Art Due Diligence – Research Tool
Cases, news articles and resources
Welcome to this new research tool for identifying potential art law cases that may have fallen foul of certain due diligence steps, either during the due diligence on the artworks stage, the due diligence on the parties to a transaction stage or during the transactional process stage.
In the list below, you will find the following:
- some UK case references and a small explanatory note for some of the key UK art law cases
- links to many online news articles referencing international cases, potential claims and examples relevant to the due diligence topics and
- some other useful resources.
Any comments made in the text below is based on the journalism within the respective news articles and I accept no liability for any errors made by the journalists. To be satisfied of the facts in any case you must access the court transcripts.
If you are aware of cases or resources that should be added to this page, please email me.
Stage 1 Due Diligence on the Artwork
- TITLE DISPUTES
- FAMILY DISPUTES
Inheritance Dispute – 2014 – One of the longest running disputes over an estate in New York concerns the Chinese art collection of Mr Wang and the dispute amongst his heirs
Husband and Wives:
2018 – Russian oligarch in biggest divorce case forced to reveal where his art collection is hidden.
DISPUTES BETWEEN BUSINESS PARTNERS/ CO-OWNERS
2017 – Catlin, The Estate of Thomas Lopresti and William Beauty v. Hogan and Christie’s, Inc., 160370/2017 (Sup. Ct. NY Cnty. Nov. 21, 2017) Andy Warhol screen print “Electric Chair.”, sold by one of the co-owners of the artwork through a consignment to Christie’s without notifying the other owners. The work was sold in May of 2006 and other owners assert they only learned of the sale in 2016.
DISPUTES BETWEEN COLLECTORS AND DEALERS
Picasso family and a family member’s dispute with a gallery and a Royal Family over sale of artwork in 2016 concerning who had acquired title. It was alleged that a painting was sold to Gagosian Gallery when a contract for sale had already been agreed with Qatari Royal family.
DISPUTES BETWEEN ARTISTS/COLLECTORS/DEALERS
[Artists disavowing artworks such as: Cady Noland or even denying art collectors or art dealers right to sell artworks, issues over ownership and consignment.]
2013 – Art gallery refuses to hand over artwork to collector consigned for sale.
DISPUTES INVOLVING MUSEUMS AND GIFTS, LOANS, SALES AND EXHIBITIONS
- 2018 – Heirs of Piet Modrian claim artworks sold by German Museum were artworks that belonged to family and contest display of other artworks.
- March 2017 – Decade long running dispute over collection of Lord Beaverbrook between heirs in UK and Gallery where the works were displayed.
DISPUTES INVOLVING DE-ACCESSIONING
Berkshire Museum and heirs of Norman Rockwell cases
THIRD PARTY INTERESTS – LIENS – BANKS, LENDERS, TAX, VAT
Art loans and default on loans
- March 2018 – Anatole Shagalov embroiled in legal cases that reveal problems of buying art with loans
- 2010 – Berry-Hill Galleries NYC
- 2009 – Dispute between Museum, Collector and Lender (collateral for a loan)
Tax authorities’ disputes
March 2017 – Swiss tax authorities seize artworks from Urs Schwarzenbach in an ongoing dispute over back taxes.
RESTITUTION – NAZI-LOOTED ART
References to cases:
2018 – France to hand back Nazi looted art to Jewish family at Louvre.
2017 – heirs fail to stop auction of alleged Nazi- looted artwork through auction house.
2017 – Old Master painting on Lord Mayor of London’s wall looted by Nazis returned to Dutch family.
2017 – Twenty-Six Antiquities to be repatriated from Austria to Greece.
2017 – Case revived against Nahmad art dealing family over allegedly Nazi-looted Modigliani
2017 – Cornelius Gurlitt – treasure trove of Nazi-looted art, artworks go in view in exhibitions but ongoing issues regarding provenance and ownership.
2016 – Italian authorities return three 15th Century paintings to heirs where their artwork had been stolen in WWII and ended up with Milanese families
2015 – Art dealer returns Nazi looted El Greco painting to rightful owners
2015 – Cassirer family long running claim for return of Pissarro painting in Thyssen-Bornemisza collection in Madrid
2013 – Long running – Bloch-Bauer Case – Maria Altmann’s case against Austria for the return of her family’s Klimt paintings that were housed in Belvedere Museum. Subject of a film Woman in Gold in 2015 that explains the lengthy court processes.
LOOTED ART – ILLICIT TRAFFICKING/THEFT OF CULTURAL PROPERTY
Resources: Art Law Blog – www.jessicafranses.com
See my blog article on recent cases and news as well as law and resources.
NATIONAL TREASURE AND EXPORT BARS
2015 – Two Picassos French and Spanish National Treasures – https://www.nbcnews.com/news/latino/picasso-paintings-put-spotlight-art-theft-disputed-ownership-n408881
2013-2014 – 6 National Treasures acquired by UK institutions
2017-2018 – Current objects subject to a temporary export bar in UK
Published in 2017 (2015-2016 – National Treasures and objects of cultural interest to the UK)
Export Licences guide – ATG
CULTURAL HERITAGE CLAIMS
2017 – Antiquity seized from MET Museum
2017 – New York seizure of Persian Artefact
2015 – Benin cultural heritage, one man returns looted artwork. Article refers to long standing issues of Benin looted art in British Museum
2015 – Elgin Marbles
2012 – Khmer Sculpture, Cambodia’s repatriation claim, Sotheby’s sale
2012 – Yale returns Machu Picchu artefacts
STATE CLAIMS OF OWNERSHIP
Portugal Government claim ownership of Miros – Christie’s pull collection from auction sale
THEFT CASES (dealt with in section below on due diligence on parties)
There are many cases of theft from collectors and thefts from museums and some cases of thefts from art galleries
2015 – Three rare 17th Century Ivory architectural brackets successfully restored to art dealer in London (represented by 36 Art.)
UK Government website – news and updates on CITES Law
New ivory ban to applied in UK
Goering case – Sotheby’s sold painting to Collector with significant provenance gap. Christie’s research find it was in Goering’s collection and refuse to sell the painting. Sotheby’s were approached again and refuse to sell the painting. Collector brought a claim against Sotheby’s. Jurisdictional issue – Sotheby’s then argued the case needed to be brought in the UK.
AUTHENTICITY AND ATTRIBUTION DISPUTES
Cases tend to involve claims for breach of contract, breach of warranty, misrepresentation, fraud, auctioneer negligence or dealer or expert negligence, consumer law regulations.
Examples of the various disputes between parties:
- Disputes between Sellers and Auction Houses/Galleries
- Disputes between Collectors/Dealers and Authenticating Bodies/ Experts
- Sleepers – where auction houses fail to spot potential of artworks to be more valuable
- Sales of fakes and forgeries
- Disputes where artists disclaim their artworks.
UK cases and citations:
Sale by description
- Mansour Ojjeh v Marke Waller  WL 1044211 (Glass mascots attributed to Lalique)
Not a Sale by description
- Drake v Thos Agnew & Sons Ltd. [2002 EWHC 294.] (Van Dyck painting)
- Harlingdon Enterprises v C Hull Fine Art Ltd.  1 Q.B. 564. Whether a statement that two paintings attributed to Gabriele Munter was intended by the parties to be a condition of the Contract. In this case there is also a discussion about risks of fakes. The dealer who sold the paintings was not an expert and the purchaser relied upon his own skill and judgment in buying them. The dealer also made clear that he gave no warranty as to identity of the Painter. Even when the artworks turned out to be forgeries, the Court of Appeal found the sale was not one by description.
Warranties & Fake artwork
- Avrora Fine Arts Investment Ltd. v Christies, Manson & Woods Ltd.  P.N.L.R. 35 – Occasionally Auction Houses will expressly give a warranty that an artwork is by a particular artist. In this case Christies warranted and represented attribution of the work to Boris Kustodiev by use of capital letters in sales catalogues. (This case also considered the Unfair Contract Terms Act 1977. Consumer law did not apply as the Claimant was purchasing as a business not as a consumer.)
Negligence and Misrepresentation Claims
- Hoos v Weber (1974) 233 E.G. 1379. Whether the attribution given by the Sotheby’s auction house was negligent. There was an issue of whether the doubtful attribution that the work could be a Rembrandt could mean the work was a forgery. There was a scholar’s opinion that doubted the attribution but notwithstanding that Court found Sotheby’s had honestly and reasonably given their own opinion and had set out the fact that the attribution was doubted. (Note how disclosure and transparency were points in the Auction House’s favour.)
- Negligence claim, problematic issue of expert opinions and therefore possibility of non-negligent errors
Thwaytes v Sotheby’s  1 W.L.R. 2143 – This case concerned the alleged negligent actions of Sotheby’s to sell an artwork as a work by Caravaggio rather than school of Caravaggio. One of the issues was whether expert opinions and technical analysis should have been sought by Sotheby’s before the sale of the artwork. The problem of the value of expert opinions and how are opinion are reached quite often on scant evidence was identified in this case. In this case the Judge also identified seven possible attributions to demonstrate the issue of degrees of certainty used by an auction house on their sales catalogues about an artwork’s attribution. The Judge also considered the issue of standard of skill and care of a leading auction house. The significance being here that a higher standard applied to leading auction houses and their potential assess to expert input.[2169C-H.]
- Advice given in anticipation of possible sale, significance of value dependent on expert opinions and standard of skill and care
Luxmoore-May v Messenger May Baverstock  1 W.L.R.1009. This case concerned a provincial auction house’s opinion who was alleged to have negligently failed to spot the George Stubbs potential of the paintings. The artworks were subsequently sold through Sotheby’s as works by Stubbs for substantially more than the value given by the provincial auction house. The case considered also the issue of what advice was given pre-sale. While it was found there was no contractual duty as the auction house had not agreed to put the paintings up for auction yet, they still had a tortious duty to “express a considered opinion as to the sale vale of the foxhound pictures, and for this purpose to take further appropriate advice.” The Court of Appeal overturned the trial judge’s finding that the provincial auction house was negligent. The Court of Appeal looked at this issue of expert opinions and that it is not an exact science and considered a cautious approach to professional negligence, particularly where a sleeper had not been spotted. Also the assessment of the standard of skill and care expected of a provincial auction house was that of a general practitioner and not a specialist within a leading auction house.
Professional duties and implied terms and problems with uncertainty of attribution of artworks
- Fordham v Christie, Manson & Woods Ltd.  2 E.G.L.R. 9 – a painting probably by de Chirico even though the artist disclaimed the piece
EXPERT COMMITTES AND AUTHENTICATION BOARDS THAT HAVE BEEN INVOLVED IN LITIGATION
There are many cases where challenges have been made against authenticating boards and experts. The high cost of litigation and reputational damage to Committees has led to several Committees closing for various reasons:
- Warhol Committee
2018 – Art dealer loses legal claim against authentication board over authenticity of works by Agnes Martin
2018 – Piero Manzoni Foundation – collectors claims against destruction of artworks
2014 – Sisters of Basquiat claimed artworks for sale in auction were fakes
2014 – Chagall committee threatened to destroy UK owner’s alleged Chagall
2014 – Group of collectors filed a complaint against Keith Haring Foundation
2014 claim brought by British owner against Monet authenticating committee in Paris Court
2013 Claim brought against Insurance Company by Warhol Foundation regarding insurance cover for two claims brought by Joe Simon and Susan Shaer against Warhol Committee
There are many examples of sleepers – where an auction house as failed to properly attribute or identify an artwork and it goes unnoticed.
- 2015 – Rembrandt sleeper discovered by two French art dealers
- 2010 – Art Dealer Philip Mould found 3 misattributed Van Dyck’s
- 2008 – Fatimid rock crystal ewer incorrectly described by Lawrences of Crewkerne Somerset auction house, believed it to be a 19th French creation. Estimate of £100-£200 and artwork sold for £220,000. Later fetched 3.2 million on sale at Christie’s
ARTWORKS THAT GREATLY EXCEED ESTIMATES
- 2017 – China’s North Song Dynasty bowl
- 2014 – Ming Dynasty Chicken cup
FAKES AND FORGERIES IN EXHIBITIONS AND SALES
2018 – Investigation into paintings displayed in Russian Avante-Garde Exhibition in a Museum in Ghent. Art experts claim the artworks are fake
2017 – Alec Baldwin paid a settlement by an art dealer for purchasing a fake
2017 – Artworks under investigation where a collector displayed Modiglianis in Ducal Palace in Genoa where art experts claim the artworks are fake, consumers have demanded compensation for their exhibition tickets
2017 – Art dealer ordered to pay compensation to collectors in Knoedler fakes scandal READ MORE
2017 – Investigation by the International Foundation for Art Research (IFAR) uncovered a large number of Jackson Pollock fake paintings sold to various collectors
2014 – Bill Harbord in UK – art dealer selling fakes in Portobello market
2014 – Lucheng Museum, located in the province of Liaoning in China was ordered to close after nearly a third of the 8,000 items on display were found to be fake.
2013 – Museum in China forced to close due to large number of fakes on display, Jibaozhai Museum in Jizhou – 40,000 fakes
2012 – Billy Mumford forger in UK sentenced to prison
2010 – Beltracchi forgery gang in Germany
2006 – Shaun Greenhalgh and family, arrested in 2006. One of Britain’s most notorious British forger
[Issues – undisclosed damage, undetected issues with condition of the artwork and damage occurred in transport and delivery.]
- Breach of Contract and Negligence claim:
De Balkany v Christie Manson and Woods Ltd. (1997) 16 Tr. L.R. 163. Rare case where an Auction House was found to be negligent in the description provided. Christie’s standard conditions considered in light of fact that there had been substantial over-painting by an unknown hand on an Egon Schiele painting which should have been detected. Here the extent of overpainting was found to be detectable by any competent or art dealer with the naked eye and ultraviolet torch. Question of whether attribution was undertaken with requisite care. Judge found on standard conditions of sale, the buyer was entitled to rescind but also considered whether the auctioneers assumed a duty of care. An issue here was the Disclaimer in the particulars. Now the Courts will look at whether disclaimers are reasonable in consideration of Pt 2 of the Consumer Rights Act 2015 (when dealing with a consumer) and also s.2 (2) of the Unfair Contract Terms Act 1977 (when dealing with a non-consumer in attempts to exclude liability.)
[Issues – failure to assess attribution and authenticity properly, negligent assessment of value, sleepers in auction houses, issue of negligently failing to identify positive expert opinions that could increase the value of the artwork and potential issues of failure to collect payment.]
Negligent Assessment of Value
- Coleridge v Sotheby’s  EWHC 370. In this case it was alleged that Sotheby’s negligently advised that a judicial collar worn by the last Chief Justice of Common Pleas had probably been made in the 17th Century rather than in Tudor times. The claim for negligence failed as Sotheby’s were found to have given competent advice, however Sotheby’s were found in the private treaty terms to have given a far too low estimate for the value of the artwork and the valuation should have been £15,000 higher.
Issue of negligently failing to identify positive expert opinions that could increase the value of the artwork
- Thwaytes v Sotheby’s  1 W.L.R. 2143 – In this case there was a claim for damages on the basis that had Sotheby’s consulted Sir Denis Mahon the known expert on Caravaggio then the potential attribution to Caravaggio would have been known and his opinion would have enhanced the value of the artwork. The Judge found the painting would have been sold for slightly more in such circumstances but made no finding on the amount and left open the issue of whether Sotheby’s was liable. If a competent auction house is liable for failing to provide positive attributions then one can equally argue that you are entitled to seek an award in damages on the difference in value.
Failure to Collect Payment
- Fordham v Christie, Manson & Woods Ltd.  2 E.G.L.R. 9 – Due to the fact that de Chirico had disowned the artwork after the auction sale, the buyer then decided not to pay for the artwork. The auction house then suspended the payment provisions pending resolution of the issue. The Judge found that if there is no specific agreement on the issue of collect ion of payment then it is not part of the usual function of an Auction House to obtain payment for goods sold.
However, auction houses due sue as agent for the purchase price.
Stage 2 Due Diligence on the Parties
Entities involved in transaction – Corporate v Private Individual
- Mansour Ojjeh v Marke Waller  WL 1044211 (Glass mascots attributed to Lalique). Issue of where dealer operates through a corporate entity and exceptional facts required to impose a duty of care on the individual rather than corporate entity. Dealer was an expert on Lalique. Judge found there was personal liability for some of the transactions.
Structure of roles – Auction v private and how the advice is being given. Potential liability to third parties
- Thomson v Christie Manson & Woods Ltd.  P.N.L.R. 38. Issue of whether an auctioneer owes a duty of care to a buyer regarding statements made in auction particulars, even where there is no contractual duty. The Auction advisers gave advice through a new New York Client Advisory Group. Court held there was a duty for the particulars to be compiled with reasonable skill and care. Significant factors – were the direct information provided about the objects, the auction advisers knew the claimant had no relevant expert knowledge and was not taking independent expert advice. In the Court of Appeal the defendant auctioneers were found to have reasonably formed the view that the vases were made in the reign of Louis XV rather than being 19th Century copies and therefore had not acted negligently in the advice given.
- Fiduciary Duties
- Agency law in the UK
- Company v Consumer
- Consumer Law in UK – Consumer Rights Act 2015 http://www.legislation.gov.uk/ukpga/2015/15/contents/enacted
- The Consumer Protection from Unfair Trading Regulations 2008 http://www.legislation.gov.uk/uksi/2008/1277/contents/made
- 2018 – theft from Picasso family, by electrician overturned in Supreme Court in France Artnet: Picasso’s Electrician Was Convicted of Stealing His Art—But Now a Court Says There’s Insufficient Proof
- 2017 – Bronze Matisse recovered by Swiss Museum 30 years after its theft https://www.antiquestradegazette.com/news/2017/art-loss-register-recovers-stolen-matisse-sculpture-purchased-for-less-than-1-of-its-value/
- 2017 – theft of a Salvator Dali from a Collector in a Middle Eastern country http://www.novinite.com/articles/184414/The+Authorities+Seized+a+Painting+by+Salvador+Dali+from+Art+Smugglers
- 2017 – theft from a private home in Scotland http://www.scotland.police.uk/whats-happening/news/2018/january/appeal-following-theft-paintings-dalkeith
- 2017 – Theft from a gallery in France – priceless Giorgio de Chirico Artnet: ‘Priceless’ Giorgio de Chirico Work Stolen From Museum in France
- 2016 Giacometti collection seized from Museum on basis the artworks were stolen from the Giacometti Foundation. Matter being decided in France. Collector who loaned the artworks to the Swiss museum tried to appeal the matter in the Swiss courts. https://www.ial.uk.com/switzerland-legal-dispute-about-alberto-giacometti-collection/
- 2010 theft of 5 major works from Paris Museum Musée d’Art Moderne de la Ville de Paris. http://www.tate.org.uk/context-comment/articles/gallery-lost-art-theft-of-five-paintings
Fraud & Corruption Cases
- June 2017 – British art dealer Timothy Sammons to face extradition to US over Ponzi scheme defrauding collectors https://news.artnet.com/art-world/uk-art-dealer-timothy-sammons-extradition-981146
- June 2017 – Malaysian corruption scandal – Leonardo do Caprio received artworks that the seller/donor obtained through improper use of government funds https://news.artnet.com/art-world/leonardo-dicaprio-gives-pack-jho-low-picasso-basquiat- 996377
- February 2015 – Brazil corruption scandal involving Petrobas oil company, artworks seized https://www.ctvnews.ca/world/dali-paintings-among-48-works-of-art-seized-in-brazil-corruption-scandal-1.2230993
- September 2014 – Philippines – Imelda Marcos, artworks seized as obtained by illicit use of public funds http://www.bbc.co.uk/news/entertainment-arts-29427876
Anti-Money Laundering (AML)
- Matthew Green charged by US authorities in Money Laundering case https://news.artnet.com/art-world/matthew-green-charged-money-laundering-us-1236929
- October 2017 Art and money Laundering scheme involving Brazilian financier Cid Ferreira (former president of Banco Santos) https://news.artnet.com/art-world/95-smuggled-works-returned-brazil-1111004
UK Gov website
Antiques Trade Gazette
RAM guidance on money laundering:
Resources: UK Gov website and Ministry of Justice website
March 2017 – International tax evasion investigation into Credit Suisse account holders – involving 55,000 suspect accounts and the seizure of millions of euros in cash, gold, jewellery, real estate and paintings
UK Gov website
Criminal Finances Bill – Corporate offence failure to prevent tax evasion
Rybolovlev v Bouvier case – claims brought in Switzerland, Singapore and now in UK (regarding Sotheby’s involvement in private treaty transactions). Claim brought by US descendants of alleged owner of Matisse paintings against National Gallery, UK
Stage 3 Due Diligence on the Transaction
- Undisclosed agents
- Undisclosed commissions/Unagreed profits
- Bouvier case
2018 – fresh case of fraud brought against Yves Bouvier in Switzerland by Dmitri Rybolovlev
- 2017 – Schulhof v Jacobs in Supreme Court, New York County. Summary Judgment in favour of art collector who was not informed of a hidden commission taken by his art advisor in selling an artwork. Claims brought were for fraud, breach of contract, breach of fiduciary duty, misrepresentation, restitution and unjust enrichment
- 2014 – Owner claims agent (step-sister) denuded him of profits
Key case on Agents Commissions and fiduciary duties to be transparent
- 2010 – Case in High Court in UK – Accidia Foundation v Simon C Dickinson Ltd  EWHC 3058 (Ch). Case concerned unagreed commissions and circumstances where commissions were taken on both sides of a transaction by the Art Gallery and the principal agent to the buyer had not disclosed the commission made by the undisclosed agents.
Fiduciary Duties of Agents
- 2018 – Simon de Pury case- successful in winning his agent commission for work done in successfully facilitating the sale of Gauguin painting. Seller – a trust had raised issues about his fiduciary duties and failed to pay the commission.
- 2015 US District Court Judge dismissed claims of breach of contract, breach of fiduciary duties and unjust enrichment brought by a Collector against and art gallery and agent where an artist Cady Noland had disavowed her artwork because it had been damaged. The Collector had sought recovery his losses against his agents but the claims against the agents were dismissed. https://news.artnet.com/art-world/judge-dismisses-cady-noland-lawsuit-782264
- Accidia Foundation v Simon C Dickinson Ltd  EWHC 3058 (Ch).
[Issues – Artist Resale Rights, costs and duties – tax, customs duties, VAT, Insurance, Shipping, protecting condition of artwork, location of artwork, viewing arrangements, confidentiality and security, copyright, moral rights, AML, bribery, escrow.]
Artist Resale Rights, Copyright and Moral Rights
[Issues – payment of ARR, who owns copyright, permission to reproduce images, permission to make replicas (maybe more than one artist involved in creation of artworks), appropriation art, display, exhibition or artworks and moral rights arguments.]
DACS – Collection Agency
Issues of where the contract was formed and jurisdiction
Morin v Bonhams & Brooks  I.I.PR 25 – In the case where a claimant bought a Ferrari from an auction house in Monaco, the claim was governed by English law and the claimant showed there was a reasonable prospect of success in a claim for mis-description in the auction particulars.
RESOURCES FOR DUE DILIGENCE
- Art Due Diligence Group:
- RAM – Responsible Art Market
- RAM – Responsible Art Market
Art Lawyer at The 36 Group, Director of the Art Due Diligence Group Ltd, MD of Vitruvian Arts Consultancy.
Last updated 21st April 2018