Paris decides "whose right of ownership should prevail?"

Stephenson Harwood 21 February 2018

Mr Bauer was the owner in France of the Pissarro painting La Cueillette or La récolte des pois. In 1943, on the order of the General Commissariat for Jewish Affairs, the painting was confiscated from Mr Bauer by an art dealer appointed as escrow agent. The art dealer then sold the painting in 1944 through his daughter, Mrs Louviot, to Mrs Eudeline.

At the end of the Second World War Mr Bauer summoned both Mrs Eudeline and Mrs Louviot before the High Court of Paris and applied for the cancellation of the sale of the painting. In 1945, the Court applied the provisions of a decree of 21 April 1945 (the “Decree”) and found the sale to be null and void and ordered the restitution of the painting to Mr Bauer.

The Court of Appeal confirmed the decision in 1951, but the painting was never returned to Mr Bauer. Instead, it was sold again in 1966 in London by a Mr Findlay, who had previously obtained the right to export the painting from the French Museum Administration. The painting was then bought by Mr and Mrs Toll in 1995 at a public auction in New York.

The painting remained out of the public eye for over 20 years until it was loaned by the Tolls to the Marmottan Monet Museum for an exhibition in 2017. It was during this exhibition that Mr Bauer’s heirs (the “Claimants”) recognised the painting as one that belonged to their ancestor and turned to the Paris High Court to reclaim it.

The Claimants claimed that, according to the Decree, acts of spoliation are null and void by law, which meant that the various subsequent sales had no legal effect and the painting should therefore be returned to the Claimants.

The key issue before the Court was; whose right of ownership should prevail? The Court addressed a number of points of law and public policy, namely whether the Decree applied to the case in question; whether the principles of good faith and infringement of fundamental rights should be considered; and whether the limitation period of thirty years (which applies to all claims based on actions in rem or in personam) had expired.

In applying the Decree, the Court explained that any person or his successor whose assets, rights or interests, have been subject to any act of dispossession related to an exceptional measure in force on 16 June 1940 and which was carried out by “the so-called French government at the time or by the enemy” may ask a court to declare the act annulled. There is a presumption of bad faith against all successive holders of disposed assets, which cannot be rebutted, and is not affected by any time limitation.

The Court found that these provisions apply not only to acts of dispossession that occurred during the occupation, but also to all subsequent acts, including the 1995 transaction. The Court agreed that Mr Bauer had taken action with the six-month period after the end of the war, during which the Decree states that claims should be made. Accordingly, the Decree was held to be applicable to the case.

The Court acknowledged that there was no evidence to suggest that Mr and Mrs Toll acquired the painting in bad faith, but it found the point to be irrelevant given the bad faith presumption in the Decree. Accordingly, the Court rejected the defendants’ claim under the French Civil Code, which protects good faith holders of movable assets from any claim of restitution.

The French Civil Code provides that all claims based on actions in rem or in personam are subject to a 30 year limitation period and that a party seeking the benefit of this limitation period does not have to prove good title and cannot be supposed to have acted in bad faith. However, the Code also provides that this limitation period does not apply to parties that have been prevented from introducing a claim during the limitation period.

The Court ruled that from the date of the sale of the painting from Mr Findlay to an unknown buyer, to the reappearance of the painting in France, the Claimants had been legally prevented from claiming restitution of the painting. The consequence of this was that the 30 year limitation period only ran from the date the Claimants knew Mr Findlay had it (1965), until Mr Findlay sold it in London (22 June 1966) and started again on 23 February 2017.

Accordingly, the Court concluded that the limitation period had not expired and the painting should be returned to the Claimants with no compensation measures for Mr and Mrs Toll.

Despite the undoubtedly harsh consequence for the defendants, this decision is a detailed and carefully reasoned judgment made in very specific circumstances.

That being said, a similar decision could be issued in different circumstances given that:

  1. a court application for relief is open to claimants that can demonstrate that they had been prevented from bringing a claim within the initial 6 month period; and
  2. the question of whether or not a claimant was in fact prevented from bringing his claim is entirely in the court's discretion to decide (and it appears that qualifying events are not restricted to force majeure events).

This decision, and the application of the Decree on which it is based, creates a serious risk that art owners could be deprived of their property without any form of compensation from its rightful owner. It also creates a risk for parties with any type of interest in the concerned work of art.

"…the Court concluded that the limitation period had not expired and the painting should be returned to the Claimants with no compensation measures…"

In light of this decision, owners would be well advised to fully review the whole chain of title of a work of art before allowing it to travel to France, as would banks and financiers more generally, when accepting works as security for any form of loan or financing.
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