Buying Art Abroad: Buyer Beware

By Denise M. Alter, Esq.

Whether to Art Basel in Switzerland, the Frieze Faire in London, or the SHContemporary Fair in Shanghai, traveling to international art fairs can be an exciting way for art collectors to vacation.  The parties, the people, and the foreign travel coupled with fantastic fine art and photography showcased by hundreds of dealers, artists, and galleries from around the world can prove quite alluring.

But before buying that extraordinary painting, work on paper, photograph, or other “objét d’art,” collectors should be aware of the legal risks involved in buying art abroad. This article does not purport to identify all such risks, or discuss any one risk in detail.  But caveat emptor-“buyer beware”—takes on special significance when acquiring art on the international market, and collectors are advised to consult with a lawyer or other knowledgeable professional before opening their wallet.  If that painting you purchase turns out to be a fake, stolen, gets damaged in shipment, or does not arrive at all, recouping your losses from a foreign seller can prove costly if not impossible.

As one might imagine, the laws of foreign nations are even more varied than the laws of our many states. Acquisitions of art from foreign sellers require sophisticated knowledge about the transactional laws of the source country and the interplay of those laws with international conventions such as the 1980 United Nations Convention on Contracts for the International Sale of Goods, and the Berne Convention, among others.  Letters of credit to protect fund transfers, conflict of law issues, the availability of dispute resolution mechanisms, requirements for enforceable warranties, shipping requirements, and risk of loss presumptions, represent just a few of the complex legal issues at play in commercial transactions in foreign countries.1

Many collectors now realize that the value of intellectual property rights to a work of art can often be more valuable than the work of art itself.  Owning the art object does not equate to owning the trademark and copyrights in the art unless those rights are specifically acquired. Without ownership of the copyrights in a work of art, or at least a license thereto, a collector may not photograph, reproduce, or otherwise create a derivative work from the object without infringing the artist’s (or other holder’s) copyrights.  Foreign copyright and trademark laws vary by jurisdiction, and may be impacted by international convention.  Successful acquisition of copyrights, either by assignment or license, requires sophisticated knowledge about international intellectual property laws.

Other legal rights attached to works of art that must be considered are “artist’s rights” or “moral rights.”  Derived from French law, the federal Visual Artists’ Rights Act, 17 U.S.C. §106A, and the California Art Preservation Act, (Civil Code §987 et seq.), vest artists in this country with continuing rights to prevent damage, destruction, or mutilation of their works or art even after sale, to claim or disclaim authorship in the work of art and, in California, royalty rights in subsequent sales of the art work under certain.  In foreign jurisdictions, these “artist’s rights” take on expanded protections that are country-specific.  Without obtaining a proper waiver of these rights, if legally possible under the law of the foreign jurisdiction, collectors are forever subject to suit by the artist should damage befall the work of art while in the collection.

Equally important are proper import/export clearances if the work has been created abroad or is acquired from a foreign seller.  Lawful export and import prevents seizure of the art.  As demonstrated by recent demands of Italy, Greece, and China to gain return of their cultural property from museums in the U.S. and abroad, foreign claims may lie dormant for decades before being asserted with the assistance of the U.S. government. By now, many countries have adopted laws that claim ownership of “cultural property” originating from within the country. Definitions of “cultural property” may broadly extend beyond antiquities to more modern works of art considered important to national culture.  Even experienced dealers can misunderstand the reach of these foreign cultural property laws.  To ensure a work of art is legally importable into the United States, buyers should obtain proper paperwork documenting lawful export of the work.  Certain specialty fine arts shippers also work with import/export brokers who can properly arrange for necessary documentation.

Enjoy the travel and the ‘scene’ at international art fairs.  Before buying art abroad, however, be certain you have an internationally enforceable purchase agreement and export documentation in place to guard against the risk of loss to that expensive work of art.

Note: The information contained in this article is not legal advice and does not establish an attorney-client relationship. Readers should consult their own legal and professional advisers in connection with the purchase, sale, and collection of art.


 

1 While insurance may help minimize certain risks, it will prove worthless if the collector is not a named insured on a policy that covers all nail-to-nail risks for fine art, issued by a properly rated and reputable insurer with a proven track record of prompt payment to claimants.