Stockholm  - A Swedish museum and the heirs of a refugee who fled Nazi Germany have agreed on the fate of a contested painting in the museum's collection, the parties said in a joint statement Wednesday.

The 1917 painting by German expressionist Emil Nolde disappeared in 1939 after Jewish businessman Otto Nathan Deutsch fled from Germany to the Netherlands.

The painting, Blumengarten (Flower garden), resurfaced in the early 1960s and in 1967 the head of the Museum of Modern Art in Stockholm bought the painting in Lugano, Switzerland.

Since 2002, Deutsch's family have demanded that the painting be returned to them.

According to the agreement announced Wednesday, an unnamed "private European collector" was to buy the painting and loan it to the museum for up to five years.

Then the museum was to be allowed to loan "other seminal expressionist paintings" for some five years, according to the joint statement issued by museum director Lars Nittve and the Deutsch's attorney David J Rowland.

The parties said they would not comment the matter further, and the statement said the Deutsch heirs were to continue to search for other missing artworks.(dpa)