as “far-fetched” (waghalsig). The consortium received a fabulous sum of money in 1935 for the artworks; perhaps not enough to recoup its initial investment, but certainly not an obvious underpayment. No-one can say with any confidence whether the sum was under the “fair market value” because it’s nearly impossible to establish a fair market value for unique masterpieces. Besides, the Depression had severely affected the international art market. The heirs are asking either for restitution of the artworks or for $250 million (!) a “conservative” estimate of its present value. Many commentators, not just Germans, wonder about the equity and good sense of conferring an overnight $250 million windfall on a group of people simply because, nearly a century ago, their ancestors may have been paid an inadequate price for artworks they had sold. After all, this was not a case of outright theft or confiscation.

On September 20, 2019, the German government and SPK filed a petition for review in the United States Supreme Court asking the high Court to dismiss the case. It’s important to note at this point that the only question here is whether the American courts have jurisdiction — we’re not yet at the merits of the case. The German government and SPK argue, unsurprisingly, that if the Supreme Court lets this case go forward, then potentially thousands of cases, from all over the world, could be filed in U.S. courts. Further, allowing the case to go forward could damage U.S.-German relations. The German government definitely wants to maintain control over the collection, and took action in 2015 to make sure it wouldn’t be going anywhere:

In light of this circumstance, the State of Berlin designated the Guelph Treasure as cultural property of national significance on February 6, 2015, after a several-month research process. Under the German Act to Protect German Cultural Property against Removal (Kulturgutschutzgesetz), removing the pieces from Germany – even for exhibition purposes – is now only possible with authorization from the German Federal Government Commissioner for Culture and the Media.

I’m not given to bold predictions on this blog, but just for a change, I’ll make one here. I think the U.S. Supreme Court will take this case for decision on the merits (called “granting certiorari”). Why is that a bold prediction? Because the U.S. Supreme Court only grants certiorari in 1-2% of the cases where it’s asked to. It keeps its powder dry for the big issues. But this is one: This case could end up with a U.S. court ordering a close American ally to relinquish some of its most treasured artifacts, or cough up a quarter-billion dollar indemnity payment. The Supreme Court may well want to make sure the legal rationale for letting this happen, if it eventually does, is absolutely iron-clad. Further, the law in this area is murky; the Supreme Court often grants review so it can clear up legal questions once and for all.

I’ll even go one further and predict that the Court will dismiss the lawsuit (or send it back to the lower court to be dismissed). The arguments of the heirs are legitimate (they’ve won in two U.S. courts so far), but not very convincing. The lower courts have had to engage in plenty of logical gymnastics to argue for U.S. jurisdiction, including defining the Holocaust as encompassing essentially everything the Third Reicht did to Jews as of 1933. A judgment allowing the lawsuit to continue will put further strain on the U.S.-Germany relationship. Unlike Congress, U.S. courts are generally quite reluctant to intervene in international relations unless absolutely necessary. In a previous stolen-art case — which forced Austria to part with several Klimt paintings which it had stolen from their owner — Justice Stephen Breyer noted that the prospect of a flood of lawsuits over stolen foreign art in U.S. courts would be a problem not only for courts but for the U.S. government, but that various restrictive doctrines would ensure that few such lawsuits would actually be filed. Well, here’s another one. I wouldn’t be surprised if the Court decided this would be a good time to draw a line in the sand.

In any case, I’ll follow the case and let you know whether my predictions come true.

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