ALBANY– The Court of Appeals ruled yesterday that Manhattan prosecutors, investigating art thefts by the Nazis, cannot prevent The Museum of Modern Art from returning two paintings to an Austrian foundation until the criminal investigation into their ownership is completed.

The 6-1 decision gave broad scope to the state’s Arts and Cultural Affairs Law, which prohibits “any kind of seizure” of art loaned to New York museums by out-of-state owners, applying the statute for the first time to a criminal proceeding.

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