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Ownership disputes unsettle art world

Klimt painting

Questions about the ownership of artwork and antiquities are an ongoing issue in the art world, and collectors and museums should review documentation and the ownership history of items to get ahead of potential challenges. 

While limited insurance coverage is available to cover the risk of losing previously stolen or requisitioned art, limits are often low, experts say. 

Restitution and repatriation efforts have accelerated in recent years as cultural property laws that protect and regulate the ownership and transport of culturally significant items such as historic artifacts and artwork have evolved.

For example, last year there were renewed calls for the British Museum in London to return the Elgin Marbles to Greece; several galleries and museums in the U.S. announced the return of allegedly looted antiquities to countries including Greece, Italy and Turkey, in some cases following high-profile investigations and seizures by the Manhattan District Attorney’s office; and descendants of Holocaust survivors and victims continued to sue for the ownership of art that was confiscated by the Nazis. 

Cultural institutions are seeing a “second wave” of inquiries related to title issues involving certain items, said Ellen Ross, New York-based managing director, fine arts, at Arthur J. Gallagher & Co.

In 2016, Congress passed the Holocaust Expropriated Art Recovery Act, which led many institutions to review their inventories, determine how they obtained certain pieces of art and return many items, Ms. Ross said. 

The law allows civil claims or causes of action for the recovery of artwork or certain other property unlawfully lost between 1933 and 1945 because of persecution during the Nazi era.

More information is now available on the internet, making it easier for people to research the ownership history, or provenance, of works of art and to find some that are problematic, she said.

“That’s why you’re seeing this new wave of incidences or inquiries to major institutes about particular pieces,” Ms. Ross said.

Provenance research, where museums look into the ownership history of proposed acquisitions or artworks in their collections to establish legal ownership, is a longstanding practice but is coming under growing scrutiny as legal and ethical concerns over some objects come to light.

Last year, for example, the Metropolitan Museum of Art in New York announced a series of initiatives related to cultural property and its collecting practices including a review of its holdings and the hiring of provenance researchers. The Met did not respond to requests for comment.

Prior to the late 1990s, “no one cared about the issue of provenance,” said Georges G. Lederman, New York-based special counsel and a defense attorney at law firm Withersworldwide. “But increasingly over time there has been a political shift, and beginning late in the 90s, early 2000s, it has become a central issue,” he said.

Many individuals, museums and other entities purchased antiquities before cultural patrimony laws were in effect or enforced, Mr. Lederman said. “If you try to sell that work and you don’t have proof that it left the source nation prior to the enactment of its cultural law, or you don’t have proof of lawful export from the government, then you don’t have proof that title passed lawfully,” he said.

“The problem is that you can’t pass title on stolen goods,” said Colin Quinn, New York-based director of claims for Precise Adjustments Inc., a subsidiary of Tokio Marine Highland.

If a policyholder purchases an item in good faith and it’s later discovered to have been stolen, “they would not have an insurable interest and therefore they wouldn’t have coverage for it,” Mr. Quinn said. 

“We always advise our clients that they should do a very thorough provenance check and always check the chain of ownership,” he said.

If there’s a gap in ownership for certain items, such as artwork from the World War II era, it’s critical that prospective buyers take extra steps to make sure they weren’t stolen or taken under duress, he said (see related story below).

The repatriation process is complex and from an insurance perspective is not a covered cause of loss, said Mary Pontillo, Charlottesville, Virginia-based senior vice president and national fine art practice leader at Risk Strategies Co.

“There’s been no physical loss or damage, so, unfortunately, there is no fine art claim. The piece has to be given up and surrendered to the authorities,” Ms. Pontillo said.

Some fine art policies carry defense cost coverage designed to reimburse policyholders if they are involved in litigation related to misrepresentation or title issues, said Erika Witler, Chicago-based senior vice president, fine art collectibles at Distinguished Programs. “It’s a very small coverage and not the main focus of the policy,” she said.

Museums have started returning items because views about looted items have changed, said Robert Read, London-
based head of art and private clients at Hiscox Ltd. “It’s a moral issue and less of an insurance issue,” Mr. Read said.

Defective title policies are available that cover financial loss due to defects in the legal title of fine art, and typically this coverage is sub-limited, he said. 

“Some insurers give it as a standard limit for $25,000, but otherwise it’s typically going to be sub $1 million and not everyone will have it,” he said.

“If you’re just collecting contemporary art and you’re buying the art straight from the artists, there’s no issue on the title, but if you’re buying antiquities, or you’re buying impressionist works, and there’s a blank on the provenance between 1933 and 1945, then that’s the sort of thing that might make you nervous,” he said. 

Technology helps validate authenticity of precious assets

Data and technology are playing a growing role in helping to authenticate works of art and verify information when title issues arise, experts say.

It can be challenging to obtain accurate data in the art world because there’s never been any systematic attempt to collect it or record it and the market is based on trust, said Angus Scott, London-based co-founder and CEO of ArtClear Ltd., a technology company.

“Once a picture has left the artist’s studio who’s to say that the next time it reappears it’s the same work of art?” Mr. Scott said. Works of art are mobile and can be traded and copied, he said.

Fingerprinting technology can be used to link a physical artwork with verified information about it, such as proof of legal title, ownership history and copyright, Mr. Scott said.

“It allows us to create a unique identifier, which is derived from the physical properties of an individual physical work of art,” he said.

Some 700,000 items ranging from lost and stolen art to antiques and collectibles, including watches, are listed in the Art Loss Register’s online database, said Olivia Whitting, London-based head of the cultural heritage team at the ALR. 

About 400,000 searches are run against the database annually, Ms. Whitting said. The ALR has also launched a cultural heritage at risk database and works with law enforcement agencies and nation states to recover looted and stolen cultural property.

If a deal seems too good to be true, clients should run additional checks, said Kristina Marcigliano, New York-based assistant vice president, fine art and specie, at Risk Strategies.

“Usually if there’s a family that’s missing an artwork or something that was looted, they will have put it on the Art Loss Register,” Ms. Marcigliano said.

Buyers should also check the sanctions list maintained by the Treasury Department’s Office of Foreign Assets Control before entering a transaction, she said.

“Even Google searching some potential donors or buyers’ names can really shed light,” Ms. Marcigliano said.