Court of Arbitration for Art - CAFA IIFor Art’s Sake: The Court of Arbitration for Art – Part I looked at the history of art disputes and the introduction of the Court of Arbitration for Art and how it solves the issues of adjudication faced in art disputes.

Part – II elaborates on the Procedure that will be followed by the Court of Arbitration for Art and what this development means for the Indian art industry.

How CAfA helps

It is essential in cases involving art disputes that there is a regime to govern and decide the disputes that may arise in the course of such sale purchases, mainly concerning the authenticity of the artworks, their valuation, instances of art fraud, cases of stolen art, chain of title disputes, contract, as well as copyright issues. Although, “art” in the broad sense of the term includes music, film, theatre, literature, et cetera, the scope of CafA is likely to adjudicate on disputes regarding fine arts and/or visual arts.

Art is a highly specialised subject matter and often includes trans-border disputes, involving not only legal but also highly sensitive non-legal issues such as religion, culture and politics. Reputed art dealers and auction houses like Sotheby’s have often found themselves in legal battles with original owners as well as buyers over the origins, questionable mode of acquisition, or authenticity of an artefact. It is imperative for disputes of such a nature to be decided in a single procedure by a tribunal well-versed in the field to avoid actions in multiple jurisdictions, conflict of law issues and contradictory outcomes. An example of this can be seen in the dispute between Dmitry E. Rybolovlev and his adversary Mr. Bourvier, whom he had accused of fraud in the courtrooms of Paris, Monaco, Singapore and Hong Kong.

CAfA is a step towards filling that gap: the technical expertise of CAfA makes a much needed difference in the so far unexplored field of art disputes. CAfA aims to provide the perfect solution by uniting expertise in art with all the benefits of arbitration, while at the same time helping both parties to the dispute as well as the market accept the result.

The newly formed CAfA has contemporaries such as: the WIPO-ICOM Art and Cultural Heritage Mediation Project, which is based on the WIPO-ICOM Mediation Rules and the parties have the choice to choose an expert mediator from WIPO’s lists; UNESCO’s mediation service which focuses on mediating matters pertaining to stolen or looted cultural property; and ADR Arte a project by the Milan Chamber of Arbitration, which is aimed at resolving art disputes through mediation. However, CAfA is the first of its kind in providing arbitration as well as mediation as a dispute resolution process for art disputes.

CAfA has enacted Rules effective as of 30 April 2018[1]; therefore, the mechanism is already in place. The primary objective is to provide market legitimacy and decision-based accuracy. As per the drafts, the Rules incorporate a standard and up-to-date approach, English is to be the default language of proceedings, unless the parties agree otherwise.

The number of arbitrators shall be three, unless the monetary value of relief sought is less than EUR 500,000 or the parties have agreed to one arbitrator. The arbitrators must have university legal training. A secretary may be appointed by the administrator to assist a tribunal at its request or on its own motion.

Owing to the technical aspects underlying many art disputes, parties are at liberty to appoint tribunal members from a selected pool of experts. The panel will draw upon expertise from a pool of neutral experts who provide opinions on connoisseurship, forensic science, and provenance. These experts will be individuals who are recognised in their fields and their expertise is accepted as definitive in the market, effectively solving the issue of market legitimacy. In compelling cases, an arbitrator may be chosen from outside of the pool. The arbitrators will be members of the international art community. Where the authenticity of the art work is under dispute, the tribunal will appoint its own forensic experts from a pool in accordance with Point 12 of the draft Rules.

The proceedings are to be private and confidential. However, Point 15 of the draft Rules authorises the publication of the award, identifying the issue, but without disclosing the identity of the parties to the dispute. By making the award public, it ensures recognition of the award in the market, further enhancing its legitimacy.

CAfA and What it Means for the Indian Art Industry

The size of the art market in India is diverse and growing, and paintings comprise 99% of the total market. According to The Arts Trust, the Indian art market is thought to be worth anywhere between INR 1000-1200 crore for the general offline art market.[2] Online auction houses and art galleries are now playing the role of an ideal marketplace for artworks in India that have difficulty finding buyers due to logistical reasons. While buying art is still largely unregulated, development of art law provides a degree of risk management that creates powerful investment opportunities. The Indian art market in 2014 has been stabilizing itself from its 2009 downturn. Auction houses like Sotheby’s, Christie’s and Bonham’s, which deal with Indian art, have all recorded higher turnovers in 2014 as compared to last year (2013).

In the past few years, India has seen a rise in disputes being referred to arbitration and has a well-established legal system in place for recognition and enforcement of international arbitral awards. Arbitration as an alternate dispute resolution mechanism has been well received in India and, so far, CAfA has been received positively by art lawyers and industry experts who understand the technicalities involved in resolving an art dispute. Moreover, in the Indian context, the establishment of a specialised arbitral tribunal for art bears a unique opportunity for the development of art law in the country as an individual field of law. At present, art galleries and museums choose to rely on in-house legal counsels and boutique law firms for contract mediation. With the introduction of a focused arbitration institution for art disputes, stakeholders in the industry ranging from private art collectors, libraries, auction houses, galleries, museums, art institutions, and artists would now have the choice to opt for resolution of disputes through CafA.

Consisting of well-regarded arbitrators and art experts whose authority and decisions are likely to be valued and readily accepted by the art market, CafA is a welcome addition to institutional arbitration and is poised to become a popular forum for art dispute settlement with parties opting to include dispute clauses referring to CAfA in their contracts.


[1] The Rules are yet to be published on the official website; Netherlands Arbitration Institute, URL:  https://www.nai-nl.org/en/cafa/

[2]Figures presented are based on turnover of auction houses, private galleries, secondary market, and Indian art globally, including sales figure of The Art Fair.

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Photo of Faraz Alam Sagar Faraz Alam Sagar

Partner in the Disputes, Regulatory, Advocacy and Policy Practice at the Mumbai office of Cyril Amarchand Mangaldas. Faraz has significant experience in the areas of commercial litigation and investment dispute arbitrations. He regularly advises multinational corporations and financial institutions in a wide range of contentious disputes including investigations, litigation and regulatory enforcement proceedings in India. Faraz also has considerable expertise in telecom disputes, white-collar, forensic and corporate espionage investigations. He can be reached at faraz.sagar@cyrilshroff.com

 

Photo of Abhijeet Shinde Abhijeet Shinde

Principal Associate in the Dispute Resolution practice at the Mumbai office of Cyril Amarchand Mangaldas. Abhijeet’s primary areas of focus are commercial litigation, arbitration and criminal litigation. He has represented various Indian and multinational clients in intricate corporate and commercial disputes before State Regulators, Appellate Tribunal, High Courts and the Supreme Court of India. He can be reached at abhijeet.shinde@cyrilshroff.com

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Associate in the Dispute Resolution practice at the Mumbai office of Cyril Amarchand Mangaldas. Pragati specialises in white collar crimes – advisory and litigation, as well as criminal litigation and technology law advisory. She has also extensively advised and represented clients before courts/tribunals in civil and commercial litigations, arbitrations, and transactional matters.

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Associate in the Dispute Resolution practice at the Mumbai office of Cyril Amarchand Mangaldas. Samiksha has experience in general corporate and advisory work, primarily focused on mergers and acquisitions and corporate restructuring. She currently advises and represents clients on litigations and arbitrations involving commercial or transactional issues.

She can be reached at samiksha.pednekar@cyrilshroff.com