In Cassirer v. Thyssen-Bornemisza Collection Foundation the U.S. Supreme Court held unanimously that in a Foreign Sovereign Immunities Act (FSIA) case against a foreign state raising non-federal claims a court must apply whatever choice-of-law rule the court would use if the foreign state was a private party. In this case that means applying California’s choice-of-law rule, not a rule deriving from federal common law.
In 1939 in order to leave Germany Lilly Cassirer had to surrender to the Nazis a Camille Pissarro painting, now worth tens of millions of dollars. In 1999 Lilly’s grandson Claude discovered that the Thyssen-Bornemisza Collection Foundation, created and controlled by Spain, had the painting. Claude sued the Foundation in federal court in California to recover it.
The Foundation is an “instrumentality” of Spain so Claude’s complaint “invoked the FSIA to establish the court’s jurisdiction.” This statute determines whether a foreign state or instrumentality may be sued in an American court. A foreign state or instrumentality is immune from suit unless an exception applies. Here a court has determined the exception for cases involving “rights in property taken in violation of international law” applies.
The question in this case is which substantive law applies to determine who owns the painting. The Cassirer plaintiffs urged the use of California’s choice-of-law rule meaning, they claim, that California property law would apply, and they would win. The Foundation argued that the federal choice-of-law rule applied, meaning Spanish law must be used to resolve ownership, and the Foundation was the rightful owner of the painting. The Ninth Circuit agreed with the Foundation.
According to Justice Kagan, writing for the Court, per the FSIA the same substantive law applies against a foreign state as a private party. Section 1606 of the FSIA states: “As to any claim for relief with respect to which a foreign state is not entitled to immunity under [the FSIA], the foreign state shall be liable in the same manner and to the same extent as a private individual under like circumstances.”
Regarding choice-of-law the Court reasoned: “Section 1606 also dictates the selection of a choice-of-law rule: It, too, must mirror the rule that would apply in a similar suit between private parties. For only the same choice-of-law rule can guarantee use of the same substantive law—and thus . . . guarantee the same liability.”
So, in this case Section 1606 requires the use of California’s choice-of-law rule to determine which law applies ”because that is the rule a court would use in comparable private litigation.”