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Foreign Cultural Exchange Jurisdictional Clarification Act returns

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Art Law Report 10 June 2015
By Nicholas O'Donnell

The U.S. House of Representatives passed yesterday H.R. 889, the Foreign Cultural Exchange Jurisdictional Clarification Act for the third time in four years.  Identical bills passed the house in early 2012 and again last year but failed to win passage in the Senate and signature by the President, thus expiring without becoming a law (and remaining just a bill sitting on Capitol Hill).  Will it become law? Probably not, and after a little reflection and evolution, that’s probably for the best.

Since the last attempt, of course, we’ve discussed the Foreign Sovereign Immunities Act (FSIA) quite a bit: it is the expropriation exception in that statute that provided jurisdiction in the Altmann v. Republic of Austria case, and which provides jurisdiction to the Welfenschatz claim against the Federal Republic of Germany and the Stiftung Preussischer Kulturbesitz.  That exception applies when the claim concerns the taking of property in violation of international law, and the defendant is engaged in commercial activity in the United States (not necessarily related to the claim).  The bill would amend § 1605 of the FSIA to clarify when a cultural object loaned with immunity from seizure pursuant to the Immunity from Seizure Act, 22 U.S.C. § 2459 (IFSA) can also constitute the “commercial activity” element.  The proposed law is, in fact, quite narrow.  It would eliminate federal court jurisdiction only when the sovereign defendant has no other commercial activity in the U.S., a scenario that as far as I know has only happened once: in Malevicz v. City of Amsterdam in 2005.  And, it does not apply to Nazi-looted claims, meaning even a sovereign defendant that lent a painting looted by the Nazis into the United States could be sued, even if the painting could not be seized.

When the bill was first proposed in 2012, I thought it was sensible, frankly.  There is a tension between IFSA and the FSIA that Malevicz exposed.  Many disagreed, forcefully.  Last year I paid less attention because it seemed destined for the same fate.

I fully expect that will happen again.  But I will say that something I heard at last week’s Art Crime Conference gives me pause about this law.  Mari-Claudia Jiménez of Herrick Feinstein gave a terrific talk about issues related to Cuba, and pointed out that claims concerning expropriations by the Cuban government of property owned by U.S. citizens (rather than Cubans) are not barred by the Act of State Doctrine.  Just last year, Boston College and the State Department had a strange pas de deux about whether to take loans from Cuba.  So while a Soviet or Cuban citizen who lost their property to the revolutionary government cannot not sue in the United States (the best example is the Konowaloff cases in Connecticut and New York), an American can by virtue of a specific statute (the “Second Hickenlooper Amendment”).  Since Cuba (and countries like Iran and North Korea) have essentially no commercial relationship directly with the United States, the loan of a cultural artifact could be the sole commercial activity that would warrant jurisdiction.

Based on all this, I’m prepared to change my mind and say that the law is probably a bad idea.  I do not believe that it is a parade of horribles or a license to import stolen art.  It is not, and as long as there is IFSA—which I firmly believe there should be to encourage cultural exchange—potentially stolen art is going to be in the U.S. temporarily.  But since it is already so limited to a rare circumstance, and since I can see Cuba in particular being a big issue in the coming years, it’s probably best if it meets the fate of its predecessors.

A final word about the possible effect on well-known cases.  As we have discussed at length in the past, the Chabad case against Russia has already resulted in a final judgment that Russia has defied.  This law cannot change that, and indeed the presence of IFSA undercuts Russia’s most oft-stated rationale for its ongoing embargo of loans to the U.S.  That is, Russia’s claim that it won’t lend into the States because it is worried the objects will be seized to satisfy the Chabad judgment is a canard.  The plaintiffs could not do so if they wanted, and have laudably and repeatedly said they have no intention of trying.  Since Russia isn’t loaning anything into the States right now, this bill would not affect what it already is not doing.  And since it’s anyone’s guess what diplomacy, if any, is going on to resolve that case, I don’t think it justifies a position one way or another as to this bill.

In any event, as stated, I do not expect this bill will become law.  The Association of Art Museum Directors lobbied for its passage the first time around, and it never even got a vote in the Senate.  It’s true that it was passed by the House earlier in the legislative calendar and not in an election year, but hard to forecast beyond that.  The extent of commentary seems universally opposed, thus far.

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