Taylor Wessing Budapest Successful for Hungarian State in US Supreme Court

Taylor Wessing Budapest Successful for Hungarian State in US Supreme Court

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Taylor Wessing Budapest, working with lawyers from America's Nixon Peabody law firm, has helped persuade the United States Supreme Court to uphold a lower court's ruling that US courts lack jurisdiction over the Hungarian State in a lawsuit involving the attempted restitution of artworks that once belonged to the Herzog Collection. The Court published its decision on January 7, 2019.

According to a summary provided by Taylor Wessing, "the fate of the enormously valuable Herzog-estate has long been a subject of fascination among art-lovers and restitution law experts alike. The eight-year-long lawsuit, which seems to be reaching its conclusion by the decision published this Monday, was initiated against the Hungarian State and four state-owned institutions by US and Italian descendants of the Jewish art collector baron Mor Lipot Herzog, for the restitution of 44 artworks currently forming part of Hungarian public collections. The court’s decision may finally close the saga concerning artworks by masters such as El Greco, Zurbaran, Ribot, Corot, and Courbet.

Plaintiffs brought their claim before the United States District Court for the District of Columbia for the restitution of the artworks in 2010 .... The lawsuit, which is especially important from the perspective of Hungary’s sovereignty, raised the central question of whether – under US law – the jurisdiction of US courts can be established over Hungary in connection to property located abroad. In Hungary’s view, due to their close connection to the country’s 20th century history, the Herzog-heirs’ claims should be decided by the courts of Hungary, as had already been the case for several of the artworks.

Following a lengthy legal battle, in 2017 the U.S. Court of Appeals for the District of Columbia Circuit accepted the defendants’ reasoning, according to which – in order to establish US jurisdiction – a much stronger connection must be shown between the object of the lawsuit and the United States than what could be found in the present case. In the court’s opinion a foreign state can only be tried before US courts in restitution cases if the asset to be restituted is located in the United States.

This decision prompted the plaintiffs to turn to the Supreme Court of the United States, the land’s highest judicial body. In addition to the invitation of the US Solicitor General to submit its views about the jurisdictional issues raised, the importance of the case is also indicated by the number of third parties who decided to share their opinion with the court. Ultimately, the Supreme Court followed the US Solicitor general’s recommendation and rejected the plaintiffs’ petition, thereby upholding the lower court’s decision that confirmed the immunity of the Hungarian State. Although the lawsuit may continue against the museums holding the artworks, the legal viability of such an action is more than doubtful.

This success ... is not only decisive in relation to the fate of the Herzog-estate, but is also a crucial development from the aspect of the sovereignty of Hungary as well as other states that are sued before US courts with restitution claims.

The Taylor Wessing Budapest was led by Partner Zoltan Novak, who leads the firm's Dispute Resolution practice. He explained of the Court's ruling that: “the decision severely restricts US jurisdiction in restitution claims brought against foreign sovereigns. Although it stops short of generally preventing the adjudication of such cases in the US, the most important US courts will be precluded from exercising jurisdiction in restitution lawsuits against foreign states. In the future, most of these claims will have to be litigated before the courts of the country accused of the wrongdoing."

The Nixon Peabody team was led by Partners Thaddeus Stauber and Sarah Andre.