Austria Can Be Sued Over Looted Paintings, Court Says (Update3)

June 7 (Bloomberg) -- Foreign countries can be forced to face some U.S. lawsuits over World War II-era property disputes, the U.S. Supreme Court said in letting a woman sue Austria over paintings worth $150 million taken from her family by the Nazis.

The 6-3 ruling allows 88-year-old Maria V. Altmann of Los Angeles to pursue her claim over six paintings by Gustav Klimt that were stolen from her uncle in Vienna by the Nazis. The paintings are held by the Austrian Gallery in Vienna.

Before 1952 the U.S. gave foreign nations full immunity from lawsuits in U.S. courts. A 1952 State Department policy began allowing suits against foreign nations over their commercial acts. In 1976 Congress enacted the Foreign Sovereign Immunities Act, which spelled out the 1952 policy and allowed suits over property taken in violation of international law.

``We find clear evidence that Congress intended the act to apply to pre-enactment conduct'' occurring before Congress intervened, Justice John Paul Stevens wrote for the court. Still, Stevens said the ruling was a narrow one and that Austria can try to get Altmann's suit thrown out on other grounds.

Stevens said the U.S. State Department also can ask federal courts not to hear certain cases involving foreign sovereign immunity. Such requests ``might well be entitled to deference as the considered judgment of the executive on a particular question of foreign policy,'' he said.

Largest Collection

``I'm very, very happy,'' Altmann said in a telephone interview. ``I have a feeling they will now have to come to the table and talk.''

``We're going to go forward with the lawsuit in California,'' said her lawyer, E. Randol Schoenberg of Burris & Schoenberg in Los Angeles. ``We hope for an early trial date. My client is, after all, 88 years old.''

Schoenberg said Altmann's case was unusual because it involved artwork, and a January 2001 executive agreement between the U.S. and Austria preserved claims over Nazi-looted artwork.

Austria's lawyer, Scott P. Cooper of Proskauer Rose LLP in Los Angeles, said there are ``a great many issues yet to be resolved in the case.''

Altmann's suit says the Nazis took the paintings from her uncle, Ferdinand Bloch-Bauer, who died in 1945. The dispute concerns whether he left the paintings to Altmann and other relatives, or whether his wife Adele left them to Austria when she died in 1925.

Austrian Gallery

The Austrian Gallery, housed in two former palaces in Vienna, has the world's largest collection of Klimt paintings.

Schoenberg said when the Supreme Court granted review in September that one of the paintings, a portrait of Adele Bloch- Bauer, is one of Klimt's most famous paintings and was on the cover of the museum's guidebook.

Lawyers for Altmann, a U.S. citizen, said in court papers that Austria and the gallery failed ``to comply with their postwar duties and obligations to return the paintings to their rightful owners.'' Her lawyers said she was denied a chance to sue in Austria because she couldn't afford the $2 million filing fee.

Altmann sued Austria and the gallery in Los Angeles in 2000. A federal judge ruled that she could pursue her claim, and the San Francisco-based 9th U.S. Circuit Court of Appeals agreed.

In appealing to the Supreme Court, Austria's lawyers argued that the Foreign Sovereign Immunities Act's provisions allowing some suits against foreign countries in U.S. courts don't apply retroactively to World War II-era conduct.

`Events Long Past'

The Bush administration supported Austria in a brief that said new federal laws generally don't apply to ``events long past.''

Altmann's lawyers argued that a 2001 agreement between the U.S. and Austria preserves individual claims for Nazi-looted art. Her lawyers also said she was suing over Austria's current refusal to return the paintings, not over the taking of the paintings by the Nazis.

The Supreme Court ruled for Altmann. Joining Stevens's opinion were Justices Sandra Day O'Connor, Antonin Scalia, David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer.

Dissenting were Chief Justice William H. Rehnquist and Justices Anthony M. Kennedy and Clarence Thomas.

Writing for the three, Kennedy said the decision ``promises unfortunate disruption'' by leaving the door open for the State Department to object to courts hearing some cases.

The case is Austria v. Altmann, 03-13.