Heirs of $100 Million Artworks from Herzog Collection Wait Patiently as Lawsuit for Nazi Looted Art Continues

By Olga Symeonoglou

A fight has been slowly making its way through the U.S. court system over 44 artworks that were once part of the largest private art collection in pre-World War II Hungary. The case, de Csepel v. Republic of Hungary, was brought in 2010 by three heirs of Baron Mór Lipót Herzog, a Jewish-Hungarian banker and art collector whose collection included over 2,500 works when he died in 1934.

After Herzog’s death, his collection passed to his widow, who died in 1940. The collection was then divided among their three children, Erzsébet, István, and András. The plaintiffs are their heirs. David L. de Csepel, a U.S. citizen, is Herzog’s great-grandson and grandson of Erzsébet, and the other two plaintiffs are Herzog’s granddaughters, Angela Maria Herzog and Julia Alice Herzog, heirs of András who are Italian citizens.

According to the complaint, “the paintings included works by El Greco, Lucas Cranach the Elder, van Dyck, Velázquez, and the Hungarian painter Mihály Munkácsy as well as more modern art by Corot, Gustave Courbet, and by Impressionists such as Renoir and Monet.” The works are held at the Museum of Fine Arts, the Hungarian National Gallery, the Museum of Applied Arts, and Budapest University of Technological and Economics. Along with the Republic of Hungary, the museums are defendants in the case.

The Herzog Collection remained within the family until World War II. At that point, as with most property owned by Jewish citizens in Europe, the government passed laws requiring the property be surrendered. Among the numerous anti-Semitic laws that were passed at this time, the complaint describes Decree 1830/1944, which “established a so-called Commission for the Recording and Safeguarding of Impounded Art Objects of Jews…and required Hungarian Jews promptly to register all art objects in their possession...These art treasures were sequestered and collected centrally by the Commission for Art Objects.”

The complaint further alleges that the Herzog family attempted to hide its collection, but it was discovered by the Hungarian authorities. At that time, some of the works were taken to Adolf Eichmann and the rest was given by the Hungarian government to the Museum of Fine arts for “safekeeping.” Since the war, some of the works from the collection have been returned to the heirs by other EU countries. But Hungary and the other defendants, while acknowledging the ownership of the Herzog heirs, has thus far refused to give up physical possession of the works.

Eleven of the paintings sought by the plaintiffs in de Csepel were the subject of a prior suit in Hungary. The suit was filed by Herzog’s granddaughter Martha Nierenberg in 1999, but the claims were ultimately dismissed in 2008 because the Hungarian Court found that the claims were extinguished by a 1973 claims settlement agreement. The Court of Appeals found that the District Court’s dismissal of these claims was not appropriate at this stage of the litigation.

The plaintiffs’ primary claim is that a bailment agreement was created between the Herzog family and the defendants that was broken when the Hungarian Court refused to return the works in 2008. At this stage of the lawsuit, however, the arguments have centered on whether the U.S. courts have jurisdiction over this matter in the first place.

In the initial stage of the U.S. litigation, the District Court for the District of Columbia found that it had jurisdiction over the litigation under the Foreign Sovereign Immunities Act (FSIA). The only way to obtain jurisdiction over a sovereign state in the U.S. is if the actions fall within one of the specified exceptions listed in the FSIA. The District Court found that it had jurisdiction over Hungary under the expropriation exception to the FSIA, which grants an exception to immunity when a state takes property in violation of international law and there is a relationship to a commercial activity in the U.S. The United States Court of Appeals for the District of Columbia Circuit disagreed, finding that Hungary’s acts instead fell within the commercial activity exception.

Discovery closed in July, and the defendants’ Renewed Motion to Dismiss filed in May is currently before the court.