Fair Deals           

Cultural tourism is a rapidly growing sector of the broader tourism market and has become a thriving worldwide business. A key component of this expanding trade is art tourism that has significantly contributed to the globalisation of the art ecosystem over the past decade or so, which in turn has stimulated rapid growth of commercial and non-commercial art sectors. Major cultural tourist destinations now attract new clusters of commercial galleries, new art fairs and biennales, and expanded public-facing collecting institutions.

This transformation of the art world has been the subject of robust recent research by many respected professional specialists and art business practitioners. Professor Martin Irvine of Georgetown University is a leading expert in media theory and visual culture, whose critical analysis of recent changes in the art world concludes that there is strong evidence of ‘an unprecedented level of new economic activity and a new configuration of the global art economy as a networked system. What was once an economy limited to loosely linked clusters in major cities in Europe and the US’, Irvine continues, ‘is now a globally distributed, highly networked economy that lives on real-time information and freely flowing capital. While the art economy follows the laws of asset concentration in global cities, it also follows the flow of capital, goods, and services across national boundaries. We are now living through an international art Renaissance where anyone participating in the art world becomes his/her own Medici. Centralized art patronage has been replaced by a globally distributed economic system with all levels of financial participation.’

Clear distinctions between public and private sales methods have become increasingly blurred during this transformation of the art market. Auction houses have expanded their services to include operating as commercial dealers to broker private treaty sales, and a small but significant number have opened new gallery premises to exhibit works for sale. Dealers have also expanded their services: not to become auctioneers, but to adopt a key marketing tool of auction houses – traditionally held seasonal auctions of specific types or periods of work (such as modern and post-war contemporary, or Old Masters, or Dutch Golden Age paintings). Dealers in specific types or periods of work have increasingly come together to collectively exhibit works for sale in one venue for several days at an art fair. Many auctioneers have adjusted their seasonal calendars to offer specific categories of works for sale on dates that link up with a related nearby art fair. Likewise some art fairs have selected their dates to be close to appropriate auction category sale dates.

Buyers and sellers have increasingly benefited from these innovations, offering multiple opportunities in one location and creating centres of attention. Witness Colin Gleadell’s latest report in 45 Telegraphon contemporary auction sales and the Frieze contemporary art fair both held the same week in London: ‘In 2003, the first Frieze Art Fair was staged in London in October partly to coincide with the ‘mid-season’ contemporary art auctions which would rustle up about £3m if they were lucky. The fair’s organisers could hardly have imagined that the big, global auction rooms might one day alter their calendar schedule around Frieze. But Frieze has since become such a magnet for the world’s wealthy (in spite of Brexit, we hope) that Christie’s abandoned its high summer season contemporary art sales this year to focus on putting a major sale together for Frieze Week instead. The result was that by Saturday night, the Frieze week auctions had reached a record £292m.’

Increasingly large sums of money have increasingly been spent buying art during the art market’s recent transformation. Widely respected independent annual reports reveal best estimates of global art market trading: in 2016 $60bn was spent on art, compared with around $40bn in 2009, representing an increase of about 43%. Post-war and contemporary sales were by far the highest valued sector at 52%, of which just under half were sales of works of living artists; 1% of works sold for prices over $1m, and 85% sold for prices under $50,000. Auction sales accounted for 43% by financial value. Dealers sold 57%, half which was generated by sales at art fairs. Numbers of contemporary art fairs have expanded from three in 1970 to over 250 today, located in major cultural destinations far beyond their origins in US and Europe.

International art fairs trading in older art and antiquities invariably check the credibility of client-dealers and their stock before accepting them as selling participants. In this way art fairs such as TEFAF in Maastricht and Frieze Masters in London protect and enhance the reputation of themselves and their client-dealers by offering professional assurance to the fair’s potential visitors/buyers about provenance and authenticity of works on sale. Such prior vetting may also protect the diligent fair and its dealer-clients in part (if not wholly) against subsequent legal claims based on issues of tainted provenance or authenticity from buyers of works at the fair. But most international contemporary art fairs do not carry out such vetting.

Art Basel is the leading international contemporary art fair held annually at Switzerland since 1970, also at Miami Beach since 2002, and at Hong Kong since 2013. Until very recently Art Basel had no vetting procedures on the basis that ‘as most of our galleries are active in the primary market and are working closely with living artists or very active artist estates, the provenance of works on display is generally very well documented’.

It is welcome news that Art Basel Art Market Principles and Best Practices was published in September 2017, an online and hard copy guide defining ‘a set of principles that express Art Basel’s perspective concerning exhibitors fulfilling their responsibilities towards artists, consignors, buyers and their industry … and outlining a new process in cases of potential criminal activity by exhibitors.’Art Basel’s global director, Marc Spiegler, explained that ‘standard operating procedures became necessary as both the Art Basel fairs and the art market have grown internationally. We’re dealing with galleries that are operating in dozens of local legal systems, there is more litigation in the art world. The combination of online news and social media means that any case can quickly become a global story. What we’re trying to do is avoid a situation where one gallery’s problems radiate outward to our other galleries, and the art market in general.’

This unique publication encourages Art Basel’s dealer-clients to pursue best practices in relation to: due diligence research into origin, authenticity and title of works; payment to artists and/or consignors; and documentation of transactions and agreements. Such matters were always taken into account by Art Basel’s organisers, but have never been formalised: they are now requirements intended to apply to the fair’s dealer-clients as permanent practices in their galleries, not just at an Art Basel event. Perhaps this represents the genesis of the art market’s wider adoption of common ethical and professional practices. Moreover, Art Basel will establish a legal compliance process to expose evidence of ‘potentially criminal conduct by an exhibiting gallery’.

But it is disappointing that Art Basel’s progressive new approach will only operate from its Miami Beach edition in December 2018. Why wait so long?

© Henry Lydiate 2017

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This article is from the Artlaw Archive of Henry Lydiate's columns published in Art Monthly since 1976, and may contain out of date material. The article is for information only, and not for the purpose of providing legal advice. Readers should consult a solicitor for legal advice on specific matters. Artists can get free online legal information from Artquest.