In Brief: Supreme Court to Determine Conflict of Laws Approach Under the FSIA

INTRODUCTION

The Supreme Court of the United States recently granted a petition for a writ of certiorari to the United States Court of Appeals for the Ninth Circuit decision Cassirer v. Thyssen- Bornemisza Collection Foundation, 862 F.3d 951, 961 (9th Cir. 2017). The argument is scheduled for Tuesday, January 18, 2022.

The issue on appeal is whether a federal court hearing a state law claim under the Foreign Sovereign Immunities Act (“FSIA”) should apply the state’s conflict rules or federal conflict rules to determine which substantive law governs the claim. The Ninth Circuit held that federal conflict rules should govern, which largely follows the Restatement (Second) Conflict of Laws. This and previous Ninth Circuit decisions depart from Second, Fifth, Sixth, and D.C. Circuit Court decisions applying the forum state conflict rules.

The purpose of this note is to briefly discuss some of the issues that the Supreme Court will grapple with and mention some potentially broader ramifications, irrespective of the outcome. But first, it is necessary to provide some semblance of a summary to this complex dispute that has been working its way through the courts for nearly two decades.

FACTUAL & LEGAL BACKGROUND

The case has its genesis in 1898 when an oil painting by Camille Pissarro entitled Rue Saint-Honoré, Afternoon, Rain Effect (“painting”) was sold to Julius Cassirer, who was domiciled in Germany. Following Julius’ death, his widow, Lilly Cassirer, inherited the painting but was eventually forced to “sell” it under the “Aryanization” scheme before fleeing Nazi Germany in 1939. The painting was then transferred from Germany to California in 1951 and subsequently sold several times before private collector, Baron Hans-Heinrich Thyssen-Bornemisza, purchased it from a New York art dealer in 1976.

The painting was eventually purchased by the Spanish government in 1993 as part of its purchase of Thyseen-Bornemisza’s entire collection (“agreement”). As part of the agreement, Spain established the Thyseen-Bornemisza Collection Foundation (“Foundation”), which owns and displays the painting in the Thyseen-Bornesmisza Museum in Madrid, Spain (“museum”). It was not until sometime in 2000 that Lilly’s heir, Claude Cassirer, discovered that the painting was on display at the museum.

The Cassirer family filed a petition in Spain requesting the return of the painting in 2001. After that petition was declined, Claude filed a similar petition in the United States District Court for the Central District of California in 2005 under the FSIA, which has been said to apply because Germany stole the painting from Lily in breach of international law. A series of proceedings have since ensued. The plaintiffs have also changed several times. Following Claude’s death in 2010, his heirs, David and Ava Cassirer, were substituted as plaintiffs along with the United Jewish Federation of San Diego County. Ava has also been replaced by the representatives of her estate, following her death in 2018.

The Ninth Circuit’s decision concerned an appeal against the District Court’s decision granting summary judgment for the Foundation on the basis that the Foundation had good title under Spain’s doctrine of acquisitive prescription.

Although the Ninth Circuit reversed and remanded (based on a misapplication of Spanish law), it agreed that Spanish substantive law applied in accordance with the federal court’s “most significant relationship” conflict rule under the Restatement (Second) of Conflict of Laws. In doing so, it held that California’s interest in “protecting the rightful owners of fine arts who are dispossessed of their property” was subordinate to Spain’s interest because, inter alia: (a) Spain used significant public funds to purchase the painting; (b) the Foundation had possessed the painting for the significant period of time; (c) there was evidence to suggest Spanish law would govern the effect of the transfer under the agreement; and (d) the painting was purchased and has remained in Spain.

The Cassirer family suggest that the difference between the federal court’s “most significant relationship” conflict rule and California’s three-step “governmental interest” conflict rule is significant in the sense it would have led the Ninth Circuit to apply California substantive law, which posits that “thieves cannot pass good title to anyone, including a good faith purchaser.” In other words, the application of the California conflict rule would have likely resulted in the Cassirer family being granted title to the painting.

ISSUES ON APPEAL

The consequential issue for the Supreme Court is which conflict rule the Ninth Circuit (and all federal courts) should apply to claims under the FSIA.

Perhaps the most compelling argument in favor of applying state conflict rules is that the application of the federal conflict rule to claims under the FSIA is said to be contrary to the text of the FSIA, which relevantly states “the foreign state shall be liable in the same manner and to the same extent as a private individual under like circumstances” (28 U.S. Code § 1606). This is the primary argument of the Petitioners, supported in the amicus brief of 14 Professors of Law. To put this in context, if a foreign private individual was sued on similar grounds, the matter would be heard in state court or in federal court based on diversity jurisdiction. In either scenario, it is long accepted that the court will apply state conflict rules. The argument continues that the only way a foreign state (or instrumentality) can be liable in the “same manner” to the “same extent” as a private individual under the FSIA is to apply the state’s conflict rules.

The role of federal common law and its application under the FSIA and beyond is also said to implicate: foreign relations (as the proper interpretation of the FSIA will influence foreign relations, the Supreme Court should provide clear guidance on this issue); federalism (a federal court’s application of state conflict rules is intrinsically connected with a state’s ability to make policy); the separation of powers (the creation and application of federal conflict rules concerns the expansion of federal law and implicates the separation of powers), and the twin aims of Erie (i.e. the “discouragement of forum shopping and avoidance of inequitable administration of the laws”).

The Foundation’s merits brief and the Cassirer family’s reply brief are still to be filed.

James Anson-Holland is an LLM Candidate at New York University, where he attends with the assistance of a Dean’s Graduate Award.