What does the recent $19 million settlement of the long-standing U.S. v. Portrait of Wally (Wally) mean to the generation of students who took on law school loans with the aspiration of practicing art law? Does it spell the end of the art law dream or does it simply mark a milestone on the widening road?

On July 20, 2010, the Art Law Group of Herrick, Feinstein LLP proudly announced settlement of this seminal art law case, commenced in 1998. A 1912 painting by Egon Schiele was stolen from Austrian Jewish art dealer and collector Lea Bondi Jaray by a Nazi agent in the late 1930s, and it was erroneously restituted to a different family after World War II, making its way into the Austrian National Gallery in the Belvedere Palace in the 1950s. Subsequently, under disputed circumstances, Rudolph Leopold, an Austrian collector of Expressionist paintings, acquired Wally for his own collection. In 1994, together with the companion painting of Schiele’s self-portrait and other important works, Wally became part of the newly formed Leopold Museum.

In late 1997, the painting was loaned to the Museum of Modern Art (the “MoMA”) in New York by the Leopold Museum. In 1998, Robert Morgenthau, then Manhattan District Attorney, subpeonaed the painting in connection with an investigation into whether Wally was stolen property and thus was imported into the United States in violation of U.S. law. The Estate of Lea Bondi Jaray asserted a claim to the painting in the action, and the U.S. agreed that upon forfeiture of the painting, it would transfer to the Estate all right and title to the painting. Thus commenced civil forfeiture action, whereby the U.S. government tried to prove that the painting was knowingly stolen and was imported property in violation of the National Stolen Property Act, 18 U.S.C. § 2314.
Both MoMA and the Leopold Museum objected to the seizure and forfeiture proceedings by alleging that the painting was not stolen, that they did not knowingly import stolen property, and that the seizure was in violation of the New York Arts and Cultural Affairs Law, which grants immunity from seizure for international loans.
For 12 years, in accordance with a federal seizure warrant, the painting was held in U.S. custody during numerous negotiations, depositions, discovery proceedings, hearings, brief submissions and revisions, and finally settlement talks. The case and the fate of the painting, as well as the repercussions of the case on the museum community, has been the subject of countless articles, conferences and debates.
Ultimately, the U.S. government, the Bondi Estate, and the Leopold Museum reached a settlement agreement just days before the New York Supreme Court commenced a trial to decide whether Leopold did not know that the painting was stolen property when the museum imported it into the United States. Under the terms of the settlement agreement, the Leopold Museum agreed to pay the Bondi Estate $19 million in exchange for the release of all claims to the painting. Before returning to Austria, the painting was displayed in New York City once again, this time at the Jewish Museum of Heritage, not as evidence of Schiele’s painterly prowess but as a token and a small victory in the international efforts to recover art and other cultural property stolen during World War II.
Cardozo students and faculty played a small role in bringing the case to its apparent end. Together with Professor Lucille Roussin, the founder and director of the Holocaust Restitution Claims Practicum, students assisted the Art Law Group of Herrick, Feinstein LLP by performing minor legal research.
In March 2011, Cardozo will host a two-day international conference organized by the American Society of International Law and the Cardozo Art Law Society to examine the continued need for restitution of cultural valuables including but not limited to those seized during World War II. The Wally decision will certainly encourage future legitimate claims. Wally and countless other cases have demonstrated the increased emphasis and need for return of property and reunification of cultural valuables. The Cardozo conference will bring together legal practitioners and academics to discuss recent developments and contemporary approaches to restitution. The panels will represent many sides of the debate: individual claimants, museums, national interests fighting recovery, collectors, developing nations, and auction houses. By focusing on the topic of restitution, the conference will draw upon various areas of law as they manifest themselves in the burgeoning field of Art law.