By Angela Dimery and Louise Carron.

New York is the reigning capital of art law, and this Fall confirmed that there are many places to be and much art to see. The three events below, which have become regular fixtures on the calendars of legal practitioners, reflect the richness of topics and the range of excellent speakers these past months.

Hot Topics in Art Law | October 24, 2019, at the New York City Bar Association

On October 24, 2019, panelists at the New York City Bar Association covered recent cases and other developments under 2019’s Hot Topics in Art Law. Steven R. Schindler and Diana Wierbicki were co-moderators of the panel.

Dean Nicyper, who heads Withers Bergman’s Dispute Resolution Group in the United States, began his cultural property update by running the scenario of a fictional client who acquired a 3,000 year old piece with a dubious provenance record, risking the antiquity’s seizure and confiscation by the District Attorney’s office, along with potential criminal prosecution for receipt of stolen goods. An important inquiry is that of intent. In other words, what red flags should buyers look for to avoid criminal liability? Mr. Nicyper spoke of the increasing scrutiny over collections of antiquities since the 1970s, due to the UNESCO Convention on Cultural Property.[1] He also noted the District Attorney’s argument that even a clear Art Loss Register report is not sufficiently reliable due to inaccurate descriptions often used.[2] Mr. Nicyper observed the jurisdictional limits in such cases, by giving the example of a court ruling in the Persian Guard Relief case that it lacked jurisdiction to determine ownership, resulting in a custodian role for the DA. Since the foreign government had no standing in the case, and since no charges were laid, the DA’s role was one of custodian until a civil court could, in the interests of justice, determine ownership.

Katie Wilson-Milne, Partner at Schindler Cohen & Hochman LLP, gave a Nazi-looted art litigation update, which began with the background to the case of Reif v. Nagy.[3] She noted the court’s denial of motion to dismiss based on its finding that the requirements for collateral estoppel were not met, and its finding of duress citing Bakalar v. Vavra.[4] Ms. Wilson-Milne drew a comparison between the approach in European cases, and New York where a thief cannot pass good title. She explained the court’s denial of a number of procedural arguments, including the defense of laches, so that it affirmed grant of the plaintiffs’ motion for summary judgment. Next, Ms. Wilson-Milne compared the applicability of duress to the political climate in question and to the transaction itself, in the 2019 decision of Zuckerman v. The Metropolitan Museum of Art.[5] She highlighted the defendant’s request that in granting the motion to dismiss that the court address the merits based defenses with the procedural arguments around the doctrine of laches. You can read the Center’s comparative analysis of the Zuckerman and Nagy cases here.

The next panelist, Anne-Laure Allehaut, switched to a transactional attorney’s perspective. She discussed learnings from the Agnes Martin case.[6] The agreement in question contained standard recission terms, which raises an interesting question about the length of time an authenticity clause can run vis-a-vis when a work makes it into a catalogue raisonné. Ms. Allehaut noted that the decision does not insulate authenticators from liability. She summarized the key takeaways that should inform drafting contracts, to limit Committees’ exposure arising out of any decision to exclude a work from a catalogue raisonné. She concluded with an update on what’s next. In 2016, a bill relating to authenticity, attribution and authorship of fine art was proposed to the New York Senate. After stalling, it was reintroduced in January 2019, and features a broad definition for authenticators. You can read the Center’s Agnes Martin case review here.

The panel concluded with a legislative update from Philippa Loengard, Director of the Kernochan Center for Law, Media and the Arts at Columbia University. Ms. Loengard began with the Copyright Alternative in Small-Claims Enforcement Act of 2019 which passed the House of Representatives in October, and which would establish a small claims, non-jury tribunal in the US Copyright Office, meaning a party could opt out in accordance with the VIth amendment. The bill is due to go to the Senate next, although this is unlikely to occur before the holiday recess. Next, Ms. Loengard discussed potential changes to section 512 of the Digital Millennium Copyright Act (DMCA),[7] following additional public consultation. She observed that Senator Nadler’s resale royalty rights bill, which the Center has written about, could still come back onto a future agenda. She wrapped up with a review of recent street art cases, which those who attended will surely be watching as some of these cases continue to proceed through the courts.


11th Art Litigation & Dispute Resolution Practice Institute | October 25, 2019, at the New York County Lawyers Association

A donor’s name is removed from an institution to protect its reputation – at the cost of a $15m settlement. A Board Member’s anonymous donation is an open secret in light of public scrutiny. A public work on campus depicting historical violence, is the subject of fierce debate between arts professionals and community stakeholders: should it be preserved, covered or destroyed? After 18 years, an heir of a 1963 screenplay sues a media company for its 1980 film, sparking arguments at the highest level about the equitable doctrine of laches. An artwork is swapped out for a fake during a messy divorce settlement. And in a hypothetical case, what rights does an artist have, when a gallery owner, the mayor of a small town, and their advisors––all with divergent interests––negotiate the commission of a public sculpture?

On October 25, 2019, disputes like these were discussed with finesse and in-depth, by panelists at the 11th Art Litigation & Dispute Resolution Practice Institute, hosted by the New York County Lawyers Association. The event was well-attended by legal practitioners. This year’s co-chairs were Amelia K. Brankov, Frankfurt Kurnit Klein & Selz PC, Megan E. Noh, Pryor Cashman LLP, and Hon. Stephen G. Crane (Chair Emeritus).

Panel 1: Who Chooses? Who Loses? Legal and Reputational Issues in Funding Public Art and Art Institutions

In her introductory remarks to the first panel, Who Chooses? Who Loses? Legal and Reputational Issues in Funding Public Art and Art Institutions, moderator Hon. Barbara Jaffe, New York State Supreme Court civil judge, observed that the argument that art can never be censored, no matter what it expresses, is contentious. She suggested we pay attention to how society’s mores change, and not always in a progressive direction. With pertinent questions, Judge Jaffe led a rich discussion on governance and reputational issues that cultural institutions face.

From l. to r.: Dr. Michele Bogart, Dr. Sally Yerkovich, Jennifer Franklin, and Hon. Barbara Jaffe, at NYCLA, October 25, 2019. Photo credit: Louise Carron.

Dr. Sally Yerkovich, Chair of the Ethics Committee at the International Council of Museums (ICOM), discussed the three main planks of the twice revised Code of Ethics for American museums.[8] She emphasized the need for written sources of rules on funding and income-generating activities to guide decision-makers. Today, museums are more careful about accepting funds, in light of recent controversies, even when there is no question of a donor influencing programs.

Jennifer Franklin, Senior Counsel at Simpson Thacher & Bartlett LLP, laid out the legal background for Boards of Trustees’ decision-making and the criteria for Board selection. In some cases, it is beneficial to appoint government officials ex-officio. She highlighted the fiduciary duties of care and loyalty the Board owes to an institution which rank above their own interests. Policies help provide a clear path through quandaries. Controversies are often amplified in social media, and a clear policy can help distinguish between optics, or an appearance of conflict, and actual financial or ethical conflicts in law.

Dr. Yerkovich provided an update on ICOM’s proposed new definition of a “museum.” As an international institution abiding by French law,[9] its definition has global influence, and is sometimes enshrined in countries’ legislation. The new definition reflects contemporary concerns of sustainability, climate change, restitution, social justice, and audience inclusion.The phrasing,which has its share of critics, begins by stating: “Museums are democratising, inclusive and polyphonic spaces for critical dialogue about the pasts and the futures.”[10] Following disagreement and concerns over insufficient consultation and disparate regional impacts, the new definition’s scheduled adoption has been postponed pending a new proposal.

Continuing the theme of inclusion, exclusion, robust debate, and voices of dissent, Dr. Michele Bogart, Professor of art history and criticism at Stony Brook University, argued that public art ought to be preserved for its historical significance, once accepted into a collection. She discussed the mural in a San Francisco public high school which depicts George Washington’s military activities. It shows European Americans stepping past a dead Native American and is part of a series depicting George Washington’s active role in the country’s history of slavery. There was a great deal of discussion over Dr. Bogart’s resolute view based on her research, that a work’s historical significance goes beyond contemporary responses rooted in generational trauma. During Q&A, an audience member posed the issue of raising African American children in this environment. She asked whether, given art’s power, is it not better observed and therefore teachable in a book or with proper recontextualization? Others asked whether positioning new works, in response to such historical works provides necessary balance.

Panel 2: Clarity or Confusion: The HEAR Act and Other Recent Developments in Art Restitution

The second panel, moderated by Hon. Charles E. Ramos (Ret.), was entitled Clarity or Confusion: The HEAR Act and Other Recent Developments in Art Restitution. The panelists included William Charron, Partner at Pryor Cashman LLP, Simon Frankel, Covington & Burling LLP, and Howard Spiegler, co-chair of Herrick Feinstein’s Art Law Group.

All have litigated cases of Nazi-looted art and spoke about the Holocaust Expropriated Art Recovery Act of 2016 (“HEAR Act”),[11] which provides a nationwide 6-year statute of limitation, and is itself the subject of litigation in 2019 New York cases of Zuckerman v. Metropolitan Museum of Art[12] and Reif v. Nagy.[13] Panelists, some of whom were counsel in the cases, sparred over the complexity that the HEAR Act has introduced.

Mr Spiegler questioned the relevance of examining the HEAR Act’s legislative history when he says the HEAR Act is not ambiguous and did not expressly permit a defense of laches. Mr Frankel observed that we are yet to see how Justices Gorsuch and Kavanaugh will treat the question of legislative history. Mr Charron, noted that in light of the Xth amendment, there is an interesting federal pre-emption question, in relation to the requirement to provide a substantive cause of action––the Washington Principles have not been made substantive law.[14] In addition, there was lively debate as to whether the duress of circumstance described in these Nazi era cases is sui generis and a matter of common law, or if it is a political question that can only be answered with legislation.

Panel 3: The Art of Divorce: Art as Marital Property, Treatment of Art in Prenups, Valuation Issues, Division … and Beyond

Hon. Matthew Cooper, matrimonial Judge with the New York County Supreme Court moderated the third panel, titled The Art of Divorce: Art as Marital Property, Treatment of Art in Prenups, Valuation Issues, Division … and Beyond.

Panelists Dror Bikel, Attorney at Bikel & Schanfield, Alan Feigenbaum, Attorney at Alter, Wolff & Foley LLP, and Lois J. Liberman, Attorney at Blank Rome LLP, discussed the hierarchy of assets in a divorce, and where art sits. The Panel discussed three areas when an artwork is at stake:

  1. Who is the client? They may be an artist, an art dealer, or a private collector, which will greatly impact how the art, or art-making, is valued and indeed whether it is distributable. Mr. Bikel spoke about the goodwill and reputation––an intangible asset––relevant to artists, and to art dealers’ businesses, and whether it is subject to equitable distribution, in addition to any tangible works’ value.
  2. Is there a prenuptial agreement? Mr. Feigenbaum discussed the rebuttable presumption that works acquired during a marriage are marital property. To avoid doubt, the speakers highlighted the importance of having a prenuptial agreement. Ms. Liberman noted the ability to contract out of the default position and to put in place processes to deal with an inability to agree on any given artwork, and to allocate treatment of auction expenses. She stressed the importance of updating any prenuptial with addendums unequivocally laying out when an item is a gift, or, to whom it belongs.The panel also addressed the possibility of postnuptial agreements.
  3. What is the fair market value (“FMV”) of the art? The panel emphasized that the Uniform Standards of Professional Appraisal Practice (“USPAP”), the law, and non-binding IRS guidance still leave room for dispute over FMV. Mr Bikel spoke about competing appraisals – often a battle of the experts. Judges at times resort to settling disputes by ordering that a piece is sold and the proceeds equally distributed. For collections, it is often beneficial to practically agree timings of sales between the parties, as availability and timing of an asset sale impacts its value.
What’s New In Art Law

In an extraordinary tour de force, co-chairs Amelia K. Brankov and Megan E. Noh gave an account of the 50+ art law cases that came out since October 2018. Read the Center for Art Law’s Case Law Corner for summaries of cases in 2018 and 2019.

Panel 4: Navigating Artists’ Rights in Installation Art: A Discussion of Relevant Statutory and Contractual Provisions

The last panel of the day was entitled Navigating Artists’ Rights in Installation Art: A Discussion of Relevant Statutory and Contractual Provisions and took the form of an amusing hypothetical situation led by Philippa Loengard, Director of the Kernochan Center for Law, Media and the Arts at Columbia University, where she played the role of a town mayor seeking to commission a public artwork. Panelist John B. Koegel, attorney at The Koegel Group LLP, Amelia Brankov, and Megan E. Noh took turn as advisors of the artist, the commissioning party, and a gallery, in illustrating how they would handle each stage of the negotiation and the safeguards along the way to avoid or handle disputes. These ranged from the initial approval process for the commissioning party, selection of the artist, clarity in the modelling, rendering and designs, site selection, budget, control over installation and assembly, insurance and allocation of costs and liabilities, payment schedules and delivery, the right to replicate, publicize, and merchandise the work, and providing for maintenance of the work to specifications, in light the Visual Artists’ Rights Act (“VARA”).[15]

The Center for Art Law would like to thank Megan Noh, advisor to the Center for Art Law, for inviting us to attend the 11th Art Litigation & Dispute Resolution Practice Institute.


Art Law Day 2019 | November 8, 2019, by the Appraisers Association of America

On November 8, 2019, the Appraisers Association of America hosted the annual Art Law Day at the Benjamin N. Cardozo School of Law for a full day of panel discussions.

Kenny Schachter, keynote address at Art Law Day, November 8, 2019. Photo Credit: Kristin Slaby Photography. Courtesy of the Appraisers Association of America.

Kicked off by a keynote address by Kenny Schachter (author, dealer, lecturer, and Cardozo alum), Art Law Day 2019 started with a dark and humorous overview of the art world where nobody was overlooked. In the past 50 years, the art market has seen more growth than in the last 500, especially in New York. Mr. Schachter noted that very few art companies are viable in this climate, and that self-regulation is not enough to fight corruption and money-laundering. The art world has its own celebrities, for example, who answer to the names of Inigo Philbrick, Jho Low, and the Marciano Brothers. The art world also has its own problems: controversial museum board members, the 3 Ds (death, divorce, and debt), the fight for more diversity in the representation of artists, and issues of title, among others. Mr. Schachter despaired in the face of what he called “curatorship without scholarship” and the new methods of owning and investing in art.

Panel 1: The Road to Repatriation? Restitution of Colonial-Era, Native American, and Indigenous Artworks

The first panel, entitled The Road to Repatriation? Restitution of Colonial-Era, Native American, and Indigenous Artworks, was lead by Dorit Straud, art and insurance advisor at Dorit Straus LLC.

Dr. Diala Touré, a French scholar and heir of Alamy Samari Touré (founder of the Wassoulou Empire, an Islamic state in present-day Guinea, and resistance fighter against the French Empire), explained the context for the Sarr-Savoy Report commissioned by French President Emmanuel Macron in 2017, which raised public awareness on the dubious acquisition of artifacts during the Colonial-era. Some of them are sacred items that may have been seized through violence, theft, or confiscation, and still to this day, the report is met with skepticism from museums. You may read the Center’s analysis of the Sarr-Savoy Report here.

Shannon O’Loughlin, attorney and Executive Director of the Association of American Indian Affairs, took over to talk about the laws that are applicable to Native American artifacts, namely NAGPRA 1990[16] and ARPA 1979.[17] The fact is that there is still a tribal antiquities market, and the FBI has the burden of attempting to restitute the items. Thomas Kline, partner at Cultural Heritage Partners, LLC, went on to explain that museums are left dealing with these issues and have to find solutions, either for the definitive restitution or for an alternative arrangement with the tribes. There is no public policy or common course of action, which also underlines that auction houses and appraisers now need to be extremely careful about their due diligence in establishing the provenance and legitimacy of the ownership. Will there be a set of standards for colonial-era artifacts? At the outset of this panel, the speakers agreed that we need to start a dialogue, akin to what happened with the HEAR Act and Nazi-era looted art claims, in an effort to build awareness and encourage policy changes.

Panel 2: New Issues And Platforms In The Art Market

The second panel, New Issues And Platforms In The Art Market, was lead by Diana Werbicki, Partner and head of the Art Law practice at Withers Bergman LLP, and tackled recent tech developments affecting the art market. Nigel Glenday (CFO of Masterworks) explained how Masterworks company tokenizes (i.e. sells digital shares) of artworks, which may interest a younger and broader part of the investment community, and how they had to comply with SEC filing regulations. Freya Stewart, CEO of The Fine Art Group, and Marc Halsema, Partner at Pennington PArners & Co., LLC, emphasized how new technology can foster more transparency in investing, by allowing companies to become more systematic in compiling art market data and information on artists without a secondary market. The panelists also talked about the external forces at play that encourage the art world to innovate, whether at a national scale, such as the end of the 1041 Exchange and tariffs on Chinese antiquities, or at an international scale, with the never-ending Brexit and the EU 5th Anti-Money Laundering.[18]

Panel 3: IP Caveats: When Is The IP As Important As The Art?

To start off the third panel entitled IP Caveats: When Is The IP As Important As The Art?, Virginia Rutledge, of PIPE Arts Group, gave the example of Duchamp’s authorizations of his ready-made work Fountain, one of which was purchased around 1950 in a flea market – the replica authorized by Duchamp. It went on tour last year in various galleries and is one of the earliest replicas in existence. She noted that appraisers know that the licensing value of a work is important to take into account, particularly with contemporary art. Ms. Rutledge noted that the Guggenheim, in its cultural authority, has decided that in some cases it will declare when an artwork is no longer an artwork. The implications of these decisions affect the market, and the field of art history – and are conversations that we all need to openly be having.

Sarah Conely Odenkirk, Attorney at ArtConverge, explained the basics of copyright law, including that while copyright exists as soon as it is fixed, there is no ability to protect it until registered with the Library of Congress. Using the ongoing Mercedes case as an example,[19] Ms. Odenkirk underscored that artists should hold off commencing license fee demands until copyright registration is in place. While speaking about the fair use doctrine, Ms. Odenkirk revealed the existence of a fifth “jerk” factor, when arrogance leads to a party losing because they disrespected the legal process, the court and/or their adversaries.

Massimo Sterpi, Partner at Gianni Origoni Cappelli & Partners, explained the non-US intellectual property rights, which include copyright and neighboring rights (the latter belong to less creative inputs, e.g. producers), moral rights, and personality rights (France is notable on the subject). In Italy and France, the list of what is copyrightable is not exhaustive; anything creative can enjoy protection–– as opposed to the US, where the work must fall within one of the listed categories. In many countries, there must be a writing in order to transfer a license or right. Under Italian law, if someone buys a mold or film negative, the purchaser also buys the reproduction right.

Abbey Green, Counsel at Christie’s, brought in the perspective of an auction house, which needs the right to reproduce artworks for its online and printed catalogues; while some countries carve out exceptions for the marketing of fine art, the US fair use exception is a question of fact and the answer is never clear-cut. Trademarks may also come into issue, when an artist’s foundation has a trademark over the artist’s name, such as Frida Kahlo. Publicity rights may also be a concern. Ultimately, the extensiveness of IP protection will depend upon the parties’ preference between exposure or preservation.

Panel 4: Financial Options For Buying And Selling Art

The fourth and final panel of the day, Financial Options For Buying And Selling Art, was moderated by Steven R. Schindler, Esq., Partner at Schindler Cohen & Hochman LLP. The panelists, namely: Andy Augenblick, President at Emigrant Bank Fine Art Finance, John R. Cahill, Esq., and Katherine Wilson-Milne, Esq., Partner at Schindler Cohen & Hochman LLP, discussed the trend where a third-party offers a guarantee to an individual consigning an artwork at auction, in the event the piece does not hit the estimated price. Known as “third-party guarantees,” these agreements require proper diligence on the works and a consensus as to when and the guarantee will be paid, if the works may be re-consigned abroad, if the auction house has the option to offer the work in a private sale, and many other considerations. Borrowing against art is another financial instrument that has been utilized in the art market: collectors now use their art as a way to finance their mortgage and some dealer do so to cover the operating costs of their galleries––which may be problematic. These mechanisms only reinforce the power of art beyond its esthetic values on a market that is driven by profit.

The CLE Materials are available here and the photos from the conference are available here.

The Center for Art Law is grateful to Linda Selvin, Executive Director of the Appraisers Association of America, and Teresa Caputo, Program Coordinator, for inviting them to attend Art Law Day 2019.


Endnotes:

  1. 1970 UNESCO Convention on the means of prohibiting and preventing the illicit import, export and transfer of ownership of cultural property; adopted by the General Conference at its sixteenth session, Paris, 14 November 1970.
  2. See for example, Charging Documents in The People of the State of New York v. Sanjeeve Asokan et al. (July 8, 2019).
  3. Reif v. Nagy, 106 N.Y.S.3d 5 (N.Y. App. Div. 2019).
  4. Bakalar v. Vavra, 619 F3d 136, 141 (2d Cir 2010).
  5. Zuckerman v. Metro. Museum of Art, 928 F.3d 186 (2d Cir. 2019).
  6. The Mayor Gallery Ltd. v. The Agnes Martin Catalogue Raisonné LLC et al., No. 655489/2016 (N.Y. Sup. Ct. 2019).
  7. Digital Millennium Copyright Act (DMCA), 17 U.S.C. § 1201 (2006).
  8. American Alliance of Museums (AAM) Code of Ethics for Museums, last accessed Nov. 23, 2019 at <https://www.aam-us.org/programs/ethics-standards-and-professional-practices/code-of-ethics-for-museums/>.
  9. Article 1, section 2 of ICOM’s Statutes last accessed Nov. 23, 2019 <https://icom.museum/wp-content/uploads/2018/07/2017_ICOM_Statutes_EN.pdf>.
  10. See full proposed text at <https://icom.museum/en/activities/standards-guidelines/museum-definition/>; compare existing Museums definition under Article 3 of ICOM’s Statutes, at <https://icom.museum/wp-content/uploads/2018/07/2017_ICOM_Statutes_EN.pdf>.
  11. Holocaust Expropriated Art Recovery (HEAR) Act of 2016, Pub. L. No. 114-308, 130 Stat. 1528.
  12. Zuckerman v. Metro. Museum of Art, supra.
  13. Reif v. Nagy, supra.
  14. Washington Conference Principles on Nazi-Confiscated Art, at <https://www.state.gov/washington-conference-principles-on-nazi-confiscated-art/>.
  15. Visual Artists Rights Act of 1990 (VARA), 17 U.S.C. § 106A.
  16. Native American Graves Protection and Repatriation Act, 25 U.S.C. 3001-3013.
  17. Archaeological Resources Protection Act, 16 U.S.C. 470aa-mm.
  18. Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU.
  19. Mercedes Benz USA LLC v. Daniel Bombardier, No. 2:19-cv-10951 (E.D. Mich. filed on March 29, 2019).

About the Authors:

Angela Dimery is the Center’s Fall 2019 Fellow. An attorney from New Zealand where she practiced in house and at private firms, Angela holds a Bachelor’s Degree in Contemporary Dance and an Honor’s Degree in Law from the University of Auckland, New Zealand. Angela will be admitted to practice in New York in December 2019.

Louise Carron is the Executive Director of the Center for Art Law since September 2018. Ms. Carron is admitted to practice before the courts of New York and holds a double Master’s degree in Comparative Business Law from the Université Paris Nanterre (Paris, France) and an LL.M from the Benjamin N. Cardozo School of Law (NY).