```

[House Report 114-141]
[From the U.S. Government Publishing Office]

114th Congress   }                                        {        Report
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                        {       114-141

======================================================================

 
  FOREIGN CULTURAL EXCHANGE JURISDICTIONAL IMMUNITY CLARIFICATION ACT

                                _______
                                

  June 8, 2015.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Goodlatte, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 889]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 889) to amend chapter 97 of title 28, United States 
Code, to clarify the exception to foreign sovereign immunity 
set forth in section 1605(a)(3) of such title, having 
considered the same, report favorably thereon without amendment 
and recommend that the bill do pass.

                                CONTENTS

                                                                   Page

Purpose and Summary..............................................     1
Background and Need for the Legislation..........................     2
Hearings.........................................................     8
Committee Consideration..........................................     8
Committee Votes..................................................     8
Committee Oversight Findings.....................................     8
New Budget Authority and Tax Expenditures........................     8
Congressional Budget Office Cost Estimate........................     8
Duplication of Federal Programs..................................     9
Disclosure of Directed Rule Makings..............................    10
Performance Goals and Objectives.................................    10
Advisory on Earmarks.............................................    10
Section-by-Section Analysis......................................    10
Changes in Existing Law Made by the Bill, as Reported............    11

                          Purpose and Summary

    Under current law, a provision in the Foreign Sovereign 
Immunities Act (FSIA) discourages foreign governments from 
lending government-owned artwork and objects of cultural 
significance to U.S. museums and educational institutions for 
temporary exhibition or display. Foreign governments are 
discouraged from such lending by the possibility that it will 
open them up to litigation in U.S. courts for which they would 
otherwise be immune. This legislation fixes this problem by 
making a narrowly tailored change to FSIA. This change will 
make it easier for U.S. museums and educational institutions to 
borrow works of art and other objects from abroad, increasing 
Americans' opportunities for cultural and educational 
development. At the same time, in recognition of the 
unprecedented scale of art theft by Nazi Germany and in light 
of the longstanding policy interest in ensuring that victims of 
Nazi crimes have an opportunity to pursue justice, the 
legislation also contains an exception for Nazi-era claims.

                Background and Need for the Legislation

    The Immunity from Seizure Act (IFSA) provides the 
President, or the President's designee, with authority to grant 
a work of art or other object of cultural significance immunity 
from seizure by U.S. courts whenever it is determined that its 
temporary exhibition or display in the United States is within 
our national interest.\1\ The intent of the IFSA is to 
encourage the cultural and educational exchange of artwork and 
other culturally significant objects which, in the absence of 
the Act, would not be made available for exchange. In enacting 
IFSA, Congress recognized that cultural exchange can produce 
substantial benefits to the United States, both artistically 
and diplomatically.\2\
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    \1\22 U.S.C. Sec. 2459.
    \2\H.R. Rep. No. 89-1070 (1965).
---------------------------------------------------------------------------
    However, for artwork and cultural objects owned by foreign 
governments, the intent of IFSA is being frustrated by the 
Foreign Sovereign Immunities Act (FSIA). Recent court decisions 
have interpreted a provision of FSIA in a manner that opens 
foreign governments up to the jurisdiction of U.S. courts if 
foreign government-owned artwork is present in the United 
States in connection with a commercial activity and there is a 
claim that the artwork was taken in violation of international 
law.\3\ Courts have determined that the non-profit exhibition 
or display of the artwork can be considered ``present in the 
United States in connection with commercial activity'' even if 
the artwork has been granted immunity under IFSA.
---------------------------------------------------------------------------
    \3\28 U.S.C. Sec. 1605(a)(3).
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    This has led, in many instances, to foreign governments 
declining to export artwork and cultural objects to the United 
States for temporary exhibition or display. Future cultural 
exchanges may be seriously curtailed by foreign lenders' 
unwillingness to permit their artwork and other cultural 
objects to travel to the United States. In order to keep the 
exchange of foreign government-owned cultural objects flowing, 
this legislation clarifies the relationship between the 
immunity provided by IFSA and the exceptions to sovereign 
immunity provided for in FSIA.

        A. IMPORTANCE OF CULTURAL EXCHANGE THROUGH MUSEUM LOANS

    ``The United States has long recognized the importance of 
encouraging the cultural exchange of ideas through 
international loan exhibitions.''\4\ Art exhibitions enrich the 
cultural life of Americans and serve a number of public 
interests, including education of the public, scholarship, 
promotion of further artistic activity, and entertainment. 
Exhibitions of international artwork in particular inspire 
cultural exploration, the expansion of the global community, 
and the exchange of ideas through art.
---------------------------------------------------------------------------
    \4\Yin-Shuan Lue, Polly Clark, & Marion R. Fremont-Smith, 
Countering a Legal Threat to Cultural Exchanges of Works of Art: The 
Malewicz Case and Proposed Remedies 3 (Hauser Center for Nonprofit 
Organization, Working Paper No. 42, 2007).
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    International loans of artwork produce significant benefits 
for the countries on both sides of the exchange. For the 
country exporting the artwork, ``art serves as an `ambassador' 
which ignites interest in, understanding of, and compassion for 
that country. As such, international exchange of artworks can 
foster the breakdown of parochialism and increase international 
harmony.''\5\ And, for the country importing the artwork, ``art 
serves to widen its citizenry's cultural horizons and stimulate 
new art and scholarship.''\6\ In short, the international 
exchange of artwork serves as a ``good ambassador'' for the 
exporting country and enriches the importing country by both 
educating and stimulating further artistic activity.
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    \5\Id. at 21.
    \6\Id.
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                    B. THE IMMUNITY FROM SEIZURE ACT

    In 1965, Congress enacted the Immunity from Seizure Act to 
allow foreign entities\7\ to lend artwork and other objects of 
cultural significance without fear that the loan would subject 
them to the jurisdiction of U.S. courts.\8\ IFSA creates a 
mechanism by which the President, or the President's designee 
(currently the Department of State), may grant immunity to 
objects to be imported that are determined to be of ``cultural 
significance and that the temporary exhibition or display 
thereof within the United States is in the national 
interest.''\9\
---------------------------------------------------------------------------
    \7\IFSA applies to artwork owned by private entities as well as 
foreign states. This legislation only applies to artwork owned by 
foreign states.
    \8\S. Rep. No. 89-747, at 2 (1965).
    \9\22 U.S.C. Sec. 2459(a).
---------------------------------------------------------------------------
    In order to qualify for immunity, there must be an 
agreement between the foreign owner or custodian and a U.S. 
cultural or educational institution ``providing for the 
temporary exhibition or display'' of the object ``at any 
cultural exhibition, assembly, activity, or festival 
administered, operated, or sponsored, without profit, by any 
such cultural or educational institution.''\10\ Additionally, 
the State Department must determine that (1) the object is of 
cultural significance, and (2) the temporary exhibition of the 
object in the United States is in the national interest. If the 
State Department determines that the requirements have been met 
and it publishes notice in the Federal Register of its 
determinations before the objects are imported,
---------------------------------------------------------------------------
    \10\Id.

        no court of the United States, any State, the District 
        of Columbia, or any territory or possession of the 
        United States may issue or enforce any judicial 
        process, or enter any judgment, decree or order, for 
        the purpose or having the effect of depriving such 
        institution, or any carrier engaged in transporting 
        such work or object within the United States of custody 
        or control of such object.\11\
---------------------------------------------------------------------------
    \11\Id.

    In enacting IFSA, Congress recognized that cultural 
exchange can produce substantial benefits, both artistically 
and diplomatically. The House Judiciary Committee reported that 
``the purposes of this proposed legislation are salutary and 
will contribute to the educational and cultural development of 
the people of the United States.''\12\ The accompanying Senate 
report recognized that the legislation was ``a significant step 
in international cooperation.''\13\ The legislation was 
intended to accomplish its purposes by encouraging ``the 
exhibition in the United States of objects of cultural 
significance which, in the absence of assurances such as are 
contained in the legislation, would not be made 
available.''\14\ The adoption of IFSA was supported by the 
State Department, the Justice Department, the Smithsonian 
Institution, and the American Association of Museums.\15\
---------------------------------------------------------------------------
    \12\H.R. Rep. No. 89-1070, at 2.
    \13\S. Rep. No. 89-747, at 1-2.
    \14\Id. at 3.
    \15\H.R. Rep. No. 89-1070.
---------------------------------------------------------------------------
    Since its enactment in 1965, IFSA has served to facilitate 
cultural exchanges with foreign countries, thereby building 
international understanding and appreciation of other cultures, 
and conferring educational and artistic benefits on Americans. 
In recent years, IFSA has been used with increasing regularity 
to provide assurances to foreign lenders when they temporarily 
export their artwork to the United States. Indeed, from 2000 to 
the beginning of 2008, the State Department has published in 
the Federal Register determinations for more than 650 temporary 
exhibits.\16\ However, recent court decisions addressing the 
relationship between IFSA and FSIA have undercut the ability of 
IFSA, in many cases, to provide foreign governments with the 
assurances they require to be willing to export artwork to the 
United States for temporary exhibition or display.
---------------------------------------------------------------------------
    \16\Because each of the notices published in the Federal Register 
can include multiple objects, the works involved actually number in the 
many thousands.
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                C. THE FOREIGN SOVEREIGN IMMUNITIES ACT

    From the Supreme Court's 1812 decision in Schooner Exchange 
v. McFaddon\17\ until the State Department's 1952 Tate 
letter,\18\ the United States adhered to the ``absolute'' 
theory of sovereign immunity, pursuant to which foreign 
sovereigns were absolutely immune from suit in U.S. courts.\19\ 
In 1952, the United States switched to the ``restrictive'' 
theory of sovereign immunity, under which ``immunity is 
confined to suits involving the foreign sovereign's public 
acts, and does not extend to cases arising out of a foreign 
state's strictly commercial acts.''\20\ Congress passed FSIA in 
1976 to codify the restrictive theory of sovereign immunity. 
FSIA for the first time established a ``comprehensive set of 
legal standards governing claims of immunity in every civil 
action against a foreign state or its political subdivisions, 
agencies, or instrumentalities.''\21\ It is the ``sole basis 
for obtaining jurisdiction over a foreign state in our 
courts.''\22\
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    \17\11 U.S. (7 Cranch) 116 (1812).
    \18\Letter from Jack B. Tate, Acting Legal Adviser, U.S. Dept. of 
State, to Acting U.S. Attorney General Phillip B. Perlman (May 19, 
1952).
    \19\Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 486-87 
(1983).
    \20\Id. at 487.
    \21\Id. at 488.
    \22\Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 
428, 434 (1989).
---------------------------------------------------------------------------
    FSIA sets forth a general rule that foreign states are 
immune from the jurisdiction of U.S. courts.\23\ Courts may 
exercise jurisdiction over foreign states only if the suit 
comes within one of the specific statutory exceptions to that 
rule.\24\ For international loans of foreign government-owned 
artwork or cultural objects, the relevant exception is set 
forth in 28 U.S.C. Sec. 1605(a)(3). This exception, commonly 
referred to as the ``expropriation exception,'' provides that a 
foreign state\25\ is not immune from suit in any case ``in 
which rights in property taken in violation of international 
law are in issue and that property . . . is present in the 
United States in connection with a commercial activity carried 
on in the United States by the foreign state.''\26\ Thus, 28 
U.S.C. Sec. 1605(a)(3), allows a suit against a foreign state 
when (1) rights in property were taken in violation of 
international law, (2) the property is present in the United 
States, and (3) the property has a connection to a commercial 
activity in the United States conducted by the foreign state. 
The United States is the only nation to have such an 
exception.\27\
---------------------------------------------------------------------------
    \23\28 U.S.C. Sec. 1604.
    \24\See 28 U.S.C. Sec. Sec. 1605-1607.
    \25\A ``foreign state'' includes a political subdivision of a 
foreign state or an agency or instrumentality of a foreign state. 28 
U.S.C. Sec. 1603.
    \26\28 U.S.C. Sec. 1605(a)(3).
    \27\Nout van Woundenberg, State Immunity and Cultural Objects on 
Loan 116 (2012).
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               D. THE RELATIONSHIP BETWEEN IFSA AND FSIA

    The United States has a strong national interest in 
facilitating cultural exchanges of artwork and cultural objects 
with other nations. In furtherance of that interest, the State 
Department has regularly exercised authority delegated to it to 
grant immunity for temporary loans from abroad that are of 
cultural significance and in the national interest. For forty 
years, this immunity provided foreign lenders with the 
assurance that immunized loans of artwork and cultural objects 
would not serve as the basis for the jurisdiction of U.S. 
courts. However, these assurances and the willingness of 
foreign government lenders to loan their objects have been 
threatened by recent Federal court decisions holding that 
foreign sovereigns waive their sovereign immunity under FSIA by 
sharing their objects with American museums and educational 
institutions even if the loan is made pursuant to a grant of 
IFSA immunity.\28\ These decisions hold that the presence in 
the United States of cultural objects protected under IFSA can 
serve as the basis for jurisdiction under the FSIA 
expropriation exception, 28 U.S.C. Sec. 1605(a)(3).
---------------------------------------------------------------------------
    \28\See, e.g., Malewicz v. City of Amsterdam, 362 F. Supp. 2d 298 
(D.D.C. 2005).
---------------------------------------------------------------------------
    Thus, in a manner that substantially undermines the 
purposes of IFSA, courts have extended the FSIA ``commercial 
activity nexus to cover cross-border museum loans . . . [and] 
stripped the IFSA of its ability to provide any sort of 
meaningful immunity to art loans coming into the United States, 
by holding that immunity under IFSA prohibits seizure but does 
not bar judicial proceedings against the property under 
immunity.''\29\ In other words, ``what were formerly viewed as 
educational and cultural promotions for international art 
exhibitions now can take the form of commercial activities 
capable of stripping foreign sovereigns of their 
immunity.''\30\
---------------------------------------------------------------------------
    \29\Charlene A. Caprio, ``Artwork, Cultural Heritage Property and 
the Foreign Sovereign Immunities Act,'' 13 Int'l J. of Cultural Prop. 
285, 287 (2006).
    \30\Id. at 291.
---------------------------------------------------------------------------
    These decisions, however, defeat the purpose of IFSA by 
allowing the very type of lawsuit that motivated the passage of 
the statute in the first place. By allowing the presence in the 
United States of immunized works to form the basis for 
depriving foreign states of sovereign immunity, courts have 
turned IFSA on its head and paved the way for further lawsuits 
of the very sort that Congress intended to prevent. As one 
scholar has observed, ``[a] museum promotion or art loan into 
the United States is not the best mechanism to trap foreign 
sovereigns into U.S. courts. It mixes together two separate 
interests: promoting (by protecting) cross-cultural art and 
cultural heritage exchanges, and providing a forum for wronged 
individuals to seek justice for their private claims.''\31\
---------------------------------------------------------------------------
    \31\Id. at 303.
---------------------------------------------------------------------------
    In enacting IFSA, Congress made the policy decision to 
promote Americans' exposure to objects of cultural significance 
over the potential rights of individual claimants. Congress' 
aim was to ensure that foreign lenders would not be subject to 
the jurisdiction of U.S. courts when they loaned immunized 
cultural objects for temporary exhibits in the United States. 
As Representative Byron Rogers explained during floor debate on 
IFSA, the bill was designed to assure the foreign lender that 
it could lend cultural objects to the United States without 
incurring the risk that the objects would be seized or the 
lender would become subject to suit:

        If a foreign country or an agency should send exhibits 
        to this country in the exchange and cultural program 
        and someone should decide that is necessary for them to 
        institute a lawsuit against that particular country or 
        those who may own the cultural objects, the bill would 
        assure the country that if they send the objects to us 
        they would not be subjected to a suit and an attachment 
        in this country.\32\
---------------------------------------------------------------------------
    \32\111 Cong. Rec. 25,929 (1965) (remarks of Rep. Rogers) (emphasis 
added).

The ongoing effectiveness of IFSA to encourage foreign 
governments to lend cultural objects depends upon the ability 
to provide assurance to foreign lenders that participating in 
an immunized exhibit will, in fact, protect them from 
litigation in the United States based on the exhibit.
    In sum, court decisions interpreting FSIA's expropriation 
exception, 28 U.S.C. Sec. 1605(a)(3), have undermined the 
interests that IFSA was designed to foster and have created 
tension in U.S. relations with other countries that IFSA was 
intended to facilitate. As a result, foreign nations are less 
willing to loan cultural objects for exhibition in the United 
States, and American institutions are less able to host 
exhibitions of such objects, depriving the American public of 
opportunities to view and learn from such exhibitions.

                           E. THE LEGISLATION

    H.R. 889 makes a very modest but important change to FSIA 
to restore the protections that IFSA was intended to provide 
and to bring the two statutes into harmony. Foreign government 
lenders will once again be assured that if they are granted 
immunity from seizure under IFSA, the loan of artwork or other 
objects of cultural significance for temporary non-profit 
exhibition or display in the United States will not open them 
up to the jurisdiction of U.S. courts.
    Although this legislation is of great importance to 
ensuring the continued willingness of foreign states to lend 
their cultural objects to U.S. institutions, it is narrowly 
tailored for at least three reasons. First, the immunity 
applies to only one of several FSIA exceptions to sovereign 
immunity--the exception related to rights in property taken in 
violation of international law, often called the 
``expropriation exception.'' Second, the immunity provided by 
this bill only applies to foreign government-owned artwork and 
cultural objects for which the President, or the President's 
designee, has granted immunity from seizure under IFSA.\33\ 
Thus, if foreign government-owned work has not been granted 
immunity pursuant to IFSA, the protection provided by this 
legislation will not apply.
---------------------------------------------------------------------------
    \33\22 U.S.C. Sec. 2459.
---------------------------------------------------------------------------
    Third, the immunity provided by this bill does not apply to 
claims arising from artwork and objects of cultural 
significance that were taken in violation of international law 
by the Nazi government of Germany and its allied and affiliated 
governments between January 30, 1933 and May 8, 1945.\34\ This 
exception is included in the bill because of the systematic 
looting of artwork by the Nazis in Europe during Hitler's 
reign--looting that was ``on a historically unmatched 
level.''\35\ According to one commentator,
---------------------------------------------------------------------------
    \34\The Conference on Jewish Material Claims Against Germany, Inc. 
and the American Jewish Committee have reviewed the text of this 
exception and have no objection to it. Letter from Conference on Jewish 
Material Claims Against Germany, Inc. to the Association of Art Museum 
Directors (Dec. 19, 2013) (on file with the Committee).
    \35\Shira T. Shapiro, ``How Republic of Austria v. Altmann and 
United States v. Portrait of Wally Relay the Past and Forecast the 
Future of Nazi Looted-Art Restitution Litigation,'' 34 Wm. Mitchell L. 
Rev. 1147, 1150 (2008).

        Between 1938 and 1945, the Nazi regime looted and 
        confiscated an estimated three million artworks 
        throughout occupied Europe. In doing so, the Third 
        Reich effectively looted between one-fourth and one-
        third of European art. . . . The racial and cultural 
        purity fundamental to Nazi ideology extended to 
        Hitler's plan to appropriate European art. It was not 
        enough merely to steal the art; rather, the Nazis' 
        exhausting and extensive processes intended to strip 
        European Jews of their dignity and cultural lifestyles. 
        Thus, Nazi looted-art restitution claims represent more 
        than the theft of a particular family's private 
        collection--they instead symbolize the profound depths 
        of the Nazis' crimes against humanity. . . . To 
        establish Germany as the world's most civilized 
        society, Hitler implemented an unprecedented, ruthless, 
        and immoral scheme to steal all European art for German 
        ownership.\36\
---------------------------------------------------------------------------
    \36\Id. at 1152-1153.

    Additionally, it is worth recognizing that without the 
protections provided for in this legislation, the artwork and 
cultural objects covered by this bill would not, in all 
likelihood, be imported into the United States for temporary 
exhibition or display. Therefore, this legislation does not, as 
a practical matter, change the status quo for those claiming 
that artwork was taken in violation of international law. In 
the absence of this legislation, foreign governments have 
simply avoided the jurisdiction of U.S. courts by refusing to 
export their artwork to the United States for temporary 
exhibition or display. In other words, the practical effect is 
that whether or not this legislation is enacted, claimants will 
not, in most cases, be able to bring suit under 28 U.S.C. 
Sec. 1605(a)(3). Without this legislation, however, Americans 
will be deprived of the opportunity to view these works of art 
and cultural objects if a foreign government believes loaning 
---------------------------------------------------------------------------
its property will open it up to litigation under FSIA.

                                Hearings

    The Committee on the Judiciary held no hearings on H.R. 
889.

                        Committee Consideration

    On March 24, 2015, the Committee met in open session and 
ordered the bill H.R. 889 favorably reported, without 
amendment, by voice vote, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that there 
were no recorded votes during the Committee's consideration of 
H.R. 889.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 889, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 30, 2015.
Hon. Bob Goodlatte, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 889, the ``Foreign 
Cultural Exchange Jurisdictional Immunity Clarification Act.''
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Marin 
Burnett, who can be reached at 226-2860.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member

      H.R. 889--Foreign Cultural Exchange Jurisdictional Immunity 
                           Clarification Act.

      As ordered reported by the House Committee on the Judiciary 
                           on March 24, 2015.

    Based on information provided by the Administrative Office 
of the United States Courts, CBO estimates that implementing 
H.R. 889 would have no significant effect on the Federal 
budget. Enacting H.R. 889 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    Under current law, works of art loaned by foreign 
governments generally are immune from certain decisions made by 
Federal courts and cannot be confiscated as long as the 
President, or the President's designee, determines that display 
of the works is in the national interest. However, commercial 
activity in which foreign governments are engaged does not have 
immunity in Federal courts. H.R. 889 would clarify that 
importing works of art into the United States for temporary 
display is not a commercial activity, and thus that such works 
would be immune from seizure.
    H.R. 889 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Marin Burnett. 
The estimate was approved by Theresa Gullo, Assistant Director 
for Budget Analysis.

                    Duplication of Federal Programs

    No provision of H.R. 889 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that H.R. 889 specifically directs 
to be completed no specific rule makings within the meaning of 
5 U.S.C. Sec. 551.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
889 clarifies the exception to foreign sovereign immunity set 
forth in section 1605(a)(3) of title 28, United States Code.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 889 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.

                      Section-by-Section Analysis

Section 1. Short title.
    Section 1 provides that the short title is the ``Foreign 
Cultural Exchange Jurisdictional Immunity Clarification Act.''
Section 2. Clarification of Jurisdictional Immunity of Foreign States.
    Section 2 amends 28 U.S.C. Sec. 1605 to clarify the 
immunity foreign states are granted under the Foreign Sovereign 
Immunities Act when they temporarily export artwork or other 
objects of cultural significance to the United States pursuant 
to the provisions of the Immunity From Seizure Act, 22 U.S.C. 
Sec. 2459. Under the amendments made by the Act, the temporary 
importation of artwork or cultural objects is not considered 
``commercial activity'' for purposes of 28 U.S.C. 
Sec. 1605(a)(3) if: (a) the work is imported pursuant to an 
agreement between the foreign state and the United States or a 
cultural or educational institution within the United States; 
(b) the President, or the President's designee, has made a 
determination that the work is of cultural significance and the 
temporary exhibition or display of such work is in the national 
interest; and (c) notice of that determination has been 
published in the Federal Register. This immunity does not apply 
if the artwork or cultural object imported was taken in 
violation of international law by the Nazi government of 
Germany or its collaborators between January 30, 1933, and May 
8, 1945. Finally, the section provides that this immunity only 
applies to cases commenced on or after the date of enactment of 
the Act.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

                      TITLE 28, UNITED STATES CODE

           *       *       *       *       *       *       *
PART IV--JURISDICTION AND VENUE

           *       *       *       *       *       *       *

CHAPTER 97--JURISDICTIONAL IMMUNITIES OF FOREIGN STATES

           *       *       *       *       *       *       *

Sec. 1605. General exceptions to the jurisdictional immunity of a 
                    foreign state

    (a) A foreign state shall not be immune from the 
jurisdiction of courts of the United States or of the States in 
any case--
            (1) in which the foreign state has waived its 
        immunity either explicitly or by implication, 
        notwithstanding any withdrawal of the waiver which the 
        foreign state may purport to effect except in 
        accordance with the terms of the waiver;
            (2) in which the action is based upon a commercial 
        activity carried on in the United States by the foreign 
        state; or upon an act performed in the United States in 
        connection with a commercial activity of the foreign 
        state elsewhere; or upon an act outside the territory 
        of the United States in connection with a commercial 
        activity of the foreign state elsewhere and that act 
        causes a direct effect in the United States;
            (3) in which rights in property taken in violation 
        of international law are in issue and that property or 
        any property exchanged for such property is present in 
        the United States in connection with a commercial 
        activity carried on in the United States by the foreign 
        state; or that property or any property exchanged for 
        such property is owned or operated by an agency or 
        instrumentality of the foreign state and that agency or 
        instrumentality is engaged in a commercial activity in 
        the United States;
            (4) in which rights in property in the United 
        States acquired by succession or gift or rights in 
        immovable property situated in the United States are in 
        issue;
            (5) not otherwise encompassed in paragraph (2) 
        above, in which money damages are sought against a 
        foreign state for personal injury or death, or damage 
        to or loss of property, occurring in the United States 
        and caused by the tortious act or omission of that 
        foreign state or of any official or employee of that 
        foreign state while acting within the scope of his 
        office or employment; except this paragraph shall not 
        apply to--
                    (A) any claim based upon the exercise or 
                performance or the failure to exercise or 
                perform a discretionary function regardless of 
                whether the discretion be abused, or
                    (B) any claim arising out of malicious 
                prosecution, abuse of process, libel, slander, 
                misrepresentation, deceit, or interference with 
                contract rights; or
            (6) in which the action is brought, either to 
        enforce an agreement made by the foreign state with or 
        for the benefit of a private party to submit to 
        arbitration all or any differences which have arisen or 
        which may arise between the parties with respect to a 
        defined legal relationship, whether contractual or not, 
        concerning a subject matter capable of settlement by 
        arbitration under the laws of the United States, or to 
        confirm an award made pursuant to such an agreement to 
        arbitrate, if (A) the arbitration takes place or is 
        intended to take place in the United States, (B) the 
        agreement or award is or may be governed by a treaty or 
        other international agreement in force for the United 
        States calling for the recognition and enforcement of 
        arbitral awards, (C) the underlying claim, save for the 
        agreement to arbitrate, could have been brought in a 
        United States court under this section or section 1607, 
        or (D) paragraph (1) of this subsection is otherwise 
        applicable.
    (b) A foreign state shall not be immune from the 
jurisdiction of the courts of the United States in any case in 
which a suit in admiralty is brought to enforce a maritime lien 
against a vessel or cargo of the foreign state, which maritime 
lien is based upon a commercial activity of the foreign state: 
Provided, That--
            (1) notice of the suit is given by delivery of a 
        copy of the summons and of the complaint to the person, 
        or his agent, having possession of the vessel or cargo 
        against which the maritime lien is asserted; and if the 
        vessel or cargo is arrested pursuant to process 
        obtained on behalf of the party bringing the suit, the 
        service of process of arrest shall be deemed to 
        constitute valid delivery of such notice, but the party 
        bringing the suit shall be liable for any damages 
        sustained by the foreign state as a result of the 
        arrest if the party bringing the suit had actual or 
        constructive knowledge that the vessel or cargo of a 
        foreign state was involved; and
            (2) notice to the foreign state of the commencement 
        of suit as provided in section 1608 of this title is 
        initiated within ten days either of the delivery of 
        notice as provided in paragraph (1) of this subsection 
        or, in the case of a party who was unaware that the 
        vessel or cargo of a foreign state was involved, of the 
        date such party determined the existence of the foreign 
        state's interest.
    (c) Whenever notice is delivered under subsection (b)(1), 
the suit to enforce a maritime lien shall thereafter proceed 
and shall be heard and determined according to the principles 
of law and rules of practice of suits in rem whenever it 
appears that, had the vessel been privately owned and 
possessed, a suit in rem might have been maintained. A decree 
against the foreign state may include costs of the suit and, if 
the decree is for a money judgment, interest as ordered by the 
court, except that the court may not award judgment against the 
foreign state in an amount greater than the value of the vessel 
or cargo upon which the maritime lien arose. Such value shall 
be determined as of the time notice is served under subsection 
(b)(1). Decrees shall be subject to appeal and revision as 
provided in other cases of admiralty and maritime jurisdiction. 
Nothing shall preclude the plaintiff in any proper case from 
seeking relief in personam in the same action brought to 
enforce a maritime lien as provided in this section.
    (d) A foreign state shall not be immune from the 
jurisdiction of the courts of the United States in any action 
brought to foreclose a preferred mortgage, as defined in 
section 31301 of title 46. Such action shall be brought, heard, 
and determined in accordance with the provisions of chapter 313 
of title 46 and in accordance with the principles of law and 
rules of practice of suits in rem, whenever it appears that had 
the vessel been privately owned and possessed a suit in rem 
might have been maintained.
    (g) Limitation on Discovery.--
            (1) In general.--(A) Subject to paragraph (2), if 
        an action is filed that would otherwise be barred by 
        section 1604, but for section 1605A, the court, upon 
        request of the Attorney General, shall stay any 
        request, demand, or order for discovery on the United 
        States that the Attorney General certifies would 
        significantly interfere with a criminal investigation 
        or prosecution, or a national security operation, 
        related to the incident that gave rise to the cause of 
        action, until such time as the Attorney General advises 
        the court that such request, demand, or order will no 
        longer so interfere.
                    (B) A stay under this paragraph shall be in 
                effect during the 12-month period beginning on 
                the date on which the court issues the order to 
                stay discovery. The court shall renew the order 
                to stay discovery for additional 12-month 
                periods upon motion by the United States if the 
                Attorney General certifies that discovery would 
                significantly interfere with a criminal 
                investigation or prosecution, or a national 
                security operation, related to the incident 
                that gave rise to the cause of action.
            (2) Sunset.--(A) Subject to subparagraph (B), no 
        stay shall be granted or continued in effect under 
        paragraph (1) after the date that is 10 years after the 
        date on which the incident that gave rise to the cause 
        of action occurred.
                    (B) After the period referred to in 
                subparagraph (A), the court, upon request of 
                the Attorney General, may stay any request, 
                demand, or order for discovery on the United 
                States that the court finds a substantial 
                likelihood would--
                            (i) create a serious threat of 
                        death or serious bodily injury to any 
                        person;
                            (ii) adversely affect the ability 
                        of the United States to work in 
                        cooperation with foreign and 
                        international law enforcement agencies 
                        in investigating violations of United 
                        States law; or
                            (iii) obstruct the criminal case 
                        related to the incident that gave rise 
                        to the cause of action or undermine the 
                        potential for a conviction in such 
                        case.
            (3) Evaluation of evidence.--The court's evaluation 
        of any request for a stay under this subsection filed 
        by the Attorney General shall be conducted ex parte and 
        in camera.
            (4) Bar on motions to dismiss.--A stay of discovery 
        under this subsection shall constitute a bar to the 
        granting of a motion to dismiss under rules 12(b)(6) 
        and 56 of the Federal Rules of Civil Procedure.
            (5) Construction.--Nothing in this subsection shall 
        prevent the United States from seeking protective 
        orders or asserting privileges ordinarily available to 
        the United States.
    (h) Jurisdictional Immunity for Certain Art Exhibition 
Activities.--
            (1) In general.--If--
                    (A) a work is imported into the United 
                States from any foreign country pursuant to an 
                agreement that provides for the temporary 
                exhibition or display of such work entered into 
                between a foreign state that is the owner or 
                custodian of such work and the United States or 
                one or more cultural or educational 
                institutions within the United States,
                    (B) the President, or the President's 
                designee, has determined, in accordance with 
                subsection (a) of Public Law 89-259 (22 U.S.C. 
                2459(a)), that such work is of cultural 
                significance and the temporary exhibition or 
                display of such work is in the national 
                interest, and
                    (C) the notice thereof has been published 
                in accordance with subsection (a) of Public Law 
                89-259 (22 U.S.C. 2459(a)),
        any activity in the United States of such foreign 
        state, or of any carrier, that is associated with the 
        temporary exhibition or display of such work shall not 
        be considered to be commercial activity by such foreign 
        state for purposes of subsection (a)(3).
            (2) Nazi-era claims.--Paragraph (1) shall not apply 
        in any case asserting jurisdiction under subsection 
        (a)(3) in which rights in property taken in violation 
        of international law are in issue within the meaning of 
        that subsection and--
                    (A) the property at issue is the work 
                described in paragraph (1);
                    (B) the action is based upon a claim that 
                such work was taken in connection with the acts 
                of a covered government during the covered 
                period;
                    (C) the court determines that the activity 
                associated with the exhibition or display is 
                commercial activity, as that term is defined in 
                section 1603(d); and
                    (D) a determination under subparagraph (C) 
                is necessary for the court to exercise 
                jurisdiction over the foreign state under 
                subsection (a)(3).
            (3) Definitions.--For purposes of this subsection--
                    (A) the term ``work'' means a work of art 
                or other object of cultural significance;
                    (B) the term ``covered government'' means--
                            (i) the Government of Germany 
                        during the covered period;
                            (ii) any government in any area in 
                        Europe that was occupied by the 
                        military forces of the Government of 
                        Germany during the covered period;
                            (iii) any government in Europe that 
                        was established with the assistance or 
                        cooperation of the Government of 
                        Germany during the covered period; and
                            (iv) any government in Europe that 
                        was an ally of the Government of 
                        Germany during the covered period; and
                    (C) the term ``covered period'' means the 
                period beginning on January 30, 1933, and 
                ending on May 8, 1945.

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