Editor’s Note: This article is part of a collaboration between the Harvard Art Law Organization and the Harvard International Law Journal.
Weitong Shan*
On 6 June 2024, the New York Supreme Court dismissed a restitution claim against the Solomon R. Guggenheim Foundation. The lawsuit, brought by the heirs of German Jewish collectors Karl and Rosi Adler in 2023, sought the restitution of Pablo Picasso’s painting La Repasseuse (1904) (“Painting”). The heirs claimed that Adler had been forced to sell the painting under duress in 1938 while fleeing Nazi persecution as part of a desperate fund-raising effort due to the Nazi’s confiscation of Adler’s assets. They alleged that Justin Thannhauser, who bought the Painting in 1938 from Mr. Adler, was aware of the Adlers’ plight and profited from their misfortune, and in the absence of the Nazi persecution, Mr. Adler would not have sold the Painting for $1,552 despite the value appraised at $14,000 in 1931. The plaintiffs demanded either its return or commensurate compensation of $100 million to $200 million.
The Painting was a bequeath of Thannhauser to the Guggenheim. In 1963, the New York Times ran a full-page article announcing that Thannhauser was to bequeath his collection, including the Painting, to the Guggenheim, and prominently featured a photograph of the Painting. In 1974, before receiving the Painting while Thannhauser was still alive, the Guggenheim contacted the Adlers as a part of the provenance studies. Eric Adler, the eldest son of Karl Adler, responded a few weeks later without indicating, explaining, or mentioning that the Painting had been sold under duress to Thannhauser, nor did he suggest anything remotely untoward about its disposition or otherwise make the demand for its return. The plaintiffs alleged that it was not until November 2013 that they first learned that they might have a possessory interest in the Painting.
The Court dismissed the claim on two grounds: the equitable doctrine of laches, and the failure of the plaintiffs to show economic or third-party duress. This decision raises complex legal questions surrounding the restitution of stolen art and historical injustices.
Legal Issues
The equitable doctrine of laches
On 16 December 2016, the Holocaust Expropriated Art Recovery Act (‘HEAR Act’) was signed into law to revive claims otherwise barred by the statute of limitations, enabling Holocaust victims and their heirs to pursue justice and reclaim property unlawfully and inhumanely taken from them. Sec. 5(a) of the HEAR Act establishes that, regardless of any Federal or State law or time-related legal defenses, a civil claim to recover artwork that was lost due to Nazi persecution may be filed within six years of the claimant or their agent discovering the identity and location of the artwork or property and the claimant’s possessory interest in it.
The Court did not address the issue of whether the plaintiffs’ claims were timely. Instead, it invoked the equitable doctrine of laches, as the HEAR Act explicitly precludes the application of “defense[s] at law relating to the passage of time” but does not interfere with the application of defenses at equity. It has been established that laches is appropriate where the delay results in deceased witnesses, faded memories, lost documents, hearsay testimony of questionable value, and the injustice of having to defend under these circumstances. The Court followed the decision in Zuckerman v Metro. Museum of Art, where the Second Circuit explicitly held that laches is an available defense to claims revived under the HEAR Act. In Zuckerman, similarly, the Leffmans sold their property to corporations without direct Nazi intervention in these sales. Neither the Leffmans nor their heirs made a demand for the artwork until 2010 despite their pursuit in other claims for their Nazi-era losses and their knowledge of the identity of the buyer. Consequently, the Second Circuit found the claim to be unduly delayed.
In contrast, the Court distinguished the present case from Reif v. Nagy, where the heirs were awarded ownership of property. Duress was found to taint the chain of title due to direct Nazi involvement in the transaction. The doctrine of laches did not bar recovery because the then-current owner acquired the artworks in 2013 at a substantial discount and specifically insured these artworks against the title claims in light of their blighted provenance. These specific facts indicated that the plaintiff suffered no change of position, loss of evidence, or other disadvantages resulting from the delay.
Economic or third-party duress
The Court ruled that a contract may be voided for economic duress if the complaining party was compelled to agree to its terms by a wrongful threat that deprived them of free will. However, general economic conditions, even the severe economic pressures felt during the undeniably horrific circumstances of the Nazi regime, are insufficient to establish duress if the counterparty had no role in creating those pressures. There is no indication in the Complaint that the Thannhausers were associated with the Nazi regime, collaborated with the Nazis, or were in any way linked to Nazi atrocities, and the plaintiffs conceded during oral arguments that they were not.
The claim of third-party duress also failed because the plaintiffs did not allege that Thannhauser was aware of or consented to any direct consequences tied to the failure to sell the Painting at the agreed but below-market-value price. In other words, there was no specific threat of harm contingent on Adler declining to sell the painting to Thannhauser
Analysis of the Case and Broader Implications
In terms of the laches defense, although a few courts, including the current one, have upheld its applicability, the growing number of cases concerning sales under Nazi persecution, rather than art directly confiscated by the Nazis, may provoke future disputes involving this defense. The reasonability of the laches defense remains contentious, as it arguably undermines the scope of the HEAR Act, which was intended to enhance protections for victims of Nazi persecution in line with the legally non-binding 1998 Washington Conference Principles and the 2009 Terezin Declaration. The Washington Conference Principles to achieve a “just and fair solution” for issues relating to Nazi-confiscated art.11 Washington Conference Principles on Nazi-Confiscated Art, released in connection with the Washington Conference on Holocaust Era Assets, Washington, DC, December 3, 1998, https://www.state.gov/washington-conference-principles-on-nazi-confiscated-art/ (last accessed 9 Feb 2025), paras. 8-9. Notably, the Terezin Declaration expanded on the Washington Conference Principles by broadening the concept of “Nazi-confiscated art” to include “sales under duress”.22 Terezin Declaration of 30 June 2009, released in connection with the Washington Conference on Holocaust Era Assets, Prague and Terezin, June 26-30, 2009, https://www.state.gov/prague-holocaust-era-assets-conference-terezin-declaration/ (last accessed 9 Feb 2025), “Terezin Declaration on Holocaust Era Assets and Related Issues,” para. 2; “Nazi-Confiscated and Looted Art,” Preamble. However, the general stance of U.S. courts in interpreting the HEAR Act—where only defenses at law related to the passage of time are set aside, while equitable defenses remain unaffected—suggests that the courts have understood the HEAR Act in a restrictive manner. Furthermore, Congress’s decision to sunset the HEAR Act on January 1, 2027, around the time when most Holocaust survivors can reasonably be expected to have passed away, may also reflect concerns about the potential for heirs to bring claims indefinitely and the need to limit the scope of the HEAR Act.
Despite adhering to the general stance of previous courts on the laches defense, the Bennigson Court was slightly less reluctant to address the duress issue. It thoroughly considered the third-party duress claim as a matter of law, a factor that was absent in previous cases. This judgment thus offers guidance for future litigation involving Nazi-era takings and wartime transactions. That said, the decision also signals a bleak outlook for the applicability of third-party duress claims, as New York law sets a high threshold for proving a third party’s awareness of the duress.
The restrictive application of the HEAR Act and the reticence in domestic law on substantive issues regarding the implementation of international initiatives on Nazi-confiscated art stand in sharp contrast to Europe’s more pro-victim stance. In Europe, State practices in the context of sales due to persecution are significantly influenced by international soft-law instruments.
For instance, the heirs of Curt Glaser, a Jewish art historian who sold his collection before fleeing Germany in 1933, brought claims against both European and American institutions. Glaser sold most of his art in two auctions when he was forced out of his home after being removed from his job at the Berlin State Library. In Switzerland, the heirs of Glaser requested the Kunstmuseum Basel to restitute two lithographs by Edvard Munch. Initially, in 2008, the government of the Canton of Basel City and the Kunstmuseum Basel rejected the claim. However, in 2017, the heirs petitioned the Canton of Basel City to re-examine the case. Following this review, the Kunstmuseum Basel announced in 2020 that the parties had reached an agreement: It was acknowledged that the involuntariness of the ownership transfer and the extent of the duress remained unclear, and the Kunstmuseum Basel was found to have acted lawfully in acquiring Glaser’s works. Nevertheless, in the spirit of the Washington Conference Principles, the museum and the heirs agreed on a “just and fair solution” that the Kunstmuseum Basel held an exhibition honoring Glaser and provided financial compensation to his heirs. In the proceedings brought by the heirs of Glaser before the Dutch Restitutions Committee, the Committee advised in 2010 that the State Secretary for Education, Culture, and Science grant the restitution of the painting in question to Glaser’s heirs. This decision was guided by the third recommendation of the Ekkart Committee, which presumes that sales by Jewish private owners in Germany from 1933 onwards are involuntary unless expressly proven otherwise. The Committee concluded that the sale should be considered involuntary, as it is likely that Glaser was unable to freely dispose of the proceeds from the auctions. Due to the circumstances of the time, he probably had to use the funds to finance his escape to the United States and to pay the exit taxes imposed by the Nazis.
By contrast, in the United States, both the Metropolitan Museum of Art and the Museum of Fine Arts, Boston, rejected the claims of Glaser’s heirs despite the fact that the artworks were sold in the same auctions. The museums argued that there was insufficient evidence to prove that Glaser sold his artworks under duress, suggesting that his decision to sell could have been influenced by other personal factors unrelated to duress, especially considering the transaction price was considered fair according to their research. However, even when the price was apparently unfair, as is the circumstance in the Bennigson case, it is concluded that third-party duress cannot be established. Due to the lack of alternative dispute resolution mechanisms for Nazi-looted art, such as the restitution panels used in Europe that offer more flexible solutions, claimants in the U.S. are left to seek restitution through the courts. However, the legally non-binding international instruments have a very limited impact on the decision of the U.S. courts, which is often attributed to the private status of the current possessors of these artworks in the U.S. in contrast to the public nature of State-owned museums in Europe. As the Second Circuit stated in Zuckerman, a “just and fair solution” includes considering justice for the defendant as well.
Nevertheless, the dismissal of the Bennigson case does not signal the end of litigation regarding sales of property due to Nazi persecution. In the Bennigson case, the plaintiffs did not provide evidence and conceded on whether the purchaser was aware of or consented to the consequence of failing to sell the artwork, leaving it uncertain whether the outcome might differ if more substantive arguments were presented. Each case involving Nazi-looted art presents its own unique set of circumstances, and it remains to be seen how courts will ultimately define the parameters of duress claims in such cases when more facts come to light.
- Washington Conference Principles on Nazi-Confiscated Art, released in connection with the Washington Conference on Holocaust Era Assets, Washington, DC, December 3, 1998, https://www.state.gov/washington-conference-principles-on-nazi-confiscated-art/ (last accessed 9 Feb 2025), paras. 8-9.
- Terezin Declaration of 30 June 2009, released in connection with the Washington Conference on Holocaust Era Assets, Prague and Terezin, June 26-30, 2009, https://www.state.gov/prague-holocaust-era-assets-conference-terezin-declaration/ (last accessed 9 Feb 2025), “Terezin Declaration on Holocaust Era Assets and Related Issues,” para. 2; “Nazi-Confiscated and Looted Art,” Preamble.