The Arts industry has changed over the years, with the expansion of globalisation due to the rapid development of the internet, buying and selling art has taken a new stance. We speak with Jessica Franses, an Art Law Barrister, who discusses these changes and how her team at 36 Group developed the Art Due Diligence Group to help enhance the Arts industry even further.
What are the main issues that arise during Fine Art sales and out of all these issues, which is the most difficult for you to tackle?
Interestingly, no art case is ever the same and often many different issues arise. However, the main types of disputes relate to title or ownership of art, breach of contract, misrepresentation, misstatement or mistake, negligence concerning attribution of an artwork and fakes and forgeries.
Our team have found that the complex cases tend to involve multiple parties or institutions, such as trusts or museums or governmental bodies, or are cross border disputes such as in restitution cases, or cases involving national treasure laws or stolen artworks. Fakes and forgery cases and disputes over authenticity, attribution and auction negligence claims, are also complex.
What are key things to be aware about in the Arts industry? How is this different to other commercial industries?
The arts industry is not regulated in the same way as the financial sector and there is not the same level of awareness about fiduciary duties, money laundering, bribery and fraud, all of which can arise in fine art sales. Art usually consists of moveable assets which can be untraceable, and the scope for criminality is very real. Unless detailed questions are asked by advisers, traders and private individuals, they can become the victims of criminal activity and unwittingly facilitate crime.
As with all industries, there has also been a decline in the value of expertise. However, we believe that there is an even greater need to consult experts and professional art advisers. There have been a number of high profile cases involving fakes and forgeries and alleged breaches of fiduciary duties where excessive agents’ commissions have been charged, and it is clear that collectors, as well as the professionals within art galleries and auction houses, are vulnerable to fraud or unethical practices.
You and your team have been active in this sector for over 7 years how has it changed over the years and how has this affected your role?
Up until 10 years ago, the art market was still a closed world, where the dealers and galleries knew each other and their customers well. There were ethical codes of conduct and the market would self-regulate informally. The art market has now expanded considerably. There are many platforms or routes through which people can buy and sell art and, whilst this is an extremely positive development, it brings challenges, for example, many more outlets through which unprofessional trading practices can occur. (We advised a client who bought many fake artworks online from a business thought to be operating in the UK but was in fact overseas; we have advised an art dealer who believed he had been the victim of an auction ring in the UK.)
With many new collectors from different cultural, professional and financial backgrounds, there is a new type of consumer—one who demands greater professionalism from the trade, and this is forcing a change. Equally, galleries and art advisers want the protection of contracts for transactions with new customers and are rapidly adapting their business models to meet the challenges.
Moreover, what changes do you foresee in the future that will continue to enhance the industry?
There have been calls for greater regulation of the marketplace. There are many laws that govern transactions and with greater education in the industry on the laws that apply and, through greater consumer awareness, there will be less scope for problems to arise.
Buying high value art can be a risky business unless proper due diligence is conducted. At 36 Art, we advocate that both buyers and sellers need to undertake due diligence to obviate potential legal risks as we have seen just as many problems for sellers as we have for buyers.
Earlier this year, our team helped to develop the Art Due Diligence Group. This company brings together leading service providers who conduct all stages of due diligence for art transactions, from provenance research, title checks, forensic checks, KYC and background checks on buyers and sellers, to assistance with the sales process, reputation management and specialist assistance to resolve any disputes through mediation, other forms of ADR and litigation. (See www.artduediligencegroup.com)
We believe that other groups like ours will emerge to provide support for the Industry, to help protect against various criminal threats and unethical practices and to enable it to regulate itself even more effectively.
Jessica Franses
Art Law Barrister
36 Art
Part of the 36 Group
36 Bedford Row
London
WC1R 4JH
Telephone: +44 (0) 20 7421 8030
Email: clerks@36civil.co.uk
www.36group.co.uk/art
Jessica Franses is an art law barrister at the 36 Group. She works within an art law team of 7 barristers all of whom have worked on art and luxury asset cases.
The 36 Group Art Law team have very specific sector knowledge. Art Law is a niche specialist area and our barristers have immersed themselves in the arts and understand very well the needs of their clients. We also have the technical knowledge across the commercial, civil, criminal and international law that applies, such as theft of art, criminal damage to art, money laundering, the sale of or making of fakes and forgeries. We are public access qualified, which means you can come directly to us without first instructing a solicitor. Our ethos is to bring matters to a satisfactory conclusion avoiding court litigation through formats of alternative dispute resolution, wherever possible.
