The much-anticipated ruling from the U.S. Supreme Court in the Welfenschatz (or ‘Guelph Treasure’) restitution case (previously discussed here) was issued on 3 February 2021, rendering precedent on the interpretation of the ‘expropriation exception’ of the Foreign Sovereign Immunities Act (FSIA). Enacted to lift the “baseline presumption of immunity” given to foreign states under the FSIA, the ‘expropriation exception’ applies only in certain instances when property has been taken “in violation of international law.” The question that arose in this case was which international law applied, and America’s highest court held it was the international law of expropriation.
Chief Justice John Roberts, delivering the opinion on behalf of the Court, found Germany rightly argued that expropriation law, which deals with governmental taking of property, applied to Prussia’s 1935 acquisition of a collection of Medieval Period relics from German Jewish dealers. The rejected argument by the dealers’ heirs had been that the taking was an “act of genocide [that] violated the international law of genocide”. The Court opined that to accept the heirs’ interpretation of the expropriation exception would lead to an “all-purpose jurisdictional hook for adjudicating human rights violations.”
The Court found Germany’s interpretation of the exception to be in line with both the exception’s wording and the FSIA’s goal of restrictive sovereign immunity. This interpretation was also found to be in step with the Court’s prior rejections of attempts “to insert modern human rights law into FSIA exceptions ill suited to the task”. An additional support of this reading was foreign policy objectives “to avoid, where possible, producing friction” with foreign states.
The heirs had initially commenced formal attempts to reclaim the Welfenschatz within Germany with no success. Both the SPK (Germany’s governmental body that maintains the Welfenschatz) and the German Advisory Commission for the Return of Cultural Property Seized as a Result of Nazi Persecution, Especially Jewish Property, ruled that Prussia entered into a fair transaction for a fair price with the German Jewish dealers who owned the Welfenschatz. This remarkable presumption of fairness between the Third Reich and Jews in 1935 Germany – two years into Hitler’s anti-semitic reign – triggered the heirs to file suit in the U.S.
The citizenship of the dealers at the time of the 1935 sale is central in an alternative argument presented by the heirs that, if preserved, will be heard on remand according to the Court’s unanimous opinion. This argument focuses on the ‘domestic takings’ rule which provides that a foreign state’s taking of its citizens’ property does not constitute a violation of international law. It is the heirs’ position that the sale of the Welfenschatz is not subject to the domestic takings rule because the dealers were not “German nationals” at the time of the transaction. While the Supreme Court did not rule on this argument, it did note that “[c]laims concerning Nazi-era art takings could be brought under the expropriation exception where the claims involve the taking of a foreign national’s property.” And the Court’s opinion closes with an order for the Court of Appeals to “direct the District Court to consider this argument, including whether it was adequately preserved below.”
Thus, while SPK president Hermann Parzinger was quoted as saying the SPK anticipates “presenting robust legal arguments for the dismissal of this lawsuit” on remand, the heirs’ counsel Nicholas O’Donnell has indicated he and his clients are charting their “next steps” before the lower court. Whatever those steps may be, a course of action that is allowed to go beyond presumption and procedure and tackle issues like whether this taking can be accurately labeled a ‘domestic affair’ would certainly be well-aimed toward achieving some measure of justice for the Welfenschatz dealers.
 Federal Republic of Germany, et al. v. Alan Philipp, et al., Index No. 19-351, Opinion of the Court
 Opinion at 1, 4. (All subsequent references are to the relevant page(s) of the Opinion).
 13 (internal quotations omitted).
 3-4, 15.
 14 (emphasis in original).