Pierre Valentin, a London-based partner and head of the art and cultural assets group at Withers law firm, was in Hong Kong recently talking to clients about his role in a case involving the recovery of a stolen painting by French post-impressionist Paul Cézanne. We caught up with him to chat about art and collectors' ability to preserve their wealth.
Pierre, you were involved in a high-profile case of recovering a stolen Cézanne painting. Tell us about that.
The case arose from the theft of one of the most valuable collections of paintings ever stolen from a private residence in the US. Among the stolen paintings was an extraordinary painting by Cézanne. For more than 20 years, our client searched for the stolen works. He has now recovered all seven paintings, after we discovered who had hidden them for so many years. It transpired that the alleged thief brought them with him to the office of a local criminal lawyer and left them there. The alleged thief was later shot dead. The lawyer kept the paintings, moved them around the world, apparently hoping that one day, he could claim a reward for returning them to our client.
The Cézanne was recovered first. Four of the stolen paintings were recovered more recently, after they were consigned for sale at Sotheby's in London. The remaining two paintings, stored in a bank vault in Switzerland, have also been recovered. The lawyer was arrested, convicted and sentenced to a prison term. Our client is now looking to recover damages from him and those who assisted him to hide the paintings and profit from the theft.
There are rather complicated laws governing the outcome of a sale if it later emerges that the object was stolen. Can you summarise those briefly? What's the law in Hong Kong?
If you buy art from a seller who does not have legal ownership, you may or may not acquire legal ownership of the art, depending on the country of purchase. In some countries, if the seller does not have legal ownership but you acquire the artwork in good faith, you will acquire legal ownership either immediately or after a short period of time, assuming that the original owner does not claim it back within that time. In other countries, a person acquiring an artwork from someone who does not have legal ownership does not acquire legal ownership. The buyer may acquire possession but the original owner remains entitled to the artwork if he claims it back.
In Hong Kong, the general principle is that he who does not have good title cannot pass good title. This means that if you buy from the thief or from someone taking from the thief, you will not acquire legal ownership, even if you buy in good faith. However, there are exceptions to that principle. One exception is if you acquire an artwork that was openly sold in a shop or market in Hong Kong. In that case, if you buy the artwork in good faith without notice of the seller's defective title, you will acquire good title. This rule was abolished in the UK but has remained in force in Hong Kong. The Law Reform Commission of Hong Kong supports abolishing the rule, to increase protection for the victims of theft.
You've mentioned in the past that often clients don't want to insure paintings in their own collection because (a) they don't believe they will sell the painting, (b) the insurance itself is rather expensive and (c) that could significantly increase the cost of keeping a painting, as you may be required to provide additional security. How do you advise clients on this matter?
I think that this is a cultural issue. In the US and the UK, it is quite unusual for art owners not to insure their collection. In my experience, collectors often do not insure -- for the wrong reasons. They assume that art insurance is prohibitively expensive, difficult to understand and arrange, or that the whole world will know about their collection if it is insured. If your art is family inheritance, or if you have spent much time and effort putting it together, it would seem to make sense to take that extra step to see that it is adequately protected. It is also good practice to have an inventory of your collection and arrange regular valuations.
If a client approaches you wanting to sell a piece of art, what steps do this person need to take to bring it to market?
If the piece of art is valuable, a sensible buyer will want to conduct due diligence before agreeing to buy. By due diligence, I mean a set of enquiries designed to establish that the buyer will acquire legal ownership and that the art is not subject to any claims. I would advise the seller to put together the evidence to assist the buyer in his enquiries, namely invoices, shipping documents, export licences, insurance policies, and restoration and framing receipts. The seller should consider the best way to market and sell the art, and the location of the sale. If the seller hires an agent, be it a dealer, a gallery or an auctioneer, I would advise the seller to sign a written contract with the agent and if the agent proposes his own contract, to review it carefully. Other issues include shipping, export, insurance, and last but not least, any tax the seller is liable to pay on the sale price. Transactions can be structured in a way to minimise taxation.
How long does this process take?
There is no rule. In my experience, once a buyer is identified and the price is agreed, the sale process can take between two weeks and two months, depending on the value of the property, the parties involved and the circumstances of the transaction. If the transaction is very straightforward, and payment is made immediately, the sale can be completed quickly. If the circumstances are complex, or third party consent is required (e.g. an export licence), the process can take several months.