The Code of Art

The idea of art industry self-regulation is accepted by an increasingly wide range of art market professionals and their expert advisers, but there is no agreement amongst them on best ways and means of successfully achieving this. Last month’s column (AM 38) considered various possibilities, ideas and suggestions put forward through a recent survey of such professionals, which mainly focus on self-regulation of the secondary art market.

Different and distinct self-regulatory issues surround the art industry’s dealings with primary sales of works by living artists. How should primary art market professionals deal appropriately with living artists, the vast majority of whom have little or no bargaining power because they have yet to establish a market presence?  In the primary sales market place dealers and collectors are vastly fewer than the thousands of artists and millions of available artworks ripe for ‘development’ and some might say manipulation.

Codes of practice have been introduced in recent times by major art auction houses, several art fairs, and some dealers’ professional trade associations. Such codes invariably focus on ethical behaviour and good practices when dealing with buyers – understandably covering secondary market issues such as provenance, authenticity, condition, and stolen or war-looted works. None substantially addresses dealings with the ‘supply-side’ of primary sales trading activity: the living artist. However, one notable exception has recently been introduced, in Australia, and offers some useful pointers for the consideration of potential development elsewhere.

Practitioners described as Indigenous Artists, located throughout the central desert region of Australia, have suffered decades of abuse by dealers taking advantage of their weak bargaining power. The Australian Senate’s Standing Committee on Environment, Communications, IT, and the Arts, published a report on the situation in 2007: Indigenous Art – Securing the Future (PDF). This found that Indigenous Artists were exceedingly vulnerable, largely though lack of basic literacy and numeracy skills – even the ability to speak and understand basic English.  Dealers were defrauding artists by paying cash for work well below its true market value, passing off forged or substantially inferior quality artworks as genuine, and in these ways were ‘debasing the integrity of the industry’. The report’s key recommendation to address its findings was the development of a ‘commercial code of conduct’ for the art industry ‘to promote fair and ethical trade in works of art by Indigenous Artists’.

An Indigenous Art Code was subsequently initiated by the National Association for the Visual Arts and the Australia Council for the Arts, who together formed an Industry Alliance Group including ‘artists, Indigenous Art Centres, commercial art galleries, public art galleries, and auction houses’, which endorsed a final Code in 2009. The operation of the Code is monitored and administered by a newly established public benefit company, Indigenous Art Code Limited, funded by central government. Because the Code is voluntary for dealers to adopt, it was essential for the art industry to ‘own’ and manage it independent from  government; but within the legal framework of a registered limited liability company.

The company’s Board of Directors has ultimate responsibility for administering the Code, to deal with complaints and impose sanctions on defaulting dealer members. (Such arrangements typically operate within other industries’ self-regulating bodies worldwide). To be as representative of the contemporary art eco-system as possible, the Board’s membership comprises up to: four commercial dealers who are Code Members elected by Code Members; three indigenous artists appointed by the Board; two artists resource organisation representatives appointed by the Board; and eight representatives with legal, arts, business or consumer knowledge and experience appointed by the Board.

Artists may join the company as Code members and supporters, free of charge. Membership for dealers costs 150 Australian Dollars (c£90) annually, and signifies commitment to the Code’s ‘ethical standards in buying and selling Indigenous Art’ that require ‘honest and transparent dealings with Indigenous Artists and customers’. The Code gives examples of unethical conduct including: ‘undue pressure or influence, including threats; not acting in good faith; paying an artist by means of alcohol or drugs; paying or agreeing to pay an artist an amount or other consideration for the artist’s artwork that is, in all the circumstances, against good conscience’. The Code specifically requires dealers to respect artist’s moral rights and copyright in the artwork by: obtaining consent of the artist before reproducing the artwork in any form; not using the name and/or image of artists who are deceased without permission to do so from the artist before death or from the artist’s family/estate after death.

The Code has detailed requirements for dealers making agreements with artists for the supply or acquisition of work, key features of which include the following. Before making any agreement with an artist in relation to artwork, a dealer must clearly explain key terms of the proposed agreement and be sure that the artist fully understands. Although the Code does not require written agreements (because many Indigenous Artists are not English literate), dealers are obliged to keep written records of all dealings with artists including agreements about artwork. To support dealers, the Indigenous Art Company has developed ‘artwork agreement templates … to suit the particular circumstances that apply in most businesses’.

A unique feature of scheme is a requirement for primary art dealers to issue a Code Certificate, which assures collectors that an artwork ‘has been sold and purchased in compliance with the Code’s ethical trading standards’. Such certificates operate in the same way as certificates of authenticity, which can be passed onto subsequent buyers in the secondary market place. In fact the Code suggests that certificates of authenticity might usefully be adjusted to include the information required by Code Certificates, such as: ‘the name of the artist; where and when the artwork was created; a description of the size and type of artwork; contact details for a person that can identify the work and their signature; and the details of the Dealer Member’ first trading with the work.

Operation of the Code was monitored by the Indigenous Art Company, which reported in detail to the Australian Government in 2013 in terms that: ‘the nature of the misconduct has not changed significantly since the Senate report was published in 2007 … there are insurmountable problems with a voluntary Code … there are significant deficiencies in the existing self-regulatory regime in the voluntary Code … less than one-third of the dealers eligible to be bound by the voluntary Code agreeing to do so’. The report recommended that the voluntary Code is replaced by a mandatory one because of ‘the failure of the Industry to develop its own effective means of self-regulation … demonstrate that it is capable of addressing the misconduct identified …  no other realistic alternatives available that can adequately or effectively address that misconduct’. The Australian Government is yet to decide whether to act on this clear and strong recommendation.

Australian Indigenous Artists and their vulnerable circumstances are unique, as is the voluntary Indigenous Art Code aimed at preventing their exploitation. But there are valuable lessons to be taken from this Australian experience by all art-market professionals dealing with first sales of all living artists’ works: industry-created self-regulation to ensure ‘honest and transparent dealings’ with living artists and customers is preferable to mandatory regulation through the law.

© Henry Lydiate 2016

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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.