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Wednesday, January 16, 2013

Judge Lamberth Issues $50K Per Day Sanctions Against Russia over Jewish Archives

In some significant breaking news from the Chabad v. Russian Federation case, Judge Royce Lamberth today finally lowered the hammer and entered contempt sanctions (Order here, Opinion here) against the Russian Federation, the Russian State Library, and the Russian State Military Archive for failing to comply with the Court's July 2010 Order to transfer the historical Jewish library and archive that is sometimes called the "Schneerson Collection" to Chabad, a religious organization.

The contempt order states that until the Russian Federation complies with the Court's order to return the collections "a fine payable to the plaintiff in the amount of $50,000 per day shall be imposed on the defendants."  The order also schedules a status conference for February 15, 2013 "to discuss whether further and/or other sanctions might lead to compliance with the Court's order."

Earlier coverage of the background of the case is here, but in brief, at issue in the case is both a Library (dating from 1772) consisting of "more than 12,000 books and 381 manuscripts" that had been stored in a private warehouse in Moscow and came into Russian government possession following the 1917 Bolshevik Revolution; and an Archive of "over 25,000 pages of handwritten teachings, correspondence, and other records" that was seized in Poland by the Nazis following their 1939 invasion and moved to a "Gestapo-controlled castle in Germany."  In 1945, as described by the Court in an earlier opinion, "the Archive was taken by the Soviet Army as German 'trophy documents' or 'war booty'" and transferred to the Russian State Military Archive.

Judge Lamberth held in 2006 that Nazi Germany's seizure of the Archive, as private property, "clearly violated international law" and that "the Soviet Army's 1945 seizure and appropriation of the Archive from its Nazi captors as spoils of war was also a taking in violation of international law," conclusions which allowed the court to assert jurisdiction over the Russian Federation (which would otherwise enjoy sovereign immunity).  Judge Lamberth initially held that the same did not apply to the Library, but that ruling was later overturned by the D.C. Circuit. (As an aside, Soviet tribunals in the early 1990s had also held that "the Library and Archive were not the national property of the Soviet Union and had ordered that the collections be returned" to Chabad, but following the fall of the Soviet Union, the Russian Federation "nullified the prior orders." In a submission (see p. 60) to a 2005 Congressional hearing on the issue, the Russian Federation argued that the collections constitute an inalienable part of its cultural heritage.)

After vigorously defending itself in the U.S. Chabad case for several years, the Russian Federation suddenly informed the Court in 2009 that its further participation in the case was "fundamentally incompatible with its rights as a sovereign nation" and asserted that "this Court has no authority to enter Orders with respect to the property owned by the Russian Federation . . . and the Russian Federation will not consider any such Orders to be binding on it."

On July 30, 2010, Judge Lamberth entered a default judgment against the Russian entities and issued the order that is the subject of today's contempt sanctions which stated:
Defendants are Ordered to surrender to the United States Embassy in Moscow or to the duly appointed representatives of Plaintiff Agudas Chasidei Chabad of United States the complete collection of religious books, manuscripts, documents and thing that comprise the "Library" and the "Archive" presently being held by the Defendants at the Russian State Library and the Russian State Military Archive
In today's opinion accompanying his contempt order for failing to comply, Judge Lamberth flatly and thoroughly rejected arguments the U.S. government had asserted in an August 2012 statement of interest filed in the case (my earlier thoughts of the U.S. arguments is here and Chabad's response to them is here).

First, Judge Lamberth summarily rejected the U.S. government's rather convoluted position that the Court did not have the legal authority to issue sanctions under the Foreign Sovereign Immunities Act.  Lamberth notes that the D.C. Circuit previously and unambiguously held that courts do have such authority in FG Hemisphere v. Democratic Republic of Congo (involving contempt sanctions against Congo for failing to comply with a court discovery order).  Lamberth held that the U.S. government's argument in Chabad, as with a similar argument the U.S. goverment asserted in an amicus brief in FG Hemisphere, "fails because it mistakenly conflates the entering of a sanction with its enforcement" (which could involve, for example, allowing the seizure of Russian government assets or property in order to satisfy the fines imposed).

Second, and more interestingly, Judge Lamberth also rejected the U.S. government's arguments that, even if the court has the legal power to issue contempt sanctions, it ought not exercise it and that imposing such sanctions would be "counter-productive" and would "damage" U.S. government efforts "towards 'promoting resolution of the dispute between Chabad and Russia over the Collection." Lamberth was "not convinced" and noted that the Russian entities "have steadily resisted all legal and diplomatic efforts to compel them to return the collection for at least two decades" and that while "the United States may indeed be 'committed to continuing these efforts,' it provides neither any information regarding its future plans, nor any reason to believe that its new efforts will be more likely to succeed than past failures."

Finally, Judge Lamberth rejected the U.S. government's invocation of "Russia's moratorium on 'all loans of Russian cultural treasures to exhibitors in the United States' which, it states, was begun 'in response to what Russia perceived to be threats from Chabad to seek attachment of the loaned items."  Lamberth noted that "the fears purportedly motivating Russia's moratorium" are "legally unfounded" given that such cultural items "would be immune under federal law from attachment" and that, more specifically, the relevant order in the Chabad case, at Chabad's suggestion, "incorporated an express prohibition on the attachment of such cultural treasures," all of which "undermines the United States' characterization" of the Russian moratorium and "suggests that other motives are at play."

As a practical matter, consistent with the distinction between imposing sanctions and enforcing them emphasized in Lamberth's opinion, whether Chabad will ever be able to collect the $50,000 per day sanctions the Court imposes is a separate issue and a fight for another day, but today's order is an undeniably significant event in the long battle over these collections.  The larger question is, of course, what, if any,  effect the contempt sanctions will have - will they spur new, more productive negotiations or make any progress on the return of the collections less likely?  While I would tend to agree with the U.S. government that the latter is probably a more likely outcome, at least in the short term, I also think that under the circumstances Judge Lamberth made the right call and has created a compelling test case to challenge such pessimism.  We will be watching with interest.

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