This post is by Emilia Beuger (LL.M. Utrecht), JD Candidate at the University of Pittsburgh School of Law.

As noted in an earlier post on this site, the United States Supreme Court granted a petition for a writ of certiorari to the Ninth Circuit’s decision in Cassirer v. Thyssen-Bornemisza Collection Foundation on September 30, 2021. Below is a more detailed discussion of the issues at play in this case.

This case originated in the state of California and was then appealed to the Ninth Circuit before filing a writ of certiorari to the Supreme Court of the United States. The central legal issue concerns the Foreign Sovereign Immunities Act (FSIA), whose application and interpretation has been split across Circuit Courts.

The issue before the Supreme Court is whether a federal court hearing state law claims brought under the FSIA must apply the forum state’s choice-of-law rules to determine what substantive law governs the claims at issue, or whether it may apply federal common law. The state law is California’s choice-of-law test and the federal common law’s choice-of-law test is set forth in the Restatement (Second) Conflict of Laws. The FSIA does not have an express choice of law provision.

Background

The Cassirer family has sought to recover a painting that was stolen from Lilly Cassirer by the Nazis in 1939, and it was subsequently smuggled into the United States and traded privately. This was unbeknownst to Lilly, who brought proceedings in the United States Court of Restitution Appeals under the assumption that the painting had been lost or destroyed. The Thyssen-Bornemisza Collection Foundation (TBC) purchased the painting in 1993. TBC is a public foundation, and it is considered an agency or instrumentality of the Kingdom of Spain. In 2000, Lilly’s grandson Claude Cassirer learned that TBC had possession of the painting and requested both Spain and TBC for the painting’s return. Spain refused. Claude filed suit against Spain and TBC in 2005. Spain was voluntarily dismissed as a party in 2011.

Claude passed away in 2010, and his children David and Ava, as well as the United Jewish Federation of San Diego County, were substituted as plaintiffs. Ava’s estate was substituted as a plaintiff after she passed away in 2018.

Issues and Arguments

A series of different proceedings have occurred since the original filing in 2005. The Ninth Circuit found that the Foreign Sovereign Immunities Act applies to the dispute because the painting was stolen by Germany in violation of international law.

The most recent case in the district court in 2015 was a result of the parties’ cross-motions for summary judgment on the choice-of-law and its application. The district court found for TBC. Even though the buyer prior to TBC had not purchased the painting in good faith and did not pass good title to TBC, TBC lacked actual knowledge under Spanish law. Because TBC lacked actual knowledge under Spanish law, TBC was allowed to keep the stolen painting.

Cassirer’s theory on appeal was that the district court should have applied California law, not Spanish law. Under California law, a thief cannot pass title to anyone, even if there was a good faith purchaser (i.e. who TBC claims to be in this case). Therefore, if California law had been applied in this case, the outcome would have been different.

Key to both sides arguments is that the FSIA provides: “foreign state shall be liable in the same manner and to the same extent as a private individual under like circumstances.” 28 U.S.C. § 1606.

On appeal, the Ninth Circuit agreed with the district court, affirming the application of federal common law to the choice-of-law analysis under the FSIA, but remanded because the Ninth Circuit felt that the district court did not properly apply the Spanish law. Cassirer argues that this contrasts with other Circuit Courts, such as the Second, Fifth, Sixth and D.C. Circuits, who have applied the law of the forum state to the choice-of-law analysis for claims under the FSIA.

In Cassirer’s petition, he cites cases across the Second, Fifth, Sixth, and D.C. Circuits that say the law of the forum state should be applied, not federal common law. The decision to apply federal common law by the Ninth Circuit turned on the wording of past precedents that show that the court may “prefer” to apply it. In contrast, the Second Circuit has interpreted that the FSIA is a “pass-through” for the application of state law to be controlling when there is an issue of choice-of-law. If the goal of the FSIA is to apply the same laws to foreign states and private individuals, then the application must be done with the law that the court would use if the court was dealing with two private parties. Cassirer argues that the application of California’s choice-of-law test would have led to the application of California law because the state law interest of California would be more impaired than if the Spanish law was chosen to be applied in this case.

The Ninth Circuit’s approach, Cassirer argues, would lead to an inconsistency within the liability standards for foreign states and private individuals because the law applied in the state court would be different than the law applied if the suit was brought in federal court. Additionally, Cassirer puts forth public policy arguments. Because there is a split in the Circuit Courts, Cassirer argues that the Supreme Court should hear this case.

While Cassier argues that both tests would have warranted application of California law, TBC argues that both tests would have warranted application of Spanish law.

TBC filed a response to Cassirer’s Petition, arguing that while there may be a split amongst the Circuits, the split is a shallow one. TBC also argues that the outcome(s) will almost always be the same, no matter what choice-of-law test is applied. Public policy arguments are also advanced by TBC that the FSIA’s goal of holding foreign sovereigns accountable and that foreign sovereigns are to be dealt with differently than individuals, specifically at the federal level. Additionally, the jurisdiction of the Ninth Circuit rests on a federal question, not a diversity matter, so the Ninth Circuit should apply the federal common law test.

Briefs will be filed later this year and early next year.

The Supreme Court is slated to hear arguments during its 2021 Term.

The relationship between comparative law and public international law is paradoxical. These fields are in principle close to each other but remote in practice. The emergence of comparative international law has changed the situation as it invites comparative law scholars to enter into discussion on international law. This article provides a critical analysis on the possibilities for comparative law in the field of international law. It discusses and explains why a non-normative understanding of comparative international law works well together with the pluralist conception of comparative law, and why a normative understanding of comparative international law is incompatible with it. This article explains why comparative law scholars do not welcome the use of comparative law for international law purposes with open arms.

More than a Problem of Characterization: The Relationship Between Consumer Contract Law and the Law of Capacity. – The EU regulations in the area of private international law largely exclude legal capacity. The law applicable to questions of capacity is determined by the applicable national conflict-of-law rules. This raises the question of the scope of the law of capacity and how it is to be distinguished from neighbouring fields of law. In particular, drawing this distinction vis-à-vis contract law presents difficulties in cases involving consumers. Both consumer law and the law of capacity place the protection of the weaker party in the foreground. Distinguishing the law of capacity from neighbouring fields of law is therefore more than a mere problem of characterization: it is a matter of not undermining the level of protection sought by the different fields of law in cross-border cases. In this paper, a proposal is made as to how the boundaries of the law of capacity can be determined in relation to contract law, taking into account this intended protection of the weaker party.

The Uruguayan General Law of Private International Law. – Uruguay has always been a center for private international law. The Montevideo Congress, held in 1888 and 1889 at Uruguay’s invitation – before the Hague Conference on Private  International Law – was of instrumental significance for the development of private international law in Latin America. Uruguay has consistently played an active role in preparing the inter-American specialized conferences on private international law and in propagating bilateral PIL treaties. The new private international law legislation underway since the end of the last century does not break with tradition completely, but seeks to develop it further adapting it to present-day demands. Some major features of the reform bear emphasis: a comprehensive regulation of the general rules of private international law, refinements to the contours of international family law, a recasting of international contracts law based on party autonomy,  and detailed rules on the exercise of jurisdiction by national courts in international disputes.

For a German translation of the Uruguayan General Law of Private International Law of 27 November 2020 by Samtleben, see: Volume 85 (2021) / Issue 4, pp. 907-925 (19), https://doi.org/10.1628/rabelsz-2021-0052

The UNCITRAL LAC Day 2021 will take place online on Thursday 21 October 2021 at 10:00 Argentinian time and 15:00 CEST time (in Spanish). This event has been organised by UNCITRAL, the Organization of American States (OAS – OEA), Secretaría de Integración Económica Centroamericana / Secretariat for Central American Economic Integration (SIECA) and ASADIP.

The focus of the conference will be international commercial mediation and expedited arbitration. In particular, it will be discussed the work carried out by UNCITRAL’s Working Group II: Dispute Settlement.

Written by Marco Farina, Italian lawyer, PhD in Civil Procedural Law at the University La Sapienza of Rome – Adjunct Professor of Civil Procedural Law at the University LUISS of Rome

In a judgment rendered on 16 September 2021, the Italian Supreme Court (Corte di Cassazione) reversed a decision from the Court of Appeal of Rome, which had denied recognition and enforcement of a monetary judgment issued by the Royal Court of Guernsey, due to a breach of the fundamental rights of defence allegedly occurred in the proceedings.

The Court of Appeal of Rome reasoned under Article 64 (b), of the Italian Act on Private International Law (Law 31 May 1995 no. 218), which provides, inter alia, that a foreign judgment may be not recognized and enforced if fundamental rights of defence have been breached in the foreign proceedings.

The Court of Appeal found that a relevant breach of the fundamental rights of defence had occurred because, at the outset of the proceedings, a worldwide freezing injunction (associated with a disclosure order) had been issued against the defendant. In the Court of Appeal’s opinion, the injunction and its effects altered the procedural equality of the parties before the foreign court, since it was a “highly coercive measure against the defendant who is not only severely affected in the free disposal of his assets, but is also exposed to the risk of even being deprived of his personal freedom, if he does not cooperate with his counterpart in the identification of his assets to be seized” (English translation).

This relevant alteration of the procedural equality of the parties existed, according to the Court of Appeal, because, whilst the defendant was impacted by this order, the plaintiff was not.

In the end, the Court of Appeal held that the injunction issued against the defendant had “the concrete ability – in the absence of any conduct of the defendant indicating that he intended to harm the claimant’s rights – to limit, restrict, diminish the defendant’s ability to defend itself, both in imposing significant limitations on the free disposal of his assets and in constraining him to collaborate with the claimant before of preparing its own defence. All this, while nothing of the same kind affected the assets or the defensive opportunities of the claimant. The defendant, therefore, found himself in a much weaker defensive position than his counterpart” (English translation).

The Supreme Court found several flaws in this reasoning.

Firstly, the Supreme Court held that if, in principle, it could not be denied that a relevant alteration of the procedural equality might amount to a breach of the fundamental rights of defence, the mere fact that the judgment to be recognized and enforced in Italy had been preceded by a provisional order – in the form of an injunction (associated with a disclosure order) – could not, in any case, lead to such a breach.

Regarding the functioning of a freezing injunction issued by a common law court, the Supreme Court asserted that (i) the injunction is sought to preserve the defendant’s assets until judgment can be obtained or satisfied, (ii) the injunction may be rendered when the claimant has shown a good arguable case and a risk of dissipation exists, (iii) it operates in personam; therefore, its effectiveness depends on the threat of punishment for contempt of court, and (iv) it is usually associated with other orders, which are aimed at rendering the freezing injunction more effective, thus constraining the affected party to identify its assets and their location (disclosure order) under the threat of being excluded (debarred) from the proceedings (unless order).

Having said that, the Supreme Court went on to state that, in the case at hand, the injunction was associated with a disclosure order but not with an unless order. So, even if the defendant were not to comply with the injunction and the disclosure order, he remained fully entitled to participate in the proceedings defending himself as no exclusion and/or debarring was pronounced against him.

In the light of the above, the Supreme Court had good reason to observe that the Court of Appeal should not have found any breach in the fundamental rights of defence (in terms of the alteration of the procedural equality of the parties) since – as the same Italian Supreme Court held in its previous judgment (judgment no. 11021 rendered on 9 May 2013 in the well-known Gambazzi case, following the decision from CJEU in Case C-394/07, 2 April 2009, Gambazzi) – the right to a fair trial should be considered breached in the event of “manifest and disproportionate infringement of the defendant’s right to be heard” (English translation).

Thus, the Supreme Court noted that, if a judgment rendered against a defendant who – due to his failure to comply with a disclosure order associated with a freezing injunction – had been excluded and/or debarred from the proceedings, must be recognized and enforced in Italy (see again judgment no. 11021 of 9 May 2013 in the Gambazzi case), a fortiori a monetary judgment rendered against the defendant whose participation in the proceedings had not been prevented notwithstanding its failure to comply with the disclosure order associated with the freezing injunction, ought to be recognized and enforced in Italy.

The validity of this line of reasoning must be inferred, according to the Supreme Court, from the injunction (and the disclosure order which was associated with it) being a provisional and protective measure aimed at preserving the claimant’s right to enforce the judgment which might be rendered in its favour at the end of the proceedings on the merits. Therefore, such measures are as much an essential part of the common law procedural system as the attachment and/or preservation orders are in Italy (sequestro conservativo, Article 671 of Italian Code of Civil Procedure).

Hence, asserting that – as the Court of Appeal did – the mere fact that a freezing injunction has been issued and enforced against a defendant (and not against the claimant) amounts to a breach of the right to a fair trial (in terms of the alteration of the procedural equality of the parties), would insinuate that a breach of the fundamental right of defence occurs in Italy every time a claimant succeeds in obtaining a protective measure against the defendant, when the former is not addressed with the same measure.

This is not an alteration of the procedural equality of the parties. On the contrary, this is the essence of litigation between two parties in an adversarial system.

It is natural in contentious civil proceedings that the party against whom a claim is brought may be affected by measures which result in finding itself in a different situation from that of the claimant. This cannot, by definition, give rise to any relevant breach of the fundamental rights of defence in terms of violation of the principle of the so-called ‘equality of arms’. For example, in the ordinary proceedings instituted by the debtor for opposing an enforceable order of payment obtained by the creditor, the debtor finds himself in different position from that of the creditor; a defendant, in ordinary civil proceedings, finds himself in a different situation from that of the claimant who has obtained – before or during the proceedings – an attachment order for the defendant’s assets.

Accordingly, provided that both parties are granted equal chances to obtain and enforce a protective and/or provisional measure, is part of the ordinary functioning of a civil proceeding that a party will succeed in obtaining it and the other will not.

In the case at hand – the Supreme Court noted – both parties were granted equal and fair chances of defence as, (i) the freezing injunction and the disclosure order were given ex parte but the defendant was given the right to apply to the court to vary or reverse the order, and (ii) the claimant had assumed the obligation of complying, under the same threat of the “contempt of court”, with any subsequent order of the Court condemning the claimant for any loss suffered by the defendant.

Moreover, the Supreme Court asserted that nothing to the contrary may be inferred from the fact that the injunction and the disclosure order operate in personam and that the infringement thereof triggered the consequences of a “contempt of court”. The Cassazione did not see any violation of the fundamental rights of defence, all the more because the Italian legal system features cases in which a failure to comply with a judicial order could amount to a criminal offence.

The judgment of the Italian Supreme Court can be read here (in Italian).