On 30 June 2016, the European Commission and the European Investment Fund (EIF) launched a €121 million guarantee initiative, the “Cultural and Creative Sectors Guarantee Facility”, to support small and medium enterprises (SMEs) in the cultural and creative sectors via financial institutions. The new guarantee facility will be offered through “Creative Europe” (see here), a 7-year programme (2014-2020) aimed at supporting the cultural and creative sectors. The guarantee facility will be managed by the EIF on behalf of the European
The Comisión Nacional de los Mercados y la Competencia (“CNMC”) is the independent authority in charge of both competition and regulatory matters in Spain. Its role is to guarantee and maintain the correct operation and effective competition of all productive sectors and markets in Spain. On 24 June 2016, the CNMC issued a press release (see here) announcing that it is investigating potentially anti-competitive practices carried out by certain companies providing transport, production and assembly services in relation to art
Less than a week after the British EU Referendum, it is becoming increasingly obvious that the vote to “Leave” has settled nothing. This is because the question on the ballot was fundamentally flawed. The Prime Minister should have delayed the process until the Leave supporters put forward a coherent, persuasive alternative to the status quo and voters should then have been asked to choose between the two alternatives. Instead, the British people have voted against an existing system but not
Last month, collectors Domenico and Eleanore De Sole settled their claims against the now defunct Knoedler Gallery and its former president and director, Ann Freedman. The settlement, though hardly surprising, left many questions unanswered and raised other interesting ones. Unfortunately, we will never know whether, in the eyes of a jury, the De Soles’ reliance on the representations made by Knoedler and Freedman was reasonably justified, and whether Knoedler and Freedman intended to defraud. The Knoedler Gallery, founded in 1846
Since 1955, it has been possible for Germany’s 16 states to register on a list of objects of national cultural importance artworks that are considered of particular cultural significance to the German nation. Once registered, the artwork cannot be permanently exported from Germany. Thus far, some 2,700 artworks have been registered by Germany’s 16 states. Most of these artworks are held in private collections. It has only been possible to register artworks held in public collections since 2007. Naturally, once
Since 1 January 2016, art collectors and art businesses dealing in art, or storing art, in Switzerland must comply with new anti-money laundering and terrorist financing laws. Key legislation in Switzerland Money laundering is regulated in Switzerland by the Swiss Criminal Code (“SCC”) which makes money laundering a criminal offence and the Swiss Federal Act on Combating Money Laundering and Terrorist Financing in the Financial Sector (“AMLA”) which sets out the due diligence and reporting obligations which must be complied
Lending against art is on the rise. In a survey conducted by Deloitte and ArtTactic for their Art and Finance Report 2014, 48% of collectors said that they would be interested in using their art collection as collateral for a loan, which according to the report, is an increase from 41% in 2012. Skate’s Global Art-Loans Market Report, whilst wildly optimistically predicting that “the 2015 art loans book [is] scheduled to grow above $10 billion this year, which is at
In November 2015, the (UK) Museums Association approved a new version of the Code of Ethics for Museums. The Code is one of a series of guidelines on museums’ ethics published by the Museums Association which also include ‘Guidance on the ethics and practicalities of acquisition’ and the ‘Disposal Toolkit’. The Museums Association has been at the forefront of museum ethics since it published its first Code of Practice in 1977. Since then, it has been continually developing museum standards.
On 4 December 2014, Larry Gagosian won a protracted, hostile, and expensive court battle against his long-time friend and client Ronald Perelman. The dispute arose in connection with a series of transactions between the parties involving works of art by Jeff Koons, Cy Twombly, and Richard Serra. In MAFG Art Fund LLC and MacAndrews & Forbes Group LLC v. Larry Gagosian and Gagosian Gallery, Inc., Index No. 653189/2012, two New York courts dismissed the claims brought against the Gagosian defendants.
On 15 June 2015, the New York State Senate approved a bill, S1229A-2015 (the “Bill”) to amend New York Arts and Cultural Affairs Law (“NYACAL”) in relation to opinions concerning authenticity, attribution and authorship of works of fine art. The Bill, which we hope will one day become law, aims to remedy some deficiencies in NYACAL around the absence of protection for experts rendering independent, good-faith opinions about authenticity, attribution and authorship of works of fine art. Specifically, the approved
Off-Premises Sales: the Consumer Goes on an Excursion… At the Art Business Conference last September organised in London by Art Market Minds, a delegate asked whether a sale to a consumer concluded by a dealer in his gallery could constitute an ‘off-premises’ sale. The short answer is that it can. The question is significant because if a dealer sells ‘off-premises’ to a consumer, he is required by law (pursuant to the UK Consumer Contracts (Information, Cancellation and Additional Charges) Regulations
Earlier this year, we wrote about the claim brought by Dallas art collector, Marguerite Hoffman, against three defendants, L&M Arts, Studio Capital and David Martinez. The subject of the claim was the purported breach of a confidentiality clause in the contract for the sale of Hoffman’s 1961 Mark Rothko oil painting, Untitled. The contract was in the form of a letter agreement, dated April 24, 2007 which provided that it would serve as “an agreement between Greenberg Van Doren Gallery
As of 1 October 2014, three new exceptions to copyright infringement have come into force in the UK. The new exceptions affect the way in which copyrighted works can be used and have come about as a result of increasing pressure on UK legislation to reflect the fast-paced digital age that we live in. These changes are likely to not only impact creators and copyright owners, but also consumers, researchers and those in the education sector. The three new exceptions
Foundations are often established to manage large art collections after the death of the art collector. Unfortunately, the interests of the collector’s heirs do not always align with those of the foundation, and disputes arise. Such disputes raise the question of the extent of the rights of the heirs when the deceased’s art collection is managed by a foundation. The Tribunal de Grande Instance in Paris had to examine this very question in the context of the Peggy Guggenheim collection,
New regulations aimed at protecting consumers come into force in the UK on 13 June 2014. The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 apply to sales between traders and consumers. Sales amongst professionals are not caught by the regulations. The regulations consider different types of trader-to-consumer sales: on-premises sales, distance sales and off-premises sales. Each category of sale is subject to its own regulations. The main issues for dealers and galleries selling art, antiques and collectibles are
French courtrooms are no strangers to disputes over the authenticity of artworks. Over the past 15 years, the French judiciary has repeatedly been called upon to adjudicate lawsuits brought against authors of catalogue raisonnés, artists’ foundations, and connoisseurs recognised by the art market as the ‘leading experts’ on a given artist. These lawsuits, usually brought by aggrieved art owners, have one fundamental objective: challenging the experts’ refusal to acknowledge the authenticity of the artwork. In authenticity disputes, French Courts like
As part of the broader EU reform of consumer protection, the UK has implemented a number of legislative changes substantially strengthening consumer rights. One of those changes is enshrined in the Consumer Rights (Payment Surcharges) Regulations 2012, which came into force on 6 April 2013 and directly impact art market professionals accepting payment by card. The Regulations prohibit traders from charging consumers fees that exceed the cost borne by the trader for the use of a given means of payment.
In response to the perceived risk to investors and to the stability of the European financial market, the activities of alternative investment fund managers are being more strictly regulated. The EU Directive on Alternative Investment Fund Managers (“AIFMD”) aims to create a harmonised regulatory framework for managers of alternative investment funds within the European Union. Impacted investment managers are currently grappling with the implementation of the new regulatory regime, in large part because of the ambiguity of the Directive, the
Art dealers regularly bid at auction in partnership with other art dealers. The law does not object to joint bidding provided that certain conditions are met. If they are not, the bidding arrangement can turn into an illegal auction ring. The risk if the bidding arrangement amounts to an auction ring is not simply pecuniary; parties bidding in concert may be prosecuted. The law in England and Wales is changing, potentially making it easier to prosecute illegal bidding practices. Traditionally,
Over a period of seven months, the Paris Court of Appeal has reached two different decisions over whether Christie’s France can collect from the buyer at auction an amount equal to the resale royalty, as opposed to charging the royalty to the seller. Now the dispute has been referred to the French Supreme Court, which is calling the Court of Justice of the European Union to the rescue. In March 2013, we reported on a judgment by the Paris Court
When, in 2007, Marguerite Hoffman, a prominent Dallas art collector, decided to sell a major painting by Mark Rothko (Untitled, 1961), she insisted on confidentiality. Her husband had died the year before. She did not want to draw attention to her finances. The painting was well known. So was the fact that the Hoffmans owned it. At the time of the sale, it was hanging on the walls of the Dallas Museum of Art, as part of an exhibition called
The discovery in a Munich flat of a hoard of over 1400 artworks acquired by Hildebrand Gurlitt in dubious circumstances during the Second World War has been making headline news. The current value of the collection of artworks has been estimated at over €1 billion and contains previously unknown works by Matisse, Chagall, Picasso and Renoir. Gurlitt, an art dealer and collector, allegedly assisted Hitler in pillaging art from Jews in Germany and other countries occupied by the Third Reich.
An increasing number of dealers in art and antiques are making sales online. Whilst legal principles relevant to the sale of goods in person apply to sales on the Internet, consumers buying online are offered an additional protection. In particular, they have the unconditional right to cancel online purchases for any reason within a ‘cooling off period’. The right to cancel is particularly draconian for dealers and is set to get worse. These additional rights are available only to consumers.
In Europe, banks and other specialist providers of loans against art, antiques and collectible items have often no choice but to take possession of the collateral in order to perfect their security interest. This is the case where the law of the country where the collateral is physically located when the security interest is granted, affords the lender no option to put third parties on notice that the lender has an interest in the collateral, other than by taking possession.
Under EU law, consumers buying goods from a trader at a distance, or from a trader face-to-face but outside the trader’s usual business premises, have the right to cancel the contract of sale within the so-called ‘cooling off period’ without giving any reason. They simply notify the trader that they no longer want the goods, and return them. In the case of distance purchase, the consumer is not able to see the goods before concluding the contract, accordingly, so the
Art collectors are often unable to display their entire collection in their homes. They keep part of it in storage, or they lend it to museums. Why not leverage artworks in storage or hanging on museum walls by borrowing against them? Art finance is a growing industry. Citibank pioneered art finance in the 1970’s. Last year, Michael Plummer of Artvest Partners in New York estimated the art lending market at USD 7 billion. Since then, new lenders have entered the market.
International sanctions are actions taken by one country against another, either unilaterally or multilaterally. Their aim is to change the behaviour of the target country’s regime in order to maintain or restore international peace and security, or to improve the situation in that country. International sanctions are generally imposed by the United Nations or the European Union. Trade sanctions typically involve a ban on trade, possibly limited to certain sectors such as armaments, or with certain exceptions (such as food
The destruction of fakes at the behest of artist committees is a long standing practice in France. In two recent decisions both involving artworks signed “Miro”, the Court of Appeal of Paris ordered the destruction of the artworks. In the first case (Lotz -v- A.D.O.M., 12 June 2013), Mr Lotz, an Austrian national, bought a watercolour on paper signed “Miro” from a US dealer through Artprice. Mr Lotz submitted the watercolour to A.D.O.M., the association with moral rights over artworks
The European Commission has unveiled plans to strengthen the Restitution Directive. Council Directive 93/7 EEC on the return of cultural objects unlawfully removed from the territory of a Member State (also known as the Restitution Directive) was adopted in 1993, when the internal frontiers amongst Member States were abolished, in order to protect cultural objects that are classified as national treasures. The purpose of the Directive was to assist Member States in securing the return of cultural objects classed as
The importation of goods into the European Union is subject to import VAT. The rate of import VAT varies from EU country to EU country. The rate also varies depending on the type of goods. Unless an exemption applies, the importer of art, antiques and collectibles is liable to pay import VAT. In some EU countries, the standard rate of import VAT applies. The standard rate (depending on the EU country) varies between 15% and 25%. In other EU countries,
HMRC have announced changes to the UK bonded warehousing regime. The purpose of the bonded warehousing regime (the technical phrase is “Customs Warehousing”) is to allow for the indefinite storage of non-European Community goods without triggering liability to pay import VAT and Customs duty. Until now, it has been standard practice in the UK for dealers and galleries to temporarily remove (for up to 90 days) artworks from bonded warehouses to show the artworks at a gallery or to exhibit
The payment of bribes to foreign customs officials to facilitate the importation of goods in a foreign country has recently been in the spotlight after the Ralph Lauren Corporation made facilitation payments to Argentinian customs officials in connection with the importation of goods into the country. On 22 April 2013, it was reported that the Ralph Lauren Corporation (a US company) would pay over USD 1.6 million to US authorities as part of a settlement for violations of the Foreign
The Customs Information Paper introducing changes to the temporary removal of goods from Customs Warehousing (see the article on this blog on Changes to the UK Bonded Warehousing Regime) refers to a previous Customs Information Paper (Ref: (10) 44 effective 18 June 2010). The Annex to that Customs Information Paper seeks to clarify certain procedures for the importation of works of art and antiques for display at galleries, fairs and exhibitions. The second paragraph of the Annex reads: “Some art
You may regard yourself as an art collector. Occasionally you may sell an artwork or two. You expect to be taxed on those sales as a collector. It may come as a surprise that the Revenue should seek to tax you as if you were an art dealer. A nasty surprise, in fact, because your tax liability as a dealer may be significantly higher than as a collector. The Swiss Federal Tribunal recently considered the fine line between selling art
Richard Prince has won his appeal against a first instance ruling in the US that 30 of his works infringed copyright in photographs by Patrick Cariou. In a victory for appropriation artists, the US Court of Appeals reversed the 2011 decision by the district court that had found for Cariou. The Court ruled that all but five of Prince’s works were fair use under US copyright law. Whilst living in Jamaica amongst Rastafarians in the mid-1990s, Cariou took a series
The London Upper Tax Tribunal accepts that an old master painting is a wasting asset, thereby escaping capital gains tax upon its sale. In November 2001, the executors of Lord Howard sold at Sotheby’s the portrait of Omai by Sir Joshua Reynolds. The portrait was painted shortly before 1776. Lord Carlisle bought it in 1796 and the painting hung at Castle Howard for over 200 years until it was sold. The question was whether the executors of Lord Howard were
New legislation is introduced in New York requiring galleries to hold sale proceeds owed to artists on a separate account. Galleries do not always segregate the percentage of sale proceeds due to the artist from the percentage of sale proceeds owed to the gallery. Instead, they place total sale proceeds in a single account and use them to pay for the gallery’s operating expenses. If the gallery is in financial distress, it may be unable to pay the artist because
French Court rules that the resale right must be borne by the seller. In December 2012, the French Court of Appeal held that where the resale royalty is due in France on the sale of an original artwork, the economic burden of the right falls upon the seller. A contractual term purporting to displace the economic burden onto the buyer is void. The decision declared null and void a clause in the general terms and conditions of Christie’s France that
The Dutch Competition Authority investigates auction rings. Traditionally, auction rings involve a group of dealers agreeing not to compete against each other in the auction room in order to keep the price of property offered at auction artificially low. The members of the ring select one of them to bid on a lot, and at the end of the auction, they conduct a second private auction, during which the lot is re-sold to the highest bidder amongst the ring members.
French Court takes a radical approach to auctioneers’ liability. In a recent decision (18 January 2013), the Paris Court of Appeal held that an auctioneer was strictly liable to the buyer of an artwork if he described it as authentic when it was not. Strict liability means that the auctioneer is liable irrespective of whether he was negligent in cataloguing the artwork. He is liable if he gets it wrong. The facts were that in April 1987, Daniel Fisch bought