Droit de Suite

Solicitors specialising in intellectual property and other professionals who work in the art market will be aware of the somewhat controversial European Union directive of 'Droit de Suite', also known as 'Artist's Resale Rights' (ARR).

Implemented in the UK in February 2006, under EC Directive 2001/84, the law entitles artists the right to a percentage of the sale price each time one of their works is re-sold on the open market.

Beginning as a social welfare measure in 1920s France, the intention behind the new law began honourably enough; 'Angelus' a painting of peasants during harvest by Jean-Francois Millet (1814–1875) was re-sold making the owner several times what he paid for it, whilst the Millet family lived on in relative poverty. It was this disparity between the value of the painting and the family's poverty that was a major impetus in the introduction of the legislation.

The controversy in the UK and other countries is that the right has had a negative impact on the art market in the countries where droit de suite is enforced and on young artists themselves, the very people the legislation was intended to help.

Certainly dealers have expressed concerns that the imposition has led to a shift in the market of 20th century and contemporary art away from Europe towards China, Hong Kong, America and Switzerland—where droit de suite does not apply. Many dealers are now saying that they will move any transactions for qualifying artists to these countries; such a move would surely seriously damage British art market interests.

At the moment only living artists can claim ARR, but as of 2010 (or possibly 2012 depending if the government apply for a further extension of the derogation) the law will grant the beneficiaries of dead artists the right to claim ARR up to 70 years after the death of the artist. This extension is expected to increase the size of ARR payments about fourfold, adding to fears that trade will be diverted elsewhere. In the majority of cases it will be the artists' heirs who will benefit. And many find it hard to see why they should enjoy such a windfall when they contributed nothing to the work itself.

According to a report commissioned by the Intellectual Property Institute in 2008 there is 'no evidence that business has been diverted away from the UK' or has reduced prices. But they conceded that with the extension of the directive, ARR payments would grow dramatically thereby increasing administration work which would undoubtedly prove time consuming and expensive for the dealers and auctioneers.

The report also estimated a figure of £2.5 million being collected annually—a median payment of £256 per artist. With most artists receiving little more than a few pounds, it seems that those who need it most are not benefitting from the legislature drafted in the help them. With a minority of high profile artists such as Damien Hirst, David Hockney and Lucien Freud reaping the lion's share, ARR has been described as Robin Hood in reverse: taking money from the poor and handing over to the rich.

It seems that what started as a social welfare measure in post-war France has had trouble adapting to a Capitalist art market spread out over a number of European countries. Not surprisingly 81% of artists approve of the payments they receive, nominal as they maybe, but the cost to the art market in general could well be much higher.

Robert Coram James

Coram James Ltd. is an art and antique valuation firm specialising in the valuation of chattels for probate, insurance and divorce.