Investing in a significant work of art can be a scary business. The art market, both internationally and domestically, is murky, unregulated and littered with counterfeit art works. The proliferation of online art auctions has further muddied the art market waters, and put a potentially dangerous distance, both contractually and geographically, between buyer and seller.
Before purchasing an art work, buyers must do their homework, especially where substantial sums of money are involved. By providing reliable and honest information, art market professionals offer value and comfort to their buyers, to ensure a legitimate transaction takes place.
Straightforward and seamless transactions are not always the reality of the art ownership experience. Buyers might discover that they have purchased a fake. Dealers might uncover a forgery hanging on their walls. Collectors might find that a valuable work has been stolen. What steps should anyone in these situations take? Who should be alerted, and what are their rights?
This chapter looks at due diligence in the context of buying art. It considers provenance and authenticity, insurance, and the perils of investing in art without adequate research. This chapter also looks at the law surrounding art crime, including what to do if you think you own looted art, or if art is stolen from you.
Forged art is not a new phenomenon. For as long as buyers have sought to purchase works by recognised artists, unscrupulous businesspeople have taken advantage of the laws of supply and demand. The desirability of the artist has a direct relationship with the value of his or her works, and so too with the prevalence of copies and imitations on the market. The last few decades have been filled with ‘blockbuster sales’ of art by sought-after high-profile artists for outrageous prices.1 This has not gone unnoticed by forgers and suspect sellers, with the result that a large part of the art market is now filled with inauthentic art. Some commentators, citing unidentified sources, estimate that as much as half of the international art market may be counterfeit.2
Before spending any sum of money on a piece of art, the buyer should conduct thorough due diligence to ensure that the work is authentic. Too often buyers are caught out by the trappings of legitimacy that a convincing – yet bogus – ‘seller’ can provide. The importance of comprehensive pre-purchase research increases with the value of the art work.
Art authentication is a three-sided coin of provenance, connoisseurship and forensic testing. Each of these methods in its own right can provide valuable proof of authenticity, and all three combined can offer robust evidence that an art work is genuine. However, the art world remains divided about the ‘best’ way to authenticate art, with supporters of one method casting doubt on the validity of another. In the American case of Biro v. Conde Nast,3 art professional Paul Biro failed in his claim for defamation and injurious falsehood in respect of a New Yorker article published about him. The article cast doubt on Biro’s method of authenticating art, which involved analysing fingerprints to determine that a particular artist had created an art work. The author, David Grann, suggested that Biro may have been forging the fingerprints in order to provide phony authentication, saying:
[i]f a forgery’s success were to depend on fake fingerprints, rather than on the sly imitation of a painter’s style, it would represent a radical departure from the methods employed by art forgers over thousands of years. And yet such a forgery would perfectly reflect the contemporary faith in science to conquer every realm, even one where beauty is supposed to be in the eye of the beholder.4
With this scepticism in mind, it is worth remembering that even convincing ‘evidence’ can be falsified in order to dupe the unsuspecting buyer.
A buyer’s due diligence should begin by establishing that the work has legitimate provenance and that the seller’s claims can be verified.
Provenance is documentation and evidence that records the ownership history of an art work, including who has owned it and where it has been since it was first created. Provenance is used to determine an art work’s quality, authenticity and value. With legitimate provenance, there should be no doubt that an art work was created by the artist whose signature appears on it or whose name is listed in the sale catalogue. It is never an unreasonable request for any prospective purchaser to ask for – and receive – good provenance from a seller, before bidding on or purchasing the art work.
Many things can establish provenance, and the appropriate evidence will depend on the nature and history of the particular piece of art. Some standard examples include:
The primary reason for consulting any of these types of evidence is to ensure that the art work fits comfortably into its artist’s oeuvre (body of work).
In the case of a particularly valuable art work, or one produced by a high-profile artist, additional forms of evidence may be used to establish the art work’s provenance. A catalogue raisonné (a comprehensive list of all works known to be by a particular artist, with substantive and accurate descriptions) may be consulted to determine the work’s place in the history of its artist. Catalogues raisonnés are often prepared by dedicated groups of scholars over many years. In some cases, an authentication committee prepares a catalogue raisonné for use by third parties interested in a particular artist or even works in a certain medium by a given artist. As discussed further below in relation to connoisseurship, in recent years litigation in American courts, particularly in New York, has seen authentication committees diminishing their services out of concern for legal repercussions.
Prospective buyers should satisfy themselves that they have checked their chosen art work’s provenance thoroughly, and are satisfied that the provenance is legitimate. For example, it would be unwise to bid at an auction where provenance is stated as being available only to the successful bidder. There is no reason that it should not be available before bidding commences, and a reputable institution should make provenance readily available. Similarly, the art work in question should be described in detail including its size, medium, title and other relevant details. A seller’s reputation will inform a buyer about the extent to which they should look beyond the provenance information provided by that seller. It is not difficult for a seller to obtain ‘evidence’ that supports their claims about an art work’s origins. A thorough buyer should obtain provenance information from their own sources, rather than relying on that provided as part of the sale.
Beware of false or bad provenance. A seller may be eager to provide some form of provenance, but not all forms should be taken into account when a buyer conducts their due diligence. First of all, it would be wise for a buyer to ensure that they are looking at original documents, with legible signatures and dates. Photocopied documents may not be sufficient to establish a valid provenance. Nor does a simple list of previous owners or galleries in which the art work has been exhibited, unless this can offer proof of the art work being created by the purported artist. Likewise, it pays to watch out for hearsay statements such as ‘when I bought this, the previous owner told me …’. Good provenance is built on concrete and provable evidence, not speculation or hearsay.
Bearing all this in mind, what should a buyer do if there is no provenance available but they still wish to acquire a piece of art? The answer to this may well depend on the value of the art work. It is a perilous decision to part with a substantial amount of money to purchase an art work the provenance of which cannot be obtained, let alone verified. Later on this chapter considers what to do if you think you own counterfeit or looted art.
A skilled art connoisseur is an expert in the work of a particular artist or period, possessed of the ability to evaluate an art work and determine its authorship. This often mystical ability seems to come from a combination of experience, intuition and empirical evidence.
Connoisseurs sometimes practise on their own, or alternatively authentication committees may exist. Frequently established by artists themselves during their lifetime or by way of instructions left in their will, authentication committees exist to verify the authenticity of works by a given artist. Notable examples of authentication committees currently active include the Francis Bacon Authentication Committee, the Damien Hirst Authentication Committee and the authentication committee for the work of Hergé (the creator of Tintin). Where buyers want additional advice regarding the provenance of an art work, they may consult a dedicated authentication committee.
However, consulting an authentication committee can be risky, including the possibility that if the committee rejects the work or refuses to authenticate it, this could render the work of little or no value. The international art market has experienced considerable dispute centred on authentication committees, with collectors suing committees for refusing to authenticate an art work even when the owner believed they had sufficient proof to meet the committee’s requirements. Some authentication committees now require that anyone consulting them sign an indemnity agreement first. Other committees have disbanded altogether, for fear of legal action. In the New York Senate, for example, legislation was passed in 2015 (but blocked in the New York Assembly) to protect art authenticators from ‘frivolous or malicious suits brought by art owners’. As noted elsewhere in this volume,5 the Bill may pass into law in 2016.
Scientific testing of an art work to determine its origin offers the most objective form of due diligence to a prospective buyer. The ever-changing technology available to forensic experts can help to determine where and when an art work was created, and sometimes even by whom. Forensic analysis can include x-raying an art work, investigating the materials used in its creation such as the chemical composition of paint and canvas fibres, and conducting carbon dating to determine its age.
‘Forensics’ could prove to be the most valuable determinant for a buyer making a substantial purchase. In many circumstances even the most methodical forger cannot beat the tools of forensic analysis. However, even science has its limitations, with forgers becoming wise to scientific techniques and employing methods to escape detection.
A quick Google search for online art sales returns a multitude of different sites offering art for sale, from affordable pieces through to fine art. While online art purchases are an easy and convenient way to choose a new art work, they can be a trap for the unwary. It can be difficult for the purchaser to conduct sufficient due diligence, and there may not be an opportunity to view the particular art work in real life before purchasing it. Bogus sellers can use copies of works that do not reflect the actual item, or repeatedly ‘sell’ the same art work when in fact they only have one version.
To avoid financial and emotional disappointment when buying art it is important to deal with reputable sellers. A good dealer, gallery or auction house’s reputation will precede it. Potentially valuable in domestic art markets are networks of industry professionals who can provide advice on where to buy art work, suggestions as to a reasonable price, and tips to avoid disappointment. If in doubt, make investigations within the art community in the area, before making an online purchase. Equally, seek out those who have had a great experience and are willing to share it.
Suspect or dishonest online sales of counterfeit or overvalued art works are just the tip of the iceberg when it comes to art crime in the internet era. The darker corners of the internet are home to sellers of illicit cultural heritage such as antiquities looted from destroyed or desecrated historic sites. These are put up for sale to the highest bidder, often to fund other nefarious activities in which their sellers are engaged. While traffickers tap into the market for contraband that exists within the so-called ‘dark web’, their ‘merchandise’ spills over into more mainstream markets. Well-known auction houses and online sales firms face a constant battle to identify traffickers who seek to exploit weaknesses in the online market, particularly the potential anonymity afforded to the seller. Substantial players in the online auction world are not doing enough to combat the problem, failing to identify and remove illicit objects from sale.6
In terms of the particular art object concerned, thorough provenance research will be rewarded. Look thoroughly into the seller’s background and check for references or reviews from other (legitimate) purchasers who have bought from the same seller. Investigate carefully where the object is purportedly from and how the seller comes to have it. If it is alleged to originate from an area currently or recently in conflict, this might be an indication that the object has been looted. Consider also whether it is unusual that the seller has such an item for sale and, if so, seek and receive further information from them. When investing a substantial amount of money in an object of art found online, delay and reconsider before confirming the sale.
It can be a nightmare for a buyer to suspect or discover that what seemed to be the perfect art work may in fact be much less than perfect. Maybe the buyer made an online purchase and despite their best endeavours is now sure that what has arrived is not what was seen online. Perhaps the buyer visited the shop of a dubious seller who persuaded them to purchase despite what their instincts told them. Maybe the buyer was at a local second-hand or antiques dealer and was mistakenly advised as to an object’s identity. It could even be that they trusted an auction catalogue and did not make sufficient further investigations to fill the blanks in the art work’s history. Whatever the story behind the purchase, the buyer is now faced with the prospect that he or she owns looted or counterfeit art.
Buyers who suspect they own looted or counterfeit art should seek legal advice as soon as possible, ideally from an adviser specialising in art law. The options available to aggrieved buyers will depend on where they live and where the purchase transaction took place, as well as the facts surrounding the apparent deception. The time elapsed between the purchase transaction, discovery that the purchased item maybe be looted or counterfeit, and any resulting legal action will be relevant, particularly where the law applies timeframe limitations.
Carrying out or being involved in a suspect sale exposes the seller to all sorts of liability. It could become necessary to involve law enforcement, as a seller who knowingly sells a looted or counterfeit art work may have committed a criminal offence. The buyer may also have other recourse available in the form of civil actions for deceit or breach of a contract where the seller knowingly sold the deceptive item. While the applicable law will of course vary across jurisdictions, the basic premise of illegality tainting the sale is unlikely to disappear.
In the United Kingdom, the United States, Australia, New Zealand, Canada and other common law jurisdictions, the basic rule when a purchaser identifies that they are unhappy with their purchase is the notion of caveat emptor, or ‘buyer beware’. Essentially the buyer is told that their lack of satisfaction is tough luck, unless some deceit on the part of the seller was involved. However, it is worth noting that consumer laws in various countries, including the United Kingdom and the United States, seek to overcome the harshness of the caveat emptor presumption by imposing requirements for warranties on the part of the seller before a purchase is made, along with provision for the return of unsatisfactory goods. Nonetheless caveat emptor will continue to apply in many circumstances, particularly where the transaction is between two businesses rather than a business and a consumer.
The seller of an art work may have terms and conditions that relate to the sale. This is especially likely where the seller is a recognised auction house or dealer. Terms and conditions should always be read thoroughly before engaging in a transaction, as they may contain unusual provisions or unexpected loopholes, and in appropriate cases professional advice should be sought and obtained. Some sellers do provide for the return of proven counterfeit art works, but this will not always result in a refund (or at least not until the buyer has expended even more money having the forgery or theft verified by the experts). The term ‘counterfeit’ may not stretch as far as a looted object, which could become a very serious matter for law enforcement.
As a general rule in common law jurisdictions, if a stolen art work is purchased, the seller has no enforceable valid ownership right to it, nor does any subsequent purchaser. If such a claim is validly raised within the timeframe of the applicable Limitation Act, the new owner could suddenly find themselves both out of pocket and with an empty space on the wall.
Where a duped buyer discovers that they have purchased a counterfeit piece of art, the best option available may be to sue for fraud. However, this can be a lengthy, complex and costly option. An action in fraud will require the claimant buyer to establish that the seller knew or ought to have known that the work was fraudulent, which can be a high threshold to meet, especially where the seller argues that they reasonably believed the work was authentic. However, even where the claimant buyer’s lawsuit is successful, a reward of compensatory damages will not fix the empty space on their wall.
In some parts of the world, including some areas of the United States, the law favours buyers and puts an onus on dealers to determine the authenticity of an art work. Where an art work turns out to be inauthentic, the buyer will be entitled to rely on the word of the dealer and take legal action against them. Unsurprisingly, when faced with law of this kind, dealers adapt their methods to protect themselves as much as possible, including by giving guarantees verbally rather than in writing.
Contract law is based on the premise of a valid and enforceable contract between parties. At its most fundamental, a contract cannot be valid where it is based on a mutual mistake between the parties. In some jurisdictions it may be possible to argue that where the buyer and seller are both mistaken about the artist of a particular art work and this is wrongly attributed in the sales documents, the contract between them should be void and unenforceable. If a claim based on this argument were successful, it would result in a return of the purchase funds to the buyer, along with a possible reward for damages against the seller.
In the case of an intentional sale of a counterfeit art work, the buyer may have an action against the seller for breach of contract. Arguably the identity of the artist is a material term in a contract for sale of an art work. This material term could well be breached by a seller who knowingly sells a forgery. In some jurisdictions the breach of a contract would entitle the buyer to terminate the contract and seek to recover his or her losses from the seller.
Around the world, judges are becoming increasingly aware of the realities of buying art in today’s market. As a result, courts will expect buyers to conduct thorough due diligence of their own (rather than relying solely on information provided by sellers) before investing in art. Where buyers can demonstrate that they have taken these steps and have still ended up in possession of a looted or counterfeit art work, courts will be more likely to take a favourable approach to their action.
The first thing to do upon discovering that an art work has been stolen is to call in the specialists. The police or other local law enforcement should be notified as soon as possible after discovering the loss, before the scene has been interfered with. As much as possible, nobody should touch the area from which the art work was taken, so that investigators can examine the scene thoroughly. If the owner has the art work insured (which they hopefully do!), the insurers should also be alerted at the outset.
The theft of an art work may be a case of mere opportunistic taking, or the thief may have been commissioned to take a particular item or items. If the owner receives a call for a ransom to be paid, this may indicate that the work was not stolen for a particular ‘client’ but rather by thieves hoping to turn a profit. The owner must follow the investigators’ instructions, as they are trained to handle these situations. Even where it is tempting to hand over the ransom money to have the art work returned, the situation may not be so simple.
The nature of the art work and its owner will determine how best to deal with the theft. It may be necessary to involve the International Criminal Police Organization (commonly known as INTERPOL) in case the art work is transported outside of the country in which it was taken. The owner would also be wise to notify auction houses and/or dealer galleries to be on alert in case the stolen art work is put up for sale. In many cases it may be sufficient to advise national auction houses and galleries, but if the work is of a high profile or particularly valuable then the warning ought to be extended internationally. In this situation the assistance of a specialist art lawyer will be beneficial to make sure that notification of the theft is provided appropriately and in consultation with the police.
A number of detailed online databases act as repositories for information about art works, antiques and collectibles that have been lost or stolen and are not yet recovered. The Art Loss Register is an international example that assists law enforcement agencies who are trying to recover stolen works. The United States Federal Bureau of Investigation (FBI) has a dedicated Art Crime Team, which among other things operates the National Stolen Art File, a ‘computerized index of reported stolen art and cultural properties for the use of law enforcement agencies across the world’.7 INTERPOL’s own database of stolen works contains details of approximately 45,000 items (as at December 20148). Various countries keep their own registers to assist with recording stolen items and enabling their recovery, although many countries do not and there is no single international point of reference. The lack of cohesion among these various national and international records can be challenging for law enforcement, especially when the theft and subsequent transportation and/or sale of an art work takes place across more than one jurisdiction.
Owning art can be an absolute joy, but in all the excitement of making a purchase, many buyers forget the basics and risk disappointment and potentially significant financial loss. It is tempting for the enthusiastic buyer to rush into a purchase, especially given how easy it can be to buy art in today’s market. A buyer who conducts thorough due diligence before making their purchase will save themselves a lot of heartache. Sellers too can demonstrate their value and reliability by providing buyers with genuine information up front.
The law will sometimes come to the rescue of an owner who finds that they have bought a looted or counterfeit art work, but with a market founded on the notion of caveat emptor (buyer beware), it is far better to avoid making such a purchase by taking time to research and validate the art work first.
If at the end of all that you find that you have purchased a dodgy piece, or you have had something stolen from you, take professional advice as soon as possible.
Louisa Gommans is a commercial lawyer based in Wellington, New Zealand, with a special interest in art law. She holds degrees in Law, Italian and Art History. She is a founding Trustee of the New Zealand Art Crime Research Trust, and writes and speaks regularly on art law topics.