Vienna's Leopold Museum has agreed to pay $19 million US and display a 1912 painting by expressionist Egon Schiele with an acknowledgement that it was stolen from a Jewish art dealer

The acknowledgement is part of an agreement that ends a 12-year legal battle over Schiele's Portrait of Wally that involved the U.S. and Austrian governments and two major museums.

The museum will also pay a $19-million settlement to the estate of Lea Bondi Jaray, a Viennese Jew who was forced to sell it at a discount in 1939 as she fled her home to go to London. She died in 1969.

The $19 million is considered the current value of the work — a Schiele painting, Houses With Mountains, sold for more than $22 million at auction four years ago.

'Finally, after more than 70 years, the wrongs suffered by Lea Bondi Jaray are at least being acknowledged and, to some degree, corrected'— U.S. heirs of Jewish art dealer

The painting will be displayed for three weeks at the Museum of Jewish Heritage in lower Manhattan before it is returned to Austria.

The Leopold Museum has been trying to get the painting back since it loaned it to the Museum of Modern Art in New York in 1997 for a three-month exhibit.

Before the exhibit closed in early 1998, U.S. authorities seized it on the grounds it had been stolen from Jaray. Henry Bondi of New Jersey, a nephew of Jaray's who has since died, filed the claim.

The Leopold Museum insisted it bought the painting, valued at $2 million in 1998, in good faith from legitimate owners.

Lower court judges ruled in the museum's favour three times and ordered the work returned to Austria.

But a year ago, U.S. District Judge Loretta A. Preska rejected the Leopold Museum's argument that the painting was not stolen property and ordered a trial over whether the museum knew the painting was stolen when it was brought into the U.S.

On Tuesday, she outlined the terms for return of the painting to Austria, which were negotiated with the involvement of the U.S. and Austrian governments.

Representatives of the Bondi estate said the settlement reflects the true value of the painting and welcomed its public display at the Museum of Jewish Heritage.

"Justice has been served," the statement said. "Finally, after more than 70 years, the wrongs suffered by Lea Bondi Jaray are at least being acknowledged and, to some degree, corrected."

With files from The Associated Press