Anthony Grant, executive vice president of contemporary art at Sotheby’s, describes Jackson Pollock’s “Number 12A, 1948: Yellow, Gray, Black,” during a press preview. (Photographer: Ramin Talaie/Bloomberg) 

For Art’s Sake: The Court Of Arbitration For Art

BloombergQuintOpinion

Part – I

Consider this: you purchased a rare Jackson Pollock painting from a prestigious auction house’s website, the auction house even provided you with a “Certificate of Authenticity”. However, an expert on Jackson Pollock remarks that the painting may be a copy/ a very public dispute ensues, not only questioning the value and authenticity of the painting, but also the reputation of the auction house. While the Courts hear the dispute, the value of the painting is affected by the controversy, its authenticity ever a subject of debate and given the bad publicity from the litigation; the million-dollar Jackson Pollock’s value is now diminished greatly.

What the Court of Arbitration of Art is All About

Established in June 2018, the Court of Arbitration for Art operates as a specialised arbitration and mediation tribunal for resolving art disputes. CAfA intends to undertake proceedings at a global level, addressing matters such as art authentication, contract and chain of title disputes, copyright, and moral rights, to name a few. The importance of this Court stems from problems often associated with judicially-administered art disputes, particularly pertaining to evidence and the art industry’s difficulty in accepting judgments pronounced by national courts, due to lack of expertise in the field. CAfA aims to resolve these issues by providing an arbitral tribunal comprising of art experts, rendering awards or results based on sound knowledge and extensive experience.

Furthermore, CAfA endeavours to deliver a speedier more cost-effective and confidential resolution of art disputes.

It aims to ensure an effective recourse to disputes within the field of art by providing a forum for adjudication of issues by experts in the industry that are chosen by the parties, thereby establishing greater faith in the system and finalisation of matters.

Furthermore, known disputes about provenance and origins of a certain piece of art have a negative impact on its value, apart from substantially affecting the reputation of the parties involved including that of the artist. Therefore, total confidentiality is a significant benefit of referring the disputes to arbitration.

CAfA is a joint initiative between the Netherlands Arbitration Institute and the Authentication in Art foundation. The NAI was established in 1949 and operates as a not-for-profit organisation to promote alternate dispute resolution procedures which range from arbitration, binding advice and mediation. The institute has an Executive Board consisting of people from the business community, legal profession and science who have extensive experience in the field of alternate dispute resolution. The NAI conducts arbitration proceedings in accordance with its arbitration rules.

Similarly, the AiA is an independent not-for-profit organisation that has an Executive Board of prominent international art world professionals who have converged to create a forum to promote best practices in the field of art and art authentication in particular. The AiA was established to develop sound practice guidelines in consonance with the global art community including collectors, art historians, art market professionals, financial institutions, legal advisors, and trust and estate practitioners, amongst other stakeholders from the industry of art.

No Shortage Of Art Disputes

The number of disputes over art and cultural property have risen significantly in the past few years. Some high profile examples include the long-running dispute over the ownership of Henri Matisse’s 1908 masterpiece Greta Moll between Moll’s grandchildren and the National Gallery in London, as well as the closure of the Knoedler Gallery, which was one of the oldest in the U.S., after it was discovered that numerous fake paintings had been sold. Primarily, the most contested issues in art disputes include ownership and title disputes, questions in relation to authenticity and provenance, mis-attribution of artwork to another artist, art fraud, sale and contractual disputes including breach of contract, loss of sale as well as auctioneers’ liability.

Courts have stated in many cases that with respect to authenticity disputes that they aren’t authenticators, they do not go out and uncover but only weigh and examine the evidence presented before them in any dispute.

The market is not under the obligation to accept the decision, and the court’s decision doesn’t do much to establish the authenticity of the artwork. The courts place their reliance on the totality of the evidence.

Bill Charron, a leading art law practitioner based in New York, who is working in conjunction with the Netherlands Arbitration Institute (NAI) and the Authentication in Art (AiA) organization and serving as an Advisory Board member, remarks on the issue of acceptance of judicial decision by the art market, “you’ve got provenance versus connoisseurship and the market just shrugs its shoulders at the whole thing.” As a consequence, litigating parties often expend time and money on discovery and expert analysis.[1]

Some notable disputes where alternate dispute resolution mechanisms have been used to reach an amicable decision include the dispute relating to the Canon Tables between the Western Prelacy of the Armenian Apostolic Church of America and J. Paul Getty Museum regarding the illegal removal of sixteen pages of the Zeyt’un Gospels in the year 1920, that was finally settled in 2015. The Momart warehouse fire dispute, saw a large number of art works by esteemed British artists with an estimated value of £40 million destroyed in a fire at the warehouse where they were stored by the company Momart, which was ultimately settled through a mediated agreement.

References:

[1] Green, Adam, host. “Bill Charron (partner at Pryor Cashman) and Megan Noh (partner at Cahill Cossu Noh & Robinson) – Court of Arbitration for Art” ArtTactic, iTunes app, June 5, 2018.

Part – II elaborates on the Procedure that will be followed by the Court of Arbitration for Art and what this development means for the Indian art industry.

Part – II

How CAfA Helps

It is essential in cases involving art disputes that there is a regime to govern and decide the disputes that may arise in the course of such sale purchases, mainly concerning the authenticity of the artworks, their valuation, instances of art fraud, cases of stolen art, chain of title disputes, contract, as well as copyright issues. Although, “art” in the broad sense of the term includes music, film, theatre, literature, et cetera, the scope of CafA is likely to adjudicate on disputes regarding fine arts and/or visual arts.

Art is a highly specialised subject matter and often includes trans-border disputes, involving not only legal but also highly sensitive non-legal issues such as religion, culture and politics. Reputed art dealers and auction houses like Sotheby’s have often found themselves in legal battles with original owners as well as buyers over the origins, questionable mode of acquisition, or authenticity of an artefact.

It is imperative for disputes of such a nature to be decided in a single procedure by a tribunal well-versed in the field to avoid actions in multiple jurisdictions, conflict of law issues and contradictory outcomes. 

An example of this can be seen in the dispute between Dmitry E. Rybolovlev and his adversary Mr. Bourvier, whom he had accused of fraud in the courtrooms of Paris, Monaco, Singapore and Hong Kong.

The newly formed CAfA has contemporaries such as: the WIPO-ICOM Art and Cultural Heritage Mediation Project, which is based on the WIPO-ICOM Mediation Rules and the parties have the choice to choose an expert mediator from WIPO’s lists; UNESCO’s mediation service which focuses on mediating matters pertaining to stolen or looted cultural property; and ADR Arte a project by the Milan Chamber of Arbitration, which is aimed at resolving art disputes through mediation. However, CAfA is the first of its kind in providing arbitration as well as mediation as a dispute resolution process for art disputes.

CAfA has enacted Rules effective as of 30 April 2018[1]; therefore, the mechanism is already in place. The primary objective is to provide market legitimacy and decision-based accuracy. As per the drafts, the Rules incorporate a standard and up-to-date approach, English is to be the default language of proceedings, unless the parties agree otherwise.

The number of arbitrators shall be three, unless the monetary value of relief sought is less than 500,000 euros or the parties have agreed to one arbitrator. The arbitrators must have university legal training. A secretary may be appointed by the administrator to assist a tribunal at its request or on its own motion.

Owing to the technical aspects underlying many art disputes, parties are at liberty to appoint tribunal members from a selected pool of experts.

The panel will draw upon expertise from a pool of neutral experts who provide opinions on connoisseurship, forensic science, and provenance. These experts will be individuals who are recognised in their fields and their expertise is accepted as definitive in the market, effectively solving the issue of market legitimacy. In compelling cases, an arbitrator may be chosen from outside of the pool. The arbitrators will be members of the international art community. Where the authenticity of the art work is under dispute, the tribunal will appoint its own forensic experts from a pool in accordance with Point 12 of the draft Rules.

The proceedings are to be private and confidential. However, Point 15 of the draft Rules authorises the publication of the award, identifying the issue, but without disclosing the identity of the parties to the dispute. By making the award public, it ensures recognition of the award in the market, further enhancing its legitimacy.

CAfA And What It Means For The Indian Art Industry

The size of the art market in India is diverse and growing, and paintings comprise 99 percent of the total market. According to The Arts Trust, the Indian art market is thought to be worth anywhere between Rs 1,000-1,200 crore for the general offline art market.[2]

Online auction houses and art galleries are now playing the role of an ideal marketplace for artworks in India that have difficulty finding buyers due to logistical reasons.

While buying art is still largely unregulated, development of art law provides a degree of risk management that creates powerful investment opportunities. The Indian art market in 2014 has been stabilising itself from its 2009 downturn. Auction houses like Sotheby’s, Christie’s and Bonham’s, which deal with Indian art, have all recorded higher turnovers in 2014 as compared to last year (2013).

In the past few years, India has seen a rise in disputes being referred to arbitration and has a well-established legal system in place for recognition and enforcement of international arbitral awards. Arbitration as an alternate dispute resolution mechanism has been well received in India and, so far, CAfA has been received positively by art lawyers and industry experts who understand the technicalities involved in resolving an art dispute.

Moreover, in the Indian context, the establishment of a specialised arbitral tribunal for art bears a unique opportunity for the development of art law in the country as an individual field of law.

At present, art galleries and museums choose to rely on in-house legal counsels and boutique law firms for contract mediation. With the introduction of a focused arbitration institution for art disputes, stakeholders in the industry ranging from private art collectors, libraries, auction houses, galleries, museums, art institutions, and artists would now have the choice to opt for resolution of disputes through CafA.

Consisting of well-regarded arbitrators and art experts whose authority and decisions are likely to be valued and readily accepted by the art market, CafA is a welcome addition to institutional arbitration and is poised to become a popular forum for art dispute settlement with parties opting to include dispute clauses referring to CAfA in their contracts.

References:

[1] The Rules are yet to be published on the official website; Netherlands Arbitration Institute, URL: https://www.nai-nl.org/en/cafa/

[2]Figures presented are based on turnover of auction houses, private galleries, secondary market, and Indian art globally, including sales figure of The Art Fair.

This note was authored by Faraz Alam Sagar- Partner in the Disputes, Regulatory, Advocacy and Policy Practice, Principal Associate in the Dispute Resolution practice, Pragati Sharma, Associate in the Dispute Resolution practice, and Samiksha Pednekar, Associate in the Dispute Resolution practice at the Mumbai office of Cyril Amarchand Mangaldas , and was originally published on the Cyril Amarchand Mangaldas blog.

The views expressed here are those of the authors and do not necessarily represent the views of BloombergQuint or its editorial team.