This article surveys significant legal developments in international art and cultural heritage law during 2021.
In early 2021, the Supreme Court decided a case involving relics and religious objects taken during the Nazi era from a consortium of Jewish art dealers. The Court held that Germany was immune from suit because the takings exception to sovereign immunity does not apply where the expropriation victims were the state’s own nationals. The Court rejected the dealers’ heirs’ argument that genocide limited the “domestic takings” doctrine.
At the center of this case was a collection of medieval relics and devotional objects known as the “Welfenschatz” (Guelph treasure). The treasure was assembled in Germany over the course of centuries. After World War I, three Jewish art dealers collectively bought the treasure and, by 1931, had re-sold about half of the collection’s pieces. In 1935, the Nazis allegedly used “a combination of political persecution and physical threats to coerce the consortium into selling” the rest of the items for about a third of their value. At the end of World War II, the United States occupied Germany and took possession of the items, which were eventually turned over to Germany. Since then, the Welfenschatz has been maintained by Stiftung Preussischer Kulturbesitz (SPK) (the Prussian Cultural Heritage Foundation), which is an instrumentality of Germany. Germany and SPK (collectively “Germany”) were Petitioners in the case.
Respondents are heirs of the consortium members. When they approached SPK with the claim that the sale of the treasure was unlawful, SPK investigated the sale and concluded that the transaction occurred at a fair market price without coercion. In 2014, the parties submitted the dispute to the German “Advisory Commission for the Return of Cultural Property Seized as a Result of Nazi Persecution, Especially Jewish Property.” Germany had created the Commission under the Washington Conference Principles on Nazi-Confiscated Art, which promote the establishment of alternative ways of resolving WWII-related disputes. After the Commission considered evidence from expert witnesses and documents, it also decided that the “sale had occurred at a fair price without duress.”
In 2015, the heirs commenced a lawsuit against Germany in the U.S. District Court for the District of Columbia, raising common law property claims and demanding $250 million in compensation. Germany moved to dismiss the case, arguing it was immune from suit under the Foreign Sovereign Immunities Act (FSIA). The District Court denied Germany’s motion, and the U.S. Court of Appeals for the District of Columbia Circuit affirmed. This decision was appealed, and the Supreme Court granted certiorari.
The question before the Supreme Court was “whether a country’s alleged taking of property from its own nationals” negates the general grant of sovereign immunity. In addition to the parties’ briefs, the Court received a number of amicus briefs, including a brief by the United States in support of Germany. The Court held that “the phrase ‘rights in property taken in violation of international law,’ as used in the FSIA’s expropriation exception, refers to violations of the international law of expropriation and thereby incorporates the domestic takings rule.”
Foreign sovereigns were generally immune from suit in United States courts for centuries. As early as 1812, United States courts generally declined to assert jurisdiction over cases involving foreign government defendants, a practice based in a sense of “grace and comity” between the United States and other nations. Judges instead deferred to the views of the Executive Branch as to whether such cases should proceed in American courts, exercising jurisdiction only where the U.S. State Department expressly referred claims for their consideration.
In 1952, U.S. jurisdiction over claims against foreign states and their agents expanded significantly when the State Department issued the so-called “Tate Letter,” which announced the Department’s adoption of a new “restrictive theory” of foreign sovereign immunity to guide courts in invoking jurisdiction over foreign sovereigns. The “Tate Letter” directed that state sovereigns continue to be entitled to immunity from suits involving their sovereign or “public” acts. Acts taken in a commercial or “private” capacity would no longer be protected from United States court review. Even with this new guidance, courts continued to seek the Executive Branch’s views on a case-by-case basis to determine whether to assert jurisdiction over foreign sovereigns, a system that risked inconsistency and susceptibility to “diplomatic pressures rather than to the rule of law.”
In 1976, Congress addressed this problem by enacting the FSIA, essentially codifying the “restrictive theory” of immunity, and empowering the courts to resolve questions of sovereign immunity without resort to the Executive Branch. Today, the FSIA provides the “sole basis” for obtaining jurisdiction over a foreign state in United States courts. The FSIA provides that “foreign states”—including their “political subdivisions” and “agencies or instrumentalities”—are immune from the jurisdiction of United States courts unless one of the statute’s exceptions to immunity applies.
Sections 1605 and 1605A of the FSIA provide the exceptions to sovereign immunity. The “expropriation” or “takings” exception, in section 1605(a)(3), provides:
A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case . . . in which rights in property taken in violation of international law are in issue and that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state; or that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States . . .
Germany asserted that the purchase of the relics at issue was not “in violation of international law.” As a sovereign’s taking of its own nationals’ property, it was a “domestic taking,” and did not violate the international law of expropriation. The heirs countered that Germany’s taking “was an act of genocide and the taking therefore violated the international law of genocide.”
The Court explained that the “domestic takings” rule is based on the premise that “international law” deals with “relations among sovereign states, not relations between states and individuals.” The rule has “deep roots in international law” and in United States “foreign policy,” and has “endured even as international law increasingly came to be seen as constraining how states interacted not just with other states, but also with individuals, including their own citizens.”
The Court pointed to its decision in the Banco Nacional de Cuba v. Sabbatino case and to the Second Hickenlooper Amendment, which Congress passed in response. When Congress drafted the FSIA’s expropriation exception, it copied the language of the Second Hickenlooper Amendment almost verbatim. The Court explained that, based on this background, courts generally agreed that the reference in the takings exception to “‘violation of international law’ does not cover expropriations of property belonging to a country’s own nationals.”
The Court explained that the takings exception “places repeated emphasis on property and property-related rights, while injuries and acts we might associate with genocide are notably lacking.” The Court stated that the heirs’ interpretation “would be remarkable” and opined that “[a] statutory phrase concerning property rights most sensibly references the international law governing property rights, rather than the law of genocide.”
The Court reasoned that “[h]istory and context” support Germany’s interpretation of the restrictive view of sovereign immunity:
Given that the FSIA “largely codifies” the restrictive theory, however, we take seriously the Act’s general effort to preserve a dichotomy between private and public acts. It would destroy that distinction were we to subject all manner of sovereign public acts to judicial scrutiny under the FSIA by transforming the expropriation exception into an all-purpose jurisdictional hook for adjudicating human rights violations.
Other parts of the FSIA confirm this interpretation, including the FSIA’s approach to human rights violations in the non-commercial tort exception in section 1605(a)(5) and the terrorism exception in sections 1605A(a) and (h). The limitations in those provisions would have no effect if human rights violations were read into the takings exception, and the Court refused “to insert modern human rights law into FSIA exceptions ill-suited to the task.” The Court emphasized that “United States law governs domestically but does not rule the world,” and that “friction” with other nations should be avoided, in order to prevent reciprocal treatment of the United States in foreign courts.
The heirs pointed to a number of statutes as confirmation that their Nazi-era claims should be heard in U.S. courts, including the 2016 Foreign Cultural Exchange Jurisdictional Immunity Clarification Act, the Holocaust Victims Redress Act of 1998, the Holocaust Expropriated Art Recovery Act of 2016 (HEAR Act), and the Justice for Uncompensated Survivors Today (JUST) Act of 2017. But the Court held that none of those statutes “can overcome the text, context, and history of the expropriation exception.” While these laws support restitution to Holocaust victims, “they generally encourage redressing those injuries outside of public court systems.” Because those other statutes do not deal with sovereign immunity, the Court held that it could not allow the heirs “to bypass [the FSIA’s] design.”
The U.S. art market is not specifically regulated as such, but that situation may soon change. In recent years, various parts of the U.S. federal government have issued various documents indicating an increased focus on the art market. Below is a brief overview of recent developments, in chronological order.
In July 2020, a U.S. Subcommittee issued a report entitled “The Art Industry and U.S. Policies that Undermine Sanctions.” The 150-page report contained a detailed case study about two Russian men who circumvented sanctions by buying art in the United States via off-shore shell companies, lawyers, and an art advisor. The report asserted, inter alia:
1. “The art industry is largely unregulated.”
2. “Secrecy is pervasive in the art industry.”
3. “Secrecy, anonymity, and a lack of regulation create an environment ripe for laundering money and evading sanctions.”
4. “Tracing the ownership of anonymous shell companies, including those involved in high-value art transactions, is difficult.”
Among other things, the report recommended applying anti-money laundering (AML) regulations to businesses handling high-value art transactions.
In October 2020, the U.S. Treasury Department issued a document titled “Advisory and Guidance on Potential Sanctions Risks Arising from Dealings in High-Value Artwork.” This document proclaimed that certain “vulnerabilities in the high-value artwork market giv[e] rise to sanctions risks” and “blocked persons have exploited vulnerabilities in the high-value artwork market.” The document advised that “transactions involving high-value artwork are not categorically exempt from OFAC [Office of Foreign Assets Control] regulation” but also highlighted the importance of “risk-based compliance programs.”
On January 1, 2021, Congress passed the National Defense Authorization Act (NDAA). Among the thousands of provisions in the NDAA, two are of particular relevance to the art market: (1) the addition of the antiquities trade to the Bank Secrecy Act (BSA) and (2) the art market study.
The Bank Secrecy Act (BSA) is designed to help identify the source, volume, and movement of currency to assist U.S. government agencies in detecting and preventing money laundering. The BSA covers banks and certain enumerated non-bank financial institutions including casinos, securities and commodities firms, insurance companies, loan or finance companies, operators of credit card systems, and dealers in precious metals, stones, or jewels. The NDAA added a new type of non-bank financial institution to that list: a person engaged in the trade of antiquities, including an advisor, consultant, or any other person who engages as a business in the solicitation or the sale of antiquities.”
Proposed regulations must be issued by December 27, 2021, considering: (1) the scope; (2) the degree of focus on high-value trade; (3) the need to identify dealers, advisors, and consultants; (4) any thresholds; (5) any exemptions; and (6) any other relevant matter.
Section 6110(c) of the NDAA, titled “Study of the Facilitation of Money Laundering and Terror Finance Through the Trade in Works of Art,” requires the Treasury Secretary—together with the Federal Bureau of Investigation, the Attorney General, and Homeland Security—to study money laundering and terror financing in the art market. This study should include an analysis of: (1) the extent of the facilitation of money laundering and terror financing; (2) which markets should be subject to regulations; (3) the degree of focus on high-value trade; (4) the need to identify dealers; (5) thresholds and definitions; (6) exemptions; (7) information usefulness to criminal, tax, or regulatory matters; and (8) any other matter the secretary deems appropriate. The NDAA requires a report on the study by December 27, 2021.
On March 1, 2021, the CRS issued a report titled “Transnational Crime Issues: Arts and Antiquities Trafficking.” The report noted factors that “may” help criminals use the art trade to profit from their crimes, including “confidentiality, challenges in documenting provenance (ownership history) of certain items, the use of intermediaries, and inconsistent due diligence practices.” The report also listed a number of federal agencies and their roles regarding art and antiquities, and it briefly analyzed a number of relevant laws and legislative activities.
On March 9, 2021, the Treasury Department issued a notice titled “FinCEN Informs Financial Institutions of Efforts Related to Trade in Antiquities and Art.” The notice explained that “crimes relating to antiquities and art may include looting or theft, the illicit excavation of archeological items, smuggling, and the sale of stolen or counterfeit objects,” as well as “money laundering and sanctions violations.” The notice contained specific instructions for filing Suspicious Activity Reports (SARs), requesting that information regarding suspicious art and antiquities transactions include: (1) detailed information on “the actual purchasers or sellers of the property, and their intermediaries or agents”; (2) “the volume and dollar amount of the transactions”; and (3) any beneficial owner information.
In a speech to a group of international bankers, then-FinCEN Director Kenneth Blanco explained the notice’s purpose:
The information you provide will help to inform FinCEN’s rulemaking efforts in extending AML [anti-money laundering] requirements to dealers in antiquities, and will also inform the study of the facilitation of money laundering and the financing of terrorism through the trade in works of art that the AML Act requires.
In September 2021, FinCEN issued an ANPRM regarding the addition of the antiquities trade to the BSA (described in Part C.1., above), soliciting comments from members of the antiquities industry, law enforcement, civil society groups, and the broader public by October 25, 2021. In the notice, FinCEN sought comments on all aspects of the ANPRM and on a list of specific questions:
1. Please identify and describe the roles, responsibilities, and activities of persons engaged in the trade in antiquities, including, but not limited to, advisors, consultants, dealers, agents, intermediaries, or any other person who engages as a business in the solicitation or the sale of antiquities. Are there commonly understood definitions of particular roles within the industry? Who would be considered within or outside such definitions?
2. How are transactions related to the trade in antiquities typically financed and facilitated? What are the typical sources and types of funds used to facilitate the purchase of items in the antiquities market? . . .
3. Can the antiquities market be broken down to show the percentage of transactions that fall in a given monetary range (e.g., 50 percent of all transactions fall below $X-value)? . . .
4. What, if any, information does a buyer typically learn about the seller, cosigner, or intermediary involved in the sale of antiquities? . . .
5. How do foreign-based participants in the antiquities market operate in the United States? . . . .
6. What are the money laundering, terrorist financing, sanctions, or other illicit financial activities risks associated with the trade in antiquities? . . .
7. Which participants involved in the trade in antiquities are in positions in which they can effectively identify and guard against money laundering, the financing of terrorism, and other illicit financing risks in connection with the transactions they conduct? . . .
8. What, if any, safeguards does the industry currently have in place to protect against business loss and fraud? . . .
9. How should “antiquities” be defined for the purposes of FinCEN’s regulations? . . .
10. How is an antiquity distinct from a work of art?
11. How should “trade of antiquities” be defined for the purposes of FinCEN’s regulations? . . .
12. Should FinCEN establish a monetary threshold for activities involving trade in antiquities that would subject persons involved in such activities above that threshold to FinCEN’s regulations, but exempt persons whose activities fall below that threshold? . . . .
13. Which aspects of the current regulatory framework applicable to financial institutions should apply to persons engaged in the trade in antiquities? . . .
Thirty-seven comments were received by FinCEN in response to the ANPRM. Commenters included auction houses, trade associations, and advocacy groups. Proposed regulations are expected before the end of 2021.
On October 8, 2021, a bipartisan group of members of the House of Representatives introduced the Establishing New Authorities for Businesses Laundering and Enabling Risks to Security Act (ENABLERS Act). The Act’s goal is “to expand the scope and authorities of anti-money laundering safeguards” under the BSA. In a separate statement, the sponsors referenced, among other things, the so-called Pandora Papers, which had been publicized just five days earlier.
The Pandora Papers were published on October 3, 2021, resembling the Panama Papers of 2016 and the Paradise Papers of 2017. The Pandora Papers recounted how a number of public figures had used offshore shell companies and trusts. In one case uncovered by the Pandora Papers, money related to allegedly looted Cambodian antiquities had passed through offshore accounts.
If enacted, the ENABLERS Act would add the following art market participants to the BSA as new non-bank financial institutions:
a person engaged in the trade in works of art, antiques, or collectibles, including a dealer, advisor, consultant, custodian, gallery, auction house, museum, or any other person who engages as a business in the solicitation or the sale of works of art, antiques, or collectibles . . .
The ENABLERS Act would also add other groups to the BSA as new non-bank financial institutions:
1. Investment advisors;
2. Attorneys, law firms, notaries involved in financial activity; and
3. CPAs and public accounting firms.
The bill has been referred to the House Committee on Financial Services.
The rapid succession of the U.S. federal government actions described above leads to two main conclusions. First, there is a perception, deserved or not, that the art market is being used in the commission of various types of financial crimes. And second, the U.S. federal government is taking steps to subject certain art market participants to new regulations that would obligate them to proactively assist in the fight against money laundering and other financial crimes. Readers are advised to monitor closely these fast-moving developments to adequately manage any new obligations as they become effective.
Copyright protects both original creative work and derivative works. The objective of copyright’s fair use exception is to strike a balance between an artist’s intellectual property rights and another person’s ability to create new works by referencing other works. The 1976 Copyright Act provides a non-exclusive list of factors, which should be weighed together, to assert the fair use affirmative defense:
1. The purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
2. The nature of the copyrighted work;
3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
4. The effect of the use upon the potential market for or value of the copyrighted work.
In 1981, defendant-appellant Lynn Goldsmith, on assignment from Newsweek magazine, made a series of portrait photographs of musical artist Prince. In 1984, Goldsmith’s agency licensed one of the photographs to Vanity Fair magazine for use as an artist reference, permitting the publication of an illustration based on the photography once as a full page and once as a quarter page, with an attribution to Goldsmith. An “artist reference” means an artist “would create a work of art based on [the] image reference.” Vanity Fair commissioned Andy Warhol to create an image of Prince to accompany the publication of an article on the musician for its November 1984 issue. Warhol also made a series of silkscreen prints and pencil illustrations collectively known as the “Prince Series.” In 1987, after Warhol’s death, the Andy Warhol Foundation for the Visual Arts (AWF) was established as a non-profit corporation in New York. AWF retains copyright in the Prince Series.
In April 2016, after Prince’s death, Vanity Fair’s parent company, Condé Nast, obtained a commercial license for a different Prince Series image to publish as the magazine cover. Goldsmith became aware of Warhol’s Prince Series when the magazine was published in May 2016. In July 2016, Goldsmith notified AWF of the perceived infringement of her copyright. In November 2016, Goldsmith registered the photograph as an unpublished work.
In April 2017, AWF sued Goldsmith for a declaratory judgment of non-infringement or fair use. Goldsmith countersued for copyright infringement. In July 2019, the United States District Court for the Southern District of New York granted summary judgment for AWF, concluding the Prince Series was transformative because: (1) it portrayed Prince as “iconic, larger-than-life,” whereas Goldsmith’s portrayal showed Prince as a “vulnerable human being”; (2) Goldsmith’s creative and unpublished photograph was of “limited importance[,]” because the Prince Series was transformative; (3) Warhol “removed nearly all” protectible elements of Goldsmith’s photograph; and (4) “the Prince Series works [were] not market substitutes that have harmed–or have the potential to harm–Goldsmith.”
Contrary to the district court’s decision, the United States Court of Appeals for the Second Circuit reviewed the grant of summary judgment de novo and found each of the four fair use factors favored Goldsmith and AWF’s defense failed as a matter of law. The Second Circuit also found Andy Warhol’s Prince Series was substantially similar to Goldsmith’s photograph, reversed the District Court’s grant of summary judgment, and remanded the case.
Because the defendant did not seek relief as to works produced by Andy Warhol that have been acquired by other art market players, the case did not decide their rights of use.
To avoid creating a “celebrity-plagiarist privilege,” the Second Circuit emphasized the law does not allow an artist to exploit another artist’s work without permission. The “purpose and character” of the primary and secondary works are used to evaluate the extent to which the secondary work is transformative. A work is not sufficiently transformative, where “a secondary work does not obviously comment on or relate back to the original” work, or does not use the original for a different purpose. The secondary work must convey a separate “new meaning or message,” embodying a “distinct artistic purpose” reasonably perceived. Thus, the District Court erred in using the artist’s “stated or perceived intent” to recognize an alteration as transformative.
The Prince Series retained the “essential elements of its source material, the Goldsmith photograph,” which remained the “recognizable foundation” of the derivative series. Simply removing certain elements like depth and contrast, and embellishing images with loud and unnatural colors did not mean significant changes were made, even if they were meant to display Warhol’s signature style of a “distinct aesthetic sensibility.” Hence, the Prince Series was not transformative according to the first factor.
Distinguishing between a commercial use and non-profit use requires determining whether a user stands to profit from exploitation of the copyrighted material without paying the customary price. Where a secondary use is found to be commercial in nature, it “tends to weigh against” fair use. But the commercial nature is less important when the secondary use is transformative enough, where the primary artist has no reasonable expectation of compensation.
Both the Second Circuit and the District Court found the Prince Series was commercial in nature and served the public interest because advancing the visual arts is AWF’s mission, which mitigated against its sales and licensing. Where both courts diverged was on AWF’s entitlement to monetize Goldsmith’s work without paying the “customary price.” A commercial, non-transformative work that might serve the public interest did not sway “significantly” in favor of fair use. The extent of serving the public interest was relevant to assess equitable remedies. The Second Circuit thus held the Prince Series was not transformative and AWF had to pay to monetize another artist’s work, even if the second work served the public interest.
Where a copyrighted work is “factual or informational” and “published,” the determination swings in favor of finding fair use. Because the Second Circuit held the Prince Series was not transformative, greater weight should be given to the nature of the copyrighted work. The District Court erred in not finding this factor in favor of Goldsmith, where her work was recognized as both creative and unpublished.
Copyright protects the “cumulative manifestation” of artistic choices of “ideas, concepts, principles, or processes.” For a photograph, these choices include the “particular expression” of the photographer’s idea underlying her photograph, such as the posing of the subjects, lighting, angle, selection of film and camera, and any other variant involved.
Besides considering the “quantity of the material used,” the “quality and importance” of the material used in relation to the original work are also part of the amount and substantiality of the work factor. The test considers the reasonableness of the quantity of the materials used in relation to the purpose of copying.
The Prince Series was found to have borrowed significantly both quantitatively and qualitatively from Goldsmith’s photograph. Despite the cropping and flattening Warhol did to Goldsmith’s photograph, his screen print was “readily” and “instantly” identifiable as deriving from a “specific” photograph taken by Goldsmith, in which Prince’s hair appears shorter on the left side of his face. The Second Circuit found Warhol copied the “essence” of Goldsmith’s photograph and held this factor swung in Goldsmith’s favor.
Thus, the District Court erred in finding Warhol removed nearly all of the copyrightable elements of Goldsmith’s photograph by removing or minimizing Goldsmith’s expressive qualities.
Fair use is an affirmative defense, and the burden of proving the secondary use does not compete in the relevant market lies with the party asserting the defense. Caselaw shows that “where the infringer’s target audience and the nature of the infringing content is the same as for the original, there is usurpation.
Even though the primary market of both works differed and there might be a public interest in Warhol’s copying, the Prince Series posed “recognizable harm” to Goldsmith’s licensing market for editorial purposes. The Second Circuit held this factor swung in favor of Goldsmith. The District Court erred in placing the burden of proof on the rightsholder and overlooked the potential harm to Goldsmith’s derivative market.
The Second Circuit granted plaintiff-appellant’s Petition for Panel Rehearing and Rehearing En Banc after the Supreme Court handed down its decision in Google. Both courts reiterated fair use decisions are highly contextual and fact specific. Courts must apply the flexible concept of fair use in light of the “sometimes conflicting” aims of copyright law.
The Google decision is limited to the unusual context of copyrights in computer code, and thus rendered no change to the application of established principles to a traditional area of artistic expression. As a result, copyright material serving an artistic function rather than a utilitarian one may enjoy stronger copyright protection.
Photographs are “creative aesthetic expressions” of a scene or image. Both photographs in this case were substantially similar as a matter of law. A reasonable viewer can easily recognize Goldsmith’s photograph as the source material for Warhol’s Prince Series. The Second Circuit deemed the “ordinary observer” test appropriate for photographs, which have “long received” thick copyright protection.
Where artists choose to incorporate other artists’ copyrighted expression into their own works, they must pay for the source material. Even if the secondary user has generated an active market for their own work, the right market must be analyzed. There is no “celebrity-plagiarist privilege” in law. It is not the function of judges to decide the meaning and value of art, which remains in the domain of art historians, critics, collectors, and the museum-going public.
In April 2021, the United States District Court for the Southern District of New York held an eight-day bench trial on the question of who owned a millennia-old artifact known as the Guennol Stargazer (the Idol). In the resulting Opinion and Order, the court affirmed its earlier holding that the 1906 Ottoman Decree on which the Republic of Turkey based its claims was an ownership law enforceable in United States courts. But the court ultimately concluded that Turkey did not meet its burden of proof in establishing it owned the Idol under that law. Additionally, the court concluded that even if Turkey had established a superior right to the Idol, recovery was barred under the doctrine of laches.
The Idol is an Anatolian Marble Female Idol of the Kiliya-type, likely manufactured in the middle or late 5th millennium B.C.E. The likely origin of the Idol is Kulaksizlar, in the Anatolia of modern-day Turkey, the only known manufacturing spot for Kiliya-type idols, though no complete Kiliya-type idol has yet been found there. The Idol’s approximate discovery location and date are unknown.
The only extant provenance for the Idol starts in 1961, when art dealer J.J. Klejman sold it to collectors Alastair and Edith Martin. In 1983, the Martins transferred the Idol to a company owned by their son, which later sold it to the Merrin Gallery. In August 1993, Michael and Judy Steinhardt purchased the Idol from the Merrin Gallery. Between 1968 and 1993, the Idol was on loan to the Metropolitan Museum of Art (the Met) and was exhibited in the museum’s permanent galleries. In 1999, the Steinhardts also loaned the Idol to the Met, where it was displayed until 2007. Previously, the Idol had been featured in publications that identified it as Anatolian, discussed its origins, and noted its location. In 2017, Michael Steinhardt consigned the Idol to Christie’s for sale, and Christie’s listed the Idol in its April 28, 2017, auction catalogue. Before the auction, Turkey sent Christie’s a letter asserting ownership of the Idol and demanding its return; Christie’s refused. On April 27, 2021, Turkey commenced an action to recover the Idol, asserting that the Idol was an integral and invaluable part of the artistic and cultural patrimony of Turkey and alleging it was illicitly removed from Turkey sometime during the 1960’s in violation of its national patrimony law.
National patrimony laws declare state ownership of cultural property found within a nation’s borders and regulate the export and private ownership of this cultural property. Accordingly, actions to recover allegedly looted cultural property in U.S. courts are often premised on the theory that the foreign sovereign is the original and priority owner of the items, under the relevant patrimony law. What authority U.S. courts should give foreign patrimony laws remains a contentious issue. Based on the holdings in the seminal McClain and Schultz cases, an undocumented archaeological artifact is owned by a foreign sovereign when four criteria are met: (1) on its face, the law must clearly and unambiguously be an ownership law, (2) the State’s ownership rights must be enforced domestically and not merely for illegal exports, (3) the artifact must have been discovered within the territorial boundaries of the country claiming ownership, and (4) the object must have been in the country at the time the law was enacted. Claimants have the burden of demonstrating the artifact was in the country before the date that the relevant patrimony law went into effect.
Turkey asserted New York state claims of replevin and conversion, which required Turkey to establish an ownership or possessory right to the disputed property. On a double motion for summary judgment, the court held that Turkey had presented sufficient evidence as to the first and second criteria: The 1906 Ottoman Decree was intended as an ownership law, and it is enforced as such. Additionally, the court found that the record contained genuine disputes of material fact as to whether Turkey owned the Idol under the 1906 Ottoman Decree because there was at least some evidence that the Idol may have been discovered in modern-day Turkey after 1906, addressing criteria three and four.
Defendant Christie’s and Defendant Steinhardt (collectively Defendants) advanced several arguments to counter Turkey’s claim. They argued that (1) the 1906 Ottoman Decree is not, in fact, the ownership law it purported to be, (2) even presuming the patrimony law were enforceable as an ownership law, Turkey could not show that the Idol was discovered in modern-day Turkey before 1906, and (3) even if Turkey could establish a claim to the Idol under the 1906 Ottoman Decree, Turkey had unreasonably and unfairly delayed bringing its claim and thus the equitable defense of Laches barred recovery.
The court held that the 1906 Ottoman Decree is a clear and unequivocal assertion of national ownership of cultural artifacts discovered in modern-day Turkey. The court then considered whether Turkey had established that the Idol was found within and exported from the boundaries of modern-day Turkey while the Decree was in effect. The court explained that Turkey’s assertion that the place of manufacture is the place of discovery was weakened by the fact that Kiliya-type idols circulated around the region after they were manufactured and trade networks during the relevant period could have reached the Aegean. Ultimately, the court found that Turkey had not demonstrated by a preponderance of the evidence that the Idol was discovered in Turkey.
The court next addressed the Idol’s date of discovery, noting that the precise date was unknown, as there is no evidence of excavation or export. The court declined to find that the Idol’s introduction to the market in 1961 meant that the Idol must have been found sometime after 1906, because an object might not surface immediately after discovery. The court held that Turkey had not demonstrated that the Idol was discovered, excavated, or exported after 1906, when the decree was in effect.
With respect to the Defendants’ laches defense, the court observed that to prove laches, the Defendants must show that (1) Turkey was aware or should have been aware of its claim, (2) Turkey inexcusably delayed in taking action, and (3) Christie’s and Steinhardt were prejudiced as a result of the delay. The court found that Turkey should have known of its claim decades before 2017 because the Idol had been featured in various publications, including Turkish publications, since at least the 1960’s and it was on public display in the Met for decades. With respect to the second element, the court held that Turkey unreasonably delayed taking action because, at a minimum, Turkey should have inquired once it knew the Idol was of Anatolian origin, was historically significant, and was located in New York, information available well before 2017. As to the issue of prejudice, the court found that had Turkey acted earlier, Defendants would have had a stronger defense, especially for access to potential witnesses and documentary evidence. Further, had Turkey timely inquired as to the Idol, the Steinhardts might not have purchased the Idol. Thus, the court held that the Defendants had shown prejudice by Turkey’s delay. The court rejected Turkey’s argument that the Steinhardts’ had acquired a duty to inquire or investigate before completing the purchase.
The significance of the District Court’s decision is largely dependent on the outcome upon appeal. The District Court’s decision is notable for recognizing the 1906 Ottoman Decree as a true ownership law. Turkey’s foreign patrimony law has been at issue in cultural property disputes before the Guennol Stargazer case, but no court has ever explicitly or clearly ruled on its enforceability.
The consistent recognition by United States courts of foreign patrimony laws as true ownership laws influences the market. This recognition disincentivizes the trade in undocumented archaeological material, by demonstrating that finders or subsequent purchasers of such material will be denied title when it can be shown the material was discovered, excavated, or exported from the country claiming ownership while relevant patrimony law is effect. Additionally, the District Court decision gives insight into what standard of clarity is required of the elements a foreign sovereign must demonstrate under the McClain/Schultz doctrine in a private replevin action premised on foreign patrimony laws. Despite the growing body of relevant case law, there are open questions as to how the McClain/Schultz doctrine, which was conceived from criminal proceedings under the National Stolen Property Act, should be applied in non-criminal litigation.
Section Authors: Birgit Kurtz (Parts I & II); Maria Goretti Tai (Part III) and Lois E. Wetzel (Part IV).
