January 17, 2024

 On January 9, 2024, the U.S. Court of Appeals for the Ninth Circuit decided that Madrid’s Thyssen-Bornemisza museum (TBC Foundation) rightfully owns Camille Pissaro’s painting “Rue Saint Honoré, après midi, effet de pluie” (“Rue Saint Honoré, Afternoon, Rain Effect”). The artwork was stolen by the Nazis in 1939 from Lilly Cassirer, who was forced to sell it for 900 Reichsmarks (around $360) to pay the flight tax to escape Nazi Germany. As described in a recent Sullivan & Worcester blog post detailing the case and the Ninth Circuit’s ruling, the Pissaro passed through several owners until 1993, when the TBC museum bought the painting from Baron Hans Heinrich Thyssen-Bornemisza, where it has been on display since.

The lawsuit, initiated in 2005 by Cassirer’s heirs against Spain and the TBC Foundation as an “instrumentality” of Spain, invoked the Foreign Sovereign Immunities Act (FSIA). The FSIA outlines the exclusive conditions allowing a foreign sovereign or instrumentality to face legal action in a U.S. court. The Cassirers relied on the FSIA’s expropriation exception, which grants jurisdiction over claims related to “rights in property taken in violation of international law.” Since the case involves parties and subject matter in different jurisdictions, the court must initially determine which body of law to apply in analyzing a specific case. In 2019, the Ninth Circuit, using a federal court test to choose applicable law, ruled that Spanish law should apply. The Cassirers appealed and the U.S. Supreme Court reversed in 2023, holding that under federal jurisdiction principles, the court should have applied California’s choice of law rule. Back in the Ninth Circuit, the court had to decide, under California’s choice of law rule, which law (Spanish or California) should apply.

As the Sullivan & Worcester blog post explains, that question was critical because of the conflicting bodies of law. On the one hand, California law holds that a thief cannot convey good title. So, if the Nazi regime compelled Lily Cassirer to sell the Pissarro (which is undisputed), no one after that first sale in the chain of title would get good title (without some intervening event). Therefore, if California law applied, the transfers from the Nazi regime’s forced sale, eventually to the TBC, would all have carried that title defect, and the Cassirer family would prevail. On the other hand, Spanish law allows for prescriptive title. Prescriptive title means that an acquirer can obtain valid title even over the true owner by holding it long enough and under circumstances that the true owner could know of or be expected to object. Under these circumstances, TBC held the painting long enough to acquire valid title through prescriptive title and so if Spain’s law applied, TBC would win.

Under California’s choice of law rule, the question is which law would be impaired to a greater degree if the other law applied (also known as a comparative impairment analysis). In other words, would California be harmed more if Spanish law applied, or would Spain if California’s law were applied? Here, the Ninth Circuit held that Spain would suffer the greater impairment because Spain’s interest in providing “certainty of title” to its museums outweighed California’s interest in deterring theft and obtaining recoveries for victims of stolen art who live there. Therefore, applying Spanish law, the Ninth Circuit held that the TBC acquired good title after holding the painting for long enough that prior claims were extinguished.

To read how Castaybert PLLC can help with art law matters, click here.

June 23, 2023

Kaye Spiegler PLLC just published a helpful article about the most prominent legal disputes of art and antiquities in the United States in The Art Law Review. The article focuses on landmark cases and laws relevant to the United States.

The main art-law related concerns discussed include:

• Issues of title defects in art sales and transactions.
• The differing statute of limitation periods depending on the type of art law claim being pursued.
• Claims for repatriation of Nazi-looted art.
• The lack of a formalized alternative dispute resolution forum for art restitution in the United States, whereas most European nations have implemented such forums.
• The landmark Federal Republic of Germany v. Philipp case in 2021 which granted restitution of the medieval-era Guelph Treasure to its rightful owners from a German agency.
• The Civil Asset Forfeiture Reform Act of 2000 (CAFRA) which aims to prevent the trade of looted and illicit antiquities.

To read the full article from Kaye Spiegler PLLC, click here.

To read how Castaybert PLLC can help with art law matters, click here.

August 9, 2022 — Last summer, the New York City Council voted to deregulate the city’s art market, purportedly as part of a broader attempt to revive its flagging businesses after the coronavirus pandemic. Those new rules, contained in a larger package known as Local Law 80, came into effect June 15^th, 2022. They could have significant and far-reaching implications for the international art market.

Under the new rules, auction houses:

• No longer require a license;
• No longer need to disclose “irrevocable bids;”
• No longer need to disclose their own financial interest in a lot nor that of a third-party;
• May engage in “chandelier bidding,” taking fictitious bids until the demand for a work reaches the reserve price.

According to the New York Times, Christie’s and Philips auction houses have said that they will continue to operate with the old rules in mind, while Sotheby’s declined to comment. Tamara Bell, a lawyer at Charles Russell Speechlys, notes that these changes to the legal requirements imposed on New York City’s auction houses “came out of the blue and without consultation.”

To read more about New York City’s changes to art market regulations, click here, here, and here.

To read more about how Castaybert PLLC can help you navigate art law, click here.

October 18, 2021-

Sullivan & Worcester highlight proposed regulations of the antiques and art markets in their latest article about the Treasury Department’s Financial Crimes Enforcement Network notice of proposed regulations from September 24^th. The notice highlights amendments to the Bank Secrecy Act and the crackdown on money laundering in the antiquities market, pursuant to the Anti-Money Laundering Act (AMLA) of 2020.

Since it passed some nine months ago, FinCEN has remained largely silent on potential draft regulations for the AMLA, passed as part of the National Defense Authorization Act. Now, with only three months until the 2021 deadline for a draft, they are ready to tackle some substantive questions in consideration of those regulations, mainly, how ancient is ancient enough? So far, neither the AMLA, not FinCEN’s notice provided a definition for “Trade in Antiquities.”

In addition to their consideration of how the critical term is defined, they are seeking input on a number of other things, including:

• Application of the Bank Secrecy Act to the trade in antiquities
• Potential for money laundering, through terrorist financing and other illicit activity
• Roles, responsibilities, and activities of persons engaged in trade in antiques
• Information typically exchanged
• Breakdown of certain kinds of transactions
• Interaction (including payment from overseas actors)
• Which participants are best positioned to guard against money laundering?
• What regulations, including thresholds and possible exemptions, should FinCEN consider?

Regulators are scrambling to meet their deadline by the end of the year, and it will prove to be an interesting few months as they consider what regulations to impose on the art and antiquities market.

To read the full article from Sullivan & Worcester by Nicolas O’Donnell, click here.

To read the Treasury Department’s Financial Crimes Enforcement Network’s notice of proposed regulations, click here.

To read how AC-Counsel can assist you with matters of Art Law, click here.

March 12, 2021 –As art shows and galleries move online because of the Coronavirus Pandemic, novel issues arise with how artist’s work is displayed digitally. Recently, painter Pat Lipsky sued the Spanierman Gallery under New York Artists’ Authorship Rights Act for allegedly damage to her reputation as a prominent visual artist. New York Artists’ Authorship Rights Act protects both  original works of art and their reproductions. Lipsky argued that she is well known for using bold colors, and the online image distorted the bright colors to look dull, allegedly in order to conceal damage on an unpainted part of the canvas. The gallery did not appear in the litigation, so Lipsky won her case in a Default Judgement; the gallery will no longer be allowed to display the digitally altered image of her work. Find the Full Decision here

Find the Full Article Here (here)  Learn about how CASTAYBERT PLLC  can assist you with your art insurance and other art-related legal needs, visit here.

April 3rd, 2019

The Panama Papers – which were 11.5 million leaked files by a Panamanian law firm – revealed the ways offshore shell companies are used to store and transfer assets outside of legal regulations. The surprise that came with this leak was the revelation of the secrecy surrounding the sale and purchase of art. Specifically, the leak exposed the use of art sales to evade taxes and launder money.

In response to this, lawmakers are working on legislation to combat the art market’s potential for money laundering and terrorist financing. Last year the European Union passed the Fifth Money Laundering Directive which extends reporting requirements for banks to transactions involving works of art. The United States Congress proposed similar legislation called the Illicit Art and Antiquities Trafficking Prevention Act in the House last year. Art dealers have expressed concern over the burden these regulations will pose as well as their potential chilling effect on the purchase of art overall.

For an in depth look at this legislation and its potential effects, check out this article by The New York Law Journal.

For more information on Castaybert PLLC’s experience in Art Law, click here.