A collection of ecclesiastical art known as the Guelph Treasure (Welfenschatz) is at the center of a U.S. restitution claim brought by heirs of Holocaust victims who sold it during the Nazi reign, previously discussed here. Having held the highly valued collection for approximately six decades, Germany is unwilling to part with what it considers a “national treasure”. After a court ordered the heirs’ claims could proceed against the German government institution in possession of the collection, Germany appealed. Now, the U.S. Supreme Court is poised to decide whether the heirs’ claims will proceed on the merits.
History of the Welfenschatz
During the Medieval Period, the European House of Welf collected an amalgam of treasures made of precious metals, ivory, sea lion tusk, and even human remains, forming the Welfenschatz. From a gold cloisonné enamel altar and crosses to reliquaries housing Christian saints’ bones, the collection grew to over eighty pieces. In 1929, three German Jewish art dealerships formed a consortium to acquire the majority of these Christian relics and sold 40 pieces to various European and U.S. buyers over the first two years.
Through “explicit correspondence” meant to “save the Welfenschatz” for Germany, Hitler learned the remaining pieces could be purchased for a suppressed price. By mid-1935, Nazi-ruled Prussia acquired the 42 Welfenschatz pieces still in the Consortium’s inventory in a single transaction, for approximately 35% of its value according to the heirs.
Germany’s advisory decision
In 2014, Germany denied the heirs’ request for return of the Welfenschatz based on a recommendation from the German Advisory Commission for the Return of Cultural Property Seized as a Result of Nazi Persecution, Especially Jewish Property. The Advisory Commission found the 1935 sale was “not a compulsory sale due to persecution”, opining that the reduced sale price “reflected the situation on the art market after the world economic crisis” of 1934-35. In contrast, the heirs allege the sale was under duress.
Following this adverse recommendation, the heirs brought their action in the U.S. in 2015. The district court found the Welfenschatz “taking” bore “sufficient connection to genocide such that the alleged coerced sale may amount to a taking in violation of international law”. The court then found it had subject matter jurisdiction under the Foreign Sovereign Immunities Act (“FSIA”) over the heirs’ claims for declaratory relief, replevin, conversion, unjust enrichment, and bailment.
An interlocutory appeal ensued by Germany and its institution that holds the collection, the Stiftung Preussischer Kulturbesitz (“SPK”), in which the D.C. Court of Appeals held, on an issue of first impression, that “seizures of art may constitute ‘takings of property that are themselves genocide.’” The appellate court then affirmed the lower court with one caveat – the remaining claims could proceed against SPK only. Germany and SPK petitioned for rehearing en banc, which was denied.
Petition for writ of certiorari
Germany and SPK’s petition to the U.S. Supreme Court is premised on two issues: whether foreign sovereigns must defend themselves under the “expropriation exception” of the FSIA from claims that they violated international human rights law by “unlawfully [taking] property from their own nationals within their own territory”; and, if it must, whether a court may decline to hear the case because it “risks grave offense to international comity”. Petitioners argued, among other things, that the circuit court disregarded the more narrow “consensus view” of the expropriation exception, under which Germany’s “domestic” taking of the Welfenschatz from its “nationals” would not violate international law.
An amicus brief signed by the U.S. Department of Justice’s Office of Solicitor General and the Department of State recommended certiorari be granted on both issues in the Petition. Also reading the expropriation exception narrowly, the U.S. Departments submitted that the D.C. Circuit erred in finding the exception covered the heirs’ claims; again framed as a “domestic taking”, the 1935 sale was alleged to be “just the kind of foreign sovereign’s public act […] that the restrictive theory of sovereign immunity ordinarily leaves immune from suit.”
Such a “domestic taking” argument assumes the Consortium members had any rights as German nationals in 1935 – an assumption that runs counter to long-held U.S. policy. As the heirs and appellate court have noted, the U.S. defines the Holocaust as beginning in January 1933. Thus, the heirs argue the Consortium members had no German citizenship rights in 1935, and the Welfenschatz sale is presumptively invalid. Heirs’ counsel Nicholas O’Donnell has described the opposing position in the U.S.’s amicus brief as an “unprecedented abdication of 80 years of leadership redressing Nazi-looted art”; the U.S. has said that “so long as the victim was a German Jew, an art sale that is indisputably forced can nonetheless never constitute a violation of international law” (emphasis in original).
Following the amicus recommendation, the Court granted Germany and SPK’s petition, scheduling oral arguments for October.
More than five years after filing the original case, the Supreme Court will determine whether the Welfenschatz heirs may have their day in court. This decision promises to set a standard for other restitution cases against foreign sovereigns, including a pending appeal involving Hungary. Thus, while 2020 is notorious for many reasons, it may stand out in art law history for the potentially far-reaching precedent perpetuated by this monumental case.
Image credit: Public domain / Wikimedia Commons
 Philipp, 248 F. Supp. 3d at 70-71 (“The D.C. Circuit has recognized that takings may fall within the expropriation exception when ‘the takings of property described in the complaint bear a sufficient connection to genocide that they amount to takings ‘in violation of international law.’”) (quoting Simon v. Republic of Hungary, 812 F.3d 127, 142 (D.C. Cir. 2016)).
 The “expropriation exception,” 28 U.S.C. § 1605(a)(3), FSIA, “has two requirements”: that “rights in property taken in violation of international law are in issue,” and that “there is an adequate commercial nexus between the United States and the defendants,” de Csepel, et al. v. Republic of Hungary, et al., 859 F.3d 1094, 1101 (D.C. Cir. 2017) (quoting 28 U.S.C. § 1605(a)(3) and citing Agudas Chasidei Chabad of U.S. v. Russian Federation, 528 F.3d 934, 940 (D.C. Cir. 2008)).
 Petition at 2-3, 10, 13-18; Reply at 2-3. Germany and the SPK rely heavily on a dissent from the denial of rehearing en banc in which the appellate court’s decision is criticized for many reasons, including its approval of “an exceedingly odd type of genocide claim—one for property harms” because, in the dissent’s opinion, genocide was “not about the taking of property”. Petition at 1, 6, 17-19, 24-26, 29-30, 35-39.
 “Congress provided jurisdictional immunity for certain art exhibition activities, 28 U.S.C. §1605(h), but created an exception for art taken during the ‘Nazi era’, defined as beginning in January 1933” […] “Congress again defined January 1933 as the beginning of the Nazi era. HEAR Act § 4 (defining ‘covered period’ as ‘beginning on January 1, 1933’).” Philipps, 894 F.3d at 413; Respondents’ Brief in Opposition at 23.
 The heirs cite Military Government Law No. 59 that provides for a legal presumption to be applied to “transactions between January 30, 1933 and May 8, 1945 involving members of groups that were ‘to be eliminated in [their] entirety from the cultural and economic life of Germany’ under German control”. Respondents’ Brief in Opposition, Introduction (quoting Military Government Law No. 59, Restitution of Identifiable Property (passed November 29, 1947)), 1-2, 23.
 The Court also followed the Solicitor General’s recommendation to deny the heirs’ conditional cross-petition as to the circuit split on interpretation of the FSIA’s “commercial nexus” requirement. Brief for the United States as Amicus Curiae at 22-23.