A painting you’ve lent to an exhibition is suddenly subject to a legal claim in that jurisdication. The museum agrees to return the work, but is it still at risk?
The first call from one of our European clients came on a Friday afternoon, just as we were about to leave town for a short vacation in Italy. He was already enjoying his own holiday in Monte Carlo, and we had a bit of trouble hearing him over the din of his yacht’s engine.
Our client said that he was preparing to lend an important painting to a traveling exhibition in the U.S. but remembered reading about the government seizure of some works by Egon Schiele a few years earlier. He asked us if we knew anything about the case and whether he ran a risk of losing his picture if he lent it to the show. Although he had purchased the painting from a reputable dealer some years earlier, there were several gaps in its provenance, including one around the time of World War II. This raised the possibility that an unknown prior owner might come forward with a claim against the work.
Naturally, we were very familiar with the much-publicized Schiele controversy, which is not yet resolved and has become one of the most important U.S. cases in the area of legal seizure of artwork. Unfortunately, providing a written response to our client’s questions caused us to miss our flight.
The case began on December 31, 1997, when two Schiele paintings on loan from the Leopold Foundation in Vienna to the Museum of Modern Art in New York were claimed by two different families. The plaintiffs asserted that the works had been wrongfully taken by the Nazis before or during World War II. The museum was not in a position to resolve ownership claims and was bound by its loan agreement with the Leopold Foundation. As a result of the families’ claims on the pictures, the New York district attorney issued a subpoena for both works. But the New York State Court of Appeals later quashed the subpoena and permitted the paintings to be returned to the lender.
The story didn’t end there. While one of the Schiele paintings did go back to Vienna, U.S. Customs seized the other, a 1912 work titled Portrait of Wally, and the U.S. attorney for the Southern District of New York began a forfeiture action, which (after various appeals and motions) is currently proceeding.
We informed our client that a foreign lender to a U.S. exhibition can protect himself from the risk of seizure by the U.S. government if a successful application is made in advance under the Federal Immunity from Seizure Act, which specifically protects works of art while on temporary display in a not-for-profit exhibition in the U.S. Significantly, this application must be made by the borrowing institution itself, not the lender. It is not surprising that in the wake of the Schiele case, applications for grants of federal immunity have increased dramatically.
We left New York the next evening, but on arrival at our house in Tuscany we were handed a fax from our client asking whether all artworks would qualify for protection under the Immunity from Seizure Act. We called him on his boat and explained that the act limits protection to works of “cultural ?significance” and that the exhibition has to be in the “national interest,” as determined by the U.S. State Department. The borrower must provide copies of all agreements between the lender and the borrowing institution, a list of the places and dates of ex?hibition and a “scholarly statement establishing the cultural significance of the artwork.”
In addition, to qualify for protection under the Immunity from Seizure Act, the borrower must provide the State Department with a full provenance of the work, as well as any information it has as to why it might be legally seized while in the U.S. and an evaluation of such a threat. If the State Department is satisfied with the application, a notice to this effect is published in the Federal Register, and the works may be shipped to the U.S. without fear of seizure by the federal authorities. In practice, the time-?consuming work required to complete the State Department application has proved very burdensome to many museums wishing to take advantage of the act’s protection.
Our client ‘s phone call woke us early the next morning. Although he had confirmed with the borrowing museum that it had applied for protection from federal seizure of the painting, he wanted our assurance that the work was safe from risk of seizure by New York State, where the traveling exhibition was to start.
We spent the afternoon not at Villa I Tatti but trying to get our client an answer. Based on our research, we told him about the mechanics of the New York Exemption from Seizure statute, which is part of the state’s Arts and Cultural Affairs Law. Under this law, a work temporarily loaned to a New York museum for exhibition may not be seized by the state if the exhibition is not commercial in nature and if the loan is from a non-New York resident. The law was originally passed in response to the 1968 seizure of work by the artist Naum Gabo while it was on loan to a Buffalo museum. The intent of the legislation was to foster the unrestricted loan of works to museums in New York State by both domestic and foreign lenders—unlike the Federal Immunity from Seizure Act, which only covers loans from abroad.
Interestingly, the New York anti-seizure law applies not only in civil proceedings but in criminal cases as well, as determined by the New York Court of Appeals in its 1998 decision to quash the district attorney’s subpoena of the Schiele paintings. The law was thereafter amended to allow seizure of loaned works in criminal cases, but this amendment expired on June 1, 2002. So even a work that is the subject of a criminal action in New York is protected from seizure, a provision that has created quite a bit of public controversy.
“Does the museum apply for protection under the New York Exemption from Seizure statute, or may I?” our savvy client asked us during a lengthy phone conversation the following day. In the background, we could hear the sounds of children playing on the beach.
No one has to apply, we answered, since protection for a work is automatic. “And what about when the exhibition travels to museums outside New York?” he asked, explaining that the show’s second venue was in Texas, after which it was scheduled to visit five other states around the country. We pointed out that, unlike most other states, Texas also had an anti-seizure law. As in New York, the Texas statute applies automatically and does not require an application process. However, the Texas law does not cover works of art that are proven by the court to have been stolen.
As for the other states on the tour, we explained that they did not grant specific protection against possible seizure. We suggested that if our client had real cause for concern regarding legal action in any of the other states, he should secure a written ?commitment from the borrowing museum in each location guaranteeing the return of the painting, and indemnifying him from any loss should it not be returned.
We expected that our client would call us again, and he did not disappoint. “And what are the risks of seizure if I lend my painting to countries outside the U.S.?” he asked, explaining that he’d also been approached about lending it to a show in Paris.
We pointed out that a few countries besides the U.S., including France and Germany, have passed laws protecting artworks from seizure when they are on temporary loan to exhibitions within their borders. In France, the law protects works that are lent to public institutions—although the legislation applies only to loans from foreign governments and institutions, not private lenders.
The French law requires that an order be obtained from the ministers for the arts and foreign affairs guaranteeing that a work will not be seized, and that this order be published in the Journal Officiel at least 60 days before a work is shipped to France. This law was passed in 1994, after an unsuccessful lawsuit was initiated concerning paintings lent by Russia’s national museums to a Matisse exhibition at the Centre Pompidou in Paris. Confiscated during the 1917 Revolution, the paintings became state property when private collections were nationalized. The heirs of the original owners tried unsuccessfully to keep them in France, where they began to pursue legal claims for their return.
After we reviewed the full extent of our legal research with our client, he asked us whether we would advise him to lend the painting after all. We pointed out that, as a practical matter, without some specific ownership problem with his painting or a particular threat of litigation, the chances of his work—or, indeed, any work—being seized were remote. With this in mind, our client ultimately decided to proceed with the loan.
Upon our return to New York, we attended the opening of the exhibition and admired our client’s painting. Our vacation was shot, but the show, at least, was beautiful.