Art, classic cars and antiquities are acquisitions that can be driven by connoisseurship, beauty, reputation, desire and investment. Each class of artefact has its own market, nuances and risks.
Whether you are a seasoned collector or new to a market, it is unwise simply to rely on warranties and an indemnity in any transaction, particularly an acquisition. You may find you have bought more than you bargained for.
Without wanting to put a dampener on any new purchases, the practical application of "caveat emptor" or buyer beware remains ever necessary to safeguard your position.
In essence, do your homework:
- Who are you buying from? Are they are a private individual or an entity? What is their reputation in the market? What have they told you about their reputation in the market? What is their role in the transaction? Have you read the terms and conditions of business? To what extent do they limit their liability? Do they own the artefact, if not what is their mandate?
- What are you buying? Have you sought independent advice from a specialist? Have you undertaken the relevant due diligence (attribution, authentication, ownership, tax, value, provenance, condition, insurance, compliance with custom formalities) and has it raised any questions? Subject to the artefact there may be a number of variables within the due diligence process.
It is all too easy in the excitement of a new acquisition to overlook these processes, however they could save you from unwitting involvement in litigation or unforeseen costs.
By way of example, collectors of antiquities should be aware that cultural property and antiquities have recently been brought to the fore through:
- the recent ratification of the Hague Convention for the Protection of Cultural Property in event of Armed Conflict (1954) and the Protocols to that Convention of 1954 and 1999 through the Cultural Property (Armed Conflicts) Act 2017; and
- a further proposal made by the Committee of Ministers of the Council of Europe, which made the decision to prepare a new Convention on Offences Relating to Cultural Property to prevent the trafficking of illegally looted antiquities and art.
It is a timely reminder of the need for collectors to assure themselves of the source of any art and antiquities that they are purchasing. Regardless of the artefact, whether a painting, classic car or antiquity, similar exposures for any buyers and stakeholders can arise.
It is a global market, deals are cross-jurisdictional and the artefacts are for the most part portable, such as a painting or a coin. The trade is international. An object can be sourced from the Middle East, stored in a freeport in Geneva, sold to a dealer in the UK, to be ultimately be purchased by a US Foundation. The transactions are multi-layered, complex and often are not a direct sale from source to ultimate buyer. In addition, artworks often traverse the world moving from jurisdiction to jurisdiction where different laws apply.
As such, it is an opaque market that is vulnerable to exploitation; with such uncertainty, the need for due diligence on acquisition or loan is critical for any party involved in such a transaction. The consequences of omitting to undertake checks or obtain professional guidance on due diligence prior to any transaction can be far reaching, affecting the reputations of families, foundations and institutions.
We are frequently called upon to assist clients in these circumstances. Running appropriate due diligence checks on any potential acquisition and on those involved in the transaction will help flush out any potential problems.