A few weeks ago the Foundation for Le Droit De L’Art organised a good one day event looking at Risk, Rules and Opportunities in Art Investment. As you would expect from a meeting of an Art and Law Society there was lots of discussion about regulation. And very little agreement.
The room was split into Roundheads that want more regulation and Cavaliers that do not. Although, not surprisingly, those saying that more regulation could be helpful, stressed that they wanted it to be international and not just in their jurisdiction.
It is hard to see how this could happen. Art is an international market. It is impossible to see how any single regulator could get involved in the sale of a work such as between a Malaysian dealer, representing an Indonesian owner, selling to a Russian collector.
Karen Sanig, Partner and Head of Art Law at Mishcon de Reya, made a compelling argument against further regulation. She – and others – pointed out there is plenty of regulation regarding high value transactions that already applies to the art market (such as money laundering regulations or fund regulation).
She also argued that the art market only really works because of reputation – something that many of her other partners at Mishcon (and she used to) specialise in.
“At the end of the day, auction houses, dealers, art historians, artists and even collectors stand or fall on the reputations,” says Sanig. “It is very hard to build a good reputation and very easy to lose one.”
Sanig said that too much regulation would stifle the art market. She also stressed how few disputes ever make it to court. “Judges are fickle,” said Sanig. “Some of the biggest disputes never go to court. Like the big one I settled yesterday that you will never know about.”
A London partner at another firm agreed: “To be honest, considering the number of transactions, we should see more disagreements. Sadly for us lawyers, the market functions pretty well.”