Art Law: S.D.N.Y. Grants Immunity to Bavaria, Dismisses Restitution Claim for Picasso’s “Madame Soler”

In an earlier post, I had reported about the restitution claim brought against Bavaria in New York in 2013. The heirs of Paul von Mendelssohn-Bartholdy were seeking the restitution of Picasso’s “Madame Soler” from the Bavarian State Painting Collection (Bayerische Staatsgemäldesammlungen). In a decision on June 27, 2014, Judge Rakoff dismissed the action, on the basis that  Bavaria was entitled to sovereign immunity.

To briefly recap: Paul von Mendelssohn-Bartholdy sold the painting to art dealer Justin Thannhauser in 1934, who took it to the U.S., where the Bavarian State Painting Collection acquired “Madame Soler” from Thannhauser in 1964. Bavaria argued that the sale in 1934 was a bona fide commercial transaction, and not a consequence of measures of persecution (verfolgungsbedingter Verkauf). The heirs believed that Mendelssohn-Bartholdy was forced to sell the painting as a result of the boycott against Jewish businesses, and the sale amounted to a forced sale. 

Judge Rakoff, howver, did not rule on the substantive issues.  He found that he had no jurisdiction over Bavaria in the first place. The claimants had argued that the “commercial activity” exeption to Bavaria’s immunity under the Foreign Sovereign Immunities Act (FSIA)  applied*, since the acquistion of the painting in 1964 from Thannhauser took place in the U.S.. Judge Rakoff was not convinced:

“In no real sense is this suit even “based upon” Bavaria’s acquisition of Madame Soler in 1964-65, let alone activity in the United States. Rather, as the ‘Nature of Action’ section of the Amended Complaint makes clear, the gravamen of this action is that title to Madame Soler never rightfully passed to Thannhauser in Germany because ‘Mendelssohn-Bartholdy consigned the Painting (to Thannhauser) in 1934 only after nearly two years of intensifying Nazi persecution.’ Thus, if this action were to ever reach the merits, the focus of the case would be almost exclusively on the circumstances of Mendelssohn-Bartholdy’s original sale to Thannhauser in Europe in the 1930′s.”

The judge had held an evidentiary hearing and on the basis of the evidence before him, found that the links to the U.S. were not sufficient for the commercial activity exeption to aply. Amongst other things, it appeared that the agreement between Bavaria and Thannhauser has been reached in Europe.

On the basis of these facts, to me as a non-U.S. lawyer, Judge Rakoff’s ruling is what I would have expected.  Nick O’Donnell at the Art Law Report has a case note that puts the immunity issues of the Mendelssohn case into perspective and discusses the other alternatives that the plaintiffs  had to plead their case.

 

* The FSIA provides for jurisdiction over a foreign state where a plaintiff’s claim is (1) “based upon a commercial activity carried on in the United States by the foreign state”; (2) where a plaintiff’s Claim is “based upon” “an act performed in the United States in Connection with a commercial activity of the foreign state elsewhere”; or (3) where “an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere causes a direct effect in the United States.”

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