B-183401, MAR 27, 1975, 54 COMP GEN 807

B-183401, MAR 27, 1975, 54 COMP GEN 807

PROPERTY - PRIVATE - DAMAGE, LOSS, ETC. - LOANED EXHIBITS WHERE CONGRESS HAS AUTHORIZED THE DEPARTMENT OF STATE TO AGREE TO INDEMNIFY THE PEOPLE'S REPUBLIC OF CHINA (PRC) FOR LOSS OF OR DAMAGE TO AN EXHIBITION OF ARCHAEOLOGICAL FINDS, AND WHERE THE DEPARTMENT HAS AGREED TO BE RESPONSIBLE FOR THE SECURITY OF THE COLLECTION WHILE IT IS IN THE UNITED STATES, THE DEPARTMENT, IF IT DETERMINES THAT IT IS TO THE ADVANTAGE OF THE UNITED STATES TO DO SO, MAY GIVE ASSURANCE TO THE PRIVATE ART GALLERY SHOWING THE EXHIBITION PURSUANT TO THE AGREEMENT WITH THE PRC THAT, IF THE UNITED STATES IS REQUIRED TO INDEMNIFY THE PRC AS A RESULT OF NEGLIGENCE BY THE GALLERY, THE UNITED STATES WILL NOT SEEK TO RECOVER FROM THE GALLERY.

IN THE MATTER OF THE ASSUMPTION BY UNITED STATES OF RISK OF LOSS OR DAMAGE BY PRIVATE MUSEUM TO EXHIBITION OF ARCHAEOLOGICAL FINDS OF THE PEOPLE'S REPUBLIC OF CHINA, MARCH 27, 1975:

THIS DECISION IS IN RESPONSE TO A REQUEST BY THE DEPUTY LEGAL ADVISER, DEPARTMENT OF STATE (DEPARTMENT), DATED MARCH 14, 1975, FOR OUR VIEWS ON WHETHER THE DEPARTMENT CAN GIVE -

*** AN ASSURANCE TO THE NELSON ART GALLERY OF KANSAS CITY THAT THE DEPARTMENT WOULD NOT GO AGAINST THE GALLERY OR ITS REPRESENTATIVES FOR ANY LIABILITY IN CASE OF LOSS OR DAMAGE TO THE EXHIBITION OF ARCHEOLOGICAL FINDS OF THE PEOPLE'S REPUBLIC OF CHINA FOR WHICH WE HAD TO INDEMNIFY THE PEOPLE'S REPUBLIC.

ACCORDING TO INFORMATION PROVIDED TO US BY THE DEPARTMENT, IT HAS ARRANGED, AS ONE OF A SERIES OF CULTURAL AND SCHOLARLY EXCHANGES AGREED TO WITH THE PEOPLE'S REPUBLIC OF CHINA (PRC), THE EXHIBITION IN THE UNITED STATES OF A COLLECTION OF ARCHEOLOGICAL FINDS OF THE PRC. THE EXHIBITION IS NOW AT THE NATIONAL GALLERY OF ART, WASHINGTON, D.C., AND, IN ACCORDANCE WITH THE AGREEMENT WITH PRC, IS SHORTLY TO BE TRANSFERRED TO THE NELSON GALLERY-ATKINS MUSEUM (GALLERY) IN KANSAS CITY, MISSOURI.

THE EXHIBITION HAS BEEN VALUED AT $51.3 MILLION. THE PRC HAS REQUIRED, AS A CONDITION OF ITS AGREEMENT TO ALLOW THE EXHIBITION TO BE SHOWN IN OTHER COUNTRIES, AN AGREEMENT OF THE HOST COUNTRY TO INDEMNIFY THE PRC FOR ANY LOSS OR DAMAGE TO OBJECTS IN THE EXHIBITION. LETTER FROM THE DEPARTMENT TO THE CHAIRMAN, SENATE COMMITTEE ON FOREIGN RELATIONS, DATED APRIL 8, 1974, QUOTED IN H.R. REPORT NO. 93-1023, 2 (1974). THE CONGRESS HAS SPECIFICALLY AUTHORIZED THE DEPARTMENT TO ENTER INTO SUCH AN AGREEMENT, TO BE IN EFFECT FROM THE TIME THE OBJECTS WERE HANDED OVER IN TORONTO, CANADA, TO A REPRESENTATIVE OF THE UNITED STATES, TO THE TIME THEY ARE RETURNED, IN PEKING, TO A REPRESENTATIVE OF THE PRC. PUBLIC LAW 93-287, 88 STAT. 143. THE DEPARTMENT HAS ACCORDINGLY CONCLUDED AN INDEMNITY AGREEMENT WITH THE PRC.

THE DIRECTOR OF THE GALLERY HAS NOW WRITTEN TO THE ASSISTANT LEGAL ADVISOR FOR EDUCATION, CULTURE AND PUBLIC AFFAIRS, DEPARTMENT OF STATE, CONCERNING THE POSSIBLE LIABILITY OF THE GALLERY IF THE UNITED STATES IS REQUIRED TO INDEMNIFY THE PRC, UNDER THE AGREEMENT, FOR LOSS OR DAMAGE RESULTING FROM NEGLIGENCE BY GALLERY EMPLOYEES. SPECIFICALLY, THE DIRECTOR STATES:

THE SECURITY OF THE EXHIBITION AND THE ATTENDANT CURATORS IS A MATTER OF DEEP CONCERN TO US, AND IS BEING CONSTANTLY CO-ORDINATED WITH THE APPROPRIATE OFFICIALS OF THE DEPARTMENT OF STATE.

WHILE THE CONGRESS HAS PROVIDED FOR INDEMNIFICATION WITH RESPECT TO THE ARCHEOLOGICAL MATERIALS ENTRUSTED TO OUR CARE FOR THE PURPOSE OF THE EXHIBITION, WE AT THE NELSON GALLERY-ATKINS MUSEUM HAVE BEEN ADVISED THAT THERE STILL EXISTS THE POSSIBILITY THAT THE UNITED STATES COULD GO AGAINST THE GALLERY FOR ANY NEGLIGENCE ON THE PART OF ITS EMPLOYEES.

IT IS OUR UNDERSTANDING THAT ALL RISK INSURANCE FOR THE DURATION OF THE EXHIBITION HERE WOULD COST IN THE NEIGHBORHOOD OF $42,000.00. WE ARE IN NO WAY IN A FINANCIAL POSITION TO ASSUME THIS OBLIGATION AND WOULD HAVE TO SEEK SUCH PAYMENT FROM THE NATIONAL ENDOWMENT FOR THE HUMANITIES, A FEDERAL AGENCY. IN CONSIDERATION OF THE CIRCUMSTANCES, THE INTEREST IN THE MATTER SHOWN BY CONGRESS, AND IN THE SPIRIT OF THE LEGISLATION PROVIDING THE INDEMNITY, IT WOULD APPEAR TO BE IN THE INTEREST OF THE UNITED STATES GOVERNMENT TO GIVE ADEQUATE ASSURANCE TO THE TRUSTEES OF THE NELSON GALLERY FOUNDATION THAT NO CLAIM WILL BE MADE AGAINST IT OR ITS REPRESENTATIVES SO THAT BY FOREGOING THE PAYMENT OF THE INSURANCE PREMIUM A SUBSTANTIAL SAVING CAN BE ASSURED TO A FEDERAL AGENCY.

THE DEPARTMENT ASKS WHETHER IT CAN GIVE ASSURANCE TO THE TRUSTEES OF THE NELSON GALLERY FOUNDATION, AS REQUESTED, THAT NO CLAIM WILL BE MADE AGAINST THE GALLERY OR ITS REPRESENTATIVES. WE CONCLUDE THAT, IN THE PARTICULAR CIRCUMSTANCES HERE PRESENTED, SUCH ASSURANCE MAY BE GIVEN IF THE DEPARTMENT DETERMINES IT TO BE IN THE BEST INTERESTS OF THE UNITED STATES TO DO SO.

THE CONGRESS HAS, AS ALREADY NOTED, AUTHORIZED THE AGREEMENT BY THE DEPARTMENT FOR INDEMNIFICATION OF THE PRC. THE DEPARTMENT POINTS OUT (IN A PROPOSED RESPONSE TO THE GALLERY'S REQUEST) THAT, UNDER ITS AGREEMENT WITH THE PRC, THE EXHIBITION WAS GIVEN INTO THE CUSTODY OF A REPRESENTATIVE OF THE UNITED STATES AND IS TO BE RETURNED BY A REPRESENTATIVE OF THE UNITED STATES. MOREOVER, THE UNITED STATES HAS UNDERTAKEN TO "*** ADOPT COMPREHENSIVE MEASURES TO ENSURE THE SECURITY OF THE OBJECTS AFTER THEIR ENTRY INTO THE TERRITORY OF THE UNITED STATES ***." OCTOBER 28, 1974, AGREEMENT WITH THE PRC. THE SECURITY OF THE EXHIBITION AT THE GALLERY "*** IS BEING CONSTANTLY CO ORDINATED WITH THE APPROPRIATE OFFICIALS OF THE DEPARTMENT OF STATE." MARCH 4, 1975, LETTER FROM THE DIRECTOR OF THE GALLERY, QUOTED SUPRA. THE DEPARTMENT CONSIDERS, THEREFORE, THAT THE GALLERY WILL BE ACTING IN IMPLEMENTATION OF THE CUSTODIAL RESPONSIBILITY OF THE UNITED STATES AND, CONSEQUENTLY, SHOULD NOT BE HELD LIABLE FOR ANY LOSS.

IN THIS CASE, WE NOTE THAT, SHOULD THE GALLERY HAVE TO ASSUME RESPONSIBILITY FOR ITS NEGLIGENCE, IT INTENDS TO SEEK FUNDS TO PAY FOR INSURANCE PROTECTION FROM THE NATIONAL ENDOWMENT FOR THE HUMANITIES. THERE IS THUS A POSSIBILITY, SHOULD A GRANT FOR THIS PURPOSE BE MADE, THAT THE UNITED STATES WOULD, IN EFFECT, BEAR THE COST OF INSURING THE EXHIBIT.

ALTERNATIVELY, THE PRC HAVING AGREED TO THE HOLDING OF THE EXHIBITION AT THE GALLERY, IT SEEMS APPARENT THAT IT WOULD NOT BE TO THE ADVANTAGE OF THE UNITED STATES, IN TERMS OF ITS RELATIONS WITH THE PRC, FOR THE GALLERY TO BE UNABLE TO ACCEPT THE EXHIBITION BECAUSE OF INABILITY TO PROTECT ITSELF AGAINST LIABILITY.

IN ANY EVENT, THE DEPARTMENT IS ENTITLED TO MAKE A DETERMINATION WHETHER IT IS TO THE ADVANTAGE OF THE UNITED STATES TO GIVE THE GALLERY THE SOUGHT -FOR ASSURANCE. WE CONSIDER IT PARTICULARLY SIGNIFICANT IN THIS RESPECT THAT THE UNITED STATES HAS ASSUMED RESPONSIBILITY FOR THE SECURITY OF THE EXHIBITION AND, IN CARRYING OUT THAT RESPONSIBILITY, IS PARTICIPATING IN THE ESTABLISHMENT OF SECURITY ARRANGEMENTS BY THE GALLERY. THAT IS, THE GALLERY HAS IN EFFECT AGREED TO RELINQUISH TO THE DEPARTMENT AT LEAST SOME OF ITS RESPONSIBILITY FOR THE SECURITY OF THE EXHIBITION.

UNDER THE CIRCUMSTANCES, WE CONCLUDE THAT IT IS WITHIN THE DISCRETION OF THE DEPARTMENT TO DETERMINE THAT IT IS APPROPRIATE AND IN THE OVERALL INTEREST OF THE UNITED STATES TO GIVE THE GALLERY ASSURANCE THAT NO CLAIM WILL BE MADE AGAINST IT AS A CONSEQUENCE OF ANY INDEMNIFICATION WHICH THE UNITED STATES MAY BE REQUIRED TO MAKE TO THE PRC FOR LOSS OF OR DAMAGE TO ITEMS IN THE EXHIBITION. WHILE SUCH ACTION WAS APPARENTLY NOT SPECIFICALLY CONSIDERED DURING DELIBERATIONS ON PUBLIC LAW 93-287, IT IS NOT, IN OUR VIEW, INCONSISTENT WITH THE INTENT OF THAT LEGISLATION.