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

Widow and daughter:
2017 – Dispute over Eleanor Rigby score put up for auction.

READ MORE

DISPUTES BETWEEN COLLECTORS AND ARTISTS
2017 – Artist Uderzo claims theft

READ MORE

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.
  READ MORE

• March 2017 – Decade long running dispute over collection of Lord Beaverbrook between heirs in UK and Gallery where the works were displayed.
  READ MORE

Tax authorities’ disputes
March 2017 – Swiss tax authorities seize artworks from Urs Schwarzenbach in an ongoing dispute over back taxes.

Swiss Authorities Seize Artworks From Billionaire Urs Schwarzenbach

RESTITUTION – NAZI-LOOTED ART

References to cases:

2018 – France to hand back Nazi looted art to Jewish family at Louvre.
READ MORE

2017 – heirs fail to stop auction of alleged Nazi- looted artwork through auction house.
READ MORE

2017 – Old Master painting on Lord Mayor of London’s wall looted by Nazis returned to Dutch family.
READ MORE

2017 – Twenty-Six Antiquities to be repatriated from Austria to Greece.
READ MORE

2017 – Case revived against Nahmad art dealing family over allegedly Nazi-looted Modigliani
READ MORE

2017 – Cornelius Gurlitt – treasure trove of Nazi-looted art, artworks go in view in exhibitions but ongoing issues regarding provenance and ownership.
READ MORE

2016 – Italian authorities return three 15th Century paintings to heirs where their artwork had been stolen in WWII and ended up with Milanese families
READ MORE

2015 – Art dealer returns Nazi looted El Greco painting to rightful owners
READ MORE

2015 – Cassirer family long running claim for return of Pissarro painting in Thyssen-Bornemisza collection in Madrid
READ MORE

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.
READ MORE

LOOTED ART – ILLICIT TRAFFICKING/THEFT OF CULTURAL PROPERTY

October 2017 – Ancient relief seized from dealer at Tefaf’s fall edition in New York
READ MORE

Resources: Art Law Blog – www.jessicafranses.com 

See my blog article on recent cases and news as well as law and resources.
http://jessicafranses.com/sniffing-underground-art-problem-illicit-trafficking-cultural-property-art-market-part-one
http://jessicafranses.com/sniffing-underground-art-problem-illicit-trafficking-cultural-property-art-market-part-two

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
https://www.gov.uk/government/news/6-national-treasures-saved-for-the-nation-last-year

Resources:
2017-2018 – Current objects subject to a temporary export bar in UK
https://www.artscouncil.org.uk/export-controls/reviewing-committee#section-3

https://www.artscouncil.org.uk/sites/default/files/summary_items_currently_under_temporary_export_deferral_09.04.18_0.pdf
Published in 2017 (2015-2016 – National Treasures and objects of cultural interest to the UK)

https://www.artscouncil.org.uk/sites/default/files/download-file/Export%20Objects%20Cultural%20Interest%202015-16.pdf

Export Licences guide – ATG
https://www.antiquestradegazette.com/guides/information-guides/export-licences/

CULTURAL HERITAGE CLAIMS

2017 – Antiquity seized from MET Museum
news.artnet.com/art-world/manhattan-district-attorney-says-antiquity-seized-from-met-should-be-returned-to-lebanon-1096220

2017 – New York seizure of Persian Artefact
https://www.ial.uk.com/ancient-crown-to-be-returned-to-turkey-in-out-of-court-settlement/

2015 – Benin cultural heritage, one man returns looted artwork. Article refers to long standing issues of Benin looted art in British Museum
http://www.bbc.co.uk/news/magazine-31605284

2015 – Elgin Marbles
https://www.ial.uk.com/uk-parliamentary-motion-for-the-marbles-return/

2012 – Khmer Sculpture, Cambodia’s repatriation claim, Sotheby’s sale
http://www.nytimes.com/2012/02/29/arts/design/sothebys-caught-in-dispute-over-prized-cambodian-statue.html

2012 – Yale returns Machu Picchu artefacts
https://www.npr.org/2010/12/15/132083890/yale-returns-machu-picchu-artifacts-to-peru

STATE CLAIMS OF OWNERSHIP

Portugal Government claim ownership of Miros – Christie’s pull collection from auction sale
http://www.bbc.co.uk/news/world-europe-26030497

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

CITES CASES

2015 – Three rare 17th Century Ivory architectural brackets successfully restored to art dealer in London (represented by 36 Art.)
https://www.antiquestradegazette.com/news/2015/customs-return-ivories-to-london-dealer-after-three-year-battle/

Resources:
UK Government website – news and updates on CITES Law
New ivory ban to applied in UK
https://www.gov.uk/guidance/cites-imports-and-exports#cites-news
ATG guide
https://www.antiquestradegazette.com/guides/information-guides/uk-ivory-ban/
https://www.antiquestradegazette.com/media/27212/atg-uk-ivory-ban-april-2018.pdf

PROVENANCE DISPUTES

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.
https://www.courthousenews.com/Sothebys-Can-Boot-Suit-Over-Nazi-Art-to-England/

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 [1998] 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. [1991] 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. [2012] 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 [2016] 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 [1990] 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. [1977] 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
• Motherwell
• Pollock
• Lichtenstein
• Basquiat.

2018 – Art dealer loses legal claim against authentication board over authenticity of works by Agnes Martin
https://www.thetimes.co.uk/article/art-dealer-loses-5m-battle-over-agnes-martin-authenticity-wsvbx9vg9

2018 – Piero Manzoni Foundation – collectors claims against destruction of artworks
https://www.theartnewspaper.com/news/piero-manzoni-foundation-criticised-for-destruction

2014 – Sisters of Basquiat claimed artworks for sale in auction were fakes
https://news.artnet.com/art-world/christies-is-offering-fake-jean-michel-basquiat-works-artists-sisters-claim-4029

2014 – Chagall committee threatened to destroy UK owner’s alleged Chagall
https://itsartlaw.com/2014/02/18/burning-fake-chagalls-market-integrity-versus-ownership-rights-a-zero-sum-game/

2014 – Group of collectors filed a complaint against Keith Haring Foundation
https://news.artnet.com/art-world/authenticity-fight-over-keith-haring-paintings-raises-complex-questions-2641

2014 claim brought by British owner against Monet authenticating committee in Paris Court
https://www.arthistorynews.com/articles/2777_’Fake_or_Fortune?%27_Monet_owner_loses_Paris_court_case

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
http://authenticationinart.org/pdf/artmarket/20130626-Warhol-foundation-settles-case-against-insurance-firm-Art-Newspaper.pdf

SLEEPERS

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
  https://www.artsy.net/article/artsy-editorial-art-spotting-sleepers-misattributed-masterpieces-earn-dealers-millions
• 2010 – Art Dealer Philip Mould found 3 misattributed Van Dyck’s
  https://www.theguardian.com/artanddesign/2011/jun/11/saleroom-sleuth-unearthed-van-dycks
• 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
  https://www.antiquestradegazette.com/news/2008/fatimid-ewer-found-in-somerset/
  https://uk.reuters.com/article/arts-mideast-ewer/middle-east-ewer-fetches-over-3-million-pounds-at-auction-idUKLNE49606C20081007

ARTWORKS THAT GREATLY EXCEED ESTIMATES

• 2017 – China’s North Song Dynasty bowl
  https://www.telegraph.co.uk/news/2017/10/03/extraordinarily-rare-chinese-bowl-sells-record-38m-auction/

• 2014 – Ming Dynasty Chicken cup
  http://www.ibtimes.com/ming-dynasty-chicken-cup-sold-record-36m-shanghai-collector-sothebys-auction-hong-kong-1569286

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

Experts Say Russian Modernism Show at Ghent Museum Is ‘Highly Questionable’

2017 – Alec Baldwin paid a settlement by an art dealer for purchasing a fake
http://www.dailymail.co.uk/news/article-5079485/Alec-Baldwin-settles-lawsuit-against-New-York-art-dealer.html

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
https://www.independent.co.uk/arts-entertainment/art/news/italy-modigliani-fake-show-police-investigation-art-genoa-a8154701.html

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

An ‘Audacious’ New Jackson Pollock Scam Targeting Newbie Buyers Has Been Uncovered

2014 – Bill Harbord in UK – art dealer selling fakes in Portobello market
https://www.telegraph.co.uk/culture/art/10626293/Old-master-of-the-faked-paintings-that-sell-for-250.html

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.

Thousands of Fake Artifacts Force Closure of Chinese Museum

2013 – Museum in China forced to close due to large number of fakes on display, Jibaozhai Museum in Jizhou – 40,000 fakes
https://www.telegraph.co.uk/news/worldnews/asia/china/10182088/Chinese-museum-found-with-40000-fake-exhibits-forced-to-close.html

2012 – Billy Mumford forger in UK sentenced to prison
http://www.bbc.co.uk/news/uk-england-london-17941464

2010 – Beltracchi forgery gang in Germany
http://www.dailymail.co.uk/home/event/article-3062397/How-British-forensic-investigator-trapped-Wolfgang-Beltracchi.html

2006 – Shaun Greenhalgh and family, arrested in 2006. One of Britain’s most notorious British forger

5 Things to Know About Britain’s Most Notorious Art Forger

CONDITION DISPUTES

[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.)

VALUE DISPUTES

[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 [2012] 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 [2016] 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. [1977] 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 [1998] 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. [2005] 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

Resources 

• 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

Theft

• 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

Resources:

UK Gov website

https://www.gov.uk/guidance/money-laundering-regulations-high-value-dealer-registration

https://www.gov.uk/topic/business-tax/money-launderingregulations

Antiques Trade Gazette

https://www.antiquestradegazette.com/guides/information-guides/money-laundering-regulations/

RAM guidance on money laundering:

http://responsibleartmarket.org/guidelines/guidelines-on-combatting-money-laundering-and-terrorist-financing/

Bribery

Resources: UK Gov website and Ministry of Justice website

https://www.gov.uk/government/publications/bribery-act-2010-guidance

https://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf

Tax evasion

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

https://www.theguardian.com/business/2017/mar/31/uk-raids-dutch-prosecutors-tax-germany-france

Resources:

UK Gov website

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/560118/Tackling_tax_evasion-legislation_guidance_corporate_offence_of_failure_to_prevent_criminal_facilitation_tax_evasion-Summary_Responses.pdf

Criminal Finances Bill – Corporate offence failure to prevent tax evasion

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/560122/Criminal_Finances_Bill.pdf

Jurisdiction

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

https://www.artsy.net/article/artsy-editorial-national-gallery-of-art-sued-over-a-30-million-matisse

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
  https://www.theartnewspaper.com/news/yves-bouvier-faces-new-charges-in-switzerland

• 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
  https://www.leagle.com/decision/innyco20170306213

• 2014 – Owner claims agent (step-sister) denuded him of profits
  https://nypost.com/2014/12/03/siblings-feuding-over-virtual-heist-of-family-artwork/

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 [2010] 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.
  http://www.bailii.org/ew/cases/EWHC/Ch/2010/3058.html

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.
  https://news.artnet.com/art-world/simon-de-pury-scores-legal-win-in-battle-for-10m-gauguin-commission-1199918
  Case: http://www.bailii.org/ew/cases/EWHC/Ch/2018/44.html

• 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 [2010] EWHC 3058 (Ch).

• http://www.bailii.org/ew/cases/EWHC/Ch/2010/3058.html

Contractual terms

[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.]

Resources:

UK Gov website
https://www.gov.uk/guidance/artists-resale-right
https://www.legislation.gov.uk/uksi/2006/346/contents/made

DACS – Collection Agency
https://www.dacs.org.uk/for-art-market-professionals/frequently-asked-questions#FAQ158

Issues of where the contract was formed and jurisdiction

Morin v Bonhams & Brooks [2003] 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:
  http://www.artduediligencegroup.com/

• • RAM – Responsible Art Market
    http://responsibleartmarket.org/guidelines/art-transaction-due-diligence-toolkit/

Jessica Franses
Art Lawyer at The 36 Group, Director of the Art Due Diligence Group Ltd, MD of Vitruvian Arts Consultancy.

Last updated 21st April 2018