Immediately at stake in the case is $150 million in paintings that an elderly California woman wants returned. They were stolen from her family 65 years ago in Austria and ended up in the government's hands.
More broadly, her lawsuit against the Austrian Gallery and the Austrian state over the six Gustav Klimt paintings gives the court an opportunity to clarify when countries are immune from lawsuits involving disputes that predate a 1952 shield from lawsuits.
The 9th U.S. Circuit Court of Appeals ruled that if the allegations in Maria V. Altmann's case are proven, the paintings were taken in violation of international law and she can sue in the United States.
Austria's attorneys have maintained that the dispute belongs in Austrian courts.
Altmann's aunt, who died in 1925, had asked that the art to be donated to the state gallery, but her uncle who died in exile in Switzerland in 1945 specified that his possessions should go to Altmann and two other family members.
Altmann, now 87, escaped Nazi persecution and fled with her husband to Los Angeles. She is the only one of the three heirs still living.
Scott P. Cooper of Los Angeles, one of Austria's lawyers, had said the case was important for U.S. foreign relations.
"The diplomatic ramifications of a United States court holding that Austria, a nation friendly to the United States, must appear in a United States court to answer charges that it is actively advancing Nazi war-crimes in connection with a matter of extreme domestic importance to Austria, cannot be understated," Cooper wrote.
Altmann's attorney, E. Randol Schoenberg of Los Angeles, said that "the current case is consistent with the United States' view that Nazi-looted artworks should be returned to their original owners."
The paintings at issue, by Klimt, founder of the Vienna Secession art movement, include two of Altmann's aunt, Adele Bloch-Bauer, a portrait of the aunt's close friend and three landscapes.
The case is Austria v. Altmann, 03-13.