(CN) - Hungary must face a lawsuit from the alleged rightful heirs to a Jewish baron's art collection that was plundered by the Nazis, the D.C. Circuit ruled.
Baron Mor Lipot Herzog, a Budapest banker, was a "passionate Jewish art collector in pre-war Hungary" who assembled a collection of more than two thousand paintings, sculptures, and other artworks, according to a complaint filed by his descendents in Washington, D.C. That collection included works by artists such as El Greco, Diego Velazquez, Pierre-Auguste Renoir and Claude Monet.
Baron Herzog died in 1934, shortly before the Hungarian government, in collaboration with Nazi Germany, began plundering Jewish property and stripping Jews of their assets.
His children attempted to hide the artworks at one of the family's factories, but the hiding place was discovered, and the collection was "taken directly to Adolf Eichmann's headquarters at the Majestic Hotel in Budapest for his inspection," according to the complaint. Eichmann allegedly "selected many of the best pieces of the Herzog Collection" to display near Gestapo headquarters and eventually move to Germany.
As transportation administrator for Nazi Germany's Final Solution, Eichmann organized all the logistics for transporting Eastern European Jews to the death camps. He personally oversaw the deportation of more than 400,000 Hungarian Jews.
The artworks that Eichmann did not select went to the Hungarian National Gallery and Budapest Museum of Fine Arts.
Herzog's descendents have repeatedly requested the return of the artworks from the original collection, claiming that the family agreed to let Hungary display the works after the war, but retained the right to demand their return.
A Hungarian appellate court dismissed the family's claims in 2008, finding that the Peace Treaty between Hungary and the Allied Powers, and the subsequent agreement between Hungary and the U.S. over settling claims, "establish an exclusive treaty-based mechanism for resolving all claims seeking restitution of property discriminatorily expropriated during World War II from individuals subject to Hungarian jurisdiction."
David de Csepel, a U.S. citizen, and Angela and Alice Herzog, Italian citizens, are leading the complaint to recover roughly 40 pieces of art.
Though Hungary claimed that the statute of limitations and Foreign Sovereign Immunities Act (FSIA) barred the lawsuit, U.S. District Judge Ellen Segal Hevelle disagreed in a 2011 ruling.
A three-judge panel of the D.C. Circuit affirmed Friday, and revived some claims that Hevelle had dismissed.
"Hungary's argument falters for the simple reason that the Herzog family's claims fall outside the treaty's scope," Judge David Tatel wrote for the panel. "Article 27 concerns property discriminatorily expropriated during World War II. As we have explained, however, the family's claims rest not on war-time expropriation but rather on breaches of bailment agreements formed and repudiated after the war's end. Accordingly, the Peace Treaty presents no conflict with Hungary's amenability to suit under the FSIA."
As to the statute of limitations, Tatel said "we see nothing that conflicts with the family's allegation that their bailment claims accrued in January 2008."
The prior Hungarian court's decision did not violate the U.S.'s "public interest in ensuring that its executive agreements ... are interpreted correctly," he added.
On remand, the family can submit evidence that the Hungarian judicial proceedings "were not conducted in accordance with internationally recognized standards of due process."
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