Art Dispute? Take it to the Court of Arbitration for Art
Art-related disputes often invoke powerful emotions from the parties, and spectators alike, with strong convictions about the authenticity, ownership, and intellectual property rights tied to the object of art in question.[1] But is a government appointed judge in the best position to rule on these matters? The lack of expertise of the judge and jury, as well as, the inherent bias of art experts hired by either party in the dispute draw into question the accuracy of traditional litigation.[2] This concern is further amplified by the current reluctance of experts to render definitive opinions on authenticity.[3]
Justice Oliver Wendell Holmes stated, “It would be a dangerous undertaking for persons trained only to the law to constitute themselves final judges of the worth of pictorial illustrations, outside of the narrowest and most obvious limits.”[4] For better or worse, courts decide a wide range of art related disputes, often echoing Justice Holmes’ words, acknowledging their own lack of expertise and the limitations of litigation in achieving the objectives of an art dispute.[5]
However, practically speaking it is the judgement of the art market rather than the court that appears to matter most.[6] The art market may disregard a court’s ruling, preferring to give credence to its own recognized expert.[7] This result could have devastating consequences to parties who have endured a lengthy and expensive trial.[8]
For example, in Greenberg Gallery, Inc. v. Bauman, the court found the mobile Rio Nero was an authentic Alexander Calder, despite testimony by the recognized authority on Calder, Klaus Perls, declaring it a forgery.[9] While the seller was permitted by the court to keep the purchase price of $500,000, the work was excluded from the catalogue raisonné and, as such, has no market value.[10]
As high-profile art disputes fill courtrooms worldwide, a team of New York-based attorneys is offering the art community an alternative to traditional litigation. This April, a new forum dedicated exclusively to resolving art-related disputes through alternative dispute resolution, the Court of Arbitration for Art (CAfA), opened its doors.[11] William Charron, Partner at Pryor Cashman, spearheaded the creation of the court to directly address the disadvantages of resolving art related disputes through litigation, such as expertise, impartiality, and market legitimacy.[12]
To codify rules for CAfA’s operation, Mr. Charron collaborated with art law practitioners Megan Noh, Judith Prowda, and Luke Nikas, as well as, the Authentication in Art (AiA) foundation and the Netherlands Arbitration institute (NAI).[13] The tribunal’s rules supplement the NAI Arbitration Rules with provisions that respect industry practice, thus outcomes have a greater chance of acceptance in the marketplace.[14]
CAfA’s Adjunct Rules propose to “flatten the learning curve” by assembling tribunals of arbitrators to adjudicate these disputes from a pool of international lawyers with substantial experience in art law and deep knowledge of the mechanics of the art market.[15] The tribunal itself will appoint neutral industry-recognized experts on forensic science and provenance.[16] Such experts will be responsible only to the court, not to an individual party, and aims to prevent the typical “battle of the experts” seen in Greenberg v. Bauman.[17] Technical Process Advisors will work with the arbitrators and the parties to create an effective and stream-lined discovery plan to reduce costs and commit to a practical timeline. [18]
The seat of the court is The Hague, however, proceedings can be held anywhere across the globe.[19] Parties can agree to refer their disputes to CAfA by contract or wait for a dispute to arise.[20]
Proceedings will be private, however, upon resolution of the case, default rules authorize the arbitrators to publish a reasoned decision that identifies the art at issue while maintaining the parties’ anonymity. [21] This will create a robust body of precedent for practitioners in the field, which due to the frequency of settlements does not currently exist.[22] At the same time, a party can object to publication if they believe the object can be traced back to them even with redacted information.[23] This leaves open the question of whether the decision will receive wider market acceptance but it is an important compromise in a market that values anonymity.[24] As Mr. Charron explains “the idea behind CAfA is to mitigate areas of concern. It would be great to achieve perfection, but we’re not criticism-proof.”[25]
Another area that could prove controversial is CAfA’s resolution of artwork looted during World War II.[26] In contrast to the HEAR Act which makes it easier to recover art, the arbitration’s rules respect applicable statutes of limitations.[27] However, if the parties consent the HEAR Act could still be invoked.[28]
With its promise of flexibility and technical expertise CAfA is a creative solution to the tensions between the art world and the justice system. Response has been enthusiastic as over one hundred applications have been received by the court since the new initiative was announced.[29] Hopefully, the court will hear its first case soon and will be able to prove its value to the art world.
Footnotes
