- The national and international context of reference.
The dynamism of the contemporary art market made a more structured organisation of the heterogeneous set of legal-economic knowledge – now commonly understood as art law – essential. A global market which as it expands, no longer includes only traditional collectors and art-lovers but also, celebrities seeking to invest the wealth they have generated in art. As a result, the complexity of the market has given rise to intricate legal issues, often transnational in scope, which require increasingly detailed and interdisciplinary expertise: from a legal standpoint – as becomes obvious on simply considering that a single dispute could range from copyright to property law, criminal law to private international law, from the protection – both international and domestic – of cultural heritage to freedom of expression.
These issues, as can be imagined, require knowledge and awareness that extend beyond the law. Cases such as the now legendary Altmann vs Austria 1, epic disputes such as those between the Russian collector Dmitry Rybolovlev and the dealer Yves Bouvier 2, as well as challenges over the rights to artists' estates – as in the case of Robert Indiana 3 – are a fair reflection of the difficulty lawyers can face. Not least, those who are called upon to make decisions must be able to assess with maximum sensitivity, not only the effects that the decision may have on the legal or market prices of an artist, but they must also be mindful of the symbolic, cultural, religious and ethical importance of disputes over the return of stolen works, the recognition of the authenticity of works considered lost or newly discovered, and the curbing of market speculation.
Over time, the professions involved have become increasingly numerous: artists seek to create works of both artistic and economic value, and today the art world has marshalled an army of professionals intricately linked by a similar multiplicity of commercial relationships. The art market is thus composed of collectors, artists and all intermediary professionals that guarantee the functioning and enhancement of the works circulating throughout the market: art gallery owners, auction houses, restorers, transporters, expert appraisers, insurers, banks and museums. Hence the interweaving of relationships and risks of conflict, which can sometimes cause the parties involved embarrassment or even serious reputational damage; delicate situations that must be managed with discretion in total confidentiality – including to avoid unwarranted attention to transactions which often involve millions.
One solution to better address the complexities highlighted and the potential disputes is recourse to the increasingly widespread Alternative Dispute Resolution ("ADR") tools, in particular, mediation and arbitration. These tools allow referring a dispute to a third party external to the parties without the need to resort to the ordinary system for administration of justice, with a series of advantages that, given the peculiarity of the market considered, ultimately facilitate or otherwise smooth the way to settlement of disputes.
Given the potential advantages, various experiences of alternative dispute resolution have emerged worldwide in recent years.
Specific ADR instruments have been established within international organisations such as UNESCO and the World Intellectual Property Organisation (WIPO) of international scope or to address specific disputes. Notably, reference should be made to the international experience of the UNESCO Intergovernmental Committee for Promoting the Return of Cultural Property 4, based in Paris, which as is already apparent from the name, facilitates the return of cultural heritage illegally removed from the countries of origin; the WIPO Alternative Dispute Resolution for Art And Cultural Heritage 5, established together with the International Council of Museums, which between Geneva and Singapore promotes mediation, arbitration and expert determination; and the International Dispute Resolution Centre in London 6, which together with the Art Law Centre in Geneva offers mediation and conciliation services. At national level mention may be made of the experience on the other side of the Atlantic of the Arbitration and Mediation Services in Sacramento 7, California, promoted by California Lawyers for Arts; in Italy, the Arbitration Chambers of Milan 8 and Rome 9 have long established mediation services dedicated to the art world.
With particular reference to arbitration, the Chambers to consider are the Court of Arbitration for Art – inaugurated in 2018 in The Hague 10 – and the newly established specialised section on Art Law of the Venice Chamber of Arbitration, to which paragraph 3 is dedicated, with a more detailed examination of regulations in the field of art.
- Functions and advantages of arbitration for art.
Although, on the one hand, mediation, as governed by Legislative Decree 28/2010, manages potential disputes out of court through a mediator who will attempt to reach an agreement between the parties, on the other hand, arbitration constitutes a veritable replacement for ordinary civil proceedings, the effects of which may be binding 11. Arbitration provides for the devolution of disputes to a third party, which assumes the role of arbitrator, according to the formalities provided for by law, and in particular Title VIII of the fourth book of the Italian Code of Civil Procedure.
The advantages of arbitration for the art world reside precisely in its most salient features. As pointed out by Theodore K. Cheng, an arbitrator and intellectual property expert, one of the main advantages of ADR procedures, and in particular arbitration, is that, unlike proceedings before the courts, they are designed with the aim of being freely accessible for the purpose of resolving the dispute 12. For this reason, if the parties have already agreed to use the service, they can incorporate a specific arbitration clause in their commercial agreements – in Italy governed by Article 808 of the Code of Civil Procedure – which allows referring disputes arising from the agreement to arbitrators. It should be briefly recalled that disputes eligible for arbitration under Italian law may concern only the available rights, as indicated in Article 806 of the Code of Civil Procedure 13.
Arbitration is also marked by the freedom of the parties to choose the arbitrator: thus it is possible to identify an expert who is able to resolve the dispute with the sensitivity necessary to apprehend its interdisciplinary nuances and the complexity of the issue to hand. This, for example, may be particularly useful if the dispute concerns matters of which the legal aspects alone are not sufficient to fully appreciate the true nature of the case. Consider, for example, disputes on the authenticity of works of art: the expert arbitrator does not totally eliminate any uncertainties inherent in the authentication of works of art, but guarantees a specific degree of science and professionalism that is essential including for the choice of supporting technical consultants 14.
The freedom of choice of the arbitrator is also consistent with the speed of resolution of the dispute and issuance of the award; in fact, by law in Italy arbitration must be concluded within the deadlines identified by the parties or, in the absence of any reference, within and no later than two hundred and forty days from the appointment of the arbitrators 15.
The freedoms of the parties are not limited to the sole choice of arbitrator, but also concern the choice of applicable law, the location of the proceedings and the language they intend to use. Disputes can therefore be addressed using a resolution system that, in essence, is tailor-made for the specific issue; the proceedings can be adapted to the specific dispute both formally and substantively, and the terms expressed in complex but comprehensive arbitration clauses in commercial agreements.
Another advantage of arbitration is guaranteed confidentiality from the moment the parties decide to incorporate this condition in their contractual relationships. The arbitration award constitutes a document accessible only to the parties involved, whose publication is necessary only when an appeal is brought before the ordinary courts for enforcement. In other cases, given the mutual confidentiality obligations and the resolution of the dispute by arbitration, nothing that occurred and was governed by the arbitration proceedings may be used in judicial proceedings.
Confidentiality plays an undoubtedly important role in the relationships between professionals and protagonists on the art market, where reputation and discretion are imperative standards that must be adhered to in order to stand out and establish oneself in the sector as a professional and collector. However, the possibility of making public at least the legal bases underpinning the arbitration award in art-related disputes has become a critical issue in recent years. The Court of Arbitration for Art, in particular, reflected on this possibility 16, initially announcing that it would publish the awards anonymously, in order to create an – albeit embryonic – basis for common rules for a notoriously deregulated market 17. Finally, the most delicate cases can be regulated by informal arbitration, the final award – by virtue of the arbitration agreement between the parties – being binding on the parties on a contractual basis. However, compliance with the decision is guaranteed by the possibility of appeal for breach of contract. Specific skills, speed and confidentiality: this summarizes the significant advantages of arbitration in Art-related disputes.
- The new Regulations on Arbitration in the Art Sector of the Venice Chamber of Arbitration.
On 13 July last, the new Regulations on Arbitration in the Art Sector of the Venice Chamber of Arbitration were published 18 (the "Regulations"), the purpose of which was to establish in the city of the lagoon, a special section, of an international nature, exclusively dedicated to the resolution of disputes relating to the art world and market. A Committee of Experts, with proven experience in the field of arbitration and the art market, worked on the project together with the President of the Venice Chamber, the lawyer Patrizia Chiampan: it also included the professors and lawyers Giorgio De Nova, Alessandra Donati, Elena Zucconi Galli Fonseca and the lawyers Giuseppe Calabi, Fabio Moretti, Lavinia Savini and Massimo Sterpi.
The guiding principle of the arbitration chamber is the concept of focussing on aspects relevant to arbitration for the art sector, ensuring the procedural advantages with optimum guarantees of confidentiality, effectiveness, rapidity and flexibility of the procedure, to formulate an international instrument that supports the market in resolving disputes.
Hence the Regulations were drawn up to incorporate in an all-encompassing manner all the peculiarities of the art market, including in the – possibly wider – definition of works of art 19 antiques and collectibles: "The Regulations [...] govern arbitration proceedings concerning disputes over art – understood in its broadest sense, including every creative human activity carried out individually or collectively or as a business enterprise, regardless of the form of expression such as, by way of example, visual arts, music, theatre, design, antiques and collectibles".
The initiative, the first in Italy of its kind, continues to promote arbitration as an international instrument for the resolution of legal disputes in the art world with the utmost guarantees of efficiency, effectiveness and confidentiality for the parties that decide to make recourse to it. In Europe, only the aforementioned Court of Arbitration for Art of The Hague had its own specific regulations for the resolution of art disputes: the Venice Chamber now offers in Italy and abroad, an alternative option which exploits the full potential of all the advantages of arbitration for the world of art.
- Features and innovations of the new Regulations.
Some specific provisions of the regulations merit a closer review. The broad definition provided by the aforementioned Article 1 already ensures that the Regulations encompass within their scope, the multiple and interconnected challenges issues that art now poses for the market and its protagonists, starting from the very definition of work of art. No reference is made to specific definitions or lists of medium, thus giving the widest freedom of interpretation, going beyond the various definitions provided by national legislation on, for example, copyright 20. Thanks to this measure, not only visual arts, but also performance arts, industrial design, music and cinema can benefit from the Regulations, thus reflecting the vocation of Venice as a city of the arts and fostering increased awareness of the legal instruments to which cultural institutions, public and private, national and international, can refer.
The choice of the Venetian Chamber of Arbitration aims to expand the potential for arbitration since the definition of the subject-matter of the dispute also addresses the issue of contemporaneity, often consisting of instructions for works of art to be (re)activated or made using materials that are bio-degradable over time, the documentation of which constitutes the ultimate safeguard for the authenticity of the work and its value, as well as evidence of the effective ownership of the work and the best ways to restore it. While focussing on the contemporary, the issues relating to the system of authentication of conceptual works of art, installations, ephemeral works, performances, photographs and video art continue to merit attention. These are flanked by the variety of practices that require specific skills in the field, for example, verification of the authenticity of works of art (including individual expertise), the practices of archives, museums, foundations, auction house or galleries and interfaces with the latter.
An additional premium was awarded to expertise by the decision to provide for the possibility of appointing ex-officio, technical consultants to support arbitrators in technical matters that the law is unable to resolve independently; this provision was also strengthened and enhanced by the option to also appoint an ad hoc scientific committee to examine the most controversial aspects 21. Arbitrators may order urgent interlocutory measures, including anticipatory, in the manner and within the limits indicated in the Regulations 22. Finally, the speed of the proceedings is also guaranteed by the provision of a maximum deadline for filing the award of one hundred and eighty days from the establishment of the arbitration 23; a deadline that can only be extended in cases specifically identified by the Regulations and in any case always considering the complexity of the dispute to be resolved 24.
The Venice Arbitration Chamber has already made its own model arbitration clause available to parties that intend to use it, currently as an electronic copy of the Regulations (and, in the case of accord, it can also be subscribed by a subsequent agreement). The arbitration clause guarantees access to an alternative solution to the ordinary courts through a body which is sensitive and competent and capable of going beyond the difficulties of the law by acknowledging the complexity of the legal status of contemporary arts. These advantages were well summarised by the great jurist René David, who acknowledged that arbitration "does not derive its powers from the State and does not rule on behalf of the state. The arbitrator, having to take into account what the parties expect of him, must seek justice rather than blindly attaching himself to the law of a State" 25.
1 Republic of Austria v. Altmann, 541 U.S. 677 (2004).
2 The convoluted sequence of scandals and court cases has been widely covered by the press from the outset. See, inter alia, for a general overview, The Bouvier Affair: The Art of Deception?, at ArtCritique, 26 November 2019, https://www.art-critique.com/en/2019/11/the-bouvier-affair-the-art-of-deception/ (viewed on 29 August 2020); Sam Knight, The Bouvier Affair, at The New Yorker, 1 February 2016 https://www.newyorker.com/magazine/2016/02/08/the-bouvier-affair (viewed on 29 August 2020).
3 Giuditta Giardini and Lorenzo Sordi, ADR e Arte: Indiana case, the judge says yes to arbitration, in Il Sole 24 Ore, 24 October 2018, https://www.ilsole24ore.com/art/adr-e-arte-caso-indiana-giudice-dice-si-all-arbitrato-AEaGFOUG?refresh_ce=1 (accessed 29 August 2020). It should be noted that this latter case and the aforementioned Republic of Austria v. Altmann were the subject of arbitration.
11 Cf. Crisanto Mandrioli, Antonio Caratta, Diritto Processuale Civile, volume III, Procedimenti speciali, l'arbitrato, la mediazione e la negoziazione assistita, Giappichelli, 2017, p. 403.
12 "One way to minimize or eliminate the drawbacks of relying upon traditional court litigation to address art and cultural heritage disputes is to consider arbitration as a mechanism to resolve them". Theodore K. Cheng, Arbitration of Art and Cultural Heritage Disputes, in Entertainment, Arts and Sports Law Journal, 2017, vol. 28, No. 3, p. 31.
13 By virtue of this limitation, disputes over moral rights, for example, cannot be referred to an arbitrator.
14 As reported by Quentin Bryne-Sutton, at the 1997 Symposium organised by the Art Law Centre in Geneva Norman Palmer stated: "The authenticity of a work of art, for example, rarely arises in a rawly factual ('yes or no') form. The context of the question (the meaning of the critical words) is likely to be or arise from a legal document or principle. That source is bound to affect the question itself, making it more subtle and ambiguous ... In this context the skills which make for a good arbitrator do not necessarily make for a good adjudicator. On the other hand, empirical experience as to the practices of me trade (rather than say) may offer a valuable background for the adjudicatory role, provided concerns about "trade bias" can be overcome" (cf. Quentin Bryne-Sutton, Arbitration and Mediation in Art-Related Disputes, in Arbitration International, Volume 14, No. 4, pages 452-453).
15 Article 819 bis of the Code of Civil Procedure.
16 A change of direction described as such in The Art Newspaper: "CAfA's proceedings will be confidential, but a press release announcing the court last May stated that publishing its decisions was "essential to ensure market understanding and acceptance of the results", a point reiterated to The Art Newspaper last May and in an ArtTactic podcast soon after. William Charron, the art lawyer who conceived of CAfA, now elaborates that if the parties themselves do not want a decision published, it will not be". Laura Gilbert, The Hague's art arbitration court to open in April, in The Art Newspaper, 21 March 2019, https://www.theartnewspaper.com/news/the-hagues-art-arbitration-court-to-open-in-april (accessed 31 August 2020).
17 Finally, the report published by the Permanent Subcommittee on Investigation of the United States Senate entitled "The Art Industry And U.S. Policies That Undermine Sanctions" (available at the link https://www.hsgac.senate.gov/imo/media/doc/2020-07-29%20PSI%20Staff%20Report%20-%20The%20Art%2020and%20U.S.%20Policies%20that%20Undermine%20Sanctions.pdf), points out, on page 2, that the art market, particularly the American market, is largely deregulated: "The art industry is considered the largest, legal unregulated industry in the United States. Unlike financial institutions, the art industry is not subject to Bank Secrecy Act's ("BSA") requirements, which mandate detailed procedures to prevent money laundering and to verify a customer's identity. While the BSA does not apply to art transactions by art dealers and auction houses, sanctions do. No U.S. person or entity is allowed to do business with a sanctioned individual or entity".
18 The Regulations are available to download at http://www.camera-arbitrale-venezia.com/?IdPagina=568.
19 As emphasised by the presentation on the official website of the Arbitration Chamber of Venice (http://www.camera-arbitrale-venezia.com/?IdPagina=568).
20 Consider the definition provided in Article 2 of the Berne Convention for the Protection of Literary and Artistic Works of 1886, as well as its national derivations such as Articles 1 and 2 of Law. 633/1941 for Italy, Articles L112-1 and L112-2 of the French Code de la propriété intellectuelle or Sections 3 to 8 of the Copyright, Designs and Patents Act of the United Kingdom.
21 Article 27 of the Regulation.
22 Article 22 of the Regulation.
23 Article 31 of the Regulation.
24 Article 33 of the Regulation: "Unless the Parties have agreed otherwise, the deadline referred to in Article 31, point 1 is extended up to 180 days in the following cases: a) if means of proof must be obtained; b) if a court-appointed technical expert assessment is ordered; c) if a non-final award or a partial award is pronounced; d) if the composition of the Arbitration Board is changed or the Sole Arbitrator is replaced."
25 René David, L'arbitrage dans le commerce international, Paris, 1982, p. 15, as reported by Quentin Bryne-Sutton, op. cit., p. 454. Even Aristotle, in his Rhetoric, praised dispute resolution outside the ordinary systems of justice, considering preferable "arbitration rather than a dispute in court", since "the arbitrator is bound by fairness, the judge is bound by law; and the arbitrator was invented precisely for this reason, to lend force to fairness" (see Aristotle, Rhetoric, 1.13.13, as cited by Francesco Zappalà, Memoria storica dell'arbitrato, Memorias XV Congreso Iberoamericana de Derecho e Informática, Buenos Aires, Argentina, 2011, available at http://www.eldial.com/nuevo/congreso_iberoamericana/MEMORIA%20STORICA%20DELL%20ARBITRATO.pdf).
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