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This blogpost is written by Stichting IJI (The Hague Institute for private international law and foreign law)

On 13 June 2023 the Amsterdam Court of Appeal addressed the scope of Regulation (EU) 2016/1103 of 24 June 2016 implementing enhanced cooperation in the area of jurisdiction, applicable law and the recognition and enforcement of decisions in matters of matrimonial property regimes (hereinafter: Regulation 2016/1103) (ECLI:NL:GHAMS:2023:1358).

The court had to rule on the matter of jurisdiction regarding the division of real estate located in New Zealand between parties who had agreed upon the exclusion of marital property. In this post, we will discuss the court’s assessment of the substantive scope of Regulation 2016/1103 with regard to the jurisdiction of the Dutch court.

Regulation 2016/1103: Overview

Regulation 2016/1103 entered into application on 29 January 2019 following the objective of certain Member States to establish a more enhanced cooperation between themselves aimed at adopting common rules on jurisdiction, applicable law and the recognition and enforcement of decisions with regard to property regimes of international couples, covering both marriages and registered partnerships.

The Regulation has been adopted under the special regime of enhanced cooperation, as provided for by Article 20 of the Treaty on European Union (TEU) and Articles 326 to 334 of the Treaty on the Functioning of the European Union (TFEU). The territorial scope of the Regulation is therefore limitedly binding for the Member States participating in this cooperation.

According to Article 69 of Regulation 2016/1103 the regulation applies only to legal proceedings instituted, to authentic instruments formally drawn up or registered and to court settlements approved or concluded on or after 29 January 2019.

Its substantive scope should include all civil-law aspects of matrimonial property regimes, both the daily management of matrimonial property and the liquidation of the regime, in particular as a result of the couple’s separation or the death of one of the spouses. For the purposes of the Regulation, the term ‘matrimonial property regime’ should be interpreted autonomously and should encompass not only rules from which the spouses may not derogate but also any optional rules to which the spouses may agree in accordance with the applicable law, as well as any default rules of the applicable law. It includes not only property arrangements specifically and exclusively envisaged by certain national legal systems in the case of marriage but also any property relationships, between the spouses and in their relations with third parties, resulting directly from the matrimonial relationship, or the dissolution thereof (Recital 18).

The Facts

The parties involved in this case got married in New Zealand in 1993. At that time, both parties had the Dutch nationality. Additionally, the woman had also the New Zealand citizenship. The parties lived in New Zealand and three children were born during their marriage.

Before marriage, the parties drew up prenuptial agreements in the Netherlands. The parties chose to apply Dutch law to their marital property and, regarding their marital property regime, decided on the exclusion of community of property in accordance with Dutch law.

On 31 March 1999 the man purchased a house in New Zealand. The parties lived in this accommodation from 2000 to 2008 with their three children. In 2007 the man paid off his mortgage on this property. Before relocating to the Netherlands, the parties drew up a ‘property agreement’ with regards to the house, stating that the parties were now co-owners of the property. This was necessary as the applicable Dutch marital property regime of the exclusion of community of property would not result in co-ownership over the property. In the property agreement the parties agreed on the following:

(…)

BACKGROUND

(…)

1. 1976. The parties wish to record their agreement as to the ownership of the home pursuant to Section 21(2) of the Property (Relationships) Act 1976.

AGREEMENT TERMS

1. 1. The husband declares that the home is relationship property.
   2. As from the date of this agreement the husband and the wife shall own the home as joint tenants and the husband declares that he now holds ownership of the home, as registered proprietor, as trustee for the husband and the wife accordingly.
   3. (…)
   4. Ownership of the home, and any transfer, is subject to all existing registered encumbrances, but the mortgage to the ASB Bank is to be discharged, as it has been repaid in full.
   5. This agreement is made pursuant to Section 21(2) of the Property (Relationships) Act 1976 and is specific to the home and is not attempting to determine ownership of any other property (separate or relationship) which may also be owned by the husband and/or the wife, nor does it otherwise effect the pre-nuptial agreement signed by the parties prior to their marriage.
   6. This agreement is binding on the parties in all circumstances including (…) dissolution of marriage (…).
   7. Each party:

(a) (…)

(b) acknowledges that before signing this agreement he or she has had independent legal advice as to the nature, effect and implications of this agreement.

(…)

The parties eventually got divorced on 18 November 2019 in the Netherlands.

First Instance Judgment

As an ancillary provision to the divorce petition the man requested the Amsterdam District Court to divide the property in New Zealand and to grant him compensation for his private investments in this property. The court retained itself competent to decide on this request based on Article 6 of Regulation 2016/1103. The court recognized the co-ownership of the property and applied Dutch law to the division of the property in line with the choice of law in the prenuptial agreement of the parties.

The court then ordered the sale of the property and ordered the woman to cooperate with that sale. If the woman would not cooperate, the court granted the man the power to act solely with regards to the sale of the property. In addition, the court ruled that both parties would share the revenue and would be held responsible for the costs regarding the sale. The woman appealed the court’s decision on the matter of the court’s competence and the applicable law to the division of the house.

Appeal Request

According to the woman, the Dutch court should have never considered itself competent under Article 6 (a) of Regulation 2016/1103 because that Regulation did not apply to the matter at hand. Accordingly, the Amsterdam District Court could not establish its jurisdiction based on the application of the Regulation.

According to the woman the parties shared no marital property in light of their prenuptial agreement. Therefore, the request regarding the division of the property could not fall within the scope of Articles 1 and 3 of Regulation 2016/1103. Instead, the woman argued that any community of property should be dissolved under “common” property law specifically related to proprietary rights and interests, since the marital property regime stipulated the full exclusion of community of property.

Court of Appeal Judgment

The Amsterdam Court of Appeal stated that with regard to legal claims in the field of international matrimonial property law that are brought on or after 29 January 2019, the Dutch court shall establish its jurisdiction on the basis of Articles 4 to 19 of Regulation 2016/1103. This applies even if the claim relates to a marriage that was concluded prior to this date. Materially, Regulation 2016/1103 covers “matrimonial property regimes” (Article 1(1) of Regulation 2016/1103). This includes all property relationships which, as a result of the marriage or its dissolution, exist between the spouses or in relation to third parties (Article 3 (1) (a) of the Regulation). The Court of Appeal then explained then the scope of the Regulation with regards to the property agreement at hand, as follows:

The parties entered into the Property Agreement in 2008. With this agreement the parties became co-owners of the property in New Zealand. Under subsection D of the Property Agreement, the parties recorded that they entered into the agreement “pursuant to Section 21(2) of the Property (Relationships) Act 1976.” It is further recorded under Section 5 of the Property Agreement that “This agreement is made pursuant to Section 21(2) of the Property (Relationships) Act 1976 and is specific to the home and is not attempting to determine ownership of any other property (separate or relationship) (…) nor does it otherwise effect the pre-nuptial agreement signed by the parties prior to their marriage.”

The Court of Appeal considered that the property agreement refers explicitly to the Property (Relationships) Act 1976. The Property (Relationships) Act 1976 pertains to the division of property of married couples (or cohabitating couples) in the event of divorce or death in New Zealand. In addition, the parties signed the property agreement as “husband” and “wife”. Thus, with the referral to the Act and the signing of the agreement in their official capacity as husband and wife, the parties had chosen to establish proprietary consequences through their marital status. With that in mind, the Court of Appeal established that the request for the division of the property in New Zealand falls within the scope of Regulation 2016/1103. Then, the Court of Appeal concluded that since the spouses were habitually resident in the Netherlands at the time the case was brought before the first instance court, the Dutch court had jurisdiction pursuant to Article 6 (a) of the Regulation. The fact that the property is established in New Zealand does not alter the foregoing.

Conclusion

This decision of the Amsterdam Court of Appeal clarifies the broad scope of Article 1 in relation with Article 3 of the Regulation 2016/1103 and Recital 18 of the preamble. Art 1(1) provides that this Regulation applies to matrimonial property regimes. This Article should be read in conjunction with Article 3(1)(a), which defines the notion of ‘matrimonial property regime’ as ‘a set of rules concerning the property relationships between the spouses and in their relations with third parties, as a result of marriage or its dissolution.’  The Court of Appeal explains in its decision that the Regulation 2016/1103 may apply even in cases where the marital property regime includes an exclusion of community of property. The exclusion of community of property might entail that an issue relating to assets of the spouses does not fall within the material scope of the Regulation. After all, it can be argued that there is no connection with the marriage of the persons concerned. However, if the spouses made an agreement with respect to a certain asset and opt for a property relationship as a result of – or in connection with – their marriage, the provisions of Regulation 2016/1103 may be applied for the division of such property.

As the Regulation is still quite young, it will be interesting to monitor rulings on similar subjects from the courts of the participating countries.

This post is part of a series regarding Colonialism and the general structure of (German) Private International Law, based on a presentation I gave in spring 2023. See the introduction here.

As mentioned in the introduction, this series does not intent to automatically pass judgment on a norm or method influenced by colonialism as inherently negative. Instead, the aim is to reveal these influences and to initiate a first engagement with and awareness of this topic and to stimulate a discussion and reflection.

The first post (after the introduction) dealt with classic PIL and colonialism. This second considered structures and values inherent in German or European law, implicitly resonating within the PIL and, thus, expanding those values to people and cases from other parts of the world.  The third category discusses an imagined hierarchy between the Global North and Global South that is sometimes inherent in private international law thinking. The fourth and for the moment last (but not least) category deals with PIL rules that allow or at least contribute to the exploitation of a power asymmetry between parties from the Global North and the Global South. For example, this power and negotiation asymmetry, in conjunction with generous rules on party autonomy, can lead to arbitration and choice of law clauses being (ab)used to effectively undermine rights of land use under traditional tribal law.

After the first post, in the comment section a discussion evolved regarding the (non-)application of tribal law. One question asked for an example. This post can also (hopefully) serve as such an example.

1. Party Autonomy in German and EU PIL

One value inherent to the German and EU legal systems is that of private and party autonomy. It reflects and expresses the individualism of the Enlightenment and a neo-liberal social order and is recognised today, at least in part, as one of the “universal values” of PIL. However, the choice of law and, thus, party autonomy as a core connecting factor or method of PIL can lead to the exploitation of negotiation asymmetries in the relationship between companies in the Global North and states or companies in the Global South, particularly to the detriment of the population in the Global South, by avoiding state control and socially protective regulations.

2. “Land Grabbing” as an Example

“Land grabbing” refers to, among other things, the procedure used by foreign investors to acquire ownership to or rights to exploit territories in former colonies. The contract is concluded with the landowner, often the state, and includes an arbitration and choice of law clause, often within the framework of bilateral investment protection agreements. The use of the land can conflict with the collective, traditional use by certain local groups, which is based on customary and tribal law. Such rights of land use were often only fought for politically after the former colony gained independence, while the original colonial legal system overrode indigenous rights of use (see also former posts here and see the  discussion in the comment section of the post). These land use rights of indigenous groups often stem from public law and are conceived as protection rights of the indigenous population, who are thus authorised to live on their traditional land.

The arbitration agreement and the choice of law clause make it possible for legal disputes to be settled before a private arbitration tribunal. The tribes concerned, as they are not part of the treaty on the land and its use, can only become parties to the legal dispute with difficulty. Furthermore, they may not have knowledge of the treaty and the arbitration clause or the possibility to start a proceeding at the tribunal. In addition, a law applicable to the contract and its consequences may be chosen that does not recognise the right of land use based on tribal law. If the arbitrator, not knowing about the not applicable tribal law or the existence of the tribe, makes a decision based on the chosen law, the decision can subsequently become final and enforceable. This may force the tribes using the land having to vacate it as property disturbers without being able to take legal action against it.

3. Party Autonomy and Colonialism

This possibility of “land grabbing” is made possible by the fact that a state – often a former colony – has a high interest in attracting foreign investment. She, therefore, tries to organise its own legal system, and therefore also her conflict of laws, in an investment-friendly manner and accommodate the investor in the contract. The generous granting of party autonomy and individual negotiating power plays a key role here. A domino effect can be observed in former colonies, where a legal system follows that of neighbouring states once they have attracted foreign investment in order to be able to conclude corresponding agreements. The endeavours of states to introduce a liberal economy form, which is reflected in party autonomy in PIL, can therefore also express a structural hierarchy and form of neo-colonialism. It also indirectly revives the original behaviour of the colonial rulers towards the indigenous peoples with the support of the central state (see former post).

4. Assessment of “Land Grabbing”

If the aforementioned power asymmetry is not counter weighted, arbitration and choice of law clauses can lead to an avoidance of unwanted laws, such as those granting traditional land use rights to local tribes. From a German domestic perspective, the problem arises that the enforcement of (one’s own) local law is a matter for the foreign state. A case where local law will be addressed before German courts will be scarce, esp. in the case of an arbitration proceeding. German courts only come into contact with the legal dispute if an arbitration proceeding has already resulted in a legally binding award and this award is now to be enforced in Germany. In my opinion, this case has to be handled in the same procedure proposed in a former post for the integration of local, non-applicable law. If foreign tribal law is mandatory in the state in question, for example, because there is an obligation under international and domestic law, the arbitral tribunal should be presumed to also observe this obligation as an internationally mandatory norm, irrespective of which lex causae applies. When enforcing the arbitral award domestically, the declaration of enforceability should be prohibited on the grounds of a violation of public policy if the arbitral tribunal has not complied with this obligation.

Furthermore, the use of party autonomy could be more strictly controlled and restrictively authorised when special domestic values and interests of third parties are at stake, as can be the case in particular with the use of land. The lex rei sitae might be more appropriate without allowing for a choice of law.

Finally, restrictions on party autonomy in cases in which negotiation asymmetries are assumed are not unknown to German and European PIL. So, ideas from these rules could be taken up and consideration could be given to which negotiation asymmetries could arise in relation to non-European states. For example, certain types of contract that are particularly typical of power asymmetries could be provided with special protection mechanisms similar to consumer contracts under Art. 6 Rome I Regulation. But that is an international problem that should be discussed on the international level. Therefore, the international community could work towards an international consensus in arbitration proceedings that, for example, property law issues are subject to the lex rei sitae and are not open to a choice of law. Similarly, there could be a discussion whether safeguards should ensure that no choice of law can be made to the detriment of third parties and that, where applicable, participation rights must be examined in arbitration proceedings. Many legal systems already provide those saveguards, so this would not come as a huge novelty.

However, it would also be paternalistic and neo-colonialist if such considerations originated in the Global North without involving the countries to which they refer. It would therefore be desirable to have a stronger and more enhanced dialogue with countries from the Global South that also allows representatives of the local population and local communities to have their say, so that these interests and possibilities for exploiting negotiation asymmetries can be better taken into account.

5. Epilogue

This series has tried to start a debate about Colonialism and Private International Law from the point of view of German PIL. Posts from other jurisdictions might follow. It is a very complex topic and this series only scratched on its surface. As writen in the introduction, I welcome any comments, experiences and ideas from other countries and particularly from countries that are former colonies.

Par arrêt de grande chambre du 21 décembre 2023, la Cour de justice de l’Union européenne fournit de précieuses indications sur l’étendue du contrôle opéré par les autorités respectives des États membres dont relèvent les procureurs européens délégués et procureurs européens délégués assistants dans le cadre d’une enquête transfrontière décidée par le parquet européen.

Sur la boutique Dalloz Droit et pratique des audiences correctionnelles et de police 2024/2025 Voir la boutique Dalloz

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Le décret a pour objet d’intégrer en droit français les nouvelles règles adoptées par l’Union européenne en matière de circulation de véhicules automoteurs et de l’assurance de responsabilité civile couvrant les dommages susceptibles d’être causés par leur utilisation.

Sur la boutique Dalloz Code des assurances, code de la mutualité 2023, annoté et commenté Voir la boutique Dalloz

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As announced in a previous post, a seminar series on the recast of Brussels I bis Regulation, is taking place during the 2023-2024 academic year, both in Paris at the Cour de cassation and online (in French), under the scientific coordination of Marie-Elodie Ancel (University of Paris-Panthéon-Assas) and Pascal de Vareilles-Sommières (University of Paris 1 Panthéon-Sorbonne).

The second seminar will take place on 18 January 2024 from 16.00 to 18.00 (UTC+1).

It will be devoted to the recast of the Brussels I bis Regulation’s provisions on special jurisdiction. The main topics to be discussed include jurisdiction on contractual matters, in litigation over financial damage and in disputes relating to collective redress.

The list of speakers includes David Sindres (University of Angers), Bernard Haftel (University of Sorbonne Paris Nord), Caroline Kleiner (University of Paris Cité) and Valérie Pironon (University of Nantes).

The programme, as well as registration and access details can be found here.

The recording of the first seminar (30 November 2003) is now available online.

The other seminars will take place from 16.00 to 18.00 (UTC+1) on 26 February, 18 March, 22 April, 30 May and 24 June 2024.

The seminar series is organised by the Research Centre for Private International Law and International Trade (CRDI, University of Paris Panthéon Assas) and the Sorbonne Department Study of International Private Relationships (SERPI, University of Paris 1 Panthéon-Sorbonne), together with the Société de Législation Comparée (SLC), the French national school for the judiciary (ENM) and the French Supreme Court for civil and criminal matters (Cour de cassation).

La transposition de la directive conduit à préciser le champ d’application de l’obligation d’assurance, à définir les modalités de contrôle du respect de cette obligation, à faciliter les conditions de la souscription de l’assurance automobile et à renforcer le régime d’indemnisation des victimes.

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The University of Stirling is bringing together academics, practitioners and other stakeholders to present research examining the role of Scots law in the international legal landscape. It is hoped this will promote the ways in which Scots law can offer solutions to global legal challenges but also to offer critiques of the way in which Scots law can or must evolve to preserve and promote its value.

With many Law Schools diversifying their programme offerings beyond Scots law it is a critical time to explore the interactions between Scots law and other jurisdictions. It is also necessary to consider the relationships between the curriculum within Law Schools and the needs of legal practice.

Seminars will be delivered in hybrid format to enable busy stakeholders to engage with these discussions.

Please register for each event in the series individually here, and find out more about a seminar by emailing internationalisationofscotslaw@stir.ac.uk.

This seminar series has been generously funded by the Clark Foundation for Legal Education.

On 12 January 2024, the United Kingdom has signed the 2019 Judgments Convention (Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters), as announced in the press release of the Hague Conference on Private International Law.

This a milestone for private international law within the coming about of the worldwide framework for recognition and enforcement of foreign judgments and potentially a valuable instrument in the post-Brexit legal landscape.

This post is part of a series regarding Colonialism and the general structure of (German) Private International Law, based on a presentation I gave in spring 2023. See the introduction here.

As mentioned in the introduction, this series does not intent to automatically pass judgment on a norm or method influenced by colonialism as inherently negative. Instead, the aim is to reveal these influences and to initiate a first engagement with and awareness of this topic and to stimulate a discussion and reflection.

The first post (after the introduction) dealt with classic PIL and colonialism and already sparked a vivid discussion in the comments section. This second considered structures and values inherent in German or European law, implicitly resonating within the PIL and, thus, expanding those values to people and cases from other parts of the world.  The third category discusses an imagined hierarchy between the Global North and Global South that is sometimes inherent in private international law thinking, for instances where courts or legislators abstractly or paternalistically apply the public policy to “protect” individuals from foreign legal norms. This is especially evident in areas like underage marriages and unilateral divorce practices found inter alia in Islamic law.

1. The public policy exception – abstract or concrete control?

The public policy exception is intended to prevent the application of foreign law by way of exception if the result of this application of law conflicts with fundamental domestic values. Such control is necessary for a legal system that is open to the application of foreign law and, in particular, foreign law of a completely different character. German law is typically very restrictive in its approach: The public policy control refers to a concrete control of the results of applying the provisions in question. In addition, the violation of fundamental domestic values must be obvious and there must be a sufficient domestic connection. In other countries, the approach is less restrictive. In particular, there are also courts that do not look at the result of the application of the law, but carry out an abstract review, i.e. assess the foreign legal system in the abstract. For a comparison of some EU Member States see this article.

2. Explicit paternalistic rules

Furthermore, there are some rules that exercise an abstract control of foreign law. Article 10 of the Rome III Regulation contains a provision that analyses foreign divorce law in the abstract to determine whether it contains gender inequality. According to this (prevailing, see e.g. conclusions of AG Saugmandsgaard Øe) interpretation, it is irrelevant whether the result of the application of the law actually leads to unequal treatment. This abstract assessment assumes – even more so than a review of the result – an over-under-ordering relationship between domestic and foreign law, as the former can assess the latter as “good” or “bad”.

Even beyond the ordre public control, there has recently been a tendency towards “paternalistic rules”, particularly triggered by the migration movements of the last decade. The legislator seems to assume that the persons concerned must be protected from the application of “their” foreign law, even if they may wish its application. In particular, the “Act to Combat Child Marriage” which was only partially deemed unconstitutional by the Federal Constitutional Court (see official press release and blog post), is one such example: the legislator considered the simple, restrictive ordre public provision to be insufficient. Therefore, it created additional, abstract regulations that block the application of foreign, “bad” law.

3. Assessment

In the described cases as a conceptual hierarchy can be identified: The impression arises that foreign legal systems, particularly from the “Global South”, are categorised in the abstract as “worse” than the German/EU legal system and that persons affected by it must be protected from it (“paternalistic norms”). As far as I can see there is a high consensus in the vast majority of German literature (but there are other voices) and also the majority of case law that the abstract ordre public approach should be rejected and that the aforementioned norms, i.e. in particular Art. 13 III EGBGB (against underage marriages) and Art. 10 Rome III-VO (different access to a divorce based on gender), should ideally be abolished. It would be desirable for the legislator to take greater account of the literature in this regard.

On 12 January 2024, the United Kingdom signed the Hague Convention of 2 July 2019 on the recognition and enforcement of foreign judgments in civil or commercial matters. As reported by Ugljesa Grusic on this blog, the UK government had announced some weeks ago its intention to move towards joining the Convention.

The next step will consist for the UK in ratifying the Convention.

The Convention will then enter into force for the UK pursuant to Article 28(2), that is, “on the first day of the month following the expiration of the period during which notifications may be made in accordance with Article 29(2)” with respect to the UK.

The notifications referred to in Article 29(2) are statements whereby a Contracting State may inform the depositary, within twelve months, that the ratification of another State (the UK, in the circumstances) “shall not have the effect of establishing relations between the two States pursuant to this Convention”. In practice, Contracting States may decide that they will not be bound by the Convention vis-à-vis any State that would later join the Convention. The Convention is currently in force for the European Union and Ukraine (since 1 September 2023), and is set to enter into force for Uruguay on 1 October 2024. None of the latter States is expected to make use of this opportunity as regards the UK.

The eighteenth annual bibliography of private international law, compiled by Symeon C. Symeonides, Willamette University, is now available.

The bibliography lists 124 books and 288 journal articles on private international law or conflict of laws and related fields, such as prescriptive jurisdiction, extraterritoriality, federal-state conflicts, as well as certain aspects of arbitration, the law of foreign relations, and international human rights.

The books and articles included in the list appeared in print in 2023, in English.

The bibliography has been posted on SSRN and can be found here.

This interesting case comment has been kindly provided to the blog by Nicolás Zambrana-Tévar , LLM, PhD, KIMEP University

The United States Court of Appeals for the Ninth Circuit has found in favor of Spain as defendant in a property case spanning several decades. A panel of three judges has unanimously ruled that, applying California conflict of law rules, Spain has a stronger interest than the claimants in the application of its own domestic law, including its own rules on prescriptive acquisition of property and the statute of limitations, thus confirming the ownership of a stolen painting, now owned by a Spanish museum.

1. Background information

In 1939, Lilly Cassirer traded a Pissarro painting to the Nazis in exchange for her family´s safe passage out of Germany. In 1954, a tribunal set up by the Allied forces established that the Cassirer family were the rightful owners of the painting. However, believing that the painting had been lost during the war, the family accepted 13,000 US dollars in compensation from the German government, which would be the equivalent of 250,000 US dollars today.
After the painting was looted, it found its way into the United States and, in 1976, Baron Hans Heinrich Thyssen-Bornemisza bought it from the Hahn Gallery of New York, where the painting was publicly in display, allegedly ignoring its origin. The Museum Thyssen-Bornemisza purchased the painting from the Baron in 1993. Claude Cassirer – the grandson of Lilly Cassirer – found out that the painting was being exhibited in Madrid and commenced proceedings under the Foreign Sovereign Immunities Act (FSIA) in 2005. The Museum is the actual defendant in the suit but it is considered an instrumentality of the Kingdom of Spain.

2. Court decisions

In 2019, a US District Judge for the Central District of California, applying Spanish law, found that court filings did not demonstrate a “willful blindness” on the part of the Museum, when it added the painting to its collection. Moreover, the judge found that it could not force Spain or the Museum to comply with the “moral commitments” of international agreements concerning the return of works of art looted by the Nazis.
In 2020, the US Court of Appeals for the Ninth Circuit found in favor of Spain, again applying Spanish law. The court ruled that, regardless of the test applied by the district judge to determine the degree of care employed by the purchaser to determine the origin of the painting, both the Baron in 1976 and the Museum in 1993, lacked actual knowledge of the theft. It is important to note that both the district judge and the court of appeals determined the application of Spanish law because they were applying federal choice of law rules.
In 2022, the US Supreme Court ruled that this case did not involve any substantive federal law issues because it basically dealt with property law. Therefore, the choice of law rules that the district judge and the court of appeals should have applied were the conflict rules of the forum state, i.e. the conflict rules of California. The Supreme Court argued that Spanish law “made everything depend on whether, at the time of acquisition, the Foundation knew the painting was stolen”. On the other hand, the claimants argued that California conflict rules led to the application of California property law, in accordance with which “even a good-faith purchaser of stolen property cannot prevail against the rightful pre-theft owner.” Basically, the Supreme Court said that in an FSIA case, the foreign state defendant has to be treated like a private defendant and that if the Museum had been a purely private entity, it would have had to return the painting. The case was returned to the Court of Appeals.

3. Conflict-of-law analysis

On 9 January 2024, the US Court of Appeals ruled that, even applying California choice of law rules, Spanish law was applicable. The court came to this conclusion applying the “governmental interest approach”. In accordance with this approach, the court first had to ascertain that the two laws in conflict – Spain and California law – were different. They were because the Spanish law provision that the defendant was relying on was article 1955 of the Spanish Civil Code, which provides that “Ownership of movable goods prescribes by three years of uninterrupted bona fide possession. Ownership of movable goods also prescribes by six years of uninterrupted possession, without any other condition”. Therefore, in accordance with Spanish law “three years of uninterrupted possession in good faith” are enough for the acquisition of title whereas California law has not expressly adopted a doctrine of adverse possession for personal property – such as works of art – and, moreover, “thieves cannot pass good title to anyone, including a good faith purchaser”. Besides, California law extends to six years the statute of limitations for claims involving the return of stolen property and Cassirer brought the claim only five years after it discovered the painting hanging at the Museum in Madrid.
Having determined that the laws in conflict were different, the court of appeals then examined and agreed that both jurisdictions – Spain and California – “have a legitimate interest in applying their respective laws on ownership of stolen personal property”. “Spanish law assures Spanish residents that their title to personal property is protected after they have possessed the property in good faith for a set period of time, whereas California law seeks to deter theft, facilitate recovery for victims of theft, and create an expectation that a bona fide purchaser for value of movable property under a ‘chain of title traceable to the thief,’ … does not have title to that property.” Therefore, there was a true conflict of laws, as both jurisdictions had real and legitimate interests in applying their respective law. Additionally, the court had to determine which jurisdiction’s interest “would be more impaired if its policy were subordinated to the policy of the other state.” Otherwise said, “which jurisdiction should be allocated the predominating lawmaking power under the circumstances of the present case”.
To do this, the interests of each jurisdiction were to be measured based on “the circumstances of the particular dispute, not the jurisdiction’s general policy goals expressed in the laws implicated”. The factors to be taken into consideration in this analysis were the “current status of a statute… the location of the relevant transactions and conduct… and the extent to which one jurisdiction’s laws either impose similar duties to the other jurisdiction’s laws, or are accommodated by the other jurisdiction’s laws, such that the application of the other jurisdiction’s laws would only partially—rather than totally—impair the interests of the state whose law is not applied”.
With respect to the first factor, the court said that it was inappropriate to judge which law is better. Also, in reply to the alleged archaism of the Spanish rule, that says that property is acquired after six years of possession, regardless of the stolen nature of the asset, the court replied that the defendant was relying on the possession with good faith during three years.
With respect to the second factor, the court of appeals reasoned that, in accordance with several precedents from the Supreme Court of California, a “jurisdiction ordinarily has the predominant interest in regulating conduct that occurs within its borders”, i.e. on Spanish territory, whereas “where none of the relevant conduct occurs in California, a restrained view of California’s interest in facilitating recovery for one of its residents is warranted.” In the case at hand, “California’s sole contact to the dispute was the happenstance of the plaintiff’s residence there.” Similarly, “California’s governmental interest rests solely on the fortuity that Claude Cassirer moved to California in 1980, at a time when the Cassirer family believed the Painting had been lost or destroyed.” Therefore, “California’s interest in facilitating recovery for that resident was minimal and the extraterritorial reach of its laws was restrained.” Since “no relevant conduct with respect of the Painting occurred in California, the impairment of California’s interest that would result from applying Spanish law would be minimal.”
The court went on to say that, in contrast, “applying California law would significantly impair Spain’s interest in applying Article 1955 of the Spanish Civil Code. For one, because the relevant conduct [the purchase of the painting] occurred in Spain” so that “Spain has the “predominant interest in applying its laws to that conduct.” Furthermore, “applying California law would mean that Spain’s law would not apply to property possessed within Spain’s borders, so long as the initial owner (1) happened to be a California resident (a fact over which… the defendant has no way of knowing or controlling…, and (2) the California resident did not know where the property is located and who possessed it. Applying California law based only on Claude Cassirer’s decision to move to California would strike at the essence of a compelling Spanish law.”
With respect to the third factor and also in accordance with past precedents of the California Supreme Court, “the court should look to whether one jurisdiction’s laws accommodate the other jurisdiction’s interests or imposes duties the other jurisdiction already imposes… A state’s laws can more readily be discarded if the failure to apply its laws would only partially—rather than totally—impair the policy interests of the jurisdiction whose law is not applied…. Here, the failure to apply California’s laws would only partially undermine California’s interests in deterring theft and returning stolen art to victims of theft, which provides further support for limiting the extraterritorial reach of California’s laws to this dispute.
On the other hand, “applying Spanish law would only partially undermine California’s interests in facilitating recovery of stolen art for California residents. California law already contemplates that a person whose art—or other personal property—is stolen may eventually lose the ability to reclaim possession: namely, if the person fails to bring a lawsuit within six years after he discovers the whereabouts of the art… Similarly, Article 1955 of the Spanish Civil Code accommodates California’s interest in deterring theft. As we have explained, Spanish law makes it more difficult for title to vest in an “encubridor,” which includes, “an accessory after the fact,” or someone who “knowingly receives and benefits from stolen property…. If the possessor is proven to be an encubridor, Spanish law extends the period in which the property must be possessed before new prescriptive title is created.”

4. Concluding remarks

This complex and interesting case seems to be coming to an end. In brief, and despite the complexity of the application of the theory of interest analysis, it seems that the US court has given the same solution which a civil court would have given, applying the usual rule that the law applicable to property rights is the law of the place where the property is located at the time of the transfer. So far, it appears that the increasing sensitivity towards cultural property and towards unraveling war crimes has not fully displaced this conflicts rule.

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