WASHINGTON: A US federal judge has allowed a lawsuit to proceed against Germany over claims of the Nazi-era theft from Jewish dealers of a celebrated collection of gilded medieval art treasures.

It was the first time a US court had agreed to hear Nazi art theft claims against Germany, said Nicholas O'Donnell, an attorney for the heirs of three Jewish art dealers who say the Nazis terrorized their families in 1935 into selling the collection at far below market price.

The claim against Germany seeks the return of the Welfenschatz collection, which includes centuries-old gem-studded busts of saints and golden crucifixes.

Germany had asked for the case to be thrown out, arguing that a US court did not have jurisdiction to deal with the matter.

Judge Colleen Kollar-Kotelly ruled on Friday, however, in federal court in Washington that since the Nazis’ organized plunder of Jewish property was part and parcel of their later genocide of the Jews - a crime under international law - the court had jurisdiction to hear the case.

Germany argued the case had already been heard before a German commission assessing Nazi-era property claims, which found the low sales price was a product of a collapse in the art market during the Great Depression - not because the Jewish art collectors were persecuted.

"This is a dispute that was already resolved on the merits in Germany, and it doesn't belong in a US court," Germany's attorney, Jonathan Freiman, said in an email.

The Welfenschatz was collected for centuries by the Brunswick Cathedral in Brunswick, Germany, according to court records. In 1929, a group of Jewish art dealers in Germany bought the art from the Duke of Brunswick.

Six years later, the dealers sold the art to the state of Prussia, then being administered by prominent Nazi official Hermann Goering. Pressure from the Nazis caused the dealers to sell for just 35 percent of its market value, lawyers for the heirs said.

O'Donnell told Reuters in an interview that the money the dealers received was deposited into a bank account they were unable to access because it was blocked by the Nazis.

Much of that money was ultimately seized as "flight taxes" by the Nazis who forced Jews to pay exorbitant fees to be allowed to leave Germany.

O'Donnell said the transaction was orchestrated by Goering at the behest of Nazi leader Adolf Hitler, who discussed in letters their effort to “save the Welfenschatz."

A few months after the sale was completed, Goering presented Hitler the Welfenschatz as a “surprise gift” during a ceremony, according to court records.