Sotheby’s has launched its rebuttal against New York’s Attorney General in the state’s Supreme Court after the NY AG filed a complaint against the auction house for “fraudulent avoidance of sales tax“. The 27-page memo seeks to dismiss the complaint – using a plethora of case law and statute – arguing that NYC AG Letitia James “fails to allege facts constituting a violation of tax law at Sotheby’s” and therefore cannot establish a violation of the New York False Claims Act (“FCA”). And while things are just starting to heat up, the client in all of this remains unidentified, despite recent art world speculation. Last November, AG James accused Sotheby’s…
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Droit De Suite: The Absence of an Artist’s Resale Royalty in the United States
The story is as old as the art market itself and familiar to anyone who collects art. An emerging artist catches the eye of a reputable collector who, along with other art world insiders, purchases the entire body of work at a relatively inexpensive price. Demand skyrockets, and the collector resells the work a couple of years later at auction for ten times what she bought it for from the artist. This is either a good investment or an aberration, or both, depending on how you view the notion of an artist’s resale royalty. An artist’s resale royalty generally entitles the artist of the work to receive a percentage of…
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Last Year’s Legislative U-Turn Is Gradually Eroding UK Art Market Secrecy
In the circus year that was 2020, the UK took front and center on the world stage. This act was one of balance – involving a tightrope Brexit transition while firming the sudden blow of Covid-related business closures. But the final surprise that would serve as a pre-warning to our fellow international onlookers [coughs: U.S.] was the rather creeping realisation that the art market, as we know it – shrouded in secrecy and money laundering accusations – is becoming more regulated and even more curtailed when it comes to what knowledge can stay highly confidential. Up until 10 January 2020, the UK art market did not have to operate under the purview of regulators in the same way as other financial gatekeepers such as bankers, brokers and realtors. Buyer and seller identities are often concealed – although not in the eyes of the law, considering a recent case – and assets are susceptible to fluctuating and subjective valuations. Since…
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Droit De Suite: The Absence of an Artist’s Resale Royalty in the United States
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50 Years On: How the ARRTSA Model Continues to Influence Artists’ Rights
In 1971, the brain-child of conceptual art dealer Seth Siegelaub and New York lawyer Robert Projansky revolutionized art purchase transactions. Set against the backdrop of a turbulent 1960’s that mirrors continued inequities today – think: the civil rights movement, women artist’s committees, art worker’s rights – The Artist’s Reserved Rights Transfer and Sale Agreement, also known as ARRTSA; the Siegelaub-Projanksy Agreement; or simply The Artist’s Contract, was designed to strengthen the economic and authorial rights artists had over the sale of their works. By no means however, as multiple art historians and lawyers comment, is the contract a ‘silver bullet’. Despite availability as a free public resource, Joan Kee, historian…
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These Art Tech Start-Ups Are Proving Why Blockchain Is Still Valuable to The Art Market
The onset of Covid-19 saw art galleries, fairs, museums and auction houses sprint to adopt augmented reality ("AR") for online-only sales, virtual viewing rooms and exhibitions (note the bizarre success of a Sotheby's cyber auction which sold Michael Jordan's old Air J'z for $560,000 despite a global health crisis). A significant number of beta stage art tech companies are now capitalising on the market's technological advancement using blockchain-assisted methods. In simple terms, blockchain consists of a database that contains the history of all exchanges between its users since its creation. The information on this database is decentralized: the records exist across several locations or among multiple participants, and; any changes…
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The UK Has Left the EU – What Does the New Trade Deal Mean for the British Art Market?
As of 1 January 2021, European Union law ceased to apply to the United Kingdom. Since the pair’s acrimonious split in 2016 – with the UK formally packing its bags on 31 January 2020 – the bitter exes have been haggling as to a mutually acceptable trade agreement by the end of the transition period on 31 December 2020. But in an eleventh-hour Christmas miracle, the two finally sealed a post-Brexit deal – albeit without a kiss – on Christmas Eve. And, while this may provide the certainty that businesses have been demanding, exactly how UK-EU business relations will fare remains to be seen over the next 11 month grace…
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Blockchain x Art: More Tech Start-Ups Disrupting The Art Market
This piece is the second in a two-part series that explores the potential art-world impact of blockchain. Read Part I to find out what blockchain is, what NFC is and why art market participants should care. LEGAL COMPLIANCE Legal compliance may also incentivize art businesses to utilize blockchain platforms. In a 2019 article titled ‘Fine Art Certificates of Authenticity: Are Yours Compliant?’, attorney Sam Miller explains that, under California[n][‘s] Civil Code Section 1742(c), galleries and dealers are “prohibited from selling or consigning a fine art print or multiple into or from the State of California unless a certificate of authenticity is provided to the purchaser or consignee on request or,…
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London High Court Deems Buyer Secrecy “Not An Absolute Obligation” in Art Fraud Case
London based art dealers Simon Dickinson Ltd have been sued for refusing to reveal certain classified information in relation to the fraudulent sale of an oil painting. In a ruling on 22nd September 2020, the UK High Court refuted the London-based art dealer’s argument that the art world custom of buyer-seller secrecy precluded them from disclosing information to a court of law. London based art dealers Simon Dickinson Ltd have been sued for refusing to reveal certain classified information in relation to the fraudulent sale of an oil painting. In a ruling on 22nd September 2020, the UK High Court refuted the London-based art dealer’s argument that the art world…
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What New York Art Collective MSCHF’s Destruction of a $30,000 Damien Hirst Taught Us About Artist’s Moral Rights
MSCHF, the outlandish New York art collective, have done it again. And if – by ‘it’ – you guessed ‘severing’ a limited edition Damien Hirst ‘Spot Painting’ print and reselling its collective 88 pieces for nearly twice the total amount – you wouldn’t be far off. Because they’ve sold what’s left of the painting too. Hirst’s ‘L-Isoleucine T-Butyl Ester’ (2018) from the ‘Spot Prints’ Edition series – acquired by the $11.5 million+ venture-backed creative studio for $30, 485 (£22,850) – was sliced into 88 dots and auctioned individually for $480-a-piece as MSCHF’s own creation, ‘88 Spots‘ (2020). The painting’s skeleton – a frame with 88 holes – was named exactly…
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The State of New York Has Sued Sotheby’s For Enabling Sales Tax Fraud
New York’s Attorney General, Letitia James, has filed a lawsuit against Sotheby’s in the state Supreme Court for enabling a major client of the auction house to evade taxes. According to court files, the client, a contemporary art collector who resides outside of the U.S. and runs a shipping business, illegally obtained tax exemption certificates on art purchases exceeding $27 million for five years. At the crux of the action is Sotheby’s alleged breach of its responsibility as a vendor under State Finance Law to collect and remit sales tax. In New York, anyone who purchases art for enjoyment in their New York home must pay a “sales tax” –…
