Hungary can be sued for return of Nazi looted art

Last week, the United States District Court for the District of Columbia (DDC) rejected Hungary's motion to dismiss a claim brought against it by the heirs of Baron Mor Lipot Herzog, a well-known Jewish Hungarian art collector.

Herzog had amassed a large collection of more than 2000 paintings, sculptures and other artworks prior to his death in 1934. After his death, and the death of his wife in 1940, his collection was divided among his three children. However, the collection was then seized by Hungary and Nazi Germany, and while the Hungarian government purported to “return” a handful of items from the collection to the Herzog heirs in the years immediately following the war, those “returns” were largely on paper or short-lived, and the vast majority of the collection remained in the possession of a number of museums and other Hungarian state-owned bodies.

One of the pieces claimed in the action.

Having unsuccessfully tried to reclaim the collection through the Hungarian courts, the plaintiffs [claimants in the UK] filed the action in the DDC in July 2010 against the Republic of Hungary, the Hungarian National Gallery, the Hungarian Museum of Fine Arts, the Hungarian Museum of Applied Arts and the Budapest University of Technology and Economics.

On 15 February 2011, the defendants filed a motion to dismiss the claim on a number of grounds including:

the Court lacked jurisdiction under the Foreign Sovereign Immunities Act;

the Court was an improper forum for the claims based on the 1973 Agreement between Hungary and the United States; and

the claims were barred by the applicable statute of limitations; principles of international comity, claim preclusion, and issue preclusions; and the Act of State Doctrine.

Unfortunately for the defendants, the DDC rejected all these grounds and, for the most part, denied the defendants' motion. In respect of the ground listed above, the court inter alia held as follows.

Jurisdiction
In order to have jurisdiction, the Court had to find that: (1) “rights in property” are at issue; (2) the property was “taken in violation of international law”; and (3) “the property at issue (or any property exchanged for it) [is] . . .‘owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality’ engages in commercial activity in the United States”.

The Court found that (1) the defendants did not dispute that “rights in property" (2) the plaintiffs’ claim that the Herzog Collection was taken in violation of international law was substantial and non-frivolous, and therefore, adequately satisfied the second requirement; and (3) the defendants admitted that the museums and the university (both agencies or instrumentalities of Hungary) were in possession of the pieces of collection identified in the complaint which was sufficient to satisfy the ‘owned or operated’ requirement, ad these bodies were are engaged in “either a regular course of commercial conduct or a particular commercial transaction or act” in the US as of the commencement of the action.

Improper forum
The 1973 Agreement did not strip the court of jurisdiction.

Barred claims
The defendants’ claim to forum non conveniens ground was not established.

The Complaint stated facts which, if true, could support a finding that the action was timely, and so was not barred by the applicable statute of limitations.

The balance of factors weighs against applying the act of state doctrine (which precludes the courts of a country from inquiring into the validity of public acts of a recognised foreign sovereign power committed within its own territory).

There were no grounds for dismissing the case on the political question doctrine (which instructs that courts should decline to adjudicate matters which have in any measure been committed by the Constitution to another branch of government).

The claims were not barred by the doctrine of international comity (that the merits of the case should not, in an action brought in this country upon the judgment, be tried afresh, as on a new trial or on appeal, upon the mere assertion of the party that the judgment was erroneous in law or in fact).

It is assumed that the case will now proceed to trial and a decision on the merits. However, this preliminary decision is a very worthwhile read. Particularly, on the historical aspects of Hungary during and after the Second World War.