Art law USA

Court battle fuels calls for less art market secrecy

Lines are drawn between those who favour openness and others who prefer a “handshake” culture

london. The $8m court case between Miami collector Craig Robins and New York art dealer David Zwirner lays bare the murky intricacies of the contemporary art world (see link, left). The accusations reveal the secret handshakes, blacklists and verbal agreements that dominate the market, prompting some to say it is time that the whole trade opened up. A few go as far as suggesting legislation such as droit de suite, where artists receive a fee on the resale of their work, should be extended to New York (see Opinion).

“A reliance on keeping things hush-hush is built into the system,” said Chelsea gallerist Edward Winkleman. “If collectors’ resales did not carry a stigma, if artists benefited from the resales, and if galleries were not placed in a precarious position between two clients—the artist and the collector—the lawyers who are now going to make a small fortune off this case would be busy with more important matters.”

Linda Blumberg, the executive director of the Art Dealers Association of America (ADAA, which has a select membership of US galleries, including Zwirner), said that transparency is something the organisation “feels very strongly about. Transparency is healthy in any market. Our dealers don’t have anything to be ashamed of, so why not?” She referred to the association’s code of practice, to which all members must adhere. The document was co-written by the association’s former president Roland Augustine, who started an ethics committee during his tenure. He said that the Robins vs Zwirner case “moves everyone to clearly articulate and memorialise agreements to avoid such litigation—where there is money involved, there is always room for misinterpretation”.

“Most dealers, and some collectors, are convinced more transparency would ruin the market,” said Hans Van Miegroet, Professor of Arts and Markets at Duke University, North Carolina. “But the counter-intuitive thing is that the more transparent you are, the more profit you capture. You will also push out the less transparent people in the market and will create a more developed market overall. You basically have to share more information about everything—about the type of transactions, background on how prices were formed in the past, the type of art.”

Art investment advisors Michael Plummer and Jeff Rabin of Artvest Partners agree, adding: “One of the powers of auctions is that they set public pricing—a similar verifiable pricing mechanism for private transactions might allow record prices in this sector to be brought to the public’s attention as well.”

Nevertheless, some insiders are happy with the status quo. Gallerist Thaddaeus Ropac said: “The fluidity of our system has its positive sides.” Revealing that his gallery does not have written contracts with its artists, he said: “Generally the handshake mentality works pretty well. It would be a pity to lose it—no one wants to feel like they are run by lawyers.”

Lucy Mitchell-Innes, president of the ADAA, said the real issue is “the relationship between collectors and dealers, which is built on trust, knowledge, and a sense of fairness. Once you interrupt that with legal documents, the basic message is that there is an erosion of trust.” New York dealer Jack Tilton, who was subpoenaed in the Robins vs Zwirner case, added: “90% of what happens in the art world is word of mouth—at the end of the day, you either trust someone or you don’t.”

Even those who are in favour of more formality concede there are practical difficulties. “You couldn’t write legislation that everyone would agree with,” said New York lawyer Peter Stern of McLaughlin & Stern, while Michael Moses, co-founder of the Mei Moses index, said: “How could you make non-public transactions transparent?”

As to droit de suite: “It’s a noble and fair idea—but also totally impossible to practice or police,” said Michael Findlay of Acquavella gallery. He added: “From an investment point of view, if I am going to share my profit with the artist, would they share the potential loss?” Todd Levin, director of the Levin Art Group, added: “Artists choose to ex­change something they love, their art, for something they need, money. After choosing that exchange, they can’t attach an umbilical cord to their artwork.” But agent Richard Wad­hams, of consultants Hogbens Dun­phy, said that artists should be given copies of invoices for the sale of their works: “It would clarify arrangements. All artists want to know is where their work is.”

However artist Jake Chapman is sanguine about the machinations of the market: “When someone comes with the white gloves to take your work, you are paid for your efforts and that’s that.” He added: “The art world is murky, and to render it transparent is to miss the nature of its dynamic. It’s based on excessive points of disproportion—it’s a world where a Giacometti sculpture can sell for £65m. You can’t restrain the insanity of the market—that would miss the point.”

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8 Jul 10
6:0 CET


There are a major problems in the American Art World. The VILLIANS are all about the entire process. It is a shame that the masterpiece herein press release is caught up in the greed and deception and the benefit to American History suffers.

30 Apr 10
15:12 CET


"fuels calls" by whom? I see only an academic and an investment manager calling for anything here.

29 Apr 10
22:4 CET


ARTISTS should stop whining and fight 4 their rights.Royalites on RESALES of originals works is a bill sitting in Congress for more than 20 years! They should take the time to get educated. ART is a non-federally controlled commodity in the USA and collectors like that leverage for tax benefits. If it works, Y fix it? Artpeace!

29 Apr 10
17:4 CET


The present laws in the U.S. do not favor the artists, but the collectors, dealers and corporations. It is not a balanced playing field tax wise. North America is still in the caves when it comes to Artists Rights.

29 Apr 10
17:4 CET


U.S. artists being able to donate art directly to group shows for donation to charities, museums or other organizations and reap the tax deduction benefit is another disadvantage. The struggling artist has become an informed and smart entrepreneur and he/she do not see the industry going 50/50.

29 Apr 10
17:3 CET


It's not the artist. Thanks for the article.

29 Apr 10
17:3 CET


The closest the U.S gets to that finely tuned organization is the Artist Rights Society in New York minus the Resale Rights. California being the only State with resale rights for American artists - this limits other artists not in the State to their economic potential.

29 Apr 10
17:1 CET


More U.S. artists need to be aware of the benefits and rights artists have in Europe and other countries. For example, look at the U.K., they have the Design and Artists Copyright Society:

29 Apr 10
16:45 CET


As collectors, why don't we start a blacklist of artists?

29 Apr 10
16:42 CET


The whole business is corrupt from the auction houses, galleries and museums.. Diffidently need controls. The whole art thing is a scam for the rich.

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