Garima Dhankar, Legal Researcher at the Delhi High Court is the co-author of this article.
Introduction
Disputes in the modern day are increasingly time-sensitive and demand specialised knowledge of the relevant field. This requirement has resulted in the proliferation of arbitration institutions and the emergence of specialised forums. It has been observed that arbitration combines the characteristics of quasi-judicial proceedings with the capability of resolving specialized and highly specific subject matter disputes. This adaptableness is advantageous in art and cultural heritage disputes since parties frequently come from diverse cultural backgrounds having vastly specific issues such as copyright, traditional cultural expressions, authenticity and cultural property including sensitive non-legal issues of historical, cultural, commercial, moral, ethical, spiritual and religious nature.
There is no independent area of law that can be accurately described as "art law" because the term and domain are very broad and inclusive. Consequently, there is no such thing as a conventional art conflict. Despite the fact that a work of art may be involved in a dispute, the claim itself is typically associated with problems that resemble commercial transactions, but involve niche considerations such as cultural and religious sensitivity, confidentiality, authenticity and legitimacy.
It's not just the niche nature of the subject matter that sets art conflicts apart; there are other distinguishing characteristics as well, like Parties can be both public and private entities. Many situations involve numerous parties from various geographical locations and cultures including but not limited to States, museums, indigenous groups and artists.
Art weaves the multi-dimensional cultural essence of India in one fabric. Indian culture can be reflected in a variety of ways thanks to the adaptability of the art market. It is indispensable to be familiar with the difficulties encountered by the industry if it is to fully realise its potential. Effective dispute resolution has emerged as one of the most pressing issues confronting the art sector in India. Disputes have become a major impediment to art investment in India due to the proliferation of contractual relationships and the absence of effective governing regulations. Art disputes are special in the way that they involve not only rights and obligations, but also sensitive cultural, religious, historical, and moral considerations. Litigation is still expensive, the suits drag along forever and the lack of specialised tools in addition to the lack of secrecy in court proceedings works as a disincentive for people to sue unethical practices and impedes growth of the industry.
In light of a new era for art law issues, the Court of Arbitration for Art (“CAfA”) under the auspices of the Foundation Authentication in Art, based in Hague and the Foundation Netherlands Arbitration Institution, based in Rotterdam is a revolutionary step forward in the right direction in the field of alternative dispute resolution for art related disputes. The CAfA endeavours to deliver a confidential, effective and efficient resolution of art disputes by providing a tribunal composed of art experts addressing the major problems associated with judicially-administered art disputes globally. While the Indian Art ecosystem consists of a number of stakeholders operating in different capacities, including but not limited to artists, private art galleries, public museums, auction houses and private non-commercial art initiatives, the art industry in India is plagued by legal ambiguities, transparency and infrastructural support, exposing the industry to various disputes.
Art Disputes: No Scarcity
Art disputes have risen significantly in recent times. Conflicts stem from transfer of title in art or an antiquity item by way of licensing, gift or sale; repatriation of artefacts; fake and forged provenance of stolen or looted art; forfeiture claims; cultural heritage issues in the destruction of art; art loans; private and public sales and auctions; cross-border transactions involving import-export licensing; art finance; artist’s economic and resale rights; death of an artist; issues of ownership and succession concerning estates, trusts and foundations to name a few.
Be it the long running Henri Matisse’s 1908 masterpiece Greta Moll dispute between Moll’s grandchildren and the National Museum; the closure of the 165 year old Knoedler Gallery in the United States over sale of fake paintings; the 2015 dispute between Asif Kamal and Christies’ for having allegedly put up a fake S.H. Raza for auction or the title claim put forth to the UK Government for the 12th century stolen Buddha Statue, with the advent of the CAfA providing an option to include a CAfA arbitration clause in art contracts, arbitration will gain popularity to resolve the rising art disputes in the USD 2 Billion Indian art industry. However, it is of utmost importance that we understand how the legal landscape in India addresses this opaque yet dynamic market.
Arbitrability and the Indian Legal Landscape
So far as the question of arbitrability is concerned, the Apex Court laid the foundation in Booz Allen & Hamilton Inc v. SBI Home Finance and ruled that basis the ‘nature of rights’ involved in a dispute, rights in rem, i.e. right of a person against the world at large and/or a disputes, whose adjudication is reserved exclusively for public forums as a matter of public policy were non-arbitrable while rights in personam, i.e. rights against specific individuals are arbitrable. In its recent decision in Vidya Drolia v. Durga Trading Corporation, the Supreme Court laid down a "four-fold" test to determine the arbitrability of disputes. The Apex Court ruled that disputes are not arbitrable when the cause of action and/or subject-matter of the dispute: relates to actions in rem, that do not pertain to subordinate rights in personam that arise from rights in rem; affects third party rights, have erga omnes effect, require centralized adjudication, and mutual adjudication would not be appropriate; relates to inalienable sovereign and public interest functions of the State; and is expressly or by necessary implication non-arbitrable under a specific statute.
In 2014, an arbitration award was rendered is a case where genuine art was maligned putting an end to a four-year legal tussle over the validity of a 126-year-old Raja Ravi Varma painting and declaring the painting to be a genuine based on the certification of antiquity authorized by the Archaeological Survey of India (“ASI”) as governed by the Antiquities and Art Treasuries Act, 1972 (“AATA”).
Awards that stem from non-arbitrable disputes, such as those involving title, fraud, or copyright ownership, are not enforceable in India under Sections 34 and 48 of the Arbitration and Conciliation Act, 1996 (“1996 Act”). Cases pertaining to art related frauds rely on specific facts and circumstances of each case, with judicial precedents indicating arbitrability in cases involving internal affairs of parties as seen in A Ayyasamy v. A Paramasivam & Ors. Although Section 26 of the 1996 Act exists, allowing parties the liberty to appoint experts, where an expert like the ASI is appointed and the tribunal disregards the opinion/findings of the expert, capitulating to a Section 34 challenge. Another aspect to consider is Limitation and Section 21 of the 1996 Act. Issues such as ownership, title in art disputes come within the limitation period for ‘declarations’ which commences from the date on which ‘right to sue’ exists first. For contracts containing arbitration clauses where Indian Law is the chosen law, the clause survives the termination of underlying contract and arbitration can be invoked within three years from the date on which request for that dispute to be referred to arbitration has been received by the Respondent.
The AATA regulates the possession and trade of antiquities and art treasures, to prevent smuggling and fraudulent dealings in antiquities. The Apex Court, in 2019 gave the AATA the overriding effect in case of a conflict with a general law covering the same aspect in Department Of Customes vs Sharad Gandhi Proprietor. Section 24 of the Act obligatory on the ASI or an expert advisory committee appointed in the proposed in the 2017 bill to classify an object as an antiquity or art treasure. Even the tribunal in the 2014 arbitration concerning the Raja Ravi Varma painting discussed above gave primacy to the certification of antiquity authorized by ASI.
The Courts' approach, particularly in cases of artists’ resale royalty where Section 53A of the Copyright Act, 1957 comes into play in cases of resale royalties and the Intellectual Property Appellate Board (“IPAB”) tends to give a stricter interpretation of the law as opposed to harmonising the law with the cultural and heritage values of the artwork, is another reason for prolonged and unresolved disputes plaguing the art industry. Not to forget, the incompetence of IPAB in terms of infrastructure and personnel to effectively and efficiently resolve disputes frequently causes the art world to reject court orders, resulting in unclear situations and further hurdles.
Conclusion
Art industry in India and worldwide has started to boom and reinvent itself after the turbulence and macroeconomic tremors caused by the Covid-19 Pandemic. Past years have been manifested by events that tested us to consider aspects of the market that the art industry had become uneasily familiar to overseeing.
While 2022 was just as rich in creativity, inspiration and novelty as 2021, it remarkably showed an appetite for added systemic and complete transparency and accountability. Aside from the two art-focused arbitration bodies (CAfA and WIPO) the usual arbitral institutions lack art-sector expertise and a handful of art experts on their respective roasters.
With the lack of precedents in the public domain, the art world demands strong confidentiality and anonymity. Section 42A added to the 1996 Act by way of the 2019 amendment exhibits several anomalies that have a natural tendency to jeopardize proceedings in a rapidly expanding and commercialized industry.
To conclude, arbitration is still an unchartered territory for the art market and its stakeholders. With the current Indian arbitral jurisprudence inadequate to be supportive of the art industry, in addition to setting out standard dispute resolution clauses specific to art industry in the contracts and art experts as neutrals, there is a dire need for strengthening the alternate dispute resolution services on offer and being better connected with the art world for it to grow and expand exponentially on the demand side.
About the Author
Tushar Behl is an Advocate, practicing at the Delhi High Court and Garima Dhankar is a Legal Researcher at the Delhi High Court. The opinions expressed in this article are those of the authors. They do not purport to reflect the opinions or views of Indic Pacific Legal Research LLP or its members.
