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04 Oct 2018

Specialist Global Arbitration Court for art disputes

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The Court of Arbitration for Art ("CAA") opened its doors for the first time this summer. As its name suggests, the CAA is a specialist court dedicated to resolving art-related disputes. Although based in the Hague, proceedings may take place anywhere in the world.

With the value of the art market increasing (with total sales of $63.7 billion in 2017), and high-profile art-related litigation also on the rise, it makes sense for there now to be a dedicated Court specialising in art-related disputes, After all there are other successful arbitration systems in place for other high-value specialist areas of law (such as the LMAA for shipping and the Court of Arbitration for Sport).

What the CAA offers is for parties involved in art-related disputes to have their disputes resolved by arbitrators and experts familiar with art law issues. Like all arbitration, the choice to arbitrate at the CAA will be party-driven; either parties will agree in their contractual dealings prior to any dispute that they will resolve any future disputes with reference to the CAA, or the parties will agree to submit to the CAA after a dispute has arisen as an alternative to other dispute resolution (this latter option being more likely in the next few years as the CAA establishes itself).

In principle at least resolving art disputes through the CAA sounds like a sensible proposition.

First of all, art disputes are well suited to be resolved through arbitration. Arbitration is regarded as more flexible and creative than Court driven processes, capturing the moral nuances and lack of certainty associated with some art disputes. It can also provide greater opportunity than Court proceedings for preserving the long-term relationship typical in the art market. Arbitration is also a confidential process which allows parties to protect their reputations and the value of a disputed art work (which might be damaged should the dispute be made public). Another advantage of arbitration is that it can be speedier and less costly than Court litigation (of course this is relative and is by no means always the case). Finally, arbitration awards can be enforced near worldwide under the New York Convention (which is not the case for Court decisions).

On top of these general benefits of arbitration, the CAA offers the advantage of its specialist nature. Parties will no longer have to waste time explaining to a judge art market practice, rather the parties choose from a pool of arbitrators, provided by the CAA, who have significant art expertise and understanding of the market. Moreover, the default rules of the CAA have been drafted specifically with the needs of resolving art disputes in mind. For example, the default position is that there will be three arbitrators, unless the value of relief sought is less than €500,000 or the parties have agreed to a sole arbitrator (which is the reverse from other commercial arbitration rules). Another example is that whilst, as stated above, arbitrations tend to remain completely confidential, the CAA may publish its award revealing the name or identity of the art work in question (whilst keeping the parties names confidential). Publication of the name of the object was considered essential by the CAA’s founders to ensure market understanding and acceptance of the results and it may be desirable if a party wants vindication. However, it is questionable how often an art work and its owner can be separated such that publicising the former does not also identify the latter; the art market is not renowned for keeping mum.

Another key focus of the CAA is the use of expert evidence. Indeed, a particularly unique facet of the CAA is that the more traditional model of competing and advocating experts will not always apply. Although the parties will be free to retain their own testifying experts on many issues, in authenticity disputes (considered the major cause of many disputes) the tribunal, not the parties, will appoint its own forensic and provenance experts from an internationally recognised pool. This provision, inspired by inquisitorial systems of civil law jurisdictions under which the court is in charge of investigating the facts of the case, appears to stem from the concern that party-appointed experts may advocate for the party who appointed them, as opposed to being a neutral expert whose duty is to assist the tribunal. The aim is to give the market comfort that the authenticity experts are truly neutral. Whilst this is commendable as an objective, even a genuinely neutral assessment by one expert may be flawed or open to a difference of opinion. There is rarely a case in which all experts are unanimously aligned as to the authenticity or attribution of a work of art.

Although in its infancy, what the CAA stands for has grabbed the attention of art law practitioners in particular. People wait to see if (or perhaps when) the CAA will catch on as a place to resolve disputes. Michael Ellis, the UK’s Minister for Arts, Heritage and Tourism, gave a deserved plug to the new CAA in a speech on 4 September 2018. He acknowledged that "[t]here is an idea that the art market might be best placed to resolve the disputes itself, avoiding what are perceived as difficulties with the adversarial judicial system." And that "[a] system of mediation and arbitration could produce decisions, based on the evidence of neutral experts, on authenticity, ownership and copyright that are respected by the market." This is precisely the aim of the CAA, as Luke Nikas, one of the people involved in its creation, has explained, "There are many disputes that aren’t handled in the most economical way through our court system, and even when they are handled and courts issue decisions about such issues, the art market doesn’t necessarily accept what the courts find…The court, in the eyes of the market, is not necessarily the proper entity for deciding issues like authenticity."

The principle of the CAA and the fact that it has been turned into a reality is admirable. The global art market could certainly benefit from having its own specialist dispute resolution infrastructure. However, given how nuanced art disputes can be it is clear that there will never be a one-fit solution. Every advantage offered has, it seems, a countervailing disadvantage.

Michael Ellis’ conclusion with regard to the CAA is shared by many when he said "I will be watching with interest to see how the art market engages with this system, how it would interact with national and international legislation, and also how its conclusions would be viewed by artists and other groups outside the art market." We too shall wait and see. The CAA will stand or fall on the quality and experience of the arbitrators and experts on its panels and the willingness of market participants to engage with it.

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