Court of Arbitration for Art Opens its Doors

Sarah Dewar

 

INTRODUCTION

In 2018, the global art market reached $67.4 billion in sales, marking the second-highest sales year in the last decade.[1] Intertwined in these transactions are intrigue, secrets, and disputes. British auction house, Christie’s, suffered criticism surrounding the sale of Salvator Mundi because experts doubted the veracity of its attribution to Leonardo da Vinci.[2] The high bidder, who purchased Salvator Mundi for a record-shattering $450 million, failed to supply the work late last year to a scheduled display at the Louvre Abu Dhabi.[3] The current owner, who is believed to be the Crown Prince of Saudi Arabia Mohammed bin Salman, subsequently failed to respond to museum inquiries.[4] This high-profile disappearance is one of many art controversies of late.

London art dealer Mark Weiss recently settled a dispute over an allegedly fraudulent Old Masters work with Sotheby’s for $4.2 million, despite Weiss’ belief the work is authentic.[5] The work in question, Portrait of a Gentleman by Franz Hals, is one of many forged paintings emanating from a single French dealer.[6] On the issue of restitution, a task force launched in France is investigating and returning works unlawfully taken during the German occupation during the Second World War.[7] This repatriation process seeks to reunite homeless works with their rightful owners and their descendants.[8]

Art disputes may arise from events occurring months, decades, or even centuries ago. Aggrieved parties seek fair and just resolution through two primary channels: litigation and arbitration. Providing a venue to navigate the intricacies of art disputes, the Court of Arbitration for Art (CAfA), a new art law arbitration court in the Hague, began officially accepting cases on April 1, 2019.[9] CAfA is a joint effort between the Netherlands Arbitration Institute and the nonprofit organization Authentication in Art, and is now open for dispute settlement.[10]

CAfA’s FOUNDING

The tribunal was founded by William Charron, an art lawyer with New York’s Pryor Cashman and a graduate of University of Virginia School of Law.[11] Charron’s main goal in founding CAfA is to formulate acceptable outcomes in a high-stakes market which necessitates accuracy.[12] Art disputes are contentious and their resolution may involve examining evidence dating back hundreds of years, especially if the mediation seeks to determine provenance or employs science-based authentication methods. CAfA will make pronouncements on a range of art law issues including fraud, stolen art, authenticity, copyright, and other contractual disputes.[13]

William Charron is uniquely positioned to lead the development of CAfA due to his intellectual property litigation experience in the media and entertainment space, as well as his victorious introduction to the art world in the near decade-long ownership dispute concerning a 1917 drawing by Egon Schiele, Seated Woman with a Bent Leg.[14] This high-profile Nazi-era restitution case shaped the legal boundaries of laches recovery and simultaneously launched Charron’s career in art law.[15]

In his role as an advisory board member of Authentication in Art, Charron approached the Netherlands Arbitration Institute to sponsor an art law tribunal.[16] Authentication in Art is a nonprofit organization based in the Hague, “compris[ing] a group of prominent art world professionals who joined together to create a forum that can act to catalyze and promote best practices in authentication.”[17] The Netherlands Arbitration Institute is a well-respected alternative dispute resolution organization, founded in 1949, poised to support Charron’s initiative.[18] Together, the two organizations pursue the combined mission of fashioning an alternative solution to litigation for international art disputes.

OPERATION

Charron described how CAfA will function and hear cases,

In many ways the court’s arbitrations will function like traditional alternative dispute resolution: While the parties are free to customize their rules to a large extent, the default rules provide for either single- or three-arbitrator panels depending on the value of the art in question, with more limited discovery than you would have in court, and with international enforcement through treaties such as the New York Convention. The arbitrators are selected from pools of international art law practitioners, and the hearings can be conducted anywhere in the world, based upon party and arbitrator agreement.[19]

The 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, mentioned here by Charron, is one international treaty providing that CAfA decisions will be legally binding under international arbitration enforcement rules.[20] CAfA received over 140 applications from experienced art lawyers in the United States, Europe, and Asia to fill its arbitrator roles.[21] The court is formally based in the Hague, but hearings may occur world-wide, furthering a primary goal: efficiency.[22]

 The default rules describe the guiding principles for CAfA proceedings.[23] In an effort to eliminate bias and quell the adversarial nature of litigious art law disputes, CAfA maintains a roster of approved experts and appoints individuals with relevant expertise given the particular circumstances of the case. For instance, a materials analyst, forensic scientist, art historian, or provenance researcher could be appointed to any case where their specific knowledge is required.[24] The rules dictate that CAfA must appoint an expert “on issues of forensic science of the provenance of an object,” leaving each party to select an expert for other issues.[25] This requirement seeks to promote neutrality in the expert’s testimony, especially since conclusions surrounding these two issues are infused with objectivity, and thus often contested.[26] Parties may formally object to the impartiality of an expert and are granted opportunities to cross-examine their findings.[27]

CAfA’s goal of efficiency further involves decreasing adjudicatory time and lowering costs when compared to the litigation route.[28] Another benefit to arbitration is anonymity. Art owners may wish to remain unknown—as the owner of Salvator Mundi intended to remain until his name was leaked—and CAfA provides such protection.[29] The “name or identity of the object in question may be revealed” along with the decision to ensure the market’s understanding and acceptance of the results, but the identity of parties themselves can remain secret.[30] Charron stresses this solution as a middle ground to ultimately remain accurate and legitimate from the perspective of both discerning parties and the inquisitive market.[31]

LOOKING FORWARD

 Critics quickly highlighted controversial aspects of the new CAfA system. Some argue the named publication requirement, or lack thereof, is not sufficiently transparent and will allow parties to conduct discussions in secrecy, without public accountability to market stakeholders.[32] Others critique the neutral expert categorization, asking whether an expert can truly be neutral, especially in the fluid, oft changing art field.[33] Some find technical roadblocks, such as restitution claim conflicts with the “statute of limitations to recover Nazi-looted art under the US Hear Act or with laws applied in cultural heritage cases.”[34] Finally, some are skeptical in placing an emphasis on arbitration over litigation in art disputes because unlike litigation, there is no appeal process, meaning the parties must abide by the arbitrator’s decision, whether or not they agree with the fairness and objectivity of the outcome.[35] Despite early criticism, proponents remain hopeful CAfA will meet its goals to ensure efficient, accurate, and beneficial dispute resolution.

FINAL THOUGHTS

As the court embarks on its evaluation of art law cases, unforeseen hurdles will emerge, and amicable solutions will be uncovered. Art and legal enthusiasts alike patiently wait for CAfA to resolve its opening case and publish its first decision. CAfA has the potential to foster universal trust within the global art market as evinced by its enthusiastic reception by the art and legal communities. The development, impact, and lasting results of this novel arbitration system remain to be seen—and the world is watching.

[1] Benjamin Sutton, The Global Art Market Reached 67.4 Billion in 2018, up 6%, Artsy (Mar. 8, 2019), https://www.artsy.net/article/artsy-editorial-global-art-market-reached-674-billion-2018-6 (last visited Apr. 8, 2019).

[2] Cristina Ruiz, “We want Salvator Mundi” for Leonardo Blockbuster, Louvre Says, The Art Newspaper (Feb. 18, 2019, 6:35 AM), https://www.theartnewspaper.com/news/we-want-salvator-mundi-louvre-says (last visited Apr. 8, 2019).

[3] Id.

[4] Id.

[5] Eileen Kinsella, London Dealer Mark Weiss Pays Sotheby’s $4.2 Million to Settle a Dispute Over and Alegedly Fake Frans Hals, Artnet News (Apr. 1, 2019), https://news.artnet.com/art-world/mark-weiss-settles-with-sothebys-over-fake-frans-hals-1505860 (last visited Apr. 8, 2019).

[6] Id.

[7] Naomi Rea, The French Government Is Launching a Task Force Dedicated to Researching and Returning Nazi-Era Loot From Its National Collections, Artnet News (Mar. 29, 2019), https://news.artnet.com/art-world/france-research-restitution-nazi-looted-art-1504219 (last visited Apr. 3, 2019).

[8] Id.

[9] Court of Arbitration for Art, Authentication in Art, https://authenticationinart.org/cafa/ (last visited Apr. 3, 2019).

[10] Laura Gilbert, New Tribunal Aims to Provide Expertise and Impartiality for Art Disputes, The Art Newspaper (May 7, 2018, 9:27 AM), https://www.theartnewspaper.com/news/new-tribunal-aims-to-provide-expertise-and-impartiality-for-art-disputes.

[11] Mike Fox, Alumnus Spearheads New Art Arbitration Court, University of Virginia School of Law (July 23, 2018), https://www.law.virginia.edu/news/201807/alumnus-spearheads-new-art-arbitration-court (last visited Apr. 3, 2019).

[12] Gilbert, supra note 10.

[13] Gilbert, supra note 10.

[14] Bakalar v. Vavra, 619 F.3d 136 (2d Cir. 2012); Case Review: The Seven-Year Saga of Bakalar v. Vavra Comes to an End, Center for Art Law (Oct. 18, 2012), https://itsartlaw.org/2012/10/18/bakalar-v-vavra/ (last visited Apr. 3, 2019).

[15] Fox, supra note 11.

[16] Fox, supra note 11.

[17] About Us, Authentication in Art, https://authenticationinart.org/about-us/ (last visited Apr. 3, 2019).

[18] Fox, supra note 11; AiA and NAI, Court of Arbitration for Art Adjunct Arbitration Rules, Netherlands Arbitration Institute & Authentication in Art 1, 7 (Apr. 30, 2018), https://dgqoanz82argk.cloudfront.net/images/content/6/3/v2/63305/CAA-NAI-Authentication-in-ART-Official-Rules.pdf.

[19] Fox, supra note 11.

[20] Gilbert, supra note 10.

[21] Marilyn Hayden & Dr. Sharon Hecker, Cheers: A New Court for Resolving Art Disputes, Center for Art Law (Mar. 29, 2019), https://itsartlaw.org/2019/03/29/cheers-a-new-court-for-resolving-art-disputes/ (last visited Apr. 3, 2019); Laura Gilbert, The Hague’s art arbitration court to open in April, The Art Newspaper (Mar. 21, 2019, 8:58 AM), https://www.theartnewspaper.com/news/the-hagues-art-arbitration-court-to-open-in-april (last visited Apr. 3, 2019).

[22] Fox, supra note 11.

[23] Netherlands Arbitration Institute & Authentication in Art, supra note 18.

[24] Hayden, supra note 21.

[25] Netherlands Arbitration Institute & Authentication in Art, supra note 18, at 4–5.

[26] Netherlands Arbitration Institute & Authentication in Art, supra note 18, at 4–5.

[27] Netherlands Arbitration Institute & Authentication in Art, supra note 17, at 13–14.

[28] Gilbert, supra note 10.

[29] David D. Kirkpatrick, A Leonardo Made a $450 Million Splash. Now There’s No Sign of It., New York Times (Mar. 30, 2019) https://www.nytimes.com/2019/03/30/arts/design/salvator-mundi-louvre-abu-dhabi.html (last visited Apr. 8, 2019).

[30] Netherlands Arbitration Institute & Authentication in Art, supra note 17, at 6.

[31] Gilbert, supra note 10.

[32] Gilbert, supra note 21.

[33] Hayden, supra note 21.

[34] Gilbert, supra note 10.

[35] Hayden, supra note 21.