A US appeal court has said a Madrid museum has the right to retain a painting by Camille Pissarro that was stolen by the Nazis from a Jewish family, in the latest twist in a decades-long legal battle that has pitted the Spanish institution against the heirs of Jewish refugees. In a decision published on Tuesday, the ninth US circuit court of appeals in Pasadena, California, said the Thyssen-Bornemisza museum may keep the 1897 French impressionist work, Rue Saint-Honoré in the Afternoon, Effect of Rain. While the decision was unanimous, one of the judges said in a separate opinion that she had hoped Spain would voluntarily return the artwork to the family. “Sometimes our oaths of office and an appreciation of our proper roles as appellate judges require that we concur in a result at odds with our moral compass,” the judge, Consuelo Callahan, said. For decades the painting, which depicts a rainswept Paris street, graced the walls of the Cassirer family’s homes in Berlin and Munich after it was bought directly from Pissarro’s art dealer. In 1939, facing escalating Nazi oppression, Lilly Cassirer Neubauer was told that exit visas could be obtained, but at a cost: the family would have to hand over the painting. A Nazi-appointed appraiser offered $360, paid into a blocked account that the family was unable to access. Cassirer spent years searching for the oil on canvas work, according to her heirs. She accepted reparations from the German government in 1958 but did not waive her right to seek the painting’s return. The painting had changed hands repeatedly before being bought by Baron Hans Heinrich Thyssen-Bornemisza. In 1993 it was passed to Spain when a state-backed non-profit foundation paid the baron $338m for much of his collection, to be installed at a museum bearing his name. In 2000, Cassirer’s grandson Claude discovered that the painting was on display at Madrid’s Thyssen-Bornemisza museum. After Spain rebuffed the family’s request for its return, the long-running legal battle was launched. The painting’s value has been estimated at $30m. On Tuesday, the federal appeals court said that Spanish law – which defines ownership as six years of uninterrupted possession – should take precedence when considering the question of ownership. Lawyers for the Cassirer family said in a joint statement that they would seek a review by an 11-judge ninth circuit panel. “The Cassirers believe that, especially in light of the explosion of antisemitism in this country and around the world today, they must challenge Spain’s continuing insistence on harbouring Nazi-looted art.” In Spain, the court’s decision was welcomed by the museum’s managing director. “It is good news,” said Evelio Acevedo, adding: “The good faith acquisition of this work by this institution is something that has been demonstrated from the first moment.”