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Russian art loans embargo was never about US immunity law

by Nicholas M. O'Donnell  |  01.02.2017
Russian art loans embargo was never about US immunity law
Blockbuster loan shows from Russia to the US, and vice versa, could resume. Meanwhile, highlights from the Shchukin Collection pull in the crowds at the Fondation Louis Vuitton in Paris. Photo: Frederic Stevens/Getty Images, 2016
The recent news that Russia may end its multi-year embargo on loaning art and cultural artefacts to the US is welcome indeed. But the statements from Russian cultural officials that the embargo’s end is thanks to the recent passage of the Foreign Cultural Exchange Jurisdictional Immunity Clarification Act is hard to square with the history of the embargo and the actual effect of this specific law. The ongoing embargo was in place ostensibly out of fear of seizure of loaned objects, a fear that had no basis under prior law, and which is not affected by the new one.

The reason for this is a complex overlapping system of US laws concerning the jurisdiction of its courts over certain cases and defendants on the one hand, and specific protections over cultural artefacts when they are on loan in the US on the other. Understanding the difference is the key to understanding why the embargo’s end cannot be credited to the new law—or blamed on its absence.

For more than five decades the US has had a law called the Immunity from Seizure Act. This allows borrowers to apply to the State Department before an exhibition for immunity for the actual objects being loaned from abroad. If granted—it is discretionary—the objects cannot be seized for any reason by judicial process. It provides immunity for an object, but not for a person or defendant. Egon Schiele’s Portrait of Wally famously did not have this immunity, while the Malevich paintings lent by the Stedelijk Museum to the Menil Collection in Houston at issue in Malevich heirs v City of Amsterdam (2004) did.

Since 1976, the US has also had a jurisdictional law about foreign governments. Entitled the Foreign Sovereign Immunities Act, it creates specific exceptions to the general rule that a “sovereign”—a country or state—cannot be sued. Included in the law is what is called the “expropriation exception” for claims that concern rights in property taken in violation of international law against sovereign defendants who are engaged in commercial activity in the US at the present time. The expropriation exception provided the means for Maria Altmann to pursue her claims against Austria for the Schiele painting, it provided jurisdiction over the Malevich case, and also for a case against Russia over the Chabad-Lubavitch Rebbe’s library.

In Malevich, Amsterdam’s only commercial activity in the US was the loan of the paintings that were immune from seizure. The court held that that was enough to find jurisdiction, and the lawsuit proceeded.

Retaliation

In Chabad, by contrast, the library at issue has never been in the US, and the Russian defendants were held to be engaging in sufficient commercial activity for reasons that had nothing to do with the library. Russia defied the Chabad judgment and refused to participate in the proceedings any further. The Russian defendants have been in contempt of the US District Court in Washington DC for four years and have been accruing a fine of $50,000 per day ever since for flouting the court’s order (last liquidated in an unpaid amount of $43,700,000 as of September 2015).

The loan embargo was in retaliation for this ruling. The new law, however, was explicitly passed in direct response to the Malevich case (which can be debated, since that scenario has only happened once). Now, if a sovereign defendant’s only commercial acts are the loan of immune cultural artefacts, there will be no jurisdiction. But the new law has no effect whatsoever on the underlying grant of immunity for the object. That is still subject to the discretion of the State Department.

Consider the question from another direction: if the Chabad case were filed today the new law would have no effect on the result because no loan of cultural objects was at stake. Conversely, any object lent today or in the past cannot and could not be seized if it had been granted immunity, and the new law does not change that.

The Russian loan embargo has been political theatre from the time it began. The resumption of art loans would be good news. But the embargo was never justifiable by the effects of US law.

• Nicholas M. O’Donnell is a Boston-based partner at Sullivan & Worcester and the editor of the Art Law Report

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