Artist’s Resale Right Regulations- The Controversial Royalty Returns to the Spotlight
On 22 March, Art Law at Mishcon de Reya hosted a symposium for “Benefit of Burden?” for artists, galleries, collectors and collecting societies, which examined the recent changes to the Artist’s Resale Right Regulations 2006. Gagosian Gallery, White Cube, Halcyon Gallery, John Martin Gallery, Richard Green Gallery, Museum of Everything, Andipa Gallery, David Breuer-Weil, Dr Andrew Renton, DACS and ACS were all represented. The significance of these Regulations and the impact on dealers, collectors, auction houses, artists and galleries alike was apparent, from the discussion generated by the panel which was chaired by Karen Sanig, Head of Art Law at Mishcon de Reya. Views were strong and the issues were hotly debated.
In 2006, the Regulations were brought in to standardise the market in qualifying states and provide a royalty to the creators of certain works. The overriding contention was to give artists a share in the escalation of their work’s value as they are subsequently resold. Until 1 January 2012, the regulations which implement EC directive 2001\84\EC, applied only to the work of living artists (where all the required conditions are met). However, on 1 January 2012 an exemption that had been in place in the UK was allowed to lapse. This now means that the royalty applies to qualifying works of deceased artists within the 70 year post death copyright period. Therefore beneficiaries of artist’s estates and their heirs, and in some circumstances “qualifying bodies,” now stand to benefit from the royalty in relation to any onward sales made since 1 January 2012.
After much discussion, views from the panel and floor remained split. Some consensus was however reached: that artists should benefit in some way from the escalation of value of their works but that ARR, in its current form, has proved to be an ineffective and cumbersome method of applying this philosophy. It was identified that there is little guidance for those parties attempting to put the legislation into practice. It was also agreed that it was often to the detriment of the galleries and dealers: the very parties that work to protect and build the reputation of artists.
Only time will tell if the amended Regulations will significantly affect the UK art market and those who work in it. There is no doubt that this will remain a contentious issue.
Amanda Gray
Solicitor
Mishcon de Reya Solicitors
http://www.mishcon.com/services/mishcon_private/art
In the Frame-
http://www.mishcon.com/news/publications/publications_list/in_the_frame_03_2012
Francesca Fiumano
March 27, 2012
I attended the Artists Resale Right Symposium last week and was very interested to hear comments and suggestions from across different sectors of the market. Several very diverse points were put across and very strong questions raised as to the effectiveness of ARR and the complications in the implementation of this legislation. A big thank you to everyone at Mishcon de Reya.
One very interesting and very pressing matter raised was how a gallery should present this to the buyer of the artwork in question. Some European countries have a very different take on the right and many do not collect it. Selling to buyers from such countries is problematic – ARR is seen as a tax levied on the buyer; one of the problem facing the UK is the global nature of the art market. London has become at least 4% more expensive than many other parts of the world who either do not have the right or do not implement it!
Elliot Lee
March 28, 2012
I’d like to thank Amanda and Karen for hosting an informative and constructive debate on the 22nd of March. It was a privelage to be amongst such distinguished friends and colleagues, and to hear the debate from all sides.
As Amanda suggests in her piece, there was consensus in veiw of the ARR ideology. Leonora’s suggestion of a Czar seemed to be well received by many on the panel and in the room as well. I was left unsure how this position might work, or which body might head the position up, and what the remit might be.
schantzgalleries
March 30, 2012
I look forward to opportunities to reward artists for their commitment to their work over their lifetimes. Certainly the galleries help promote them, but without the art, we would all be out of luck. It is not always easy to keep working through the ups and downs of economies and tastes. Won’t the market adjust once it becomes an international law, like with authors and musicians? Kim Saul – Schantz Galleries, Contemporary Art, Stockbridge MA
Sarah Percy-Davis
April 11, 2012
The UK is under pressure from international competition especially with the growth of new economies such as China.
The market for living artists currently represents by value 14% and the market by value for deceased artists is 48%, thus ARR affects approximately 62% of the British Art Market as a whole. Now that the Right has been extended to deceased artists we see a fourfold increase in the number of sales eligible. This constitutes an unprecedented threat to the UK’s future global competitiveness given that our principal overseas art market competitors, the USA and China, have not introduced ARR and do not look likely to do so. The strength of the competition is exemplified by the recent rapid growth of China.
The auction of works by top modern artists such as Picasso and Matisse will surely be driven to New York since the network of international salerooms would facilitate the transport of artworks globally and cost effectively in relation to the €12,500 capped levy for works over €50,000. The knock-on effect for the UK art market and for the smaller dealers and auction houses could be very serious.
It is also worth noting that all segments of the art market are intrinsically linked. The
dealers and auction houses have a symbiotic relationship and if the major auctions of contemporary and 20th century art move from London to New York for example, then this will have a detrimental knock-on effect for the British dealer and the art market in general.
In addition, British dealers are likely to take more works of art to the many suitable fairs that already take place in countries such as the USA and Switzerland rather than sell them in the UK.
Only time will tell but LAPADA will continue to fight this levy and dealers should be keeping a note of real examples of diversion of trade or examples of how the administrative burden has affected their business so that we have some solid evidence to present to the Commission for the 2014 Review. Please send such examples to lapada@lapada.org.
John R Walker
April 10, 2012
I am a professional visual artist. Resale royalties are for almost all artists a very poor/harmful idea .
Many economic studies have seriously questioned the assumptions underlying the argument that resale royalties have net benefits to artists. Australia’s chief lobbyist for the adoption of artist resale royalties, the collection society, Viscopy, commissioned in 2004 a report from Access Economics to model the likely impact of their scheme. In the resulting report, Access Economics warned that the claim of net benefit to artists was: “based upon extremely unrealistic assumptions, in particular the assumption that seller and buyer behaviour would be completely unaffected by the introduction of RRR [ARR]” and that, “ Access Economics considers that the results of this analysis are both unhelpful and potentially misleading.Link here to report pdf: https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B_ik4LNeE71EYWNiMTk4YzctM2MyMy00ZGVkLThjODAtZGI3Y2E0MDI0NzE5&hl=en_GB
Viscopy suppressed this report.
The resale right only needs to have a tiny negative impact on buyer behaviour in the primary market to have major negative impacts on artists’ net income. Because the harm caused to artists by such schemes comes in the form of what doesn’t happen, the harm caused is easily overlooked and underestimated.
For example, when an artist sells a painting for $10,000, the artist typically pays, say $5,000, to the costs of sales and marketing (through their representative agent) and retains $5,000 as income. Under the recent American proposal, In the case of $10,000 resale, the artist would receive $287. If buyer nervousness about the resale royalty, was to cause an artist to lose just one $10,000 primary market sale that artist would need the royalty owed on almost $240,000 of future resales to recoup the lost income of that one primary market sale. These are very unattractive odds.
Claims that there is even potentially a “global” resale royalty scheme are extremely misleading. The scheme that was recently advocated for in America is a hybrid of hypothecated tax and individual royalty right. The scheme in the UK is essentially an individual right (although it generates a lot of money that cannot be paid to the individual rightholder and is therefore redistributed). In Germany, the scheme takes the form of an open, hypothecated tax. In Australia, the scheme is not retrospective in application and artists have a limited right to refuse to use this ‘right’. In Australia, for constitutional and political-cultural reasons, hypothecated taxes are not acceptable; and retrospective application of laws is restricted to matters of national significance.
John R Walker
April 10, 2012
Inquiry into Resale Royalty Right for Visual Artists Bill 2008
Friday 6 feb 2009
http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22committees%2Fcommrep%2F11596%2F0000%22
Yours John r walker
John R Walker
April 11, 2012
From the Europa website http://ec.europa.eu/internal_market/copyright/resale-right/resale-right_en.htm
[The emphasis is theirs]
“Indicative list of third countries (Article 7.2)
Article 7.1 of Directive 2001/84 states that “Member States shall provide that authors who arenationals of third countries and, subject to Article 8(2), their successors in title shall enjoy the resale right in accordance with this Directive and the legislation of the Member State concerned only if legislation in the country of which the author or his/her successor in title is a national permits resale right protection in that country for authors from the Member States and their successors in title.”
Article 7.2 states that “On the basis of information provided by the Member States, the Commission shall publish as soon as possible an indicative list of those third countries which fulfil the condition set out in paragraph 1. This list shall be kept up to date.”
Recital 29 of the Directive also states that “Enjoyment of the resale right should be restricted to Community nationals as well as to foreign authors whose countries afford such protection to authors who are nationals of Member States. A Member State should have the option of extending enjoyment of this right to foreign authors who have their habitual residence in that Member State.”
In the Contact Committee meeting on 25 November 2005 the interpretation of these requirements was discussed. The Member States present agreed that for a third country to appear on the list, there should be legislation in place which provides for resale right and that evidence of its application should also be provided. In practice, this means that there should be arrangements in place which are administered by public or private entities which ensure that rightholders or the relevant supervisory body can have recourse to the results.
A letter was sent to Member States on March 1, 2006 requesting that they provide a list of third countries which meet these requirements and that they also provide evidence of application.To date the Commission has not been supplied with evidence for any third country which demonstrates that they qualify for inclusion on this list. ”
Their claims of a ‘global scheme’ is just puff.
Yours
John R Walker
John R Walker
April 11, 2012
The failure of the rest of the world(particularly the US And China) to harmonize with the EU/UK scheme is getting very pointed, no?
If the UK scheme is not a violation of the 3 step Stockholm test, as it is incorporated in several international agreements, including the Berne Convention,57 the WIPO Copyright Treaty,58 and the TRIPS Agreement.59, I will eat my hat!
yours john
John R Walker
April 11, 2012
This links to a longer post on the 1709 Blog that Prof. Jeremy Phillips kindly uploaded:
http://the1709blog.blogspot.com.au/2010/12/artist-resale-royalty-harmonisation-and.html
“Artist Resale Royalty, Harmonisation and a Comment from Down Under”
John R Walker
August 31, 2012
Recently, all reference to an indicative list of non EU counties that have a functioning resale royalty scheme has been removed from the Europa website.
A wayback machine archive cache of the Europa website is here http://web.archive.org/web/20100421024430/http://ec.europa.eu/internal_market/copyright/resale-right/resale-right_en.htm.
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