Arbitration and art

Disputes revolving around art have traditionally been resolved through litigation. As of late, however, litigation’s perceived shortcomings have seen a shift towards arbitration.

Whilst the number of art disputes resolved through arbitration has increased over time, they still make up a small proportion of the whole. Art disputes do not comprise the bread and butter of most arbitration practitioners; in fact, most will never work on any art cases at all.

It is nevertheless a peculiar and interesting domain, in part precisely because it is so different from major commercial cases.

The most notable institution in this respect is the Court of Arbitration for Art (CAfA), set up in 2018 as a joint initiative by the Netherlands Arbitration Institute (NAI) and Authentication in Art, a non-profit organisation. The CAfA has its own set of rules – essentially the NAI’s Arbitration Rules with some significant modifications (the CAfA Rules).

The CAfA was not the first attempt at making arbitration more suitable for art. The World Intellectual Property Office (WIPO) set up its Alternative Dispute Resolution for Art and Cultural Heritage Service in 1994 (the WIPO Service). The focus of the WIPO Service was slightly different than that of the CAfA Rules, and there was no administering institution. This issue was among the main reasons that CAfA was established.

Why is arbitration used?

As mentioned above, litigation was perceived as having several shortcomings. A notable case concerning a painting called “the Plough” was litigated for 100(!) years, from 1918 to 2018. It even has its own website dedicated to it, see: https://ploughinart.org/.

It allegedly took so long because of two reasons: a. the judges lacked art expertise, and b. there was negative publicity surrounding the artwork’s provenance as a result of the case’s publicity. Such negative publicity may occur even where experts ultimately deem the painting authentic: once negative rumours hit the press, the truth may no longer matter.

Arbitration, however, can tackle both these issues. Parties are able to select adjudicators with the relevant art law expertise whilst cases remain confidential. In 2005, parties who were unsuccessful in litigating a dispute around the “Woman in Gold” painting referred their dispute to arbitration for precisely these reasons.  Arbitration can also be quicker, especially if a court’s decision is appealed several times. The average NAI arbitration takes approximately nine months from request to final award.

What types of disputes arise and between whom?

Commercial disputes relating to art arise over a range of issues, a major one of which is provenance / authenticity. Resolving such issues may require specific expertise, and it may be helpful for parties if adjudicators have a knowledge of art law. Other issues involve questions of IP law, including fair use and copyright infringement, ownership rights such as chain of title and droit de suite (allowing artists to receive a fee if paintings are resold), various contracts relating to the sale or loan of art, or insurance agreements.

The parties involved may be artists and/or their agents and heirs, insurers, museums, art galleries, art collectors, auction houses, States, or universities.

Any drawbacks to CAfA?

As highlighted above, confidentiality is often a crucial concern when it comes to art. The default rule under the CAfA is that awards may be published in anonymous form, i.e., with parties not being named. The artwork in question, however, may on occasion be named, potentially resulting in continuing issues around an artwork’s provenance. Sometimes, the fact that there has been any dispute at all about an artwork may negatively affect its value, so a party may want to consider objecting to such publication.

Another potential drawback of the CAfA Rules is the restraints it places on parties. For example, any arbitrator must be chosen from the CAfA’s/AiA’s database. The same goes for experts on forensic science and provenance issues, who must be appointed by the tribunal, with outside experts only being permitted for undefined “compelling reasons.” The only known example of such a “compelling reason” so far is where an expert is required with expertise that no one else on the roster has.

This set-up is essentially designed to avoid any experts advocating for parties and strongly influencing the outcome of the dispute. Such an approach is in line with civil rather than common law proceedings, perhaps unsurprising given CAfA’s strong connections to the NAI.

Outlook

The art market is a different kettle of fish than the arbitration market as we know it. The clients will not be in-house counsel at e.g., major energy companies. Instead, they’ll be a range of actors, all of whom will be heavily reliant on the expertise that CAfA has available and the levels of confidentiality it decides to maintain. Overall, parties’ confidence in CAfA will depend on the amount of respect its rules and the institution itself command in the art market - which only time will tell.