On the same day Russia officially abandoned the Chabad case, it sent a delegation to Prague, Czech Republic, to join 48 other countries discussing issues of World War II restitution. Each country committed itself to a set of standards for returning artifacts belonging to Holocaust victims. According to Eizenstat, who led the U.S. delegation, Russia lobbied for language that would have let it argue against handing back much of its wartime loot. (Eventually, Eizenstat said, the conference allowed a more "harmless" version of the clause.)
THE COURT ROUTE
Chabad launched its U.S. litigation to retrieve the rabbis' library in November 2004, suing Russia in the U.S. District Court for the Central District of California, where it was represented by Bingham McCutchen partners Seth Gerber and Marshall Grossman. The case hinged on a section of the Foreign Sovereign Immunities Act that permits individuals to sue foreign countries over property seized in violation of international law. Under the statute, the FSIA suit was removed to Washington, where Nathan and Alyza Lewin of Lewin & Lewin joined the case, along with Howrey partner William Bradford Reynolds. The case is before Chief Judge Royce Lamberth.
Initially, Russia sought to dismiss the suit on grounds that it had never violated any international conventions. But the U.S. Court of Appeals for the D.C. Circuit sided with Chabad in June 2008.
In January of this year, Russia's lawyers at Squire, Sanders & Dempsey -- including James Murphy, Alan Briggs and Jeremy Dutra in the Washington office, who declined comment -- asked to be removed from the case. They had lost contact with their client, they told the court, and weren't being paid. In March, they withdrew the request, explaining only that they had "reached an accommodation" with their client.
Meanwhile, Chabad discovered that pages of the handwritten teachings were turning up on the Israeli black market, where they were selling for $10,000 to $20,000 per page, according to Nathan Lewin. Russia denied that the pages had come from the military archive, but Lamberth issued an injunction on Jan. 27 ordering Russia to step up its efforts to protect the contents of the library.
The case seemed to be moving slowly toward discovery until this month, when Russia finally stepped out.
"The Russian Federation views any continued defense before this Court and, indeed, any participation in this litigation as fundamentally incompatible with its rights as a sovereign nation," its filing stated, adding that Chabad was free to press its case in the Russian courts. However, if the U.S. government chose to intervene again, Russia wrote, the United States should stick to "diplomatic channels."
"If they had wanted to take that position, they should have taken it without trying to test their legal arguments in the courts," responded Lewin.
TACTICS VS. TACTICS
Ordinarily, when countries are sued under the FSIA, they decide at the start whether to defend themselves or simply default and let the plaintiff try to collect a judgment. But Russia's move is not unprecedented, said Steven Perles of the Perles Law Firm in Washington. In politically charged suits, countries sometimes attempt a legal defense through a motion to dismiss and then bail out of the litigation before the case can go to discovery or be tried on the merits, said Perles, a specialist in FSIA cases. He pointed to suits over terrorist attacks involving Libya and Sudan as examples.
"It's just smart litigation tactics on their part," Perles said. If Russia had managed to persuade the court to dismiss Chabad's case, he noted, it could have used the ruling as a buffer against diplomatic pressure down the line.
With Russia gone, Chabad will still be free to pursue a judgment in U.S. district court. But Russia might not have much to worry about, said Crowell & Moring partner Stuart Newberger, who co-chairs the Washington firm's international dispute resolution practice. Even if Chabad were to win an award in federal court here, he said, it could collect only by petitioning a Russian court.
"If they want to enforce the judgment, they're going to have to go to Moscow, and that may be why the Russians decided to pull from the case," Newberger said.
Nathan Lewin disagrees with that interpretation of the FSIA. He said he believes that Chabad could enforce a judgment by attaching Russian assets in the United States.
Not that Chabad wants those assets. "The reason we went to the courts was that we saw from the diplomatic efforts that we were running up against a stone wall," Lewin said. Any assets his client claimed, he said, would serve as leverage to pressure Russia to, at long last, release the library.
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