Steve Schindler: Hi, I'm Steve Schindler.
Katie Wilson-Milne: I'm Katie Wilson-Milne.
Steve Schindler: Welcome to the Art Law Podcast, a monthly podcast exploring the places where art intersects with and interferes with the law.
Katie Wilson-Milne: The Art Law Podcast is sponsored by the law firm of Schindler Cohen & Hochman LLP, a premier litigation and art law boutique in New York City.
Steve Schindler: Hi, Katie, how are you?
Katie Wilson-Milne: I'm good, Steve.
Katie Wilson-Milne: Happy 2025.
Steve Schindler: Yes, it's been a rough start, but I'm looking forward to some good things, at least in the art space.
Katie Wilson-Milne: Yes, we have some great episodes coming up, including today.
Steve Schindler: Yeah.
Steve Schindler: So it's my pleasure to introduce a good colleague, Dr. Katharina Garbers-von Boehm.
Steve Schindler: Katharina is a partner in Onto Partners, a Berlin-based law firm that she just founded with four other partners earlier this month.
Steve Schindler: Katharina has an impressive CV with several degrees from French and German universities, including a doctorate as well as a long list of career achievements.
Steve Schindler: I'm going to pass on reciting them because it will only just reveal the infirmity of my pronunciation in German, but we're going to post a link to Katharina's website, and our listeners can read them all there.
Steve Schindler: But suffice it to say, Katharina is a lawyer with almost 20 years of professional experience in all areas of art law, including copyright law, export and import of cultural assets, provenance, and restitution matters.
Steve Schindler: She also practices in the area of IP law.
Steve Schindler: She both advises clients and litigates for them.
Steve Schindler: Katharina's clients include, among others, galleries, museums, art fabricators, artists, art institutions such as museums, family offices and banks, as well as collectors, heirs, and artists' estates in Germany and abroad.
Steve Schindler: Katharina is continuously ranked by best lawyers for art law in Germany and by chambers for art and cultural protection law tier one.
Steve Schindler: And I should also mention— and this is a little bit of a tip for our listeners, because it's not yet official— that Katharina and I are both the incoming co-chairs of the IBA's Committee on Art, Cultural Institutions, and Heritage Law.
Steve Schindler: And I'm looking forward to our exciting plans for the committee over the next two years.
Steve Schindler: Katharina, welcome to the podcast.
Katharina Garbers-von Boehm: Thank you, Steve.
Katharina Garbers-von Boehm: Thank you, Katherine.
Katharina Garbers-von Boehm: Thank you so much for having me.
Katharina Garbers-von Boehm: And yes, Steve, I'm also looking forward to co-chairing the IBA's Art Law Committee with you.
Steve Schindler: It will be great.
Steve Schindler: But today we're going to focus a little bit on German law regarding stolen artwork and other related title issues.
Steve Schindler: We have focused on some of these issues before, in the context both of some US cases and particularly with respect to the restitution of Nazi-looted art.
Steve Schindler: And we wanted to try today to focus a little bit on the way Germany deals with some of these title issues with respect to stolen artwork and take the opportunity to compare it to the way that we deal with these issues in the United States.
Steve Schindler: So maybe we can just start, Katharina, with— if you could just give us a little bit of background about how title to artwork is passed in Germany and how it works with respect to stolen art.
Katharina Garbers-von Boehm: Yes, Steve.
Katharina Garbers-von Boehm: So first maybe how title usually passes with respect to artworks.
Katharina Garbers-von Boehm: It is like I think anywhere in the world, usually title passes by hand over.
Katharina Garbers-von Boehm: So not with full payment or anything like you can write whatever you want in the paperwork.
Katharina Garbers-von Boehm: But there is in addition to the paperwork and in rem layer to any transaction, which means that title usually only passes by hand over.
Katharina Garbers-von Boehm: However, there are certain exceptions to that rule.
Katharina Garbers-von Boehm: For example, title passes whatever the parties write into the paperwork if the acquirer already possesses the artwork.
Katharina Garbers-von Boehm: So possession, which means the actual factual power to put a thing from A to B is an important, yeah, external sign of ownership according to German law.
Steve Schindler: Okay.
Katharina Garbers-von Boehm: And there is another exception if the seller assigns a claim to surrender against the third party to the buyer.
Katharina Garbers-von Boehm: So for example, if an artwork is still to be fabricated and is at fabricator's premises, and the gallerist is very impatient and would like to have this artwork directly shipped to a biennial or so, then the claim to surrender against the fabricator could be assigned to a third party. And that third party could then ask the fabricator to ship the artwork from A to B and become the owner at an earlier stage.
Katharina Garbers-von Boehm: Or for example, if an artwork is at a storage, then you could assign the claim against the storage.
Steve Schindler: I see.
Steve Schindler: Maybe I could just ask a clarifying question, because it sounds to me like possession is a very sort of central part of the passing of title.
Steve Schindler: Is something more required than possession? If someone has just, for example, left a work of art with me to store, I'm in possession of it— but at least here I would not view that I would have title to it to pass.
Steve Schindler: So what's the relationship between possession and some sort of legal ownership?
Katharina Garbers-von Boehm: Oh, no, of course you need a contract that says that the title shall pass.
Katharina Garbers-von Boehm: And in addition to that, you need the handover.
Steve Schindler: Right.
Steve Schindler: I guess my question is before the contract and before the handover, is there some other sort of requirement in terms of legal ownership?
Steve Schindler: So again, here, if somebody leaves me a work of art and I then decide to sell it to somebody else, I don't own it, I'm just selling it.
Steve Schindler: I'm in possession of it and I have a contract with the third person.
Steve Schindler: There's some issues around that.
Katharina Garbers-von Boehm: There would have to be a contract between you and the person who dropped it at your office.
Steve Schindler: Okay.
Steve Schindler: All right.
Katharina Garbers-von Boehm: So a purchase contract or a gift contract or agreement that title shall pass.
Katharina Garbers-von Boehm: That is the actual...
Katie Wilson-Milne: What if there are no contracts?
Katie Wilson-Milne: Because I think one thing Steve's getting at is similar but different in the US, is whether possession in and of itself creates a presumption of ownership.
Katharina Garbers-von Boehm: Yes, we do have that presumption in German law.
Katie Wilson-Milne: Right.
Katie Wilson-Milne: So maybe we'll get into that more as we talk about more details.
Katie Wilson-Milne: I would say, maybe in the US, we have possession is relevant, but it doesn't create a presumption of ownership in the same way it does in civil law countries.
Katie Wilson-Milne: So I think that that difference is interesting, in the absence of clear contractual terms or title ownership paperwork.
Katharina Garbers-von Boehm: Yeah, just to make that clear, Katie, paperwork is not required.
Katharina Garbers-von Boehm: There's just a requirement that there shall be agreement about the title to pass.
Steve Schindler: So then let's just say that I am in possession of a work that was stolen.
Steve Schindler: Can I pass title to that work to a buyer?
Steve Schindler: How does that work?
Katharina Garbers-von Boehm: Oh, that is an interesting question about good faith acquisition.
Katharina Garbers-von Boehm: So as a general rule, good faith acquisition of a stolen item is not possible according to German law.
Katharina Garbers-von Boehm: Of course, there are exceptions, and one of these exceptions is the acquisition in a public auction.
Katharina Garbers-von Boehm: It is a much disputed exception actually, because of course this makes the auction houses to, let's say, whitewash stolen items.
Katharina Garbers-von Boehm: But if the auction house is of good faith and the acquirer at auction is of good faith, then unfortunately the former owner from whom the artwork was stolen lost its property.
Katharina Garbers-von Boehm: And then there is another important exception, that is usucaption, ersitzung, which means that if you acquire an artwork— a stolen artwork in good faith— and you are in good faith for 10 years or longer, then you can also acquire ownership.
Steve Schindler: Ah, okay.
Steve Schindler: And under US law, a thief can never pass good title, period.
Steve Schindler: Doesn't matter whether someone's acquiring it in good faith, bad faith, works that are actually stolen.
Steve Schindler: And stolen really means, you know, literally either break into a museum, you steal the work of art, the case of Nazi-looted art, obviously, you have stolen art.
Steve Schindler: So, if a work is stolen, you can never pass good title.
Steve Schindler: There are issues relating to statutes of limitations, but fundamentally title can never pass.
Steve Schindler: It's different here.
Steve Schindler: We have some lesser exceptions.
Steve Schindler: So for example, we have something called voidable title, right?
Steve Schindler: So that's a situation where if the work isn't stolen, but I acquire the work from, say, my friend, and I give my friend a check for the work, and I get the work, and then the check bounces, you know, I still can then sell that piece of art to a buyer who buys it in good faith without knowing that I have somehow cheated my friend.
Steve Schindler: And that's called voidable title, and under those circumstances, this title can pass to a good faith purchaser, but it's not stolen.
Steve Schindler: It was just sort of taken by, you know, trickery, so to speak.
Steve Schindler: And then the last example here, which is something that is very controversial and, you know, actually comes up more than I like to think, is something called entrustment, where if I entrust a work of art to a merchant, an art merchant, an art dealer, and leave it with the art dealer for any reason whatsoever, just to look at it, to evaluate it.
Steve Schindler: And even if I say to the art dealer, under no circumstances am I allowing you to sell this work of art.
Steve Schindler: And then I leave, and then the art dealer turns around and sells the work of art to a buyer who buys it in good faith in the ordinary course of business.
Steve Schindler: Under that scenario, title passes.
Steve Schindler: And a lot of people just don't get that, because it seems crazy that you can do that.
Steve Schindler: And I'm just curious whether in Germany, you have something similar.
Steve Schindler: It sounds like you might.
Katharina Garbers-von Boehm: Exactly the same, yes.
Katharina Garbers-von Boehm: We have exactly the same.
Katharina Garbers-von Boehm: With a merchant, the good faith only has to relate to the entrustment of the merchant, actually.
Katharina Garbers-von Boehm: So as a buyer from a merchant, you just have to believe that the merchant is entitled by the owner of the artwork to sell it.
Katharina Garbers-von Boehm: So if you don't have any reason to believe that he's not entitled, then you can purchase in good faith from a merchant.
Katie Wilson-Milne: Does that apply to stolen property as well?
Katharina Garbers-von Boehm: No.
Katie Wilson-Milne: Okay.
Katie Wilson-Milne: Because here, it's not.
Steve Schindler: Right.
Steve Schindler: If the work was actually stolen in the first place, it doesn't matter what happens in the middle, title can never pass.
Steve Schindler: And obviously under the entrustment scenario that I outlined, you still have an opportunity to recover damages against the merchant who essentially sold something without permission.
Steve Schindler: But as is often the case here, we see that the merchant who does that doesn't often have assets themselves to satisfy such a judgment.
Katharina Garbers-von Boehm: Yeah, you know, but nowadays the merchants, according to German law, they have to make sure that when they take something from an owner, that he really is the owner, there are new due diligence requirements for merchants.
Katharina Garbers-von Boehm: And you really have to look into the provenance of an artwork now.
Katharina Garbers-von Boehm: So that has changed.
Katie Wilson-Milne: We don't have those regulations yet, maybe never.
Katie Wilson-Milne: But I mean, in the art world specifically, I just wanted to add on to what Steve was saying about our sort of concepts of voidable title and entrustment, which come from the Uniform Commercial Code, which has been adopted by every state in the US.
Katie Wilson-Milne: And the real purpose of that code was to make commercial transactions more reliable, right?
Katie Wilson-Milne: So in the balance of risks, it decided that we should always have the risks fall on the side of commercial transactions being reliable and happening versus gumming them up, because some parties' rights were violated.
Katie Wilson-Milne: And in the entrustment and avoidable title context, the distinction with stolen art is that possession was voluntarily relinquished.
Katie Wilson-Milne: So I guess when the presumption in the US is if you voluntarily relinquish possession for whatever reason, even if it's under circumstances that do not allow sale, you've sort of taken that risk and it's on you.
Katie Wilson-Milne: Whereas if something's stolen, you haven't voluntarily relinquished possession and the law is going to stay on your side.
Katie Wilson-Milne: I don't know if there's any balance like that in German law.
Katharina Garbers-von Boehm: I think this is the balance in every jurisdiction in the world, the balance between, let's say, the security of the market, whether you as a buyer can trust that what you buy on the market will be your property and the protection of the victim of theft.
Katharina Garbers-von Boehm: And in my opinion, yeah, in the German law, the security of the market is quite well protected, because although there is this general rule that stone artworks cannot be acquired or ownership to stolen artworks cannot be acquired, there are plenty of exceptions.
Katharina Garbers-von Boehm: But the general rule still exists, so the normal good faith rules, they don't apply on stone artworks.
Katie Wilson-Milne: So we would call this one of the big exception you mentioned before about possessing something in good faith for a period of time, prescriptive title.
Katie Wilson-Milne: We don't have that in the United States.
Katie Wilson-Milne: I think that's the major difference with respect to stolen property, especially, that stolen property in the US has its own rule and we don't have prescriptive title. Because we don't— possession is not the only or the main attribute of ownership in the absence of other circumstances.
Katie Wilson-Milne: So, you know, we've seen that play out in the Nazi cases and Franco's Spain and the art seizures that happened during the Spanish Civil War and sort of the efforts to get artworks back and when they've been in the hands of good faith purchasers for a very long time and how that looks very different.
Katharina Garbers-von Boehm: Yeah, you know, for the victim of a theft, it is very difficult to prove that someone who possesses the artwork acquired it in bad title and actually the burden of proof, unfortunately, it is with the victim.
Katharina Garbers-von Boehm: So the victim has to prove that the person who possesses the artwork now was in bad faith when he was acquiring it or became aware of the theft during that 10 year period.
Katharina Garbers-von Boehm: And this makes it almost impossible for a victim of a theft, because of course— I mean, unless the police confiscate it and there's proof about the identity of the thief, which is the now possessor.
Katharina Garbers-von Boehm: But in other cases, yeah, this can be very difficult.
Katharina Garbers-von Boehm: And in one of my cases, I acted on behalf of the heirs of the well-known artist Pohlmann, from whose heirs two paintings had been undisputedly stolen.
Katharina Garbers-von Boehm: So this was well documented by the police.
Katharina Garbers-von Boehm: The possessor claimed that he had acquired ownership by usucaption.
Katharina Garbers-von Boehm: However, due to contradictory statements on how and when he acquired possession, there were doubts about the credibility and good faith of the possessor, which resulted in a so-called secondary burn of proof imposed on him.
Katharina Garbers-von Boehm: And he was unable to provide the necessary evidence on how and when he acquired the artwork in good faith.
Katharina Garbers-von Boehm: Therefore, we won the case and the court rejected the claim of prescription.
Steve Schindler: Maybe I could just clarify, so in Germany, if I'm in good faith possession of a work of art that was actually stolen, after 10 years, do I then acquire title to the work?
Katharina Garbers-von Boehm: Yes.
Katharina Garbers-von Boehm: If you acquire an artwork now, wherever you acquire it, from me, and this artwork has been stolen from one of my partners from the firm, and you don't know about that, then in 10 years time, you will be the owner.
Steve Schindler: Okay.
Steve Schindler: And then I have another question about that possession.
Steve Schindler: Does it have to be open possession?
Steve Schindler: In other words, if I acquire the artwork and I put it in a vault, in a free port, and then it just sits there for 10 years, and then 10 years in one day, I take it to my home, and then is that sufficient, or does it have to be hanging on a wall or in public display or in some fashion like that?
Katharina Garbers-von Boehm: No, if you are the only person who can access that vault, then this is as good as physical possession.
Steve Schindler: It doesn't matter.
Steve Schindler: Okay, so...
Katharina Garbers-von Boehm: What matters is that you have the power to decide that this artwork will go from A to B, or that you have the power to take it out of the vault, or that you have the power to give it to someone else, or to lend it to a museum, or whatever you want to do with it.
Steve Schindler: Right, okay.
Steve Schindler: So, it's interesting...
Katharina Garbers-von Boehm: So factual power to the thing.
Steve Schindler: Okay.
Steve Schindler: As Katie said we don't have this concept with respect to property here in the United States— with respect to personal property like art.
Steve Schindler: We do have the concept in some states with respect to real estate and real property, which is sort of a funny historical anomaly.
Steve Schindler: But at least in the context of real estate, you have to be what they call in open and notorious possession, which is to say that it has to be visible to the world.
Steve Schindler: And that's one of the requirements for...
Katharina Garbers-von Boehm: Well, if you hide it, this could of course be something that could be disadvantageous if you want to prove your good faith.
Steve Schindler: Sure.
Katharina Garbers-von Boehm: It is always like in order to prove the good faith, it's always good to be able to state that, for example, you exhibited the work in a museum or yeah, openly possessed it, as you say, but it's not a requirement.
Katharina Garbers-von Boehm: So for example, in this Pohlmann case I just described to you, the artwork was found in some cupboard on business premises.
Katharina Garbers-von Boehm: So yeah, this was then of course, also used in order to establish the bad faith.
Katie Wilson-Milne: And in the Pohlmann case, what were the circumstances of the theft, the original theft itself?
Katharina Garbers-von Boehm: It was just a theft, a normal theft from a private house, which was documented by the police.
Katie Wilson-Milne: And was that a recent theft or had a long period of time elapsed?
Katharina Garbers-von Boehm: A certain period of time elapsed.
Katie Wilson-Milne: Yeah, you know, we think about this in the Nazi-looting cases, but of course, art theft happens outside of war and cultural genocide.
Katharina Garbers-von Boehm: It's unbelievable, but it does. I mean...
Katie Wilson-Milne: Yeah, it happens quite a bit.
Katie Wilson-Milne: So in the context of World War II, when obviously the Nazi government in Germany, you know, had a huge cultural campaign to both dispossess people of their art and redefine what art and culture was, we know that a lot of artwork was stolen, taken, or sold under circumstances of duress from owners in Nazi-occupied Europe.
Katie Wilson-Milne: This exception, this prescriptive title exception in Germany and in many other countries and continental Europe would seem to make it very, very difficult, if not impossible for heirs of owners of artworks that were stolen, let's say, by the Nazis to recover their artworks.
Katie Wilson-Milne: Because by this point in 2025, most likely these artworks have been owned by good faith purchasers for some long period of time, and have maybe changed hands multiple times.
Katie Wilson-Milne: So talk us through how, especially in Germany, this problem of that extensive personal property looting is dealt with when the law seems to maybe foreclose recovery.
Katharina Garbers-von Boehm: Okay, so in Germany, we really have two different worlds regarding Nazi-looted art.
Katharina Garbers-von Boehm: If you look at the letters of the law, unfortunately, a claimant would, in 99.9% of the cases, have no chance to recover any Nazi-looted artwork under German law at a German court.
Katharina Garbers-von Boehm: Because of these provisions regarding prescription or usucaption, and also because in any event, after 30 years, there is, let's say, a hard statute of limitation which says that you don't lose ownership, but you lose your claim to surrender, right?
Katharina Garbers-von Boehm: So you cannot do anything with your ownership any longer after these 30 years.
Katharina Garbers-von Boehm: There is no claim to surrender after 30 years.
Katharina Garbers-von Boehm: So like theoretically, possession and ownership then are torn apart.
Katharina Garbers-von Boehm: But this is a rather academic discussion and...
Steve Schindler: In some ways, we have the same thing.
Steve Schindler: The way we deal with some of these issues is through statutes of limitations, right?
Steve Schindler: So even though the principle remains that a thief can never convey good title.
Steve Schindler: So if there is something that was stolen by the Nazis, subsequent possessors won't have title.
Steve Schindler: But after certain amounts of time, depending on where you are and the circumstances, the owner or the heirs of the owner can no longer bring a claim to recover the work.
Steve Schindler: So it's similar in that sense.
Steve Schindler: Except we don't have the sort of shorter period where title can actually be transferred by prescription.
Katharina Garbers-von Boehm: So yeah, in Germany, unfortunately, this is the case.
Katharina Garbers-von Boehm: And therefore, usually Nazi-looted art cases are not court cases in Germany.
Katharina Garbers-von Boehm: But— there is a big but—
Katharina Garbers-von Boehm: We do have soft law, which is taken very seriously by institutions and also by the art trade, which is based on the Washington Principles.
Katharina Garbers-von Boehm: We have an advisory commission, which deals with controversial cases.
Katharina Garbers-von Boehm: But you know, in practice, these cases are very often just settled, because any serious dealer would not accept a Nazi-looted artwork for its dealings.
Katharina Garbers-von Boehm: And also now we do have the Cultural Protection Act, which imposes due diligence requirements on dealers.
Katharina Garbers-von Boehm: So they have to look at the provenances, and they cannot simply deal with Nazi-looted artworks.
Steve Schindler: Could you just explain that a little bit, the Cultural Protection Act?
Steve Schindler: I know you referenced it before, but what obligations does that impose on individual, either a dealer or does it have to be a dealer?
Steve Schindler: What are the outlines of that?
Katharina Garbers-von Boehm: According to the Cultural Protection Act, there are due diligence requirements, which require anyone not to deal with stolen items.
Katharina Garbers-von Boehm: And if you deal with stolen items anyway, such transaction is null and void.
Katharina Garbers-von Boehm: It is a very weird situation, because this act is actually public law, but it has an effect on private law.
Katharina Garbers-von Boehm: And it is really not clear yet—
Katharina Garbers-von Boehm: There is no jurisprudence yet about the relationship between these due diligence requirements and this consequence of voiding the contract or nullity and invalidity of such contract.
Katharina Garbers-von Boehm: And for example, yeah, the exceptions I mentioned earlier on regarding good faith acquisition of stolen artworks.
Katie Wilson-Milne: Right, so...
Katharina Garbers-von Boehm: The Cultural Protection Act entered into force in August 2016.
Katharina Garbers-von Boehm: And yeah, so far, there is no clarity, but dealers do take these requirements seriously and start to look at provenance.
Katharina Garbers-von Boehm: This doesn't change, however, that to possess an artwork that was once stolen is not forbidden as such.
Katie Wilson-Milne: Right, so I think this is what you're saying, and it was my question too, is even though there are these due diligence requirements, it may be that even though a work was stolen 50 years ago, the title is now good because of prescriptive title, because at some period of time, a good faith purchaser had it for the right number of years, and it sort of cleanses the title on that work.
Katie Wilson-Milne: What happens in that situation if the dealer finds out it was stolen a long time ago, but now through this exception in Germany, which we would call prescriptive title, that a good faith purchaser has possessed it for over 10 years, title is good again.
Katie Wilson-Milne: And so does the law have anything to say about that?
Katharina Garbers-von Boehm: Yeah, this is exactly the academic disputes are currently going on.
Katharina Garbers-von Boehm: The majority of the authors, they say that it was oftentimes discussed whether the acquisition of title by prescriptions should be abolished, and it was never abolished.
Katharina Garbers-von Boehm: And therefore, it is very unlikely that the legislator of the Cultural Protection Act wanted to abolish it, let's say, through the back door by creating public law, which influences civil law, but there is a dispute around it.
Katharina Garbers-von Boehm: And if you are on the side of a victim of a theft, of course, now you have much more possibilities to create a certain amount of pressure on the current possessor of an artwork.
Katie Wilson-Milne: And when you say soft law, I mean, I think that's very interesting in Europe, because it is true from what you're saying that, let's say, the heir of a victim of Nazi-looted art isn't going to be able to go to the courts in Germany and get title to that work.
Katie Wilson-Milne: But you're saying there's so much sort of ethical and cultural pressure and understanding around these issues that parties will voluntarily give these works back.
Katie Wilson-Milne: Is that what you mean by soft law, or what's creating that incentive and pressure?
Katharina Garbers-von Boehm: Well, I don't know if you have heard about the database lostart.de.
Katharina Garbers-von Boehm: It is a publicly searchable database.
Katharina Garbers-von Boehm: It doesn't cost any money, other than the Art Loss Register.
Katharina Garbers-von Boehm: It doesn't cost any money.
Katharina Garbers-von Boehm: You can access it for free, and claimants can register artworks, especially Nazi-eluded artworks, which they are searching there.
Katharina Garbers-von Boehm: And if an artwork is listed there, then no dealer will accept it for sale, because also again, in the Cultural Protection Act, it says that you have to consult databases, like the publicly accessible databases, or the usual databases, and creates, of course, a certain amount of pressure and makes this database a very powerful tool for claimants
Katharina Garbers-von Boehm: in order to get their artwork back.
Katie Wilson-Milne: And why does the database have that much power?
Katie Wilson-Milne: I mean, again, soft law.
Katie Wilson-Milne: So why does the market respond to that?
Katie Wilson-Milne: Even if no court has said this work is currently stolen or there's not good title, why does the database usurp that legal function?
Katharina Garbers-von Boehm: Well, would you want to process an artwork which is listed on the database?
Katharina Garbers-von Boehm: I mean, even if in Germany, you cannot go to court and claim the artwork back, you might be able or someone might be able to claim it back in another country.
Katharina Garbers-von Boehm: So this makes this artwork de facto unsellable.
Katharina Garbers-von Boehm: And therefore, there's a huge incentive to find an agreement and a settlement, for example, by splitting the proceeds in order to achieve deletion of the entry in the database.
Steve Schindler: Right.
Steve Schindler: And I think just so I understand, the Cultural Protection Act of 2016, that's not soft law, that's hard law, right?
Steve Schindler: That is...
Katharina Garbers-von Boehm: Yeah, yeah, yeah, that's hard law, yeah.
Steve Schindler: Okay, just I didn't want us to be confused that there are penalties for not exercising certain kinds of due diligence under that law, whether or not the stolen artwork, you know, has...
Steve Schindler: title has passed to that by virtue of the passage of time, that you still...
Steve Schindler: It's not like the Washington Principles, which are a form of soft law in a sense, that those are sort of voluntary.
Katharina Garbers-von Boehm: Yeah, we have these different layers.
Katharina Garbers-von Boehm: I mean, the only hard law layer which we now have is this public law layer of the Cultural Protection Act...
Katharina Garbers-von Boehm: But in addition to that, there is the soft law layer of the Washington Principles, which is, I think, in Germany quite elaborated, because we do not only have the Washington Principles, which is like a one-pager, but we also do have so-called Handreichung, which contains, let's say, instructions for institutions how to deal with Nazi-looted art, and in which cases artworks should be restituted.
Katharina Garbers-von Boehm: It elaborates a little bit on the different scenarios which one could imagine.
Katharina Garbers-von Boehm: And now, there is much development in this field.
Katharina Garbers-von Boehm: I mean, we currently do have two different developments.
Katharina Garbers-von Boehm: On the one hand side...
Katharina Garbers-von Boehm: Yeah, let's talk about those.
Katharina Garbers-von Boehm: Yeah, there is a draft law, which tries to mitigate some of the problems just described.
Katharina Garbers-von Boehm: However, as you might have heard, our government will very soon change, and we do have this principle of discontinuity, which says...
Steve Schindler: We're familiar with that.
Katharina Garbers-von Boehm: This draft law will then no longer be on the table.
Katharina Garbers-von Boehm: It will simply be off the table.
Katharina Garbers-von Boehm: And also, it didn't really deal with the provision regarding prescription.
Katharina Garbers-von Boehm: It was actually explicitly said to remain unchanged.
Katharina Garbers-von Boehm: So they were very criticized for not improving the situation for Jewish heirs, really.
Katharina Garbers-von Boehm: According to the draft, the statute of limitation for claims of restitution should only be suspended if the possession of the artwork was acquired in bad faith.
Katharina Garbers-von Boehm: Apart from the constitutional difficulty that laws cannot be retroactively enacted, the claimant would have borne the burden of proving bad faith.
Katie Wilson-Milne: But what was the law trying to do?
Katharina Garbers-von Boehm: The law was only trying to abolish this 30-year statute of limitation in case the possessor acquired the artwork in bad faith.
Katharina Garbers-von Boehm: So you would have had to prove that the Nazi who simply stole the artwork from a Jewish family in 1944 was in bad faith when he stole it.
Katharina Garbers-von Boehm: Or, you know, in that case, you would have been able to prove it.
Katharina Garbers-von Boehm: But in many other cases, the artworks have changed hands many, many times since they were looted and therefore this provision was not very helpful.
Steve Schindler: Right.
Steve Schindler: And maybe just take a step back, because there's something called the Advisory Commission.
Steve Schindler: Could you just explain what that is?
Steve Schindler: And I thought that this new law is theoretically to do away with the Advisory Commission and to provide other avenues for heirs of victims of the Nazis to try to recover their art.
Katharina Garbers-von Boehm: That is another development.
Katharina Garbers-von Boehm: And so the development we just discussed, which was not really, really helping and which is off the table anyway, this concerns the subject matter of the law, the content of the law really.
Katharina Garbers-von Boehm: And this other layer, which we will discuss now, it concerns the Advisory Committee.
Katharina Garbers-von Boehm: This Advisory Committee, it was installed after the Washington Principles came into place, and there was an agreement of the Federal Government and the Government of the Lender that everyone wants to help to put into life the Washington Principles, and therefore in disputed cases, an Advisory Committee was installed, which dealt with controversial cases of Nazi-looted art.
Katharina Garbers-von Boehm: Very experienced historians and lawyers were in this Advisory Committee, and the Advisory Committee decided on 23 or 24 cases by now, which is not a lot.
Katharina Garbers-von Boehm: The reason for this is that the Advisory Committee could only be called upon by both parties.
Katharina Garbers-von Boehm: So the claimant and the institution possessing an artwork.
Katharina Garbers-von Boehm: And this was the main point of criticism, actually.
Steve Schindler: So that if I am a possessor of a work of art that's being claimed, and the Advisory Commission could not hear that case unless I agreed to sort of submit to it.
Katharina Garbers-von Boehm: Absolutely.
Steve Schindler: Okay, so that does seem like an impediment.
Katie Wilson-Milne: And then would it be binding if both parties agree to go before the Advisory Commission?
Katie Wilson-Milne: Is their decision binding?
Katharina Garbers-von Boehm: No, the Advisory Committee simply issued recommendations.
Katie Wilson-Milne: So in no case is it binding.
Katie Wilson-Milne: And what was in place before the Washington Principles, if anything, in Germany?
Katie Wilson-Milne: Was there any kind of claims, restitution committee, or process?
Katharina Garbers-von Boehm: Well, after the war, there were restitution proceedings based on the laws of the allied forces.
Katharina Garbers-von Boehm: And there was a first wave of restitution right after the war and in the 50s.
Katharina Garbers-von Boehm: But these claims, which you could apply for, they were time-barred after a certain period, because at the time one said, okay, there has to be security in the market again and so forth.
Katharina Garbers-von Boehm: So there was a first wave of restitutions, but then nothing happened for a very long time until actually the Washington Principles came.
Katie Wilson-Milne: Right.
Katie Wilson-Milne: And what is the second development you were starting to talk about?
Katharina Garbers-von Boehm: Yeah.
Katharina Garbers-von Boehm: So the second development is trying to tackle the weaknesses of the Advisory Committee.
Katharina Garbers-von Boehm: So the fact that it can only be called upon by both parties and the fact that it only issues recommendations and the fact that the proceedings in front of the Advisory Committee had to be not very transparent.
Katharina Garbers-von Boehm: And therefore, a reform of the Advisory Committee was in the coalition agreement at the beginning of this legislation period, which now soon will come to an end.
Katharina Garbers-von Boehm: And actually, this did not lead to a reform of the Advisory Committee, but to the abolishment of the Advisory Committee and the creation of something new, which is a new arbitration body.
Katharina Garbers-von Boehm: And this is what was now agreed upon in October, and now it was agreed upon on a federal level again in January.
Katharina Garbers-von Boehm: Yeah, many of the lenders have also already agreed to it, but it's not the law yet, and it's not clear yet when the Advisory Committee will really take on its work, and it's not really public yet according to which rules the arbitration body will work.
Katharina Garbers-von Boehm: So again, there is a huge wave of criticism, and there was a letter just published one day before the federal government passed this reform.
Katharina Garbers-von Boehm: And interestingly enough, this letter was signed by many prominent restitution lawyers.
Katharina Garbers-von Boehm: So by the claimants, which said that, yeah, this reform is not helping a lot, but even worse, there is the risk that restitution will be even more difficult under the new rules.
Katie Wilson-Milne: What's the basis for that criticism?
Katie Wilson-Milne: Because I saw that too in the press, and I don't totally understand the specific criticisms of the mechanisms.
Katharina Garbers-von Boehm: Well, you know, I don't understand the criticism totally either.
Katharina Garbers-von Boehm: I think there are different layers again.
Katharina Garbers-von Boehm: So the first layer is that, of course, it puts claimants in a better position if they don't depend on the agreement of the defendant.
Katharina Garbers-von Boehm: So this is clear improvement from the claimant side.
Katharina Garbers-von Boehm: And also, it is said that these decisions of the arbitration body should be binding.
Katharina Garbers-von Boehm: So this is also an improvement.
Katharina Garbers-von Boehm: And I think that the criticism mainly comes from the fact that there are also material law rules.
Katharina Garbers-von Boehm: So not only procedural rules, but there is a framework, the bewertungsrahmen für die Prüfung und Entscheidung zu den S-Verfolgungsbedingten Kulturgut.
Katharina Garbers-von Boehm: This is actually quite similar to what was before in the Handreichung.
Katharina Garbers-von Boehm: It's a little bit of an elaboration, which cases should be regarded as Nazi-looted and which shouldn't.
Katharina Garbers-von Boehm: From the point of view of a claimant, it can of course be beneficial if we only have, you know, just an unfair solution and we can deal with that.
Katharina Garbers-von Boehm: So there's much more flexibility.
Katharina Garbers-von Boehm: And if you have more stricter rules, what should be restituted and what shouldn't, this kind of limits in certain cases.
Katharina Garbers-von Boehm: But also, I think the main point of criticism of the signatories of the letter is that they want a law.
Katharina Garbers-von Boehm: This again, it's just soft law in the sense that it's an agreement between the different administrative bodies in Germany.
Katharina Garbers-von Boehm: So the Bund, the federal government and the Länder and the Kommunen, so like the cities, they agree that they want to put this into place.
Katharina Garbers-von Boehm: But it is not a law.
Steve Schindler: I mean, that's really fascinating, I think, because my understanding, just having read the newspaper articles, that this new arbitration body would be given the power to issue enforceable awards.
Katie Wilson-Milne: Right, which doesn't sound like soft law.
Katharina Garbers-von Boehm: No, this is also a point of criticism, actually, of the other side, like of the defendant side.
Katharina Garbers-von Boehm: The defendants say there is no law.
Katharina Garbers-von Boehm: Everyone is criticizing it.
Katharina Garbers-von Boehm: The cultural minister who wanted to fulfill her promise from the coalition contract to pass this reform, and now literally everyone is unhappy.
Katharina Garbers-von Boehm: So, yeah, this is typically German.
Katie Wilson-Milne: So it has legal ramifications, meaning the arbitration body issues legally-binding decisions.
Katie Wilson-Milne: But you're saying the way it came into being, some people are saying it's not legally legitimate, because its creation didn't go through the proper legal system, legislative system.
Katie Wilson-Milne: Is that what you're saying?
Steve Schindler: Or that's what the critics are saying?
Katie Wilson-Milne: I think we want to just make clear that the arbitration body itself is not soft law.
Katie Wilson-Milne: They will issue legally-binding decisions if that's begins.
Katie Wilson-Milne: We don't know what the criteria are.
Katie Wilson-Milne: We don't know any of the rules, but that's what it means.
Katie Wilson-Milne: The criticism is about the creation of that body, not the legal power the body will have.
Katharina Garbers-von Boehm: Yes.
Steve Schindler: Right.
Steve Schindler: I guess one criticism could be, I suspect, that if they're not able to apply soft law, so to speak, then it's going to be very difficult for a claimant to recover even using this body because they'll say, well, okay, but these time periods have passed and therefore.
Katharina Garbers-von Boehm: No, but this is not what is going to happen.
Katharina Garbers-von Boehm: I mean, this body will issue decisions based on the Washington Principles.
Steve Schindler: Ah, okay.
Katharina Garbers-von Boehm: And based on what is called the bewertungsrahmen für die Prüfung und Entscheidung zu den esserverfolgungsbedingten Kulturgut.
Katharina Garbers-von Boehm: So it's like a, how would you put that in English?
Katharina Garbers-von Boehm: It's like a validation framework.
Katharina Garbers-von Boehm: There's already a draft which was leaked on the internet, creating some rules on how to deal with Nazi-looted art cases.
Katharina Garbers-von Boehm: And this is actually a point of criticism that there are rules applied by an arbitration body, which were not really publicly discussed.
Steve Schindler: Okay.
Steve Schindler: Are there cases that would be interesting to discuss involving stolen art or title issues that are current?
Steve Schindler: They don't have to be Nazi cases.
Steve Schindler: I mean, we kind of skipped over that.
Katharina Garbers-von Boehm: Well, I mean, the classic case to show what German law does to victims of theft is that I am a victim of theft and you are the thief, Steve.
Steve Schindler: Yes, okay.
Steve Schindler: I like that scenario.
Katharina Garbers-von Boehm: I don't know who you are for a very long period of time, but by some coincidence, I found out who you are after 31 years.
Katharina Garbers-von Boehm: And I, the victim of theft...
Steve Schindler: Yeah.
Katharina Garbers-von Boehm: And I won't be able to get it back.
Steve Schindler: Katharina, who?
Steve Schindler: I don't think I know you.
Katie Wilson-Milne: And there are absolutely no exceptions to that, right?
Katharina Garbers-von Boehm: Yeah, absolutely no exceptions to that.
Katie Wilson-Milne: Good faith, bad faith, that's only relevant for 10 years.
Katie Wilson-Milne: After 30 years, it doesn't matter if it was bad faith.
Katharina Garbers-von Boehm: Exactly.
Katie Wilson-Milne: So, I mean, we talk about cases so much in this podcast, but does that mean that there are very few cases in Germany, because the law is so clear that these issues don't get litigated for very long because there aren't good arguments for the victim?
Katharina Garbers-von Boehm: Absolutely.
Katie Wilson-Milne: Wow.
Steve Schindler: You know, one of the things that we see here, and not really with respect to Germany necessarily, but just civil law jurisdictions, you know, we've talked on the podcast about the Cassirer case, you know, the case that was brought by the heirs of Lilly Cassirer against the Thyssen-Bornemisza Museum or Foundation in Madrid.
Steve Schindler: And that involved an artwork by Camille Pissarro, as our listeners can recall, that was clearly stolen by the Nazis.
Steve Schindler: But the lawsuit brought over a decade ago now was brought in California.
Steve Schindler: And the issue really in the case, the main issue was whether the law of California should apply with respect to statutes of limitations or whether the law of Spain should apply.
Steve Schindler: And obviously, if the law of Spain applied, then title would have passed and there'd be no claim.
Steve Schindler: If the law of California applied, then the result would be different.
Steve Schindler: So those rules dictate the outcome in a lot of these cases.
Steve Schindler: And it seems like Germany, as in other civil law jurisdictions in Europe, would make it very difficult at this time for the victims to recover.
Steve Schindler: They have a little bit of an easier time here, even though very often these cases do get litigated, both because of our rules about title never passing, and also statute of limitations.
Katharina Garbers-von Boehm: Yeah.
Katharina Garbers-von Boehm: I mean, what I do when I have a case on my desk in which an artwork was clearly stolen and is documented, and we now know where it is, I often have it confiscated by the police.
Katharina Garbers-von Boehm: Once it is with the police, of course, it is easier to negotiate a settlement, because there's a certain amount of pressure.
Steve Schindler: So that's interesting.
Steve Schindler: We have something similar going on here too.
Steve Schindler: It's kind of interesting because we have, as you probably know, an assistant Manhattan District Attorney whose name is Matthew Bogdanos, who has taken a very aggressive stance in recovering stolen artifacts, cultural property, and now really Nazi art and has gone after a number of museums, institutions, particularly with respect to works by Egon Schiele.
Steve Schindler: And we have both the oddity of civil law cases, seeking the return of some of those works of art to the heirs of, in this case, Fritz Grünbaum, who is a victim of Nazi persecution and died in Dachau.
Steve Schindler: But you had civil cases brought here in which the victims did not prevail, or the heirs of the victims did not prevail for certain technical reasons.
Steve Schindler: But now you have Matthew Bogdanos, who is a law enforcement officer, basically coming along and saying, well, there are different rules that apply to stolen works of art, and these were stolen and trafficked through New York, which is my jurisdiction, no matter when they pass through New York, and I'm going to go out and seize the works, which is done.
Steve Schindler: And in many cases, the institutions holding those works have just given them up because it's fighting with the district attorney, is not always a great idea.
Steve Schindler: And we have one case now that's being hotly litigated by the Art Institute of Chicago, in which they are defending themselves in a case in New York against the seizure of Schiele work, which they say both Bogdanos lacks jurisdiction here in New York to prosecute, but also that the work actually wasn't stolen by the Nazis.
Steve Schindler: So we have-
Katie Wilson-Milne: That's the very same work, was subject to civil lawsuits that where the, at least in federal court, the federal court found that it was not in fact stolen.
Katie Wilson-Milne: So it's, you know, we're all over the place here.
Katie Wilson-Milne: And there was actually a New York state court case that found that it may have been stolen, but this particular work and the circumstances of the Grünbaum art collection are being litigated in an incredibly divergent forum with divergent results.
Katharina Garbers-von Boehm: Yeah, interesting.
Katharina Garbers-von Boehm: We have not discussed a lot about the criminal law layer of sealing with stolen artworks in this podcast.
Katharina Garbers-von Boehm: So I just wanted to highlight that, yeah, there is an intersection between civil law and criminal law.
Katharina Garbers-von Boehm: And sometimes the criminal procedure can help in civil law cases and can also create a leveling ground for negotiations.
Katharina Garbers-von Boehm: I had this case.
Katharina Garbers-von Boehm: So there was an artwork which served as a collateral for a loan.
Katharina Garbers-von Boehm: And despite the fact that actually the bank who gave out that loan was the owner of the artwork, the recipient of the money was still in possession of the artwork.
Katharina Garbers-von Boehm: And this artwork was then somehow transferred to Germany.
Katharina Garbers-von Boehm: And it was by the intermediary of two art advisors sold on to someone in the UK.
Katharina Garbers-von Boehm: And the artwork was actually physically in Germany.
Katharina Garbers-von Boehm: And this bank, which used to be the owner of the artwork, had lost ownership due to good faith acquisition through the intermediary of an advisor and a dealer in Germany.
Steve Schindler: Right.
Steve Schindler: Those are difficult cases.
Steve Schindler: You know, and we've had similar cases here.
Steve Schindler: In fact, one that we worked on, which involved the now infamous fraudster Inigo Philbrick.
Katharina Garbers-von Boehm: Oh yes, I had a case like that too.
Steve Schindler: And you know, to me, in this particular case, we represented a client who purchased a very important work of art from a London gallery.
Steve Schindler: It was shipped to New York, put in storage.
Steve Schindler: There was some damage that the work had sustained on its being shipped to New York.
Steve Schindler: And our client, who was friendly with Inigo Philbrick, asked him for a recommendation about, you know, who a restorer could be or who could look at it, a conservator.
Steve Schindler: And Mr. Philbrick said, I'll take care of it for you, just release it to me, and I'll get someone I know in to look at it.
Steve Schindler: So the work was released to Mr. Philbrick, who then turned around and sold it to a Belgian collector.
Steve Schindler: And so you had the classic sort of outline of an entrustment, an owner of a work of art entrusting it to someone who was a dealer, who then went and sold it.
Steve Schindler: And there were some interesting questions raised like this, because remember, we talked earlier on, I think Katie said that the reason that we have this entrustment rule is to protect consumers, really, and transactions.
Steve Schindler: So that if you go into a gallery and you see something hanging on the wall, you don't have to do a whole due diligence project.
Steve Schindler: You can just accept that the dealer has the right to sell it.
Steve Schindler: But this was different because it took place in a storage facility.
Steve Schindler: It was sold to another dealer.
Steve Schindler: There were some red flags potentially with respect to the way this was done.
Steve Schindler: So it was an interesting case involving this concept of entrustment.
Steve Schindler: Of course, the subsequent purchaser argued that title passed under entrustment, and we argued that it didn't.
Steve Schindler: Of course, the case was litigated and ultimately settled confidentially, but it really raised all of these questions a little similar to what you had said.
Katharina Garbers-von Boehm: Yeah, I was actually an expert witness in one of the favorite cases at the Supreme Court, New York.
Katharina Garbers-von Boehm: And it rose many, many very interesting questions.
Katharina Garbers-von Boehm: In that particular case, Philbrick had purchased and sold for one and the same person.
Katharina Garbers-von Boehm: And during that time, the artwork was in the storage which they had owned jointly.
Katharina Garbers-von Boehm: So this also, yeah, rose many interesting questions regarding the so-called substitute of possession.
Katharina Garbers-von Boehm: Is this good enough, this relationship, that someone purchases an artwork for you which he's then supposed to sell for you?
Katharina Garbers-von Boehm: Is this enough for title to pass?
Steve Schindler: Right.
Steve Schindler: That case was in New York where they were applying German law in that case, which I assume why you were an expert.
Steve Schindler: Okay.
Steve Schindler: Well, Katharina, thank you so much for joining us on the podcast.
Steve Schindler: It was a real pleasure.
Steve Schindler: And I look forward to our next two years of adventure with the IBA.
Katharina Garbers-von Boehm: Yes, me too.
Katharina Garbers-von Boehm: Very much so.
Katharina Garbers-von Boehm: Thank you so much for having me again, and I liked our conversation.
Steve Schindler: And that's it for today's podcast.
Steve Schindler: Please subscribe to us wherever you get your podcasts, and send us feedback at podcast@schlaw.com.
Steve Schindler: And if you like what you hear, give us a five-star rating.
Steve Schindler: We are also featuring the original music of Chris Thompson.
Steve Schindler: And finally, we want to thank our fabulous producer, Jackie Santos, for making us sound so good.
Katie Wilson-Milne: Until next time, I'm Katie Wilson-Milne.
Steve Schindler: And I'm Steve Schindler, bringing you The Art Law Podcast, a podcast exploring the places where art intersects with and interferes with the law.
Katie Wilson-Milne: The information provided in this podcast is not intended to be a source of legal advice.
Katie Wilson-Milne: You should not consider the information provided to be an invitation for an attorney-client relationship, should not rely on the information as legal advice for any purpose, and should always seek the legal advice of competent counsel in the relevant jurisdiction.