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[House Report 112-413]
[From the U.S. Government Publishing Office]

112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-413

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

 
  FOREIGN CULTURAL EXCHANGE JURISDICTIONAL IMMUNITY CLARIFICATION ACT

                                _______
                                

 March 19, 2012.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Smith of Texas, from the Committee on the Judiciary, submitted the 
                               following,

                              R E P O R T

                        [To accompany H.R. 4086]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 4086) 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, reports favorably thereon with amendments 
and recommends that the bill as amended do pass.

                                CONTENTS

                                                                   Page
The Amendments...................................................     1
Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     2
Hearings.........................................................     7
Committee Consideration..........................................     7
Committee Votes..................................................     7
Committee Oversight Findings.....................................     8
New Budget Authority and Tax Expenditures........................     8
Congressional Budget Office Cost Estimate........................     8
Performance Goals and Objectives.................................     9
Advisory on Earmarks.............................................     9
Section-by-Section Analysis......................................     9
Changes in Existing Law Made by the Bill, as Reported............    10

                             The Amendments

    The amendments (stated in terms of the page and line 
numbers of the introduced bill) are as follows:

  Page 2, line 13, strike ``it''.

  Page 2, line 22, strike ``; and'' and insert ``, and''.

  Page 3, line 7, strike ``Nazi era'' insert ``Nazi-era''.

                          Purpose and Summary

    Currently, 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.

                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 is within the national interest 
of the United States.\1\ The intent of the IFSA is to encourage 
the cultural and educational exchange of artwork and other 
culturally significant objects which, in absence of the 
legislation, 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).
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    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.
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    \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.
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    \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\
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    \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).
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    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 artwork ``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:
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    \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\
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    \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\
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    \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.
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    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, the 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 the FSIA have 
undercut the ability of IFSA, in many cases, to provide foreign 
governments with assurances they require to be willing to 
export artwork to the United States for temporary exhibition or 
display.
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    \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).
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    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, 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.'' 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.
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    \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.
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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 with other nations. 
In furtherance of that interest, the State Department has 
regularly exercised authority delegated to it to grant immunity 
for temporary art 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 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 artwork 
have been threatened by recent Federal court decisions holding 
that foreign sovereigns waive their sovereign immunity under 
FSIA by sharing their artwork with American museums and 
educational institutions even if the loan is made pursuant to a 
grant of IFSA immunity.\26\ These decisions hold that the 
presence in the United States of artwork protected under IFSA 
can serve as the basis for jurisdiction under the FSIA 
expropriation exception, 28 U.S.C. Sec. 1605(a)(3).
---------------------------------------------------------------------------
    \26\See, e.g., Malewicz v. City of Amsterdam, 362 F. Supp. 2d 298 
(D.D.C. 2005).
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    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.''\27\ 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.''\28\
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    \27\Charlene A. Caprio, ``Artwork, Cultural Heritage Property and 
the Foreign Sovereign Immunities Act,'' 13 Int'l J. of Cultural 
Prop.285, 287 (2006).
    \28\Id. at 291.
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    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.''\29\
---------------------------------------------------------------------------
    \29\Id. at 303.
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    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's 
aim was to ensure that foreign lenders would not be subject to 
the jurisdiction of U.S. courts when they loaned immunized 
artwork 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 artwork to the United States without incurring 
the risk that the artwork 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.\30\
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    \30\111 Cong. Rec. 25,929 (1965) (remarks of Rep. Rogers) (emphasis 
added).

    The ongoing effectiveness of IFSA to encourage foreign 
governments to lend artwork 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. 4086 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 artwork 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 the object immunity from seizure under IFSA.\31\ 
Thus, if foreign government-owned artwork has not been granted 
immunity pursuant to IFSA, the protection provided by this 
legislation will not apply. Third, the immunity provided by 
this bill does not apply to claims arisihng 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.
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    \31\22 U.S.C. Sec. 2459.
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    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 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. 
4086.

                        Committee Consideration

    On February 28, 2012, the Committee met in open session and 
ordered the bill H.R. 4086 favorably reported with an 
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. 4086.

                      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. 4086, 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 19, 2012.
Hon. Lamar Smith, 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. 4086, 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 Martin von 
Gnechten, who can be reached at 226-2860.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member

          H.R. 4086--Foreign Cultural Exchange Jurisdictional 
                       Immunity Clarification Act

    As ordered reported by the House Committee on the Judiciary on 
                           February 28, 2012.

    Based on information provided by the Administrative Office 
of the United States Courts and the National Gallery of Art, 
CBO estimates that H.R. 4086 would have no significant impact 
on the Federal budget. Enacting H.R. 4086 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 to certain decisions made by 
Federal courts and cannot be confiscated. However, foreign 
governments engaging in commercial activity do not have 
immunity in Federal courts.
    H.R. 4086 would clarify that importing works of art into 
the United States for temporary display would not be considered 
a commercial activity and thus would be immune from seizure if 
the President, or the President's designee, determines that 
display of the works is in the national interest.
    H.R. 4086 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 Martin von 
Gnechten. The estimate was approved by Theresa Gullo, Deputy 
Assistant Director for Budget Analysis.

                    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. 
4086 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. 4086 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 the objects are: (a) 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):

              SECTION 1605 OF TITLE 28, UNITED STATES CODE

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

    (a) * * *

           *       *       *       *       *       *       *

    (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 
                Public Law 89-259 (22 U.S.C. 2459), 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,
        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) of this 
        section.
            (2) Nazi-era claims.--Paragraph (1) shall not apply 
        in any case in which--
                    (A) the action is based upon a claim that 
                the work was taken in Europe in violation of 
                international law by a covered government 
                during the covered period;
                    (B) the court determines that the activity 
                associated with the exhibition or display is 
                commercial activity, as that term is defined in 
                section 1603(d) of this title; and
                    (C) such determination is necessary for the 
                court to exercise jurisdiction over the foreign 
                state under subsection (a)(3) of this section.
            (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 Nazi government of Germany;
                            (ii) any government in any area 
                        occupied by the military forces of the 
                        Nazi government of Germany;
                            (iii) any government established 
                        with the assistance or cooperation of 
                        the Nazi government of Germany; and
                            (iv) any government that was an 
                        ally of the Nazi 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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