An Expert’s Guide to Buying Art: The Auction - Expectations, Reality, Champagne, and Overpriced Sush

Art law is quite an interesting multidisciplinary field. Although it seeks to regulate the protection and sale of artworks, many other branches of the law intervene to facilitate that, such as IP, contract, tax and criminal law. In my previous article A Beginner's Guide to Buying Art, another Maastricht Diplomat exclusive, I have already touched upon the dangers of the art market, which arise from its mystique and its proneness to anonymity: coming across looted art and art money laundering. Although I have highlighted a couple of ‘red flags’ to look out for, how to spot irregularities when it comes to the authenticity of artworks, I have yet to show how such tactics could work in a real setting.

This article explores how art law addresses auction-related risks, drawing on experiences one may encounter at TEFAF. Following my first article on art law, the main questions covered are: 1) how authenticity is determined, 2) what information buyers should ask for, and 3) how redress mechanisms work at auctions. By the end, you will understand key practices for buyers and intermediaries navigating these complex issues.

I. The ever pressing question of authenticity

Authenticity in the art world is often seen as a relative concept. Normally, it is decided based on whether the artist claims the work as their own. However, other factors can also matter, such as where and when the artwork was created, the artist’s personal history relating to the inspiration for the work, the materials used, the techniques applied, and the artwork’s record before examining its authenticity.​

Therefore, it could be concluded that no art object by definition is authentic or inauthentic: it is highly dependent on how the term itself is defined. It is not something considered to be intrinsic to an art object. An artwork is only authentic in view of  a certain (explicitly worded or implied) attribution. Thereby buyers could evaluate authenticity based on the considerations of different features such as creation date, materials, and history.

Most agree that inauthentic artwork is art that is wrongly attributed. Attributing art is difficult because artistic production is complex. Not all types of attribution are illegal; the law has strict criteria for ‘illegally attributed art’. An example of illegally attributed art is forgery involving copying a work with malicious intent, which is a crime. Whereas pastiche is imitation in the style of other artists, but it is not criminal; it honours the style or artist. It can be increasingly difficult to know whether authenticity issues are penalised by law or allowed as imitation. This makes buying more challenging.

II. How much information are you expected to ask for? What counts as expertise?

Having explored the challenges of authenticity, our next concern arises: how much information should buyers seek, and what does expertise mean in art transactions? To circumvent issues of artwork authenticity, when at an art fair, such as TEFAF, you (obviously) need to ask questions about it. However, what is not so obvious in this case, is which questions an individual should raise and how much information they should be given. It is quite easy to get lost in the mystique of it all: sipping on champagne, being momentarily dumbfounded by the recognition that there is an overpriced sushi place in the same exact spot where you are going to write your exams in about two weeks could be quite distracting. But do not fret: here is the gist of all that needs to be kept in mind when making an art deal.

Anonymity and fast-moving exchanges in the art market make it an easy target for money laundering purposes. It remains quite difficult to track money streams, and this area remains mostly unregulated, which can lead to shady practices. Because of the inconsistencies and risks, EU-wide legislative proposals suggest art dealers should exercise due diligence to protect customers, in particular, those with little to no expertise in the field of art. The KYC (know your customer), a requirement under Regulation 2024/1624 (AML Regulation), which is the new instrument introduced to support Anti-Money Laundering and Counter-Terrorist Financing, aims to harmonise previously fragmented national laws into a directly applicable, uniform set of rules across all EU Member States. The KYC standard obliges art dealers to enforce customer due-diligence, or rather to keep their customers to the EDD (enhanced due diligence) standard. The introduction of the standard aimed to bring consistency and to fill in the regulatory gap in the area of art law. Relying on online searches is not going to be enough moving forward, more information is required by the sellers when the pieces are accepted by an intermediary for auctioning, enhancing the protection of customers from illegally attributed art. Therefore, more transparency is expected from the sellers from the get go. Will they be able to give this information? God only knows. Will they want to give this information? Certainly not all of them. But one thing is for certain: this puts quite a burden on art dealers moving forward. Due to that statement alone: can we as the buyer simply rely on art dealers keeping to this standard? Not really. How then can you as a buyer mitigate such circumstances? Should you, above a certain monetary threshold, ask for expert advice?

However this prompts the question: who counts as an expert in art? ‘Expertise’ in the world of art is more self-proclaimed than anything. It is indeed true, that you could possibly enforce it with a degree in art, or relevant experience in the field as an agent or experience with an intermediary, let it be at an auction house or at a gallery. However, still there is no threshold for who counts as an expert. Does that mean that if you are quite knowledgeable in a specific style of art, for instance, you are quite fond of impressionism, and you know quite a bit about Monet, your favourite painter, you count as an expert? Of  course not, expertise in the art world more so requires an intent: to operate as an expert in the field, and therefore, claiming to be one.

Professionals in the art industry must meet a higher standard of due diligence than customers, who are protected by non-conformity, making redress mechanisms, touched upon below, available to them. Non-experts do not need to conduct advanced research; ordinary inspection will suffice as long as there is no increasingly suspicious detail which the customer could have been expected to notice, such as no prior sale history of an artwork or a rather fragmented one.

This leads to a second question: could it be expected to bring an expert for a sale above a certain threshold of the prices? Think of the culture that it would create in the art world. People would be more discouraged to conduct purchases, if they were to think of intermediaries as these absolutely untrustworthy operators. Moreover, you are already spending quite a bit of money, should you then be expected (by the law) to even spend more money to pay an expert to overview the process? And in any case, should not intermediaries count as experts considering the broad definition of ‘expertise’ in the artworld? Besides, bringing an expert would per definition involve an expert opinion, meaning customers would lose the protection of non-conformity under the law and would be held to a higher standard. No buyer would want that. All in all, it could be concluded that no, introducing a rule which would oblige buyers to require expert opinion would be inadvisable. Does that mean that it is not beneficial beyond a certain monetary threshold? Of course it is, but it should not be by any means mandatory.

III. Redress mechanisms or lack thereof

Buyer recourse depends on the sale structure. If dealing directly with a seller, sales law applies. However the mechanism inherently becomes more tortuous as soon as redress has to be sought through an intermediary, such as an auction house.

Auction houses usually operate under two models. In the first one, the consignor, or rather the owner of the artwork communicates through an undisclosed agent with the purchaser. The undisclosed agent in this case sells on behalf of the consignor, or more pertinently, sells for the account of the consignor. In this particular instance, the undisclosed agent could be an auction house. The purchase price goes to the consignor except for a commission fee charged by  the auction house for making the sale possible. The intermediary, in this case, does not get ownership over the artwork at any point, therefore, they can shift liability onto the owner if they can prove to have acted with due diligence in the sense that they asked the right questions when accepting the piece for auctioning, and nothing seemed suspicious about the artwork that could have lead to the conclusion that it was either looted or used for money laundering purposes.

In the second scheme, however, the sale goes through a disclosed agent, who sells for the account of the consignor. Due to it being disclosed in this case, the intermediary themself can be held liable in case the artwork is proven to be illegal in nature. Surprisingly enough, this is the safer model to take for an auction house, as it provides the purchaser with more of a sense of validity; the artworks and the way in which they are gathered for the auction seems more trustworthy than in the case of the other model. Such a model was adopted by TEFAF as well.

IV. Prevention techniques: the role of registers

What can then an auction house do to limit the chances of running into looted art or ‘dirty’ art turning up on its doorsteps beyond its regulatory (law mandated, in some instances) checks. They could possibly check registers to see whether any collection pieces turn out to be looted. Such registers are often operated by countries, providing a list of artworks which have been proven to have been looted out of the country. It gives an opportunity to buyers, intermediaries and museums to spot art crime more easily, therefore, it could be regarded as a sort of ‘unofficial’ way of cooperation in art crime. Such registers could be, for instance, the Looted Art Commission’s Registry or the Interpol’s Stolen Works of Art Database. 

Is it compulsory to check such registers? Definitely not as a buyer, if there are no apparent ‘red flags’, so to speak, concerning the artwork at the purchase. But perhaps, it could be expected of an expert, as they are held to a much higher threshold by authorities, usually in case of inconsistencies. Then, it is on them to show due diligence; and knowing about the existence of such registers and checking them could be an action which authorities consider a requirement of exercising due diligence. 

Are these registers trustworthy though? Not all of them, certainly not. The problem with such registers is that most of them require quite little background check, therefore it is quite easy to claim that something has been looted or lost in these registers, which gives reason for concern. Therefore, most of them (though not all of them) are handled with ambiguity. It requires quite a bit of research for the authorities to determine whether the art was indeed illegally acquired in cases where something is claimed to have been looted or stolen.

V. Parting words

That is it for our advanced course, everyone. We have learnt quite a bit about art law and the art market in general: amongst its importance as one of the most booming markets out there, the dangers of its unregulatedness in facilitating the financing of money laundering through art have been revealed. Stolen art can emerge in the most unexpected places; the possibility of it appearing even at one of the most well-reputed art fairs in the world, such as TEFAF, is not as unlikely as one might think.

The only thing a buyer can do is be aware of such dangers and be on top of their game when conversing with dealers. Ask as many questions as you would like, and if you become even the slightest bit suspicious, raise your concerns to the organisers and authorities on the spot. If you have already regretfully gone through with the transaction, do not fret, laws usually protect buyers who are not expected to conduct a very detailed examination; however, if you choose to  consult a professional, which cannot be expected of you, such protection instantly lapses, as experts are held to a much higher standard. One question should remain on our minds: after following this bumpy journey through my two articles, are we experts yet?