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Germany to appeal first ruling allowing Nazi-looted art claim against it in U.S. court

Tragaltar of the Eilbertus, circa 1150. (Jürgen Liepe/Prussian Heritage Image Archive/Museum of Decorative Arts, National Museums in Berlin)

A case closely watched in art and diplomatic circles is moving forward in a U.S. court, where a federal judge ruled that the German government will have to defend itself in a suit brought over art purportedly confiscated by the Nazis.

The ruling that Germany must face litigation in the United States seeking the return of the art will be appealed, posing a new test for Germany’s art-restitution system.

The lawsuit involves the ­Guelph Treasure, a collection of medieval gilded and jeweled artifacts dating to the 11th century that heirs of three Jewish art dealers allege the dealers were forced to sell in 1935 to the Prussian state, led by Prime Minister Hermann Göring. Göring, who was also chief of the Luftwaffe, presented the collection later that year as a “surprise gift” to Adolf Hitler, the suit states.

U.S. law generally bars civil suits against foreign governments, but two decisions by appeals courts in Washington last year carved out an exception in expropriation cases, U.S. District Judge Colleen Kollar-Kotelly wrote in an opinion March 31.

Jonathan Freiman, an attorney for the German government, said that by April 21 it would appeal the ruling, a move both sides said would require the country for the first time to defend itself against lawsuits in the United States involving such claims.

The works, the largest collection of German church treasures in public hands, are held at Berlin’s state-run Museum of Decorative Arts, managed by the Prussian Cultural Heritage Foundation, which is named along with the German government as a defendant.

The lawsuit, filed in Washington in February 2015, has drawn attention in the art world, coming soon after Germany pledged in 2014 to make its process for resolving claims over Nazi-looted art more transparent and efficient.

“The taking of the Welfenschatz . . . bears a sufficient connection to genocide such that the alleged coerced sale may amount to a taking in violation of international law,” Kollar-Kotelly wrote in refusing to toss out the case, referring to the collection as it is known in Germany.

In court filings, the German government sought to dismiss the case under the U.S. Foreign Sovereign Immunities Act, arguing that the lawsuit ran counter to American foreign policy and relitigated a question already settled by a German commission.

“This is a dispute that was already resolved on the merits in Germany, and it doesn’t belong in a U.S. court,” Freiman, of New Haven, Conn., said in a statement. German officials said the sale was a consensual one by experienced dealers, and the commission in 2014 found that the Great Depression, not prosecution, drove down the items’ prices.

The Guelph collection was named for the founders of the House of Brunswick, who amassed a trove of gilded and jeweled relics from the 11th to the 15th centuries. Held for nearly 900 years, the treasure was kept at Brunswick Cathedral and is Germany’s largest collection of medieval Christian artifacts, including the arm reliquary of Saint Lawrence, encrusted in gold and silver; gem-studded busts of saints; and religious objects such as crucifixes and altars made with silver, gold and pearls.

In 1929, the Duke of Brunswick sold the collection for ready cash to a consortium of three art dealers from Frankfurt. The consortium sold about half the pieces to museums and collectors in the United States and Europe, including the Cleveland Museum of Art.

However, amid a Nazi crackdown on Jews, the dealers sold the remaining 42 works to the Prussian state for roughly $1.7 million, 35 percent of their market value and less than what the dealers paid for them, their families allege.

In the lawsuit, the dealers' heirs to the art dealers cite correspondence between Göring and Hitler to "save the Welfenschatz" for the German Reich. They say the consortium never obtained the full sale proceeds because the money was split and partly paid into a state-controlled bank account, which was blocked by the Nazis and subject to "flight taxes" that Jews had to pay to escape Germany.

An attorney for the heirs, Nicholas M. O’Donnell of Boston, said the ruling continued a series of findings by U.S. courts that restitution claims cannot be dismissed by arguing that oppression of Jews came at the hand of their own government rather than from international actors, and that bringing cases before the German advisory commission does not bar U.S. litigation.

The heirs and plaintiffs are Alan Philipp of London, Gerald G. Stiebel of Santa Fe, N.M., and Jed R. Leiber of West Hollywood, Calif.

Report of Nazi-looted trove puts art world in an uproar

The case was the first to go before the German panel after a 2013 disclosure that officials in Germany had let nearly two years pass before revealing the discovery of 1,400 artworks in the Munich apartment of Cornelius Gurlitt, the son an art dealer who worked for Hitler to liquidate art, much of it bought at fire-sale prices.

In the ensuing uproar, Israel's culture minister urged Germany to follow "moral and historical obligations" in the Guelph case, according to the Wall Street Journal, which first reported the U.S. lawsuit.

The United States in December enacted the Holocaust Expropriated Art Recovery Act, which eliminated a statute-of-limitations hurdle in the case.

(An earlier version of this story included a reference that stated as fact that the disputed artworks were part of a 1935 forced sale to the Nazi-controlled Prussian state. The story has been updated to make clear that the nature of the sale is in dispute between heirs of three Jewish art dealers and the German government.)