Second Year Review

The UK Intellectual Property Office (UKIPO) is currently conducting a post-implementation review of the first two years’ operation of the Artist’s Resale Right (ARR), introduced into UK law in February 2006 and throughout the rest of the EU that year.

One of the reasons for this relatively early review is because four member states which currently apply ARR only to living artists are required by EU law to implement, by 2010, ARR for the benefit of the estates of EU artists who died within the past 70 years. Those four are Austria, Ireland, Netherlands and the UK; and their post-implementation reviews of ARR will inform and influence their respective governments’ future implementation decisions.

How has ARR been operating in the UK, and is there scope for improvement or change? The Artist’s Resale Right Regulations 2006 implemented in the UK the requirements of EU Directive 2001/84/EC, which gave artists a legal right to receive a small percentage or royalty of the resale price of their works, whenever an art market professional was involved in the transaction: 4% of resale prices from €1,000 to €50,000; 3% from €50,000.01 to €200,000; 1% from €200,000.01 to €350,000; 0.5% from €350,000.01 to €500,000; and 0.25% of resale prices exceeding €500,000. The total amount of royalty payable on any one resale is capped, meaning that a living artist whose work resold for €5m would receive the same as an artist whose work sold for €500,001, namely €12,500. Art market professionals are legally responsible for paying the ARR royalty, not directly to the artist, but to an artist’s ‘collecting society’ (and in fact usually recoup the ARR royalty by passing it on to the buyer).

Two collecting societies have been established since ARR’s implementation: Artists’ Rights Administration Ltd (ARA), and the Artists’ Collecting Society CIC (ACS). A third UK collecting society, the Design and Artists Copyright Society (DACS), established over 20 years ago to manage artists’ copyrights, added ARR collection and payment to their services in February 2006. UK artists therefore have a choice of collecting society with which to register for collection and payment of their ARR royalties. UK artists who fail to register with one of the three collecting societies are nevertheless entitled to receive their ARR royalties, which art market professionals must pay to DACS (which is effectively the ‘default’ collecting society, under the ARR regulations).

ARA is a profit distributing company registered in the UK in July 2007. It has one director, a share capital/limited liability of £1, and was formed to ‘look after rights, including copyright, resale right and moral right, on behalf of visual artists and their heirs’. Its website (www.aradmin.com) offers the information stated in the previous sentence, and has not to date published a report of its operations over the past 18 months or so.

ACS is a not-for-profit distributing community interest company registered in the UK in June 2006. It has seven directors including two artists, and is sponsored by the Bridgeman Art Library, The British Art Market Federation, and The Society of London Art Dealers who jointly wish to offer artists a choice of collecting society. Its website (www.artistscollectingsociety.org.uk.) currently lists around 240 artist members, offers information about how it collects and pays ARR royalties, how artists and dealers can register with them, and a section for FAQs. It requests information from art market professionals on a quarterly basis, invoicing them regularly; and pays artists within seven days of receiving royalties, of which 15% is retained to cover administrative costs (it is not clear whether this percentage is retained for royalties collected from overseas). ACS has not to date published reports of its operations over the past two years or so, offering information about royalties received and paid, from and to whom, and evaluating the operation of its service and the UK’s ARR Regulations.

DACS is a not-for-profit distributing company registered in the UK in December 1983 to administer and licence copyrights of visual creators. It has nine directors including four visual creators, and a separate consultative body, the Creators’ Council. Its website (www.dacs.org.uk) does not list its 53,000 members but has a search facility that lets website users identify them and, in addition to information about copyright matters, has a specific menu offering information about ARR for artists and art market professionals, including FAQs. In its publicly distributed annual reports, DACS gives facts and figures about royalties received and paid, from and to whom, and evaluating the operation of its service and the UK’s ARR regulations. Like ACS, it retains 15% of royalties received to cover its administrative costs (0% for royalties collected from overseas).

An important issue for UKIPO’s post-implementation review of ARR is its effect on the UK art market. During several years before the implementation of ARR throughout the EU in 2006, a strong campaign was mounted on behalf of art market professionals. They lobbied the UK government and predicted that the UK’s art market, in London in particular, would be severely damaged. The campaign’s core argument was that resales of late modern and contemporary works would be driven out of the UK to non-ARR countries such as the US and Switzerland. These fears have proved to be unfounded. As early as March 2006, The Antiques Trade Gazette reported the early assessment of Robin Woodhead, CEO of Sotheby’s Europe: ‘At the top end of the market the €12,500 ceiling for droit de suite [ARR] on any single work is not going to be a deciding factor. London is such an important centre and the market here is so strong, led by names like Freud, Bacon and Caro, that ultimately I do not believe it will make a difference.’ In fact, the UK’s art market (representing around 27% of the global art market) has rapidly increased over the past two years according to all published accounts: in 2007, Sotheby’s and Christie’s together increased their art sales hammer prices by 40% compared with 2006; Sotheby’s London contemporary art sale in February 2007 was widely reported to have been the most successful contemporary art sale in Europe to that date, turning over £45.7m; works by living British artists Peter Doig, Lucian Freud and Damien Hirst, sold in the UK since February 2006, broke previous record prices for living EU artists; and in October 2006, Phillips de Pury chose to establish a new contemporary art saleroom in London. Also encouraging is the absence of any reports or rumours that art market professionals in the UK have not been cooperating and complying with the implementation of ARR; anecdotal evidence points to the contrary, and suggests that such cooperation and compliance have been very positive.

In the absence of published detailed information by ARA and ACS about their ARR operations since February 2006, a good sense of the scale of operations can be gained by considering a selection of headline facts and figures published by DACS, reviewing its ARR work since 2006:

  • total resale royalties collected: £4.2m, from resales of 8,302 works
  • resale royalties collected represent less than 1% of the estimated £8.5bn value of the current UK art market
  • different artists paid: 1,444, of which 80% were UK artists
  • artists paid every 30 days
  • over 2,000 artists have registered specifically for ARR collection
  • over 5,000 art market professionals have been contacted for ARR resale information
  • dedicated ARR telephone helpline for artists and art market professionals, charged at local rates: 0845 410 3410.

It is hoped that all three UK collecting societies in particular, and artists and art market professionals generally, will contribute to UKIPO’s current review of ARR implementation in the UK, by submitting factual reports and critical evaluations of their experiences since February 2006. The results should be both interesting and useful.

© Henry Lydiate 2008

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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.