Karen Sanig, Head of Art Law, Mishcon de Reya Solicitors, London
Karen Sanig examines some of the dangers likely to be encountered by investors when they enter the world of art - "a law unto itself".
The art world is a law unto itself. From the creation of art to its exhibition, acquisition and sale, there are myriad potential pitfalls lurking which are often ignored. Any art transaction, be it loaning, moving, storing, auction, private sale, holding art on trust, or a bequest or gift of art, requires special attention.
There is little regulation in the art market. There is no central registry of art ownership. Art is often on the move. Authentic artwork can be exposed as fake or forged many years after sale, if at all. Attribution of work to a certain artist can and does change over time. New artworks deteriorate and old ones are badly restored. Deals are often done on a handshake with inadequate documentation. Investments of passion ought not to be blighted by unnecessary oversights but all too often they are. The repercussions are manifold, and can include loss in value, in reputation and in the pleasure which should be associated with owning art.
The use of carefully drafted agreements for the sale and purchase, storage, shipping and loaning of art ought to limit any disappointment if a transaction turns sour. Such agreements cover, for example, liability for tax, compliance with import and export regulations, payment of artists’ resale rights, copyright, risk and insurance, as well as much more. The art market does not always embrace such agreements. Irrespective of this, there are frequently recurring issues which always merit careful scrutiny. They are ownership, provenance, attribution and authenticity. A brief examination here may go some way towards “eliminating the unnecessary”.
Ownership and Provenance
Art transcends national boundaries. Rights to ownership are won and lost as it changes hands in different jurisdictions. Often it is not until an artwork appears for public sale that the question of ownership arises. Artworks may hang for many years in private collections or remain in storage as part of the assets of a trust or foundation. The assumption is that they are legally owned by that entity. This is not always so.
Few collections have been thoroughly vetted. It is unusual to find a correct comprehensive inventory of art appended to a trust deed or elsewhere. It is rare to see complete documentary evidence of sale and purchase, ownership history, a precise record of proportions, an accurate description of the work or up to date valuations. Such information was not always easily available in a market which historically relied on trust alone for the purposes of transactions. Today there is much more readily accessible data. It needs to be sought out and regularly updated. If art is lost or stolen the chances of recovery or adequate compensation are greatly reduced without such information.
Recent challenges to ownership demonstrate the dramatic effect on the saleability of art, such as was the case in the attempted sale by the Andrew Lloyd Webber foundation of Picasso’s “The Absinthe Drinker”, which was pulled from sale at a Christie’s auction in 2006 in New York. It had been estimated for sale at $40–$60 million. A claim was made to ownership by a member of a family from whom the work had been allegedly either forcibly sold or stolen by the Nazis during World War II. A court application to stop the sale was unsuccessful but the moral pressure meant that it could not be sold at public auction at that sale. An agreement appears to have now been reached and the work is currently due to go under the hammer on June 23, some 4 years later than originally planned.
This incident may have been avoided if any of the stolen art databases had contained information that this artwork was a Nazi era looted piece and if they had been searched prior to consignment for sale. The consignor to auction usually has to give a warranty and indemnity in relation to title.
However there is no complete global database and such searches are not always conclusive, as in the case of the sale of fourteen miniatures at Christie’s London which included works by John Smart, Richard Cosway and Horace Hone. They had been the subject of a search on two stolen art databases prior to auction. The fact that they had been stolen two years’ prior to the auction was however only discovered after the sale had taken place.
Often a buyer places too much reliance on auction catalogue entries alone. Auction house terms and conditions contain provisions excluding their own liability and encouraging independent checks. The auction house terms often state (in the small print) that they do not carry out “exhaustive due diligence.” Auction houses are usually acting as agents for the seller in his contract with the buyer. Their information may only be as good as the seller’s.
There is also a common misconception that a good faith purchaser automatically acquires title to an artwork. In the UK, for example, no one can transfer title that he does not have. “Good faith” turns on all the facts. 10 years ago stolen art databases were not so commonplace or easily accessible. Today, due diligence is required to support an assertion of good faith which means at the very least checking one of the databases. Much more detailed research is always advisable, however, given that art is so easily portable and it moves around the world frequently.
Laws transferring ownership rights vary from country to country. An artwork may be stolen in the UK, for example, but sold abroad in a common law jurisdiction where ownership is immediately transferred on a good faith acquisition.
When art is being loaned, inadequate ownership history research has led to seizure of artworks at public exhibitions. This can be avoided by only loaning art for exhibition to countries which have anti-seizure legislation in place.
Attribution and Authentication
Attribution of works to certain artists can and does change. Adequate research and regular review ought to iron out any issues in this regard. Old Masters are usually the most problematic area but contemporary works are bringing their own challenges, even where the artist is still alive!
Various methods exist to aid checking such as, published catalogue raisonnes on artists, art historical expert opinion, independent valuation and appraisal. Conservators can also carry out scientific dating of artworks by analysing the age of the paint or the canvas.
The maxim “Caveat emptor”, or buyer beware, has great resonance in the artworld. But seller’s must beware too. Prior sales at public auction alone do not determine attribution. A 16th Century Painting, “Salome with the Head of St John the Baptist”, was sold in 1994 for £8,000 at auction by Christie’s. It was described as “Studio of Titian.” It is in fact a lost masterpiece by the Venetian artist once owned by King Charles I. It was put up for sale by Sotheby’s in 2009 with a guide price of £2.6 million-£4 million. The original sellers of the Titian reached an out-of-court settlement with Christie’s recently. They had sued the auction house for failing in its commitment to research and advise competently on the painting’s value.
Authentication bodies exist around the world which confirm (or deny) attribution and authentication of artworks. They are usually set up after an artist has died and are not without controversy. The Andy Warhol authentication board is currently under attack in the US Courts in two separate actions. In one it is alleged to have wrongly authenticated a work which is not genuine. In the other it is alleged not to have authenticated a genuine work. In both cases the complainants claim there is better evidence from people who were present when the art was created (or not) who have different opinions to the board about the validity of the work.
Fakes and forgeries abound in the art market. Careful checks ought to reveal any problem areas but even the specialists are fooled sometimes. This suggests that it is worth obtaining two opinions where there is any room for doubt. The following examples show just how complicated authentication can be, why the truth is often missed and mistakes are still made despite rigorous checks. Some examples follow.
The Head of Amenhotep III, recently repatriated to Egypt (with the help of the writer) had been illegally excavated in Egypt, smuggled out dressed as a tourist trinket. It was sold to unsuspecting purchasers by the invention of fake provenance and its placing in an academic journal to give the provenance credence. It was even given as security for a large loan to a bank. It was left as part of a legacy under a will. It was a central piece of evidence in two criminal cases (in the UK and in the US) to convict two dealers for dishonest handling. When the Arab Republic of Egypt sought its return many other claims to ownership were made, delaying for years its return home.
John Myatt, an English forger, managed to reproduce more than 200 works by Modern Masters, surrealists, cubists and impressionists, though the quality of the works was not particularly good – he used emulsion instead of oil paint. He worked with an accomplice, John Drewe, who was a master at creating false provenance. Drewe managed to slip faked details into card indexes and catalogues at the Tate and the Victoria and Albert Museum and purportedly with the Institute of Contemporary Arts. The pair duped the art world for a long time before being caught. In the meantime, their paintings had passed through Sotheby’s, Christie’s and elsewhere and there are still some unrecovered works!
74 recently discovered plaster casts of Degas sculptures that were purportedly made during his lifetime were used to make bronzes, including those of “The Little Dancer”. They have been selling for more than $2million each in the secondary market. Experts in the US are reported to be deliberating their authenticity but none has yet spoken out.
It is hard to imagine the embarrassment if a substantial lifetime gift of artworks from a gracious benefactor by a well known artist to an eminent institution turn out to be forged. Neither would the heirs of a beautiful sculpture be best pleased if it transpired that it had been looted from victims of the Holocaust. Such situations can and do occur. Thorough due diligence in relation to art is imperative to eliminate the unnecessary.
Karen Sanig, Head of Art Law, Mishcon de Reya Solicitors, London