Altmann v Austria: A Restitution Case End to End

A request, not a bequest

Ferdinand Bloch-Bauer was a Viennese sugar industrialist whose principal residence held six paintings by Gustav Klimt, two of them portraits of his wife Adele. Adele made a will on 19 January 1923 and died two years later. The clause that would be argued over for the following eight decades asked her husband, after his death, to bequeath the Klimts to the Austrian Gallery.

The legal character of that clause is the whole case. Adele did not own the paintings; Ferdinand did. A request addressed to a surviving spouse is not a disposition of the testator's property, and the Supreme Court's statement of facts records that Ferdinand never executed any document transferring ownership to the Gallery and remained the paintings' sole legitimate owner until his death. He fled Austria after the annexation of March 1938 and died in Switzerland on 13 November 1945. His will left his entire estate to a niece, Maria Altmann, a second niece and a nephew.

Everything that follows is an argument about whether a precatory request in the will of a non-owner could be converted, by administrative practice and a lawyer's signature, into a transfer of title.

Fuehrer, and then the export permit

After the annexation the six Klimts came into the hands of Dr Erich Fuehrer, a Nazi lawyer. He sold two to the Austrian Gallery in 1941 and a third in 1943, retained one for himself, and sold another to the Museum of the City of Vienna. One of the 1941 acquisitions reached the Gallery with a covering letter from Fuehrer signed Heil Hitler. The Gallery's own archive held that letter.

In 1946 Austria enacted a law declaring Nazi-motivated transactions void. It also maintained a prohibition on the export of culturally important works without official permission, and the Supreme Court's opinion records the allegation that the Gallery and the Federal Monument Agency adopted a practice of pressing Jewish owners to donate or trade valuable artworks in exchange for permits to export the remainder of their property. In January 1948 Maria Altmann's brother Robert instructed a Viennese lawyer, Dr Gustav Rinesch, to recover Ferdinand's estate. The Gallery answered that Adele had bequeathed the paintings to it, which was untrue. Later that year Rinesch signed a document acknowledging Ferdinand's declaration that on his death he wished to follow his late wife's wishes and donate the Klimts. The opinion records that Rinesch had no permission from Maria Altmann either to negotiate on her behalf or to allow the Gallery to obtain the paintings.

The 1946 voiding statute and the export regime therefore worked against each other. One declared Nazi transfers void; the other gave the state a lever over every owner who wanted to take anything out of the country. The second was the operative one.

1998: the archive opens, Austria says no, and Vienna is priced out

An Austrian journalist examining the Gallery's archives found evidence that Gallery officials had known the paintings were never donated. Publication followed, including of the Fuehrer letter. Austria then enacted the Art Restitution Act of 4 December 1998, which allowed individuals who had been coerced into donating artworks to state museums in exchange for export permits to reclaim their property. Maria Altmann applied immediately.

The Austrian committee agreed to return certain Klimt drawings and some porcelain. It declined to return the five paintings, concluding that Adele's will created a binding obligation. That conclusion is the mirror image of the reading later set out in the American statement of facts, and it is the reason the case left Austria. A restitution statute had been passed, the archive had been opened, the coercive practice had been publicly documented, and the claim was refused anyway.

Altmann announced that she would sue in Vienna. Austrian court costs are calculated as a proportion of the value of the recovery sought. On paintings of this value the filing cost would have run to several million dollars. The court granted a partial waiver of costs, which still left approximately USD 350,000 payable before the action could proceed. The Austrian government appealed against even the partial waiver. Altmann dismissed her suit.

This is the least discussed and the most transferable part of the case. A claimant's operative question is not whether the claim is good but whether any tribunal will hear it at a price the claimant can pay. Austria legislated a restitution right in 1998 and left standing a fee rule that removed its own courts from the reach of the most valuable claims. No provision of the Washington Principles addresses court fees, and none of the national commissions built after 1998 was designed to.

What the Supreme Court decided, and what it did not

Altmann sued in the United States District Court for the Central District of California. She relied on the expropriation exception to the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. section 1605(a)(3), which withdraws immunity in cases in which rights in property taken in violation of international law are in issue, where the property or its owner has the required commercial connection to the United States. Austria and the Gallery, an instrumentality of the state, moved to dismiss on immunity, arguing that in 1948 they would have enjoyed absolute immunity from American courts and that nothing in the 1976 Act retroactively divested them of it.

The district court rejected that argument and the Ninth Circuit affirmed, reasoning that Austria could not legitimately have expected immunity in 1948 for the conduct alleged, and citing the State Department's expressed policy as of 1949 of relieving American courts from any restraint upon the exercise of their jurisdiction to pass upon the validity of the acts of Nazi officials. On 7 June 2004 the Supreme Court affirmed by six votes to three. Justice Stevens, for the majority, held that the Act applies to conduct occurring before its enactment in 1976 and before the United States adopted the restrictive theory of sovereign immunity in 1952, reasoning that immunity from suit is present protection rather than a rule by which a state shapes past conduct. Justice Scalia concurred on the narrower ground that the relevant date for retroactivity analysis is when judicial power is invoked. Justice Breyer, joined by Justice Souter, concurred more broadly, noting that limitation periods, personal jurisdiction, the act of state doctrine and executive statements of interest already guard against unfairness. Justice Kennedy, joined by Chief Justice Rehnquist and Justice Thomas, dissented, arguing that the majority weakened the presumption against retroactive application and would draw executive influence back into immunity determinations.

The judgment established that Austria could be sued in an American court. It established nothing whatever about who owned the Klimts. Commentary that treats 2004 as the year Maria Altmann won the paintings has skipped the only stage at which ownership was ever adjudicated.

Three arbitrators in Vienna decided the thing itself

In May 2005 the parties agreed to terminate the American litigation and submit the dispute to arbitration in Austria. Each side appointed an arbitrator and the two appointed a third. In January 2006 the panel held that Austria was obliged to return five paintings: the two portraits of Adele, the birch forest landscape catalogued variously as Birkenwald and Buchenwald, Houses at Unterach on the Attersee, and Apple Tree I. Portrait of Amalie Zuckerkandl was dealt with separately and was not returned.

The University of Geneva's ArThemis case note, which is otherwise the most useful single account, records the two arbitral decisions as January and May 2004. Those dates cannot be reconciled with a Supreme Court judgment of June 2004 and an arbitration agreement of May 2005, and contemporaneous reporting from Vienna places the award of the five paintings in January 2006. The 2004 dates in that entry should be treated as an error until the award itself is consulted.

The mechanism deserves to be named exactly, because it recurs. A claim that could not be afforded in the Austrian courts, and that an Austrian administrative committee had rejected in 1999, was upheld seven years later by three Austrian arbitrators applying Austrian law. The law of Austria had not changed in the interval. What had changed was that the state had been brought to a forum it could not exit, and had then chosen the forum it preferred.

What the market did with them, and how to read the figures

Portrait of Adele Bloch-Bauer I was sold privately in June 2006 to Ronald Lauder for the Neue Galerie in New York for a reported USD 135 million, at the time the highest figure reported for any painting. The other four went to Christie's in New York in November 2006. The ArThemis note records the results as USD 87.9 million for Portrait of Adele Bloch-Bauer II, USD 40.3 million for the birch forest, USD 33 million for Apple Tree I and USD 31.4 million for Houses at Unterach, a total of about USD 192.6 million.

Three cautions apply, and they apply generally. The ArThemis note does not state whether its auction figures are hammer prices or premium-inclusive totals; results at this level are normally published inclusive of buyer's premium, so they should be read as totals rather than as bids until the sale record itself is checked, and any account that treats USD 87.9 million as what the buyer bid has conflated two different numbers. The USD 135 million is a reported private sale price, which means a figure that neither party was obliged to publish or to verify. And all of these are United States dollars of 2006: a conversion into any other currency, or into present value, is a derived number that changes with the date chosen for it.

The restitution and the sales are frequently discussed as a single event, as though the second proved something about the motives behind the first. They are separate. The arbitrators decided title on the documents. What an owner then does with a painting is a matter for the owner.