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Copyright ownership can either be with the original creator of the artistic work or any validly transferred assignee.

There are a limited number of fair dealing exceptions for educational, library and public administration use.

There is no system for registration of copyright and a copyright claim is best supported by enfacing the first publication of a relevant work with the date of its creation together with the symbol ©.

Moral rights provide that the author of a copyright literary, dramatic, musical or artistic work, and the director of a copyright film, has the right to be identified as the author or director but no third party shall have infringed this right unless the right has been asserted either generally or in relation to any specified act or description of act whether by reference to assignment or in relation to public exhibition of an artistic work.

However, the right to be identified as author or director is not applicable in relation to a computer program, the design of a type face or any computer-generated work nor in respect of a bundle of further exceptions to the right being basically where the author has consented to publication under any of these exceptions.

The Copyright Ordinance further provides for a right of an author or director to object to derogatory treatment of his or her work as specifically provided for in the Ordinance.

ii Registered Designs Ordinance

The Registered Designs Ordinance provides that a person who creates a design or, if there are two or more such persons, each of those persons, may, when a design is new, apply as the owner to register it in respect of any article or set of articles specified in the application. Computer programs and protected layout designs (topographies) are not registrable under this Ordinance.

Note that for the purposes of this Ordinance, ‘design’ means features of shape, configuration, pattern or ornament applied to an article by any industrial process, being features in which the finished article appeals to and are judged by the eye but expressly does not include a method or principle of construction or any feature of the shape or configuration of an article that is dictated solely by the function that the article has to perform or is dependent upon the appearance of another article of which the article is intended by the designer to form an integral part.

‘Designer’, in the case of a computer-aided design of a layout design (topography) means the person who made the arrangements for the creation of the layout design (topography).

Where a design is created in pursuance of a commission for money, the person commissioning the design shall, subject to any contrary agreement between the parties, be treated as the original owner of the design and where the design is created by an employee in the course of his or her employment, the employer shall, subject to any contrary agreement between the parties, be treated as the original owner of the design.

Registration of a registered design gives the exclusive right to the registered owner to make in or import into Hong Kong for sale or hire or for use for the purposes of trade or business or to sell, hire or offer or expose for sale or hire in Hong Kong, any article in respect of which the design is registered.

The period of registration of a design shall be for an initial period of five years, extendable for additional periods of five years, up to a maximum of 25 years and six months in the aggregate.

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iii Resale rights

Hong Kong law does not provide for any droit de suite or resale rights and the Copyright Ordinance expressly provides that moral rights are not assignable.

VII TRUSTS, FOUNDATIONS AND ESTATES

It is possible for a collector to settle all or part of his or her collection:

ainter vivos to trustees establishing a trust for them to hold the settled collection assets on trust for designated beneficiaries; or

bby will, effectively creating the executors of the estate as the trustees for designated beneficiaries either for a life interest or as an absolute gift.

The Trustee Ordinance was amended to exclude the former rule against perpetuities and, accordingly, the effective life of a trust is unlimited.

Very often in establishing a trust it is common practice for the collector or settlor to leave either with the trustees of an inter vivos trust or with the executors of a will trust a letter of wishes that is expressed to be not binding on the trustees or executors but nonetheless expresses guidance to the wishes that the collector settlor or testator wishes to put into effect.

There is no current Hong Kong case law on the effective establishment of either inter vivos trusts or will trusts of art assets that are accordingly effective and binding.

VIII OUTLOOK AND CONCLUSIONS

The use of the internet for online auctions – either exclusively or as an optional alternative to physically bidding in the room or telephone bidding – is fast becoming a staple mode of audience response to an e-invitation from auction houses.

Quite apart from auction houses, art galleries are making available full details of available works of art for purchase and art fairs are providing individual links to separate dealers to provide the purchasing public with direct access to each dealer’s listed artworks, and this appears to be a use of the internet that is well supported, efficient and accordingly likely to grow exponentially.

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Chapter 18

INDIA

Kamala Naganand 1

I INTRODUCTION

India has been synonymous with its arts in various forms. From the time of our earliest civilisation in the Indus valley, the subcontinent has been known to have artisans of extraordinary skill and creativity. Each invader brought with them local traditions and design elements that local artisans assimilated and amalgamated into elements of design that we see as the style synonymous with the Indian subcontinent today.

The Indian art market is a US$2 billion industry, which includes artisans, weavers, tribal and contemporary artists. Sixty per cent of the work artisans create is for the domestic market, while 40 per cent of the art is exported around the world. Most artisans work with designers and buying houses to export their products and have very little say in terms of pricing. In the past few years, we have seen huge interest in artisan art from the domestic market. Brands have started to work on reviving old and dying crafts.

For paintings and fine arts, there are established galleries dealing in masters, modern art, photography, etc., in all major cities, and these hold regular events, including those of an educational nature, for their patrons. In the past five years we have seen auction houses becoming popular sources for procuring artworks. These auction houses have regular sales and curate their events around festive seasons. 2020 has seen exclusive online auctions with enthusiastic turnout and strong sales.

India has been very mindful of protecting the various traditional art forms and ensuring that it supports artisans in the remote corners of the country. Each state has a handicrafts emporium that procures works from artisans local to the state and sells it in their retail outlets. These handicraft emporiums are popular with both locals and tourists. They procure ethically sourced works and have fixed prices to protect artisans’ interests.

II THE YEAR IN REVIEW

2020 will be remembered as the year that brought technology into the art world. From being a highly tactile industry, it moved to a touchless system, which took some out-of-the-box thinking and creativity. Artists, artisans, galleries and auction houses moved seamlessly online and saw benefits from using technology. Artisans also understood how they could reach buyers and audiences with the help of various social media platforms, such as Instagram, Pinterest and WhatsApp. This year saw the India Art Fair go ahead, but the Kochi Biennial was cancelled. These are the largest art events in the country.

1 Kamala Naganand is managing partner at Aarna Law.

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The most notable contribution to the development of the art world in India is the setting up of private art galleries. The Kiran Nadar Museum of Art,2 which was set up in 2010, saw how private patronage and encouragement could enhance the art ecosystem. Similar initiatives by the Piramal Museum of Art3 through its artist-in-residence programme have generated great interest among up-and-coming artists.

IIIART DISPUTES

iTitle in art

Art and antiquity have wide meanings and interpretation. The connotation extends to various articles, such as paintings, books, statues, sculptures, manuscripts, objects and heritage sites as contained in Section 2(1)(a) of the Antiquities and Art Treasures Act 1972 (the Antiquities Act). The law under the Antiquities Act not only examines the ‘buyer’ of an art or antique object or item, but also recognises those who are in possession, by ownership, possession or inheritance.

The transfer of title in an antiquity or art item by means of an auction or a private sale is accompanied by requirements such as registration under Section 14 of the Antiquities Act. This registration is mandated in a time-bound manner of three months for a person who owns, controls or possesses such antiquity, from the date on which such item is declared an ‘antiquity’ by the central government through a notification. For all other persons, registration is mandated within a period of 15 days of the person owning, controlling or possessing such antiquity.

The transfer of title through purchase or by gift, and licensing, entails necessary scrutiny by the person accepting the art or antiquity in respect of its authenticity, source, origin, registration, licence and all such determinants indicating its nature and origin. The lack of necessary licence or registration will result in criminal prosecution under the Antiquities Act.

The ancient Buddha statue displayed at the High Commission of India in London is a notable instance of title claims being put forth and considered favourably in India’s art heritage. In this instance a claim was put forth to the UK government and the arbitration award was in favour of the Indian government.4

ii Limitation periods

The limitation periods for bringing about civil claims in India is governed by the Limitation Act 1963, which contemplates a period of three years from the date of accrual of cause of action to sue as the statutory period within which a claim or suit shall be preferred. There is a fine distinction drawn between the ‘date of first accrual of the right to sue’ versus the ‘date of accrual of the right to sue’. Article 113 of the Limitation Act prescribes the limitation period for suits or claims not falling under any specific category of the said statute to be three years from the date on which the right to sue accrues, unlike in other articles of the Limitation Act, which refer to the first instance of the accrual of the right to sue. This distinction has been

2www.knma.in.

3www.piramalmuseum.com.

4‘FM hands over restituted 12th Century Buddha statue to Shri Prahalad Sing Patel, Culture Minister,’ Ministry of Finance, India, Press Release, 17 September 2019, https://pib.gov.in/PressReleaseIframePage. aspx?PRID=1585346.

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analysed in various cases.5 Under Article 113, the period of limitation would be computed depending upon the last day of the cause of action arising.6 However, while considering the limitation period for ‘declarations’ (title, ownership, etc.), it shall commence from the date on which the right to sue ‘first’ arises.7

Therefore, the facts and claims set out in a case will determine the applicable period of limitation in civil cases.

With respect to criminal action, the limitation for any crime punishable with imprisonment above seven years shall be while the accused is alive, and, in the case of multiple accused, while all or any one of accused is alive.

The Antiquities Act stipulates a maximum imprisonment of three years for any contravention of Section 3. Because the penal provision is less than seven years, the limitation period to initiate criminal action is three years under Sections 468 and 469 of the Criminal Procedure Code 1973, commencing from (1) the date of the offence; (2) where commission of the offence was not known to the aggrieved, the first date on which such offence comes to the knowledge of such person or any police officer (whichever is earlier); or (3) where it is not known by whom the offence was committed, the first day on which the identity of the offender is known to the aggrieved or a police officer (whichever is earlier).

Contracts for sale or purchase of art or antiquities may be in writing through contract, or merely evidenced through invoices, and in some cases only contain a record of payment in support of the sale. Agreements containing governing law clauses with Indian law as the chosen law are bound by the three-year limitation period to initiate proceedings. Arbitration clauses are said to survive the termination of the underlying contract, entitling the parties to invoke and initiate arbitration within a period of three years from the date on which it is commenced as per Section 21 of the Arbitration and Conciliation Act 1996 (the Arbitration Act).

iii Alternative dispute resolution

The Indian art industry is flooded with legal ambiguities. The consistent growth in the strata of high-net-worth individuals or families (HNIs) in India and the increased frequency and magnitude of online and other auctions has contributed to the growth of the Indian art market.

In an arbitral award passed in December 2014, the arbitrator considered the claims of auction house Bid & Hammer seeking payment of its dues towards a Ravi Verma painting, bid for and purchased by Kiran Nadar. Ms Nadar had disputed the authenticity of the 120-year-old painting. The tribunal observed that the respondent’s expert himself was not sure of the authenticity of the painting in question and that a suspicion could never partake in character of a proof in a court of law. Therefore, the tribunal held the painting to be genuine.8 This decision was perhaps the first of its kind in India where a dispute in relation to the authenticity of art was brought before a legal forum. There is clearly a need for judicial precedent in the Indian art framework setting out some of the best

5Shakti Bhog Food Industries Ltd. v. The Central Bank of India and Anr, (2) RLW 1417 (SC).

6Union of India & Ors. v. West Coast Paper Mills Ltd. & Anr., 2004 (2) SCR 642.

7Khatri Hotels Private Limited & Anr. v. Union of India & Anr. (2011) 9 SCC 126.

8‘Auction House Successful in Recovery Suit Against Kiran Nadar Museum of Art Founder’, Cision PR Newswire, 18 December 2014, www.prnewswire.com/in/news-releases/auction-house-successful-in- recovery-suit-against-kiran-nadar-museum-of-art-founder-286200361.html.

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practices in the authentication process during sale offerings. Although arbitral awards do not carry precedential value, this case can certainly be said to be a small yet significant step in encouraging legal intervention and exposing vested interests in the art market.

There are questions as to the maintainability and enforcement of awards passed by such institutions owing to the statutory restrictions placed under the Arbitration Act. Sections 34 and 48 particularly render an award arising out of an ‘inarbitrable’ dispute, such as title, fraud and copyright, unenforceable in India. It has been established that art disputes arising from testamentary or succession matters are inarbitrable in India.9 Cases of art-related fraud are dependent upon the specific facts of each case, with judicial precedents indicating arbitrability in cases involving internal affairs of parties.10

There is also a possibility of parties subsequently executing agreements to negotiate or arbitrate disputes that arise in respect of such art or antiquity. Arbitration and private mediation appear to be preferred means of resolution due to their time-efficient and confidential nature.

The Antiquities Act stipulates that the Archaeological Survey of India (ASI) shall be the determining authority for classification of an item as an ‘art’ or ‘antiquity’. Parties must be afforded the opportunity to appoint experts who are conversant with the standards and parameters of the art market to make determinations as to age, authenticity, etc., of the art object. Although the Arbitration Act recognises and permits the parties and the tribunal to appoint an expert under Section 26, in instances where the tribunal fails to refer the question of authenticity to the ASI or disregards the ASI’s opinion, there is a possibility that the award passed may succumb to a Section 34 challenge.

The Supreme Court of India has ruled that in the case of a conflict, the provisions of the Antiquities Act will override the provisions of a general enactment covering the same aspect.11 There is much to be explored in this area as such precedence is likely to create new problems. For instance, the right to engage experts under Section 26 of the Arbitration Act will stand to be overridden by Section 24 of the Antiquities Act, which is likely to affect the analysis as to the age of the artwork. This puts the potential award at a risk of challenge at the stage of a Section 34 petition, for possibly being ‘contrary to the public policy of India’. Much remains to be explored on the conflict of law aspect of this discussion; however, the recent developments point to a growing enquiry into these concepts.

IV FAKES, FORGERIES AND AUTHENTICATION

There has been a rise in fakes and forgeries of artworks in the country.

i Fake and forged artworks laws

Indian Contract Act 1872

The Indian Contract Act stipulates that for a contract of sale to be valid, consent to enter into the contract must be obtained freely and must not be induced by coercion, undue influence, fraud, misrepresentation or mistake.12 Therefore, it will be the responsibility of

9Booz-Allen & Hamilton Inc v. Sbi Home Finance Ltd. & Ors (2011) 5 SCC 532.

10A Ayyasamy v. A Paramasivam & Ors, 4 October 2016, (2016) 10 SCC 386.

11Department of Customs v. Sharad Gandhi 2019 (3) SCALE 447.

12Section 14, Indian Contract Act 1872.

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art houses to ensure that the contract of sale of the artwork does not amount to fraud or misrepresentation. ‘Misrepresentation’ under the Contract Act includes use of unwarranted and untrue statements, breach of duty by misleading the other party and inducing mistake as to the substance of the subject matter of the contract. Therefore, where a seller induces a buyer to believe that the artwork is true, when it is actually fake, this would amount to misrepresentation and the buyer may void the contract. In India, artists, including Anjolie Ela Menon,13 have themselves filed cases14 against people selling their forged paintings.15 Such acts will also attract the provisions of the law of torts.

The liability of dealers and auction houses under the Contract Act

In their contracts for sale, most art houses, with a view to absolving themselves of any liability, inter alia, for fakes, state that they are only agents of the sellers of the artwork and the actual transaction is a bipartite agreement between the buyer and the seller. The laws governing principal–agent relationships are given under the Contract Act. Ordinarily, an agent is not liable for the acts done by him or her on behalf of the principal, or, where the act he or she does is ratified by the principal. Further, he or she is not personally bound by the contract that he or she enters into on behalf of the principal, nor can he or she personally enforce such a contract, except as provided below.

The agent will be held personally liable:

awhen the seller or buyer of the goods resides abroad;

bwhen the name of the principal is not disclosed by the agent; and

cwhen the principal is disclosed but cannot be sued.

However, this liability has evolved over time and will depend upon the facts of a case; for example, when the agent plays fraud on the parties.16 If the contract between the seller and the agent specifically imposes a liability on the agent, the third party may also sue the agent.

Indian Penal Code 1808

The laws in India criminally penalise the act of faking or forging documents under the provisions of Indian Penal Code 1808 (IPC). The form or the substance of the document is immaterial for the laws to be applicable.17

13An artist honoured with one of India’s highest awards, the Padma Shri.

14‘Anjolie Assistant in fake net’, The Telegraph, July 2004, www.telegraphindia.com/india/anjolie- assistant-in-fake-net/cid/730487#:~:text=New%20Delhi%2C%20July%2022%3A%20Anjolie,and%​ 20selling%20the%20artist’s%20paintings.&text=He%20has%20given%20us%20the%20fake%​ 20painting%2C%E2%80%9D%20said%20Bhatt.

15Vandana Kalra, ‘Two Coats of Paint: Welcome to the dark world of art fakes’, The Indian Express, 6 July 2014, https://indianexpress.com/article/lifestyle/two-coats-of-paint-welcome-to-the-dark-world-of-art- fakes/.

16Link International and Ors. v. Mandya National Paper Mills Ltd., AIR 2005 SC 1417.

17Section 29, Explanation 1, Indian Penal Code (IPC).

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Under the IPC:

Whoever makes any false documents or false electronic record or part of a document or electronic record, with intent to cause damage or injury, to the public or to any person, or to support any claim or title, or to cause any person to part with property, or to enter into any express or implied contract, or with intent to commit fraud or that fraud may be committed, commits forgery.18

Therefore, a dealer or an art house will commit forgery if it tries to sell a fake or forged artwork, to enter into a contract or to defraud a person. The person committing forgery will be penalised with imprisonment for a term of up to two years, or a fine, or both. Further, if any person uses a forged document as genuine, he or she would be punishable under the IPC in the same manner as if he or she had forged the document.

Forgery committed for the purpose of cheating somebody is punished with imprisonment for seven years and a fine.19 Forgery for the purpose of harming a person’s reputation is punishable with imprisonment of a maximum of three years and a fine. One such incident in India was the Sheetal Mafatlal case, where Mafatlal faced criminal charges for filing fake cases regarding fake paintings, and the Court ordered her to pay 700,000 rupees as a fine for filing false complaints.20

The IPC also penalises ‘cheating’ as a criminal offence. A dealer, art house or seller that, with the intention of cheating the buyer, sells forged artwork as genuine will be liable and can be imprisoned for one year, or fined, or both, if found guilty.21 Any person who commits cheating with the knowledge that such an act will cause wrongful loss to the opposite party, whose interest he or she is supposed to protect, either by law or contract, will be punishable by imprisonment for a maximum period of three years, or a fine, or both.22

The IPC also penalises cheating when it leads to delivery of the property by the deceived person to any third party.23 Therefore, if an art house or a private person selling artwork was cheated when they acquired the work, and goes on to sell the work as a genuine work of art, the party that had originally cheated the seller will be punishable with seven years of imprisonment and a fine. The art dealer, auction house or art gallery will also be criminally liable for conspiracy to sell fake artworks, and a criminal breach of trust, under the IPC.

ii Consumer protection laws

The rights of consumers in India are protected by the Consumer Protection Act 2019 (COPRA). Art dealers, auction houses, art galleries and online art sellers will be liable for selling defective goods under the COPRA. They may also be sued for deficiency in their services of providing proper services.

18id., Section 463.

19id., Section 468.

20Swati Deshpande, ‘Fake paintings: Sheetal Mafatlal faces prosecution’, The Times of India,

11 September 2014, https://timesofindia.indiatimes.com/city/mumbai/Fake-paintings-Sheetal-Mafatlal- faces-prosecution/articleshow/42290983.cms.

21Section 417, IPC.

22id., Section 418.

23id., Section 420.

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A ‘defect’ under the COPRA encompasses:

any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard which is required to be maintained by or under any law for the time being in force or under any contract, express or implied or as is claimed by the trader in any manner whatsoever in relation to any goods or product and the expression ‘defective’ shall be construed accordingly.

Further, ‘deficiency’ includes any shortcoming, negligence, omission or the deliberate holding back of important information, by a service provider, which may amount to loss to the person seeking their service. Therefore, a buyer who seeks the services of an art dealer, art gallery, auction house or online art platform for buying art will be entitled to a remedy under the COPRA.

iii Warranties laws

The laws related to warranty are covered under the Sale of Goods Act 1930 (SOGA). According to the SOGA, ‘a warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated’.24 There will be no implied warranties applicable to the quality or fitness for purpose of goods, unless the buyer makes known to the seller the particular purpose for which goods are required or the other conditions stipulated in Section 16 of SOGA are met.25

In the case of breach of warranty, the buyer may, in addition to rejection of the goods, ‘set up against the seller the breach of warranty in diminution or extinction of the price, or sue the seller for damages’.26

iv Role of experts, art foundations and catalogues raisonnés

Experts in art can help one understand the importance of the art that they are buying. They will help the buyer and the seller to differentiate between a fake and an authentic artwork, and how much an artwork is really worth. The expert will usually look for distinguishing features of the art by the artist, any famous strokes, colour palette, patterns, etc., to prima facie evaluate the painting. They will also know the market trends, whether the painting will fetch the desired amount, and what could be its future prospects.

Art foundations and experts will usually advise art buyers to keep a track of an artist’s artworks using a catalogue raisonné.27 This will help the buyer in understanding the type of paintings the particular artist creates, and will be able to differentiate between a fake work and an authentic work, more easily. These catalogues have been compiled by eminent art historians who have studied works of art and are available in many reputable galleries.

Art foundations and galleries in India have helped to provide a platform for up-and- coming artists. Art foundations, such as the India Foundation for the Arts, have documented

24Section 12(3), Sale of Goods Act.

25id., Section 16.

26id., Section 59.

27Kennith Rosario, ‘The art of deception’, The Hindu, 25 March 2017, www.thehindu.com/entertainment/ art/the-art-of-deception/article17657893.ece.

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the works of various artists to encourage talent and highlight the rich cultural milieu India has. These foundations are usually not-for-profit organisations that not only provide a platform for the budding artists, but also invest in art research, art planning and other projects.

VART TRANSACTIONS

iPrivate sales and auctions

Several auction houses have conducted online auctions during the coronavirus pandemic. General considerations when buying art through online auction are the following.

aTerms and conditions: auction houses put the terms and conditions applicable to all their online auctions on their websites, and these must be closely scrutinised before taking part in the bidding process.

bThe role of the auction house: the art house will sell the artwork with an authenticity certificate. The bidder must also conduct a thorough due diligence about the artist and the artwork they intend to buy.

cRegistration: a bidder must register with the auction house before he or she can bid. Some auction houses ask for a minimum deposit registration along with details of how the payment will be made post auction.

dBuyers’ premium: auction houses generally charge a buyers’ premium to cover their administrative charges. This premium varies between auction houses.

ePayment: another important aspect that a bidder must understand is the terms of payment for a successful bid. Once a bid is placed by the bidder, the auction house will either generate the invoice immediately and email it to them, or a representative will contact the bidder by telephone to convey the payment details.

fDelivery: the auction house will be liable to take back the artwork if there is any damage during the transportation of the painting.

In terms of legislative considerations, the provisions relating to auctions and sale of goods in India are governed under the Contract Act and the SOGA. E-auctions have been recognised as a valid mode of conducting business in India.

The COPRA defines e-commerce ‘as an activity that encourages buying or selling of goods/services including digital products over the digital/electronic network’. An electronic service provider means ‘a person who provides technologies/processes to enable a product seller to engage in advertising/selling goods/services to customer and includes online market place’.

Another important piece of legislation that governs online platforms includes the Information Technology Act 2000 (the IT Act). The Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules 2011 ensure that portals and platforms safeguard buyers’ personal information, such as passwords and biometric information. These Rules also impose a duty on portals collecting sensitive information to have a consumer privacy policy that is available on their website. Auction houses will have the liability and responsibility to store and record all the information related to their sales and bidders in compliance with the above rules.

Another important piece of legislation that guides art houses in conducting e-auctions and private sales is the Information Technology (Intermediary Guidelines) Rules 2011. The IT Act defines an ‘intermediary’ in terms of a particular electronic record as ‘any person who on behalf of another person receives, stores or transmits that record or provides any service with respect to that record’. This definition expressly includes online auction sites within its ambit.

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