ARTINFO interviews Gagosian HK director

ARTINFO's "Conversations with" series has recently published an interview with Nick Simunovic, the director of Gagosian's newish Asian outpost in Hong Kong. The growing importance of the Asian market and the buying power of collectors in the East cannot be ignored (this blog has followed the trend closely since its launch in September) making the interview not only interesting but also incredibly relevant. In particular, I agree with Nick's view that "to think that every Chinese collector is going to end up collecting Western art is a canard. A small percentage of people will end up doing so, but my guess is that a much larger percentage will stick to what they love and know best: Chinese antiquities and Chinese painting."

UPDATE: could the UK's new Bribery Act 2010 really capture finder's fees?

LONDON. In a previous post, I discussed the UK's new anti-bribery legislation and how according to several commentators, it could be applied to capture certain payments by or to art dealers. I've now had a look at the actual text of the Bribery Act 2010 (found here) and I'm not certain it could be applied to prosecute payments of finder's fees by art dealers. In a nutshell, for the payment to fall under the Act, the dealer must (i) either be expected to act in good faith and/or impartially or be considered a fiduciary of the collector (the Act says one or more of these three conditions but the first two are fiduciary duties already so really it's one or both of conditions 1 and 2 where the dealer is not considered a fiduciary) and (ii) the payment (i.e. the "relevant function or activity" for purposes of the Act) must breach the "relevant expectation" of the person to whom the duties are owed, meaning it was offered, promised or made in bad faith and/or partially or in breach of trust, depending on which condition/s brought the function or activity under the Act. If we look back at the example cited in The Art Newspaper about the dealer who pays a collector's decorator for having aided the sale of an artwork to said collector, not only do I remain sceptical about the dealer being considered a fiduciary, even if he were or, alternatively, one or both of the other two conditions were satisfied, would it really breach the "relevant expectation"? I would imagine these payments are quite frequent in the market and if I were a collector regularly operating in the art market, I don't think that the payment of a finder's fee or the failure to disclose such payment would be contrary to my expectations of the dealer. Pierre Valentin is a leader in the field so am I missing something here? I would be very grateful to hear your views on dealers as fiduciaries of collectors (that is, collectors buying from the dealer as opposed to a collector or artist who consigns art for sale), the prevalence of finder's fees in the market and the new Bribery Act generally in the context of the art market.

"The lines between gallery and museum, corporate and curated, keep getting blurrier and blurrier"

The author Sarah Thornton once described the art world as "a loose network of overlapping subcultures held together by a belief in art." While an astute observation, those overlaps are becoming more frequent and more profound with the divide between the public (institutional) and the private (commercial) becoming ever-more blurred. A corollary of this mish-mash of roles in the art world are the glaring conflicts of interest that arise, a running theme too of this blog (e.g., see here). The latest conflict to catch my eye is the Whitney Museum's announcement that one of the two curators for its 2012 Biennial comes from the ranks of the commercial rather than the institutional or academic sphere: Jay Sanders, "a veteran art dealer who was previously director of New York's Greene Naftali Gallery." On the one hand, the co-curator of the show is clearly conflicted because he has a vested interest in promoting those artists represented by the gallery where he formerly worked, especially given the financial and reputational gains that flow from an artist being included in such a prestigious (albeit controversial) show. On the other, Jay Sanders is, according to ARTINFO, "a highly-regarded art dealer whose sophisticated approach to showing art has been evidenced in such gallery shows as one last year spotlighting the late experimental filmmaker and "flicker" pioneer Paul Sharit." I think in cases like this one a conflict of interest should not trump talent -- careers and talent would otherwise be excessively constrained and wasted -- but Sanders should have left the gallery before last month. Carol Vogel had reported that he left the Naftali Gallery in 2005 but Tyler Green reports that Sanders actually left the art market only last month...

Another auction record price expected, albeit tainted by claims of illicit provenance

2010 was the year of record auction prices: for painting and any artwork generally (the Picasso sold at Christie's for $106.5m); for sculpture (the Giacometti sold at Sotheby's for $104.3m); for rare books (the Audubon classic "Birds of America" sold at Sotheby's for $11.5m) and for Chinese art (the Qianlong vase sold at Bainbridges for $85.9m). The market has undoubtedly shown remarkable depth in buying power emanating largely from Russia, China and the Middle East (it is widely believed that the mysterious buyer of the record-breaking Picasso could only have been either Russian or Middle Eastern) and it is no wonder that this has been accompanied by the rise of art funds, art securitization and even the launch of an art "stock exchange" in Paris.

The Art Newspaper is now anticipating what could be the first record auction price for the new year: £3.5-4.5m for a Benin ivory mask, which would make it the highest price ever paid for an African artwork. The top-end of the market for Chinese art has been dominated by Chinese buyers making patriotic purchases so it will be interesting to see if a similar trend arises in the case of the iconic mask when it is auctioned at Sotheby's in London on February 17. That the mask is believed by many to have been looted by the British "in the infamous punitive expedition of 1897 when the British invaded Benin, looted thousands of artefacts, burnt Benin City and sent Oba Ovonramwen, the King, into exile" makes it much more likely that the buyer will indeed be African. But what of the allegation that Sotheby's is actively participating in trafficking illicit antiquities? When it comes to antiquities, the statistics are staggering -- it's been held that the provenance of approx. 80-90% of antiquities on the market would raise legal issues (S.M. Mackenzie), the resolution of those issues often being impossible given the origins and age of the antiquities. While it would not make sense to freeze virtually all sales of antiquities, sales of those that are suspected to have been illegally exported from their country of origin should not take place unless and until those suspicions are put to rest. Otherwise, the auction houses and dealers involved will be feeding the market demand fuelling looters all over the world (the causal link between market demand and supply for looted antiquities has been conclusively proven in my opinion).

Finally, a serious response to the potentially unconstitutional censorship by the Smithsonian

WASHINGTON DC. Although First Amendment issues generally fall outside this blog's main focus within art law, I had to write this post to commend the Warhol Foundation's decision to pull its funding of the Smithsonian if David Wojnarowicz's 1987 video "Fire in My Belly" is not reinstated in the exhibition "Hide/Seek." The Smithsonian's capitulation to the pressure exerted by the Catholic League and two certain Republican lawmakers (who threatened to pull federal funding of the nation's preeminent art institution) by conceding to the removal of the work from the show is a lamentable assault on the First Amendment. Protesting liberals have since voiced their concern about this infringement of the nation's most sacred constitutional right but none have gone as far as the Warhol Foundation. It's all very well to protest and point a finger but what was really needed was a serious and genuinely meaningful reaction like the Foundation's. Artworld Salon commends it and so do I. I just read in The Art Newspaper that "Jim Hedges, a hedge-fund specialist and art aficionado, has written to Martin Sullivan, director of the National Portrait Gallery in Washington, DC, requesting that his loaned work "Untitled, Self-Portrait" by Jack Pierson be removed from the Hide/Seek NPG exhibition "until such time as the David Wojnarowicz video is reinstated in its full unedited version."" Hedges is also urging others who have loaned works to the institution for said exhibition to do the same. Another commendable reaction. The one I'm most hoping for is a constitutional attack on the institution's conduct in a court of law. Question is whether a federal court will hear such a claim. The constitution applies to governmental actors so the fact that the institution receives federal funding will help but who will have standing to bring the claim? The deceased artist's estate on his behalf is the best bet but potentially others too. Do we think the courts will rule that the video is "hate speech" (i.e. unprotected speech under the First Amendment)? Hopefully a landmark decision for the arts and for our constitutional right to freedom of speech.

UPDATE: artist AA Bronson had asked that his work be removed from "Hide/Seek" in protest of the Wojnarowicz debacle arguing that to not do so would violate his moral rights under Canadian and US law. Sergio Sarmiento (author of the blog "Clancco" and Associate Director of the VLA) and Donn Zaretsky do not agree at least from a US law perspective. Sergio writes: "it does not seem to us that under the 1990 Visual Artists Rights Act the NPG would be violating Bronson’s moral rights simply by exhibiting the work within a context and/or exhibition that Bronson did not like or approve of. If this were the case, artists could dictate and–ironically–censor the speech of individuals whom they did not identify with ideologically. Interesting move though."

New anti-bribery legislation to change the way dealers earn commissions

LONDON. The Bribery Act 2010, which is set to come into force in the UK next year, is likely to change the way dealers do business in the UK but potentially also abroad given its wide territorial reach. The payment of commissions will continue to be a legitimate business practice though subject to increased scrutiny; the payment of finder's fees, on the other hand, will require disclosure to and consent from the collector or otherwise constitute "bribery" under the new legislation. The example cited in the article is illustrative: if a dealer were to pay a decorator a commission for making possible a sale of a painting to the collector the client of the decorator, the dealer would have to disclose the payment to the collector and it seems also obtain his consent. The rule is an "information-forcing" rule in that it penalizes the failure to disclose certain behavior thus forcing the payor (what about the payee?) to reveal what lawmakers consider to be "improper performance." However, the example is not correct if, as the article also states, the Act captures payments to (and by?) intermediaries "owing a duty of trust to art collectors" -- I don't think dealers are fiduciaries of art collectors (at least not in the US) but I will look into it.

Other crucial details of the legislation include the fact that it is a strict liability offense (i.e. the prosecution need not prove intent, only that the defendant's conduct was that prohibited under the Act) and the maximum penalty is ten years' imprisonment or, in the case of an organizational defendant, unlimited fines. The first of these is particularly important because intent is the hardest element to prove in a fraud action and the enactment of the Act will mean individuals can instead be charged and prosecuted more easily for "bribery."
That the Act is not aimed at the art trade but at eliminating corruption generally does not preclude it being applied to prosecute those operating in the art world. As Pierre Valentin (leading art lawyer of Withers, London, and cited in Art Meets Law on other occasions) warns: “it only takes one prosecutor to receive a complaint from a collector or a dealer in competition with another dealer for an investigation to be launched.”

I am currently traveling but when I return, I will review the legislation itself and update this post. I will also look into whether dealers owe collectors a duty of trust and are therefore held to the highest standards at law. I know auction houses do owe their clients (i.e. those consigning art to the auction house for purposes of selling it) a duty of trust but I was under the impression no such duty was imposed on dealers or galleries, the policy reasons being that such actors, unlike auction houses, are not "affected by a public interest" (Cristalling case) and it would be unduly onerous to hold dealers and galleries to such high standards. In the US, to mitigate the effect of this general rule, the majority of states have passed "consignment statutes" that impose a duty of trust on dealers and galleries when artists consign their work to them for sale. However, where such a statute applies, the duty flows to the artist and not to the collector buying the art. The principal of caveat emptor -- "buyer beware" -- is just as relevant to art sales as it is to real property sales and save for known defects, the person selling the art does not owe any dutires to the prospective buyer.