PROPERTY JOURNAL

Art resale rights after Brexit

What does the UK's departure from the EU mean for artists resale rights?

Author: Vittoria Mastrandrea

10 May 2020

The resale right for visual artists in the UK manifests as an intellectual property (IP) right. Accordingly, it requires an additional payment on the secondary sale of qualifying works of art in a commercial setting.

This royalty is calculated as a percentage of the sale price of the artwork up to a maximum of £10,600 and is provided to the artist or their estate. It operates as a beneficial interest in the work that continues after the original transfer of title from the artist and follows the copyright term of life plus 70 years.

It is far from typical many other nations with strong art markets lack an equivalent right. Given that it is a requirement of EU law, the future of the resale royalty in the UK following its departure from the union is uncertain.

EU Directive 2001/84/EC on the resale right for the benefit of the author of an original work of art was implemented in the UK under the Artists Resale Right Regulations 2006 which allowed for a resale royalty for living artists. This preceded the Artists Resale Right (Amendments) Regulations 2011 , which came into force on 1 January 2012, extending the right as required by the EU Directive to the same term as copyright. The right is payable by the seller but this responsibility is commonly contracted out to the purchaser. Payment of the royalty must be made to the appropriate collecting society the Designs and Artists Copyright Society (DACS) or the Artists Collecting Society which are then responsible for the distribution of the right to the artist. Both charge 15 per cent of the fee collected.

"The UK was concerned that introducing the right to a resale royalty may result in stagnation of the market"

Recognition of the resale right began in France in the mid to late 1800s. It gained popularity in several European states throughout the early 20th century: it was introduced in Belgium in 1921, Poland in 1935 and Italy in 1941. EU Directive 2001/84/EC of the European Parliament and of the Council on the resale right for the benefit of the author of an original work of art was issued on 27 September 2001.

This harmonising legislation requires that: "Member states shall provide for the benefit of the author of an original work of art a resale right to be defined as an inalienable right, which cannot be waived, even in advance, to receive a royalty based on the sale price obtained for any resale of the work subsequent to the first transfer of the work by the author."

The purpose of the legislation was to ensure consistency and equality in the application and provision of a royalty payment for visual artists. However, this requirement was met with objections in the UK. As this is one of the largest art markets in the world, and the largest in Europe, opponents were concerned that introducing such a right may result in stagnation of the UK market in comparison to the growth of those in the USA and China, neither of which have a resale royalty requirement.

In an article in the Antiques Trade Gazette in October 2012 copyright lawyer Simon Stokes commented: "So the UK art market has to work with a law it never wanted, but which is likely to remain on the statute book for the foreseeable future. Never mind concerns about its cost of administration its disproportionate impact on dealers who quickly buy and sell in succession and (in the authors view although the evidence is disputed) a likely long-term shift of trade offshore or at least increasing attempts to avoid ARR in international transactions."

Opposition to the introduction of the right was widespread among market players and commentators before its implementation in the UK. Debate has continued as to its impact on the domestic art market. Those opposed claim that the right has damaged the market economy for art; for example in the British Art Market Federation's 2014 report on the impact that the directive had had, its chair Anthony Browne said the introduction of resale rights in London "when it does not apply to London's major global competitors ... is now causing a decline in the UK's international competitive position."

"We are unlikely to be able to ascertain the full impact the royalty has had"

However, others believe that the introduction of the right in the UK has had a positive impact on living artists and relatively little effect on the health of the market overall. In 2016 DACS released a report concerning the effect of the first ten years of the resale right: "There is no evidence that these modest royalties negatively [affect] the art trade nor drive sales away from the UK. In fact comparing the percentage of artists' resale royalties collected by DACS against post-war and contemporary and modern art auction sales in the UK in 2014 was only 0.64 per cent."

With a wealth of contradictory information we are unlikely to be able to ascertain the full impact the royalty has had, if any, on the UK art market. It is also unclear what other factors may have affected the market. However, with the UK's departure from the EU, many commentators and art market professionals see an opportunity to deliver the nation from the shackles of potentially harmful legislation.

As the UK has now left the EU, any of its forthcoming legislation will no longer be automatically applicable domestically, but this remains subject to the requirements of  the agreed transition period allowing for the applicability of EU legislation under the withdrawal agreement. Howeve,r any directives implemented by the UK before the break from the EU will still apply so far as existing domestic legislation allows. As the legislation providing a resale royalty in the UK was enacted domestically, it will continue to apply unless and until a decision is taken by the legislature as to amendment or repeal.

The review of the legislation allowing for a resale royalty for visual artists in the UK may not take place for several years. This depends on the importance placed on the sector immediately following its departure from the EU. However its status remains an important and timely question for art market professionals.

This IP right may be taken away from visual artists, possibly putting practising artists in the UK at a disadvantage compared to their European counterparts. Some people argue that the repeal of such legislation will put the UK on an even footing with other market leaders, namely the USA and China, thus satisfying those in opposition to the right. The decision taken will highlight the UK's stance in the debate between the protection of the artist and the importance of the country's position in the international market.

Vittoria Mastrandrea is law lecturer for the MSc art law and business programme at Christies Education vmastrandrea@christies.com

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