|High Court (England and Wales)|
City of Gotha and Federal Republic of Germany v. Sotheby's and Cobert Finance S.A
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In resolving the disputes as to foreign law, I must be guided by the following principles:-
(1) When faced with conflicting evidence about foreign law I must resolve differences in the same way as in the case of other conflicting evidence as to facts. (Bumper Corporation v. Commissioner of Police of the Metropolis  1WLR 1362, 1368G).
(2) Where the evidence conflicts I am bound to look at the effect of the foreign sources on which the experts rely as part of their evidence in order to evaluate and interpret that evidence and decide between the conflicting testimony (Bumper Corporation at 1369H)
(3) I should not consider passages contained within foreign sources of law produced by the experts to which those experts have not themselves referred. (Bumper Corporation 1369D-G)
(4) It is not permissible to reject uncontradicted expert evidence unless it is patently absurd (Bumper Corporation 1371B).
(5) In considering foreign sources of law I should adopt those foreign rules of construction of which the experts have given evidence (this principle underlies the principle that an English court must not conduct its own researches into foreign law).
(6) Whilst an expert witness may give evidence as to his interpretation of the meaning of a statute it is not for the expert to interpret the meaning of a foreign document. His evidence will be limited to giving evidence as to the proper approach, according to the relevant foreign rules of construction, to that document. There is no dispute as to the approach the German Court would take to issues in respect of which there is no judicial precedent. It would have regard to commentaries on the German Civil Code ("BGB"). It would not feel bound by the mere fact that the majority of commentators took a particular view or by the most recent statement of opinion. It would take into account the quality of arguments, the consistency of the statements and the reputation of the authors. German Courts adopt a teleological approach, interpreting a statute according to its purpose.
There is no dispute between the parties but that I must apply German domestic law in order to trace the title to the painting. Both sides agree that:-
"the validity of a transfer of a tangible, movable and its effect on the proprietary rights of the parties thereto and of those claiming under them in respect thereof, are governed by the law of the country where the movable is at the time of the transfer. ( Lex Situs ). ( See Rule 118 Dicey and Morris Conflict of Laws 1993 Edn. Page 965 and Winkworth v. Christie Manson and Woods Limited and anr.  Ch. 496 at 513 ). " No-one has suggested that any of the five exceptions to which Slade J. referred at pages 501 and 514 A-B. apply. Accordingly, the Federal Republic of Germany must establish that it has title to the painting under German law. There was no argument before me as to the effect of Soviet law on proprietary rights whilst the painting was within Soviet territory. Under Soviet law if the transfer of possession occurred without lawful consent of the owner, no subsequent possessor could acquire title. No-one has suggested that Soviet law is relevant to the issue of title.
The question whether the Federal Republic of Germany can prove title to the painting turns on the effect of legislative provisions passed between 6 July 1945 and 24 July 1946 and the location of the painting during that period. Whilst not admitted in the pleadings, Cobert was prepared to assume The Art Foundation acquired ownership of the painting in 1928.
The Orders and Laws passed in the period July 1945 to July 1946 concerned confiscation, sequestration and expropriation of property within the area covered by the Soviet Military Administration in Germany. It is important, therefore, to distinguish between confiscation, sequestration and expropriation. It is accepted by both Professor Werner and Professor Brunner, the experts in German Law, that:-
(i) Confiscation merely had the effect of placing the property under the control of the state. It did not have the effect of altering ownership.
(ii) Sequestration was concerned with the administration of the confiscated property; to secure confiscation by preventing interference by the owner whose rights were restricted by confiscation. Sequestration did not, therefore, alter ownership in the property.
(iii) It is only expropriation which has the effect of depriving a former owner of his title to the asset. Confiscation and sequestration may therefore be regarded as measures preliminary to expropriation, designed to prevent subsequent expropriation from being frustrated by the former owner.
In order to determine whether the painting was expropriated in October 1945 it is necessary to determine whether the painting was confiscated in July 1945. Three or four days after Russian troops arrived in Thüringia, the President of the Government of Thüringia passed a Polizeiverfügung (called in these proceedings a police order) and a Polizeiverordnung (called in these proceedings a police regulation) concerning confiscation of certain assets. It is accepted by both Professor Werner and Professor Brunner that, as a matter of general law, the legal validity of a Verfügung depends upon a Verordnung. The Verfügung of 6 July, 1945 purports to confiscate assets of the former reigning royal house of Saxe-Coburg-Gotha.
"Based on paragraph 1ff of the Polizeiverordnung (regulation) concerning the confiscation of assets of former members of the national socialist German workers party, the assets of the Duke of Saxe-Coburg-Gotha and of his house ... are confiscated"
"In particular also in so far as assets have been transferred to the "Foundation of the Duke of Saxe-Coburg-Gothas Family" and the "Foundation for the Arts and Sciences" (see para 2 of Polizeiverordnung (police regulation) dated 6th July 1945)" The Polizeiverordnung appears on its face, to be inconsistent with the Verfügung which purported to confiscate all the assets which had formally belonged to the Duke of Saxe-Coburg-Gotha. The Verordnung provided in paragraph 1 for the confiscation of assets of former members of the national socialist German workers party, its organisations and affiliated bodies. The Foundation for Art and Science was not such a body. But by paragraph 2 of the Verordnung:-
"Such confiscation of assets also applies to third persons to whom individuals named in paragraph 1, have transferred, after 30th January 1933, ownership, possession or other entitlements in relation to such items." Although the Duke fell within paragraph 1, the assets of the Art Foundation and in particular the painting were not transferred after 30th January 1933. There is no evidence that any assets were transferred by the Duke to the Art Foundation after that date. Thus, the problem arises as to whether the Verfügung had the legal effect of confiscating the painting or whether, because the painting was transferred to the Foundation before 30th January 1933, the Verordnung prevails and had the effect that the painting was not confiscated.
Although at one point Professor Brunner expressed some doubt, in general both experts agreed that, although the confiscation of all the assets of the Art Foundation whether or not they had been transferred after 30th January 1933 lacked a legal basis, the confiscation under the Verfügung was not null and void ("nichtig") but was merely open to be challenged by appropriate legal remedies and was effective unless and until such legal remedies were taken to have the Verfügung declared invalid ("rechtswidrig"). In other words, the Verfügung was, to put it loosely in English terms, only voidable and not void and had legal effect until successfully challenged in court. No such challenge took place.
Professor Brunner took the view that there was no conflict between the Verfügung and the Verordnung. It was necessary to read them together. Read together, all that was confiscated by the Verfügung and Verordnung were those assets transferred to the Art Foundation after 30th January 1933. But there is no evidence that any assets were transferred to the Foundation after that date. Nor is there any basis for supposing that the Verfügung was passed in the mistaken belief that the assets were transferred to the Foundation for Art and Science after 30th January 1933. (A memorandum for the file dated 24 June 1949 asserts that the Foundation for Art and Science was created in 1934, but the same memorandum refers to Foundation Statutes 23rd March 1928 at its head and contradicts such a belief in the following page). In my judgment the Verfügung and the Verordnung are inconsistent. Nevertheless I accept that the consequences are that the Verfügung, which was never challenged, was legally effective; in other words was not "nichtig" but only "rechtswidrig". Accordingly the painting, which was in Thüringia on 6th July 1945, was confiscated.
On 9th October 1945 the Soviet Military Administration in Germany (SMAD) passed a law ("Gesetz") concerning the securing and expropriation of Nazi property. By paragraph 19:-
"The confiscation orders (Verfügung) made pursuant to the police regulations (Verordnung) concerning the confiscation of assets of former members of the national socialist German workers party on 6th July 1945 (Government Gazette page 3) are valid as expropriation orders within the meaning of this Act, even if such orders had not been published." The effect of the paragraph was to expropriate the assets of the Art Foundation. Both Professors agree that if the picture was confiscated by virtue of the Verfügung, as I have already concluded, the consequence of the law of 9 October 1945 was to expropriate it. Thus, title to the painting passed to the Land of Thüringia in October 1945 because the painting was at that time within the territory covered by the Soviet Military Administration.
Even if the painting was expropriated by the Law of 9 October 1945, Cobert contend that the October 1945 Law was repealed by the Law of 4 December 1945 and the painting was no longer the subject of expropriation. That issue turns on the proper construction of those two laws and the effect of Orders (SMAD) passed by the Soviet Military Administration for Germany pursuant to which local Orders (SMA) were made by the Soviet Military Adminstration in Thüringia and the two local Thüringian laws were passed. Both Professors accepted that, after October 1945, the Soviet Military Administration appreciated that the German authorities may have been over-eager in their confiscation and expropriation of assets, in the belief that their owners may have belonged to organisations forbidden or disbanded by the Soviet Military Command. The overall policy of the Soviet Military Administration between October 1945 and July 1946 was to secure assets located in areas under its jurisdiction which might, on due consideration, fall to be expropriated and to allow time for considering whether all the assets previously confiscated and expropriated should be subject to expropriation. Accordingly, on 30th October 1945 by Order 124 (SMAD) assets located in the zone occupied by the Red Army were declared the subject of sequestration if they belonged to persons listed in that order. That order did not itself cover the Foundation. The instructions to the Order did not assist me. By a Law (Gesetz) of 4 December 1945 concerning the repeal of the Law of 9 October 1945 by order of the Soviet Military Administration for the Land of Thüringia :-
In view of the exhaustive regulations contained in orders of the Supreme Chief of Soviet Military Administration in Germany concerning the sequestration and temporary administration of some categories of assets in Germany (Order No 124 of 30th October) ... the Thüringian law of 9th October 1945 concerning securing and expropriation of nazi assets ... is hereby repealed.
All matters pending at the time of this Act coming into force with authorities responsible pursuant to the Thüringian expropriation law of 9th October 1945 are as far as they are subject to the provisions of Orders No 124 and 126 in their current state handed over to the authorities appointed, according to these Orders and to existing and future execution regulations" The translation probably does not do justice to the original.
Order No 38 (SMA), of 25 January 1946, of the Soviet Military Administration in Thüringia was passed in order to carry out Order No 124 within the region of Thüringia. It imposed sequestration upon the museum at Gotha (item 134) and the castle at Reinhardsbrunn (item 173). It is agreed that the sequestration, which referred only to buildings and installations, covered their contents.
Professor Werner takes the view that the effect of Paragraph 2 of the Law of 9 December 1945, is to maintain the expropriation under the Law of 9 October 1945 because the painting was covered by Order No 124 when read with its consequential local Order No 38.
The question whether the Law of 4 December 1945 had the effect that the painting was no longer the subject of expropriation turns on the proper interpretation of Paragraph 2 of that Law. I do not think that any reliance can be placed upon the fact that the repeal purported to be retrospective. Professor Werner took the view that the Law of October 1945 was effective despite its retrospective effect and appeared to accept in cross-examination that a repeal of such expropriation was possible even if it was retrospective.
Cobert contends that Paragraph 2 is a merely procedural, transitional measure which has nothing to do with the substance of expropriation repealed by Paragraph 1. Professor Brunners evidence was that Order 124 (SMAD) and Order 38 (SMA) merely provide for sequestration, and not expropriation, for the purposes of deciding whether subsequent expropriation might take place later.
In my judgment, detailed analysis of the Law of October 1945 and Paragraph 2 of the Law of 4 December 1945 leads to the conclusion that the expropriation of the painting by the Law of 9 October 1945 remained effective.
In order to establish that the expropriation of the painting under the Law of 9 October 1945 remained effective despite the Law of 4 December 1945, the plaintiffs must establish:-
(1) that the expropriation was one of the "matters pending at the time of this Act (Law of 4 December 1945) coming into force with authorities responsible pursuant to the Thüringian expropriation Law of 9 October 1945".
(2) that the painting was subject to the provisions of Order No 124. If those conditions were satisfied then, pursuant to Paragraph 2 of the Law of 4 December 1945 the painting was handed over to the authorities appointed in its "current state"; in other words its legal status was maintained.
The scheme of the Law of 9 October 1945 was:-
(1) Assets liable to be expropriated were to be registered with Honorary Commissions established to check lists of assets and ensure compliance with the Law (Articles 13 and 14).
(2) The President of the Land of Thüringia was to decide which assets were to be expropriated (Article 7). Notice was to be served on former owners, if necessary by substituted service (Articles 7 and 8).
(3) A decision of expropriation had the effect of confiscation (Article 9).
(4) Land expropriations were to be notified to the Land Registry so that the appropriate changes could be entered (Article 10).
(5) The President of the Land had power to order temporary confiscation pending a decision as to expropriation (Article 12)
(6) Objections by third parties, other than spouses, claiming the assets could be lodged within 6 months (Article 17). Matters would be pending, within the meaning of Paragraph 2, under those Articles when the Law of 4 December 1945 came into force.
It is important to emphasise that the painting, having been confiscated by the Verfügung of 6 July 1945 was treated as expropriated under the Law of 9 October 1945 without the need for the procedure under Articles 7, 8, 13 and 14. By Article 19 (which suffered from a number of translations):-
"The confiscation orders made pursuant to the police regulation concerning the confiscation of assets of former members of the National Socialist German Workers Party of 6 July 1945 ... are valid as expropriation orders within the meaning of this Act, even if such orders have not been published." The closing paragraph of Article 19 read:-
"Assets which have been confiscated by the Occupation Authorities, or which will be confiscated in future are considered to be expropriated under the provisions of this Law. In such cases an expropriation decree by the President of the Land of Thüringia is not required." Thus expropriation of the painting under the October Law did not depend upon any decision of the President of the Land but was effected by Article 19.
In my judgment, although expropriations falling within Article 19 had effect without the need for any further decision by the President of the Land such expropriations did fall within the meaning of "matters pending" under Article 2. They were still subject to the six month period for objection under Article 17 of the Law of October 1945.
Order 124 made provision for similar procedures under a fresh regime. The assets listed in Paragraphs 1 and 2 of that Order were to be notified to Local Administrations (Paragraph 3). Those Administrations were required to find and take into custody assets which were then to be registered and notified to military commanders (Paragraph 4).
It is to be noted that Order 124 itself made no provision for confiscation of assets. The function of confiscation was delegated to the local administrations by Paragraph 4.
The collection previously owned by the Art Foundation fell within Order 124 by virtue of Order 38. It is true that Order 38 was only enacted pursuant to Order 124 on 25 January 1946. It was faintly argued that the painting did not, therefore, fall within Order 124 as at the date of the Law of 4 December 1945. But, in my judgment, it is clear that for the purposes of Paragraph 2 of the Law of 4 December 1945 Order 38 must be read with Order 124 (the letter dated 16 January 1946 from the Director to the Trustee of the confiscated assets copied to the State Commission for the execution of Orders No 124/126 and the letter dated 17 November 1947 support that view).
I accept Mr Layton QCs submission that it makes no sense if confiscations which had already been carried out by local authorities pursuant to the Verfügung of 6 July 1945 were no longer legally effective but were to be subject to the regime under Order 124 of notification and decision by the local administrations under Paragraph 4 of that Order. The correct view, in my judgment, is that the legal effect of previous confiscations remained effective under Paragraph 2 of the Law of 4 December 1945. The status of the collection confiscated by the Verfügung of 6 July 1945 was preserved by Paragraph 2 without the need for the procedures under Paragraphs 3 and 4 of Order 124; the collection remained subject to confiscation. If, moreover, the legal status of the collection was preserved by Paragraph 2 it follows that the collection remained subject not only to confiscation but also to expropriation. It is difficult to see how assets such as the collection, including the painting, retained their status as confiscated assets but not their status as expropriated assets. There was, after all, no provision for returning assets which had been expropriated to their original owners such as the Art Foundation. In my judgment, therefore, Professor Werner is correct in his opinion that the painting remained subject to expropriation. The effect of the Law of 4 December 1945 was to replace the regime which had previously existed under the Law of 9 October 1945 with the regime under Order 124 but not to repeal the confiscations which had been carried out prior to the Law of 9 October 1945 and which took effect as expropriations under that Law.
Both sides rely upon documents written between l945 and l947 to support their rival contentions as to the effect of the legislation passed in l945 and l946. Those documents provide a glimpse of the difficulties of administration in the post-war turmoil in Germany. They demonstrate the increasing confusion of those responsible for administering the Art Foundation. The Laws governing the legal status of the Art Foundation were not drafted with the precision to be expected in times of peace and stability. They are primarily concerned with difficulties in administration and not with legal status. But in my judgment those documents do at least support three propositions:-
(1) The assets of the Art Foundation had been confiscated with effect from July l945;
(2) The trustee (Treuhänder in German has been loosely translated as trustee) appointed in l945, acted under the authority of the Land and reported to the Land.
(3) There was no reference to expropriation by the Law of 9 October l945. Anton Etthoefer was appointed as trustee to administer the confiscated assets on 16 July l945. On 9th January l946 the Vice-President of the Land wrote to the Soviet Military Administration in Weimar warning that troops were taking away property of the House of the Duke of Saxe-Coburg-Gotha, which, he asserted, was under the supervision of the State Office for Public Education. He asked for immediate intervention to prevent removal of the museum objects which, he said, belonged to the Land of Thüringia. On 16th January l946 the Director von Schenk wrote to the trustee of the confiscated assets complaining that objects had been removed by, amongst others, Professor Alexeyev. The letter was copied to the State Commission for the Execution of Orders 124/126 at Weimar. On 28th January l946 Geithner, the Director of Administration, sought orders to stop removal of objects from the Museum from the Presidential Chancellery at Weimar. On 16 February l946 the trustee of the confiscated assets sought to prevent release of the confiscated assets of the Family Foundation asserting that, by Order 124, they had been confiscated for the benefit of the Soviet Military Administration. He referred to confiscation pursuant to the Government Gazette dated 16 July l945. On 6th May l947 the Vice-President of the Land wrote to the Department of the President requesting that the trusteeship pursuant to 124 be assigned to the Ministry of Finance. On 16 September l947 a draft Memorandum from the Ministry of Finance recorded confiscation of the Dukes assets under the Order of 6 July l945. It recorded that the assets were affected by Order No.124 and that the trustee was Etthoefer under the supervision since May l947, of the Ministry of Finance. On 17th November l947 the Ministry of Justice addressed a review to the Officer in Charge for the execution of Order 124. Apparently that Officer had taken the view that the assets of the Duke had been confiscated on the strength of the Police Order of 6th July l945. The author of that review asserted that the Order of 6th July l945 had been rendered redundant (there was, I accept, a mis-translation which originally translated redundant as invalid). He stated that the Law of 9 October l945 had replaced the previous order and had itself been repealed by the Law of 4 December l945. He said that the assets of the former Duke had been sequestered and expressed astonishment that the person responsible for Order 124 had not been informed. Later, the review says that Etthoefer is under the direct jurisdiction of the First Vice-President and receives his instructions from him. The review concludes:-
"Considering the importance and political implications, irrespective of the possibility that huge claims for damages may be lodged against persons involved in this matter, we consider it a matter of urgency to clarify, as precisely as possible, the legal situation of individual cases, and to keep precise documentation on them." I doubt whether the author of that letter could have imagined that his plea for clarification, as a matter of urgency, would remain unanswered at least for another 50 years. I observe, that this review cited a letter from the State Commission dated 19 January l946, 11 days before Order 38 was enacted, which like the letter from von Schenk three days before regarded the assets as falling under Order 124 despite the fact that Order 38 had not yet been passed.
As I have already noted, none of these documents refers to the expropriation of 9 October l945. Further documents, on which Cobert relied, do not provide any greater clarification. They demonstrate the increasing confusion. On 2nd July l946, the trustee of the confiscated assets in a letter to the State Commission for the execution of Orders No.124 and 126 under the heading "Assets of the Duke of Saxe-Coburg-Gotha" stated that he had been made personally responsible for the preservation and protection of all confiscated assets of the Duke which had been sequestered. He said he would undertake the preliminary work to effect the handover. A Memorandum dated 4 February l947 concerning a discussion with the trustee of the former Dukes assets on 27 January l946, refers to the fact that the Family Foundations assets had been confiscated by the Police Order of 6th July l945. It continued:-
"The art treasures remaining at Friedenstein Palace and the Library which formerly contained 300,000 volumes, have been severely decimated through war events and actions of the Occupation Forces. There is, however, still a sizeable portion of art treasures remaining, which have not yet been catalogued.....further art treasures, approximately worth Reichsmark 30 million, have been taken to Coburg (American Occupation Zone)." A letter dated 28 April l947 to the Ministry for Public Education referred to former state art collections at Gotha and spoke of the difficulty of making an inventory. This had been locked away, with all the art objects, by the Soviet Military Administration. The current Administration of the State collections could not obtain access. An undated letter, thought to have been written in l947, spoke of the museums being under the authority of the Soviet Military Administration. It warned of a Russian Major appearing at the Museum, looking for art objects. Geithner was asked to inform the state authorities if anyone tried to remove anything. On 18 September l947 the Director of the Institutes for Art and Science Gotha (the organ through which the Land administered the art foundation), complained of lack of funds to the trustee. On 28 July l948 the Land gave instructions for payment to the Institute, the funds to be taken from the confiscated assets of the Duke.
In my judgment, these documents do not support Coberts contention that control of the assets had not been passed to the Land. Etthoefer was trustee of the confiscated assets and the repeated pleas to departments in Weimar either to prevent removal of assets or for money, demonstrate, to my mind, that control of the assets had passed to the Land. This material was concerned with problems of administration. The authors were not, in the main, concerned with the true legal status of the assets. In those circumstances I can place no reliance upon the fact that they make no reference to the law of 9 October l945. It is not surprising, given the political upheaval in the ruin of Germany, that they cast no light on the ownership of the collection. If they shed little light now that is not surprising after the shadows of the past 50 years.
In the light of my conclusion that the painting was taken out of the territory under the jurisdiction of the Soviet Military Administration in January, l946, the Law of 24 July l946 cannot assist the plaintiffs. However, since the effect of the Order No.154/181 of 21 May l946 and the Law at 24 July l946 which followed that Order were the subject of evidence from Professors Werner and Brunner, I should record the issues between them and my conclusions based upon their evidence.
By Order No.154/181 dated 21 May l946 ("concerning utilisation of sequestered and confiscated assets based on Order 124"):-
It was ordered that:-
2 .Sequestrated and confiscated assets which belonged to the Nazi party and its organisations or to Nazi party leaders, are to be transferred to the possession and disposal of German local government authorities of the Laender and Federal territories wherein such assets are located...
3. The transfer of the respective assets into the possession and disposal of German local government of laender of federal territories is to be carried out accompanied by appropriate legally binding lists"
(The translation in the plaintiffs supplementary bundle at 27 was corrected during the course of the hearing).
By the Law of 24 July l946,
"Concerning the delivery of sequestered and confiscated assets by the Soviet Military Administration to the Land of Thüringia" :-
The assets .... which were confiscated or sequestered by the Soviet Military Administration according to Orders No.124 ... of 30 October l945, and which are to be delivered to the state of Thüringia based on Orders No 154/181 ... 21st May l946 ... are upon such delivery expropriated without compensation for the benefit of the state of Thüringia".
"Any sequestered assets which do not come under the Orders No.124
.. of 30 October l945 are to be returned to their original owners, without
Professor Brunner took the view that expropriation could only be effected by a four-stage procedure:-
1) that the assets fell within Order 124 (read with Order 38)
2) that the assets fell within Order 154
3) that the assets fell within the law of 24 July l946 and
4) that there should be a physical handing over of control to the Land of Thüringia following the passing of the Law of 24 July l946. Professor Brunner did not take the view that it was necessary that each and every item in the Art Foundations collection should be physically handed over but, he asserted, physical control had to be passed to the Land of Thüringia following and in consequence of the Law of 24 July l946. Cobert contend that no such physical control passed to the Land following the Law of 24 July l946. The trustee was the trustee of confiscated assets but his control was not the control of the Land. Cobert rely upon the documents to which I have already referred demonstrating that physical control remained with the Soviet Military Administration and not with the Land. It refers in particular to a copy of a document sent to the State Office for Public Education in Weimar dated 26 June l946 referring to art works under lock and key at Friedenstein Palace and Castle Reinhardsbrunn in which it was said that it would be advisable to make an application to the Soviet administration at Potsdam in relation to the fate of the art works. The letter, to which I have already referred, from Etthoeffer, dated 2nd July l946, said that he had been made personally responsible for the preservation and protection of all confiscated assets of the Duke which had been sequestered by Order of the Chief of Administration of the Soviet Military occupation for Thüringia, Major General of the Guards Kolesnitschenko. By Memorandum dated 27 January l946 in relation to developed real estate confiscated pursuant to Order 124/126, the trustee said he could not hand over that property to the state. I have already referred to the District Education Office letter dated 28 April l947 which spoke of the difficulties of making inventories when the lists had been locked away by the Soviet Military Administration. The letter from the Central Administration Office for Public Education in Berlin spoke of the Museum at Gotha being under the authority of the Soviet Military Administration.
The difficulty with Professor Brunners views is that, if he is correct, the art collection was not expropriated as a result of the Law of 24 July l946 and thus should have been returned to the Foundation pursuant to Article 4 of that Law. I find that conclusion surprising. It is plain that it was the intention of Order 154/181 and Article 1 of the Law of 24 July l946, that assets confiscated or sequestered by Order 124 were to be transferred to the Land of Thüringia. I am unable to envisage any reason why the art collection, which undoubtedly fell within Order 124 (read with Order 38) should have formed an exception to this process of expropriation. The scheme of Order 154/181, and of the Law of 24 July l946 was that assets which fell within Order 124 were to be handed over pursuant to Order 154/181 and upon handover expropriation took effect by virtue of the Law of 24 July l946. But that does not mean that assets which had already been handed over fell outwith the scope of the expropriation of the Law of 24 July l946. It was not, in my judgment, the intention of the legislation that assets which fell within Order 124 and which had already been handed over should not be expropriated. As Mr Layton Q.C. submitted, Order 154/181 provided the mechanism for handover in respect of those assets which had not yet been handed over. Expropriation took place with effect from the time of handover.
I do not regard the documents upon which Cobert relied as demonstrating
anything more than the reality of the influence exerted by the presence of
the Soviet Military Command in that part of Germany. In my judgment the
trustee had been in physical control of the assets of the Art Foundation
under the supervision of the Land ever since l945. If the painting had
been within the territorial jurisdiction of the Soviet Military
administration in July l946 and had not hitherto been expropriated, then
the Law of July l946 would have effectively expropriated that painting as
part of the collection of the Art Foundation.
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