Fakes and forgeries in the fine art world: What’s an art dealer to do?

This time last year, there were a series of frauds in the art world being discovered and an increase in museums and galleries hiring forensic investigators to verify artworks. Things look to be picking up right from where they were left at the end of 2016. Two “Old Masters” previously sold in 2011 and 2012 have now been proven to be forgeries and in one case the auction house is looking to the U.K. courts to order the art dealer to reimburse them.

Detecting forgeries and culpability

Today, it’s possible to prove fakes and forgeries among works that have previously been considered authentic

In addition to advances in the scholarship of artists and their works, forensic investigators are constantly developing new approaches and knowledge by staying abreast of the most recent technology in the field. So it’s possible that we can prove fakes and forgeries today that have previously been considered authentic.

The legal mechanics of a transaction in art are essentially no different from the legal mechanics of a transaction on other commodities. The art world may have its own selling techniques but the concepts on which those transactions are made are those of general law, i.e. on the civil side in the U.K., the Sale of Goods Act 1979 and the Misrepresentation Act 1967 and, on the criminal side, the Trade Descriptions Act 1968. Other jurisdictions have similar laws protecting the rights of the consumer.

Anyone selling art (or any goods for that matter!) has a duty of care to the buyer. They need to ensure that reasonable steps were taken to determine the authenticity, provenance and title of the artwork—although historically, courts don’t confirm whether they believe an artwork is genuine or not, they prefer to state that the tests conducted were thorough enough, or that the expert opinion is based on enough tests.

Whether or not the art dealer did enough

To understand whether the duty of care was breached involves testing the art dealers’ actions against the standard of a reasonable art dealer, which varies depending on a number of factors. It will vary again on the knowledge and expertise of the buyer to assess whether they have or should have the skill set to determine whether the work is genuine or not. In such instances the “caveat emptor” rule would normally apply.

It is not for me to decide whether the art dealer should’ve known the work to be a forgery – the courts themselves are not capable to determine whether a work is genuine or not. The law will decide on the facts surrounding the sale and which side has presented the most credible expert evidence.

What to do if you are an art dealer?

However, art dealers could protect themselves from such eventualities by extending their fine art dealers insurance to include an errors and omissions limit. This would, subject to certain conditions, provide an indemnity for the costs of defence and if found to be in breach of their duty of care, the coverage would also indemnify them for the award by the court to the claimant/buyer subject to the policy sub-limit.


 

Cynthia Dugan has 18 years in the insurance industry and works closely with clients in Fine Art, Jewellery & Specie to ensure they receive the best possible service from Willis Towers Watson. Cynthia leads sales for Fine Art, Specie & Jewellery team. Cynthia is a Chartered Insurance Broker, having completed the Advanced Diploma in Insurance by the Chartered Insurance Institute.

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