Repatriation of Artworks throughout Investment Arbitrations
Repatriation of art looted during armed conflicts or foreign occupations is still a major concern for many countries, who have been dispossessed of parts of their cultural heritage. Despite the existence of international instruments for the prevention of art-looting and the restitution of stolen art, States are often reluctant to return cultural objects collected in the past and now displayed in their museums. In such instances, could governments dispossessed of their cultural property rely on Bilateral Investment Treaties (BITs) to recover their works of art from recalcitrant States?
An Evolving Legal Framework
Until the second half of the 19th century, international law recognized the jus praedae ( “prize right”), meaning the winning army could take or destroy the property of the enemy upon its defeat. The 1874 Brussels Declaration was the first attempt to codify the then-emerging denial of the prize right. This declaration was seminal in the adoption of the 1899 and 1907 Hague Conventions on land warfare and the annexed Regulations, which forbid the seizure or destruction of works of art in wartime.
The blatant and systematic art-looting committed by the Nazi regime during WWII called for the adoption of the first international convention exclusively focused on the protection of cultural property: the 1954 Hague Convention for the Protection of Cultural Property in the Event of Armed Conflicts. This instrument was in turn influenced by the 1943 London Declaration, which among other things declared invalid any transfers of property by the Nazis concerning works of art.
The First Protocol to the 1954 Hague Convention – which was adopted in the same year – regulates the circulation of cultural property during wartime, by imposing on occupying Powers the obligation to prevent the exportation of cultural property and – in the event of its exportation – the obligation to return such property. This return is deemed to be unconditional and no time bar applies for bringing a claim for return. Furthermore, the First Protocol lays out that cultural property shall never be retained as war reparations.
In the wake of the independence movements during the 1960s, many countries were eager to recover their cultural objects located in the museums of former colonial Powers. This led to the adoption of the 1970 UNESCO Convention, which affirms the unlawfulness of the exportation and transfer of ownership of cultural property under compulsion arising directly or indirectly from the occupation of a country by a foreign Power. Consequently, such illicit exportations or sales of cultural property are to be regarded as null and void. Therefore, the UNESCO Convention arguably enables the recovery of the misappropriated cultural property upon the end of foreign occupation.
Following the cultural losses in the wars fought during the second half of the 20th century, a Second Protocol to the 1954 Hague Convention was adopted in 1999 to enhance the protection of cultural property during armed conflicts.
To fill up the gaps left by the UNESCO Convention, in 1995 the UNIDROIT Convention on Stolen or Illegally Exported Cultural Objects was adopted effectively as a sort of protocol to the UNESCO Convention itself. The UNIDROIT Convention provides for an outright obligation of restitution, tackles the issues of time-limits for restitution claims, and entitles a bona fide possessor of stolen cultural objects to fair compensation.
The Weakness of the Legal Framework
Notwithstanding the widespread ratification of the 1954 Hague Convention, its two Protocols, the 1970 UNESCO Convention and – to a lesser degree – the 1995 UNIDROIT Convention, claiming restitution of looted art before a court in a foreign State is often a daunting task.
The main drawbacks of these international instruments are that, arguably, they are neither self-executing nor retroactively applicable. Accordingly, they cannot be directly applied by a domestic court, unless a national law has previously implemented them, nor could they be applied to events that occurred prior to their entry into force.
Regrettably, major “art market States” have been extremely slow in ratifying these instruments and passing legislation implementing them.
Furthermore, since these instruments seem not to allow for retroactivity, they may not be applied to the massive art-looting that occurred in colonial times. To curb this non-retroactivity limit, in 1978 a special Intergovernmental Committee was established under the auspices of the UNESCO to address restitution claims where international conventions cannot be applied, also through mediation and consultation. However, the scarce use of this Committee over forty years may be indicative of its ineffectiveness, probably due to the voluntary character of its procedures, allowing the disputing parties to opt-in on a case-by-case basis.
Given the shortcomings of the international legal framework and the difficulties in litigating a restitution claim before a foreign court (including national laws restricting State museums from returning objects), ADR mechanisms – where available – are preferred over court litigation to seek just and fair solutions. Indeed, many restitution claims have been satisfactorily resolved through negotiation, mediation, conciliation, and arbitration. In this view, also, investment arbitration may have an important role to play.
Notably, some investment arbitration tribunals have already responsibly weighting in the preservation of cultural heritage and referred to the UNESCO Convention in cases featuring cultural elements.
Cross-border Restitution Claims of Looted Art as Investment Claims
A country that was stripped of its works of art and is having difficulties in recovering them from a foreign jurisdiction may avail itself of the remedies in BITs to claim back its artifacts by initiating a State-to-State investment arbitration.
Cultural property located in a foreign State may indeed qualify as movable assets falling within the definition of protected investment under most BITs. ICSID jurisprudence may point in this direction: the ICSID ad hoc Committee in Malaysian Historical Salvors v. Malaysia annulled the jurisdictional award because the arbitrator “manifestly exceeded” his powers by failing to exercise jurisdiction granted under the ICSID Convention and the Malaysia-UK BIT. This investment arbitration had as subject-matter the recovery of historical artifacts from a British vessel’s cargo sank in 1817. By overturning the jurisdictional award of the sole arbitrator, the ad hoc Committee may provide support for the view that artifacts fall within the definition of ‘investment.’ Arguably, besides their inherent historical, material, and economic value (which increases over time), cultural objects are also capable of yielding considerable profits in terms of museum ticket sales. Hence, such property can rightfully be regarded as an investment. Looted cultural property can also be regarded as a foreign investment to the extent that any illicit transfer of ownership was void ab initio, therefore, ownership of such objects is still vested with the “country of origin.”
Many BITs often protect not only foreign investments that were made after their entry into force but also foreign investments made before that date. So, even if many looted cultural objects began to be exhibited in foreign States’ museums prior to adopting some BITs, most likely that property would still receive the protection under an applicable BIT.
In investment arbitration, the country of origin may rely on the ever-standing offer to arbitrate and articulate a repatriation claim, as most BITs impose on the host-State the obligation to guarantee the repatriation of foreign investments and their returns. A reluctant host-State – that is not willing to return cultural property to the legitimate country of origin – may be breaching this obligation by continuing to unlawfully withhold such property. By continuing to refuse to return cultural property, the host-State may also be in breach of the prohibition to expropriate foreign investments, which is another omnipresent obligation in BITs. Thanks to the arbitration provision contained in BITs, the host-State might be compelled to perform the restitution of looted cultural property and compensate the country of origin with a fair and reasonable sum amounting to the profits generated by the cultural property exhibited in the host-state’s museum.
Non-retroactivity of treaties and continuing breaches
Generally, international treaties do not apply retroactively to ensure legal certainty. This principle is codified in Article 28 of the Vienna Convention on the Law of Treaties (VCLT). Nevertheless, the non-retroactivity principle comes with a notable exception in case of a continuing breach of an international obligation. Article 28 of the VCLT rules out the retroactive application of a treaty, provided that the relevant situation (to which a treaty may apply) ceased to exist before the entry into force of that treaty. Accordingly, where the relevant situation has not ceased yet by the time a treaty has entered into force, that treaty will apply to that ongoing situation arising out of the conduct of a State which remains not in conformity with the treaty obligations (in line with Article 14(2) of the Articles on State Responsibility). As the international legal framework applicable to looted art provides for the obligation to prevent the looting of cultural property and the obligation to return such property, the conduct of many European States may continue to be in breach of such obligation insofar as they have not yet performed the restitution of cultural property looted during the colonial period upon the requests of African, American, and Asian countries.
The current legal framework applicable to the looting of cultural property formulates adequate standards for the prevention and restitution of looted art. Nevertheless, the misappropriation of cultural objects remains an unsettled problem. Cultural property is undoubtedly worthy of legal protection, particularly in cross-border cases. Where the request of the country of origin to get back its cultural property meets the refusal of the host-State or host-state’s museum, a State-to-State investment arbitration may provide that sought-after legal protection. Such procedure might be resolutive since it would put teeth into the existing legal framework, thanks to the everlasting offer to arbitrate and the binding effect of arbitral awards.