Princess Paley Olga v. Weisz
[1929] 1 KB 718 (English Court of Appeal)
The expropriation of property by the government of a foreign country will be
recognized as divesting the former owner of title if the property was situated within
the territory of the foreign country at the time of the expropriation. An expropriation
of property in these circumstances is a foreign act of state the validity of which may
not be questioned in proceedings in the forum, at least where the former owner was a
national of the expropriating country.
SCRUTTON LJ. [722] ... Princess Olga Paley was married to the Grand Duke Paul of
Russia [the uncle of Tzar Nicholas II] without the consent of the Tsar. The marriage
being, therefore, morganatic, she did not become a member of the Romanoff family.
This result saved her property from being confiscated under a Russian decree
confiscating the property in Russia of members of that family. The Princess had in
1917 at her house [the Paley Palace] in Tsarskoe Selo, near St Petersburg, or
Petrograd, afterwards Leningrad [now St Petersburg again], a quantity of valuable
furniture and works of art, admittedly her property. [In 1918 a section of
revolutionaries, whose acts were adopted subsequently by the Russian government,
took physical possession of the Paley Palace against the will of the Princess.] In
1928 she discovered this property in England, and issued a writ claiming it against the
persons in possession of it [including Mr. Weisz]. They replied that they or their
principals had bought that property [for £48,000] from the [Russian] government,
who, in 1924, had been recognized by the British government as the de jure
government of Russia. ... That Russian government had, in the contract of sale [made
in April 1928], described the property as “nationalized property”; and the Russian
government claimed, and the defendants alleged, that by the law of Russia the goods
claimed were the property of the Russian government.
They [the defendants] did so for two reasons which the judge below [MacKinnon J]
has held to be valid. The first is by the Decree of March 18, 1923 (No 245), of the
All-Russian Central Executive Committee and of the Council of People’s
Commissaries, s 5 of which is relevant: “Works of art, antiques, and articles of
historical interest being in museums and depositories, as forming part of the Museum
Fund and being safeguarded by State means, are recognised to be State property.” I
am quite satisfied on the evidence that from 1918 to the date of sale in Russia, the
goods in question in this action were in a State museum in Russia, safeguarded at the
expense of the State, having been in 1918 taken by force from the possession of
Princess Paley by persons whose acts were adopted by the Russian government. …
[723] Being the property of the Russian state, the Russian government has sold them;
and I can find nothing in the Russian decrees enabling their former owner to complain
in these or any courts of the sale by the Russian government.
The second title in the Russian government alleged by the defendants is under s 1 of
Decree No 111 of the Council of People’s Commissaries, signed by Lenin as
chairman of that body [and published on 5 March 1921]. That section reads: There is
declared “the property of the Russian Soviet Federal Socialist Republic all the
moveable property of citizens fled outside the confines of the Republic, or hiding
themselves up to the present time, and of whatever consisting, and wherever situated.”
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It is clear on the evidence, and is admitted by the Princess, that she escaped from
Russia without a passport [in or about February 1919]; and I am satisfied that this is
“fleeing from Russia” within the meaning of the Decree, and that thereby her property
in Russia became automatically confiscated and the property of the Russian state
without any necessity of further legal proceedings. ...
There is, however, a third defence which he [the primary judge] rejected, which I
think should also succeed. Counsel for the defendants put in the front of his argument
below and before us that if the seizure of this property began without legal
justification, or only by revolutionary right, it was ultimately adopted by a
government, which was recognized by the British [724] government as the lawful
government of the territory in which the property was, and that this was an act of state
into the validity of which this Court would not inquire. …
The learned judge dealt with this rather summarily. ... As it was based on three
decisions of the Supreme Court of the United States, followed by this Court in AM
Luther Co v. James Sagor & Co [1921] 3 KB 532, I regret that the learned judge did
not indicate more precisely why it was a bad point. I think it was a good one. … The
United States, situate in the neighbourhood of South and Central American republics,
where the life of any government is precarious and its death rarely by natural causes,
frequently found in its territory property seized by a revolutionary force which
ultimately succeeded in establishing itself in power and there sold the goods it had
seized to persons who exported them to the United States, where they were claimed
by their original owners. In Oetjen v. Central Leather Co 246 US 297 these facts
occurred with reference to a seizure in Mexico of property of a Mexican citizen which
when sold came into the United States, and in Ricaud v. American Metal Co. 246 US
304 they occurred again with respect to the property of a citizen of the United [725]
States. In each case the Supreme Court acted on the principle stated thus in Oetjen’s
case:
It is also the result of the interpretation by this Court of the principles of
international law that when a Government which originates in revolution or
revolt is recognised by the political department of our government as the de
jure government of the country in which it is established, such recognition is
retroactive in effect and validates all the actions and conduct of the government
so recognised from the commencement of its existence. … To these principles
we must add that: ‘Every sovereign State is bound to respect the independence
of every other sovereign State, and the courts of one country will not sit in
judgment on the acts of another done within its own territory. Redress of
grievances by reason of such acts must be obtained through the means open to
be availed of by sovereign powers as between themselves.’
Two further authorities of the Supreme Court of the United States are cited in support
of that proposition. This court acted on the principles laid down in the above cases in
AM Luther Co v. James Sagor & Co [1921] 3 KB 532. For this reason also in my
opinion the claim of the plaintiff fails. …
Our government has recognized the present Russian government as the de jure
government of Russia, and our courts are bound to give effect to the laws and acts of
that government so far as they relate to property within that jurisdiction when it was
affected by those laws and acts. The appeal must be dismissed with costs … .
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[In separate judgments, Sankey and Russell LJJ agreed with Scrutton LJ. On the act
of state point, Russell LJ observed, at p 736:
This court will not inquire into the legality of acts done by a foreign
government against its own subjects in respect of property situate in its own
territory.]
Appeal dismissed
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