Republic of Austria v. Altmann – Klimt Goes to Court!

Altmann was committed to retrieving what was rightfully hers. She initiated a lawsuit in Austria against the government to recover the paintings. In Austria, the costs to sue are determined by a percentage of the recoverable amounts. At the time, the five Klimts were estimated at a value of $135 million, accounting for a fee of over $1.5 million. Although she requested a waiver, which reduced the fee to $350,000, still unable to pay the requested amount, Altmann dismissed the lawsuit and filed it again in the federal courts in Los Angeles, California. In the end, the case reached the Supreme Court of the United States. 

The Foreign Sovereign Immunities Act (FSIA) of 1976 establishes the limitations and conditions on which a foreign sovereign nation (or its political subdivisions, agencies, or instrumentalities) can be sued in the US courts. In Republic of Austria vs. Altmann, the parties argued whether the FSIA does apply retroactively to claims that occurred before the enactment of the Act. 

The petitioner, the Republic of Austria, produced two main points erected around sovereign immunity. Firstly, they argued that when the transaction between the Nazi lawyer and the Gallery occurred, Austria was protected by absolute immunity and that the FSIA cannot be applied retroactively. However, the Court recognized that retroactive application may not be as important in statutes concerning jurisdiction, like in this case. 

Altmann’s lawyer, E. Randol Schoenberg, focused more on the “expropriation exception” of the FSIA. The exception dissolves the protection granted by sovereign immunity for states under the following circumstances: the entity has commercial ties to the US, and the case covers international law violations. The first condition was satisfied by the Gallery’s publishing and advertising activities within the US. And remember the extortion allegations brought up earlier? Altmann asserted that precisely those actions initiated by the Galley violated either customary international law or a 1907 Hague Convention. On top of this, there was another catch: the FSIA applies to conduct before the 1976 Act or the 1952 “restrictive theory” adopted by the US but to not country status.

The Verdict

In the FSIA, some language indicators suggested that Congress wished to apply this Act retroactively. The Supreme Court ruled in favor of Altmann, allowing her to continue her venture into recovering the paintings. The Court wrote that “[The] language suggests Congress intended courts to resolve all such claims ‘in conformity with the principles set forth’ in the Act, regardless of when the underlying conduct occurred.”1

Altmann agreed to binding arbitration in Austria. If you are not familiar with this legal term, arbitration is a procedure in which one or more arbitrators decide the outcome of the dispute. The arbitration needs to be consensual, neutral, and confidential. In 2006, Altmann won the five Klimts. Victory! She died a few years later at the age of 94. 

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