Friday’s Legal Briefs

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The art world and the law collide more often than the wider public realize. This novel intersection where the visual form meets Lady Justice has been making headlines, notably the Knoedler Gallery’s sale of fakes, leading to its demise and of course, the trove of Nazi-looted art discovered in Munich, Germany (the latter deserves a proper blog entry to navigate the legal complexities – stay tuned). The legal system touches so many aspects of our lives and its relationship with art is no different. Like art, law is constantly and continuously evolving, emerging from older relics into new forms to suit the needs of modern society.  Another commonality between both fields, the legal profession today is influenced by the legislation and law makers from the past, the same can be said about artists influencing each other, continually straddling the past and the present—each adding their own stories to the larger law or art history narrative.  Both art and law are heavily reliant upon interpretation – lawyers and judges interpret words on page, while collectors, critics, academics and museum directors interpret the visual aesthetic of a given artwork.  As the art market continues to boom and record high prices dominate media headlines, there is a clear interest between art’s relationship with the world of finance (art as an investment and “flipping” art).  This relationship has been out under the microscope recently due to the lack of transparency in the art market where sophisticated financial gurus (the likes of hedge-fund owners), are perhaps exerting more influence than known.  However, the rule of law can also impact the art market and this important knowledge needs to be shared and properly understood.

There have been a couple of recent developments in American art law, whose impact is worth addressing.

The United States has taken a slightly different stance with regard to art, from different export license policies to taxation from its European brothers. However, American legislation finally appears to be adhering to European sensibilities regarding Droit de Suite (aka resale royalties) law.  Last Wednesday, a bill was introduced in Congress that would enable artists to receive 5 percent of the sale price when a work is resold at public auction.  As the law currently stands, artists do not profit from their art being sold on the secondary market. Once an artist sells their art for the first time (known as the primary sale), they do not receive any royalties associated with any future sales. For example, a prominent New York City art dealer purchases a painting for $ 1 million from artist X, the same piece is then sold at auction for $20 million—artist X would receive nothing in return.

This proposed legislation is trying to protect the interests of the artists (and their heirs) by appearing to right the wrongs of parties benefiting from such transactions, (ironically not the artists, themselves) which should be applauded. However, do dealers, collectors and auction houses deserve some reward for supporting an artist’s career?  Also, the bill, in its current form, is aimed at the so-called “fat cats” the auction houses, and online auction platforms. While dealers are exempt, herein lies the flaw. For any art piece that is sold at auction, full disclosure of sale prices are available to the public while those that take place as private sales are not.  It is also worth noting that major auction houses provide sales through private channels, while dealers solely conduct sale on a private basis. Lawmakers should aim to make the art market more transparent rather encouraging more secrecy.  Let’s see what the revisions bring as the bill makes its way through both houses.

The New York City Bar Association has proposed legislation, the first of its kind, to protect experts’ opinion on art authenticity. There has been a string of lawsuits in recent years against art experts and artists’ foundations, who find themselves defending their judgments in a court of law for a hefty sum.  Leaving prominent foundations such as the Roy Lichsteinten, Warhol and the Estate of Jean-Michel Basquiat to refrain from providing authentication services as the risk and expense is far too great.  So much rides on a painting’s legitimacy (intrinsically linked to its value) and common to America’s suing culture, disgruntled individuals, whose artwork has been deemed by experts to be a copy, are eager to prosecute.  Although, professional liability insurance is available as a means of protection, there is no guarantee it will cover a particular claim (Warhol Foundation v. Philadelphia Indemnity Insurance Company (PIIC)). New York legislators want to provide adequate means for academics and scholars to be encouraged to express their opinions regarding an artwork’s authenticity.  Their expertise is integral and vital to the proper functioning of the art market.  Legislators are hopeful the bill will be passed during New York State’s current government session.

Holly knows art.

Photocredit: Lady Justice, Old Bailey 

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