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Petra Warrington discusses exporting artwork in Art Law Magazine

  • November 14, 2017
  • By Hunters Law

Exporting an artwork from the United Kingdom to Switzerland

Many countries share a concern for ensuring that important works of art stay within their borders. In the United Kingdom, any artwork of a certain age and meeting a particular value threshold requires a licence to be exported. The Reviewing Committee on the Export of Works of Art and Objects of Cultural Interest (the “Reviewing Committee”) is an advisory non-departmental public body that advises the Secretary of State on whether items that come before it are of national importance and how they should be treated.

By placing a temporary export bar on national treasures going abroad and giving UK institutions or qualifying individuals an opportunity to purchase the works before they are exported, the State undertakes a balancing exercise between public and private interests. There is a natural opposition between the State’s perceived duty to protect the national heritage, the rights of private collectors to deal freely with their possessions and the reliance of the art market on the international movement of artworks.

The number of artworks whose export is barred each year, however, is very small compared to the large number of works that are freely exported. This article traces the regulatory journey that an artwork might take if it is being exported from the UK to Switzerland. If the artwork meets the criteria that determines it to be a national treasure, its journey will be slower and more convoluted.

Statutory framework

The UK has sought to address competing public and private interests in dealing with cultural objects by implementing a relatively liberal export control system, which has been crafted over many years since the first export controls were introduced in 1939 and now combines European and domestic law. The current statutory framework lies in the Export Control Act 2002 and the Export of Objects of Cultural Interest (Control) Order 2003, which prohibit the export, with certain exceptions, of “objects of cultural interest manufactured or produced more than 50 years before the date of exportation” unless a licence is obtained. Council Regulation (EC) No. 116/2009 requires a Community licence to export outside of the European Union any “cultural goods” meeting certain criteria.

Exporting to countries outside of the EU

Export to any destination of certain items (i.e. postage stamps and other articles of philatelic interest, correspondence written by or to the exporter or his/her spouse and goods not released into free circulation in the EU) does not require a licence. The rules regarding export of other cultural items depend on their destination, age and value.

An export to Switzerland, for example, would be governed by EU rules and the threshold for the value of the object requiring an export licence differs from the domestic rules, which only apply to objects being exported to other countries within the EU. The current value threshold for an export of a painting to Switzerland is £117,657. The threshold for a drawing is £11,766. There is no value threshold for an archaeological object over 100 years old. If the value of the work equals or exceeds the applicable threshold, and is not being exported by its maker, it requires an EU licence.

If the value of the object being exported falls under the threshold, it can be exported under an Open General Export Licence (Objects of Cultural Interest) (OGEL) without obtaining an individual licence. This does not require any application to the Export Licensing Unit of the Arts Council and there is no licence to present to customs. Customs should be informed that the object is being exported under an OGEL.

Assuming that the applicable threshold is met or exceeded, however, the applicant (who is usually the owner of the object although a purchaser would be well advised to make the purchase of an object conditional on obtaining an export licence if he intends to export it) applies for an individual export licence with the Export Licensing Unit. The application may then be reviewed by an expert adviser, who is generally a director, curator or keeper of a national museum or gallery.

If the expert adviser deems the object to be of national significance, he will object to the proposed export and refer it to the Reviewing Committee. This happens only on occasion. The most recent published report of the Reviewing Committee states that between 1 May 2015 and 30 April 2016, there were 10,585 applications for export licences covering a total of 71,731 items, of which only 25 cases were referred to the Reviewing Committee.

The Reviewing Committee, which, with one exception, is made up of art and cultural property experts, considers the expert adviser’s statement as well as any representations made by the applicant for the export licence and determines whether the object is of national importance based on whether it meets one or more of the Waverley criteria (as to which see below). If the object is not deemed to be of national importance, the Reviewing Committee will recommend to the secretary of State that an export licence should be granted. If it is of national importance, the Reviewing Committee will recommend to the Secretary of State that a decision on the licence application should be deferred temporarily to allow a domestic purchaser to raise funds to purchase the object at a fair market price.

The fair market price is usually the price at which the applicant purchased the object, whether privately or at auction, or, if the application is made in anticipation of a sale, the agreed sale price or an estimated value supported by evidence such as recent prices fetched by comparable objects. The fair market price is intended to take into account buyer’s premium or dealer’s commission and reasonable conservation costs but not interest charges, transport and storage costs, insurance costs or legal fees resulting from the reviewing process and the deferment of a decision on granting an export licence. If there was no VAT charged on the purchase price, but there would be if a domestic purchaser were to purchase the item, VAT would be included in the fair market place.

If an object has been imported into the UK within the last 50 years, and the applicant can provide proof of the import, an export licence will normally be granted unless there is a bar to the granting of a licence. The bars currently in place relate to objects that have been unlawfully removed from the territory of another EU Member State on or after 1 January 1993 and objects that are destined for export to an embargoed country.

A recent example

In the past year, the Reviewing Committee has considered a number of highly significant works that have inspired a great deal of media publicity and fundraising on behalf of institutions to have those works ‘saved for the nation’. A few less celebrated works have gone almost unnoticed as they have navigated the export control system. One such work is a drawing by the Austrian Romantic artist, Joseph Anton Koch, of a Swiss waterfall, titled The Schmadribach Waterfall near Lauterbrunnen, Switzerland, which is presently subject to a temporary export bar. The first deferral period will end on 27th September 2017 and if, by that date, a serious intention to raise funds to purchase the work is made by an institution or qualifying individual, the period may be extended until 27th December 2017. The work sold at auction for £68,750 inclusive of premium, which is therefore deemed the fair market price.

A temporary export bar

The reader may wonder how an obscure drawing of Swiss scenery by an Austrian artist who trained in Germany and lived in Italy could be considered by the experts involved to be a national treasure belonging to the UK. The work belonged to Brian Sewell, a well-known English art critic, and was sold in a sale of his collection at Christie’s in London on 27th September 2016. The work had never been published or exhibited prior to its sale and, as the applicant argued when the work was considered by the Reviewing Committee on 12 April 2017, the drawing was unknown to specialists or the broader public. The work’s ownership history before entering the collection of Brian Sewell was unknown. While Koch was highly admired by British collectors in the late eighteenth century and had a number of British patrons, he never visited Britain and it is not immediately evident why his work should have a strong link with the UK.

However, the Reviewing Committee is tasked with deciding whether a work has particular significance from a historical, artistic or scholarly point of view on the basis of the Waverley criteria and a work does not need to be defined by its British-ness to be considered a national treasure. In fact, the majority of cases that are considered by the Reviewing Committee relate to masterpieces whose origin is traced to other countries. To have its export temporarily barred, an object needs to meet only one of the Waverley criteria, all of which are equally weighted. The three criteria are:

(1) is the object so closely connected with our history and national life that its departure would be a misfortune?;

(2) is it of outstanding aesthetic importance?; or

(3) is it of outstanding significance for the study of some particular branch of art, learning or history?

In this case, the Koch drawing met the third criteria on the grounds that it of outstanding significance for the study of Romantic landscape art and Swiss scenery.

Hypothetical outcomes

This section assumes that an offer to purchase the Koch drawing is made within the allocated time frame by an institution in the UK or a qualifying individual who meets the requirements of the ‘Ridley rules’, including by offering to put the drawing on public show for 100 days a year. The applicant for the export licence must then decide whether to accept the offer to purchase or to decline it.

An acceptance means that they will receive the fair market price, which in this case would be the price achieved at auction one year earlier. There may not be a great difference in the price achieved in September 2016 and the value of the drawing in September 2017. Depending on the circumstances, however, currency fluctuations and market forces during the intervening period may mean that the applicant for the export licence is put at an economic disadvantage by accepting repayment of the same amount at a later date.

The alternative option, however, may be less appealing as to decline the offer to purchase would mean that the export licence application is most likely declined. This leaves the drawing in export limbo as any further application made within ten years will likely be refused without a deferral period, unless accompanied by evidence of a change of circumstances since the previous application.

If, on the other hand, we assume that no offer to purchase is made for the Koch drawing, the Reviewing Committee will recommend to the Secretary of State that an export licence is issued. The applicant is therefore free to export it out of the country. Perhaps the Swiss scene might be destined for Switzerland, in which case the drawing would be subject to value added tax at its destination and would need to be cleared with Swiss customs, who will also want to see a copy of the UK export licence. This is the case for any artworks and objects that meet the criteria for ‘cultural property’ under Swiss law. If the artwork is intended for museum display or is being imported for the purpose of sale by a gallery or at auction using the temporary admission procedure, it may be imported dutyfree but otherwise the duty must be paid.

Conclusion

Once an export licence has been issued and an artwork safely transported to its destination, import and customs rules complied with and duty paid, the owner is relieved of some of the more significant regulatory burdens of ownership. If the artwork then remains in one place for a length of time, depending on the country in which it resides, it may eventually fall within that country’s definition of its cultural patrimony and be subject to strict rules governing its further movement. Switzerland is considered to have a liberal export regime, and the United Kingdom a moderate one, but many countries make more vigorous claims to their national treasures.

Petra Warrington, Associate

This article was originally published in Art Law Magazine’s November issue, and can be accessed here behind a paywall. 

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