Holocaust-Looted Art: A Changing Legal Landscape

In recent months, the United States federal courts have grappled with a spate of cases addressing the restitution of Nazi-looted art. Arguably the best-known of these cases, United States of America v. Portrait of Wally, involving a painting by Egon Schiele, was settled in July 2010 by way of an amended Stipulation and Order filed in a New York federal district court. The terms of settlement provided for the release by the Bondi Jaray Estate of its claim to the painting in favour of the Leopold Museum in Vienna. In return, the Museum was required to pay the Bondi Jaray Estate US$19m for title to, and possession of, the painting. In addition, the Museum is required to display signage wherever the painting is exhibited setting forth the painting's history – including its litigation, which dates from January 1998.

The well-publicised – and justly celebrated – settlement of Portrait of Wally is one example of the recent cases which serve boldface notice that the United States government does not condone the trafficking within its borders of art looted by the Nazis. Another such case, Bakalar v Vavra1, which is ongoing, has, in its choice of law determination, effectively changed the legal landscape in the Second Circuit to favour aggrieved original owners of Nazi-looted art and such owners' heirs.

Bakalar also involves a Schiele: an erotic picture of a headless woman brushed on paper with opaque paint, Seated Woman with Bent Left Leg (Torso) (the 'Watercolour'). In this suit, it is alleged that Fritz Grünbaum, a satirical cabaret artist who fled Berlin for Austria in the hope of escaping Nazi reprisals, owned a collection of 449 artworks, including 81 works by Egon Schiele, which he kept in his apartment in Vienna. In 1938, days after the Anschluss, Grünbaum was arrested and imprisoned by the Nazis in Dachau. That same year, while in Dachau, he was made to sign a power of attorney authorising his wife Elisabeth to represent him in all his affairs, including listing and filing with the government a statement of his assets and property, as was required by the Reich of all Jews living within its borders.

The Nazis then used the information to impose confiscatory taxes and penalties on Grünbaum and compelled Elisabeth to dispose of Grünbaum's assets to pay the imposed taxes and penalties.

In 1941, Grünbaum died in Dachau. In 1942, Elisabeth Grünbaum was arrested by the Nazis and died shortly thereafter in a concentration camp in Minsk.

In 1956, the...