Resale right extension to deceased artists will have a "devastating impact" on the British art market

Back in 2006 when the UK implemented Directive 2001/84/EC of the European Union, the Artist's Resale Right ("ARR"), also known as droit de suite, it entered a derogation limiting what are effectively royalty payments to resales of works by living artists only. However, the derogation merely delayed the application of droit de suite to deceased artists' works and for contracts entered into on or after January 1, 2012, ARR will apply to the resale of works by artists who died less than 70 years before the date of the sale (i.e. artists of the likes of Francis Bacon, Matisse and Picasso).

Auctioneers and art dealers concur, as does the government, that this will have a "devastating impact" on the British art market. The extension of the right to the estates and heirs of deceased artists will greatly increase the risk that the UK will be bypassed in the valuable market for 20th century art, especially given that the UK's main rivals in the global art market- the United States, Switzerland and China- have not (with the exception of California) thus far introduced droit de suite. According to an article in the Antiques Trade Gazette, the British Art Market Federation ("BAMF") is of the view that "extending ARR to the estates of dead artists after 2012 poses a serious threat to the 60,000 jobs the UK art industry supports." Based on a report by Dr. Clare McAndrew of Arts Economics, the leading industry analyst and statistician, the article goes on to say the following:

"ARR affects Modern and Contemporary art sales, which account for just under 40 per cent of the value of the British art market, the report explains. With the derogation in place, only a fifth of such sales are affected, but if the ARR is extended to the estates of dead artists, it would encompass around 80 per cent of the Modern and Contemporary market. What makes it worse is that it is exactly this sector of the market that is most mobile, as it is not subject to the export controls that affect Old Masters and other areas."

It should also be noted that the BAMF has identified the UK as "the most vulnerable art market in Europe to competition from markets outside Europe" because "global cross-border activity has been the key factor underpinning the UK's dominant position." It remains to be seen whether the UK will be able to sustain after 2012 the current scale of art imports accounting for its status as "an entrepôt market for international art" but most would predict it will not.