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Another reform entailed the export process, specifically relating to monetary thresholds. Indeed, this provision’s operativity was suspended by the Ministerial Decree of the Ministry of Cultural Heritage of 17 May 2018. The Ministerial Decree of the Ministry of Cultural Heritage of 31 July 2020 amending the Ministerial Decree of 17 May 2018 allows the application of the minimum monetary threshold of €13,500 and facilitates the enacting of e-passports for artworks, which were both introduced by Law No. 124 of 4 August 2017.22

In terms of contracts involving cultural property and public administration, in a ruling of the Administrative Court of Lazio (Rome),23 the Court ascertained the right to unilaterally rescind the contract between the public administration (the Ministry of Cultural Heritage) and a private party under Article 11 of Law No. 241/1990 regarding cultural goods for reasons of public interest, with the obligation on the public party to refund the private party for the costs incurred in entering into the agreement.

iii Limitation periods

The ordinary term set forth by Article 2946 of the CC is 10 years. No special statute of limitation applies to art disputes, even for art misappropriated during the Nazi era.

iv Alternative dispute resolution

In recent years, some forms of alternative dispute resolution were made compulsory prior to starting a proceeding before the civil court in specific subjects. Among these, claims over title to goods fall under the scope of applicability of mandatory mediation under Article 5(1) bis of Legislative Decree No. 28 of 4 March 2010.

Arbitration has recently become a useful tool in art disputes. However, Article 33(1)(t) of Legislative Decree No. 206 of 6 September 200624 prevents professionals from establishing a standard clause on arbitration while negotiating with a consumer, unless they can show in court that the consumer negotiated and agreed upon that clause. Thus, generally, the presumption on the abusive nature of the arbitration clause narrows the scope of the application of arbitration to art transactions, where a consumer is involved.25

IV FAKES, FORGERIES AND AUTHENTICATION

Under Article 1477 of the CC, the seller must warrant to the buyer that the item has not suffered any wrongdoing able to sensibly decrement the value of the item. The jurisprudence applies this principle to the sale of artworks.

If the buyer discovers that the art, antique or collectible is a forgery, the following claims and remedies are available.

aTermination of the contract because the asset sold is different from the asset that was promised in the contract.26 The claim is time-barred for 10 years after the sale.

22Pending registration, by the Italian Court of Auditors, at the time of writing.

23Administrative Court of Lazio (Rome), No. 3402 of 14 March 2019.

24The Consumer Code.

25However, recent initiatives have been carried out on alternative dispute resolutions in the art sector where transactions between professionals are involved.

26Article 1453, CC; see Court of Cassation, 27 November 2018, No. 30713.

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bTermination of the contract based on alleged wrongdoing to the purchased item;27 the claim is time-barred if the defect was not communicated to the seller within eight days of its discovery and within one year of delivery of the item to the buyer.

cTermination of the contract based on alleged lack of promised or essential qualities;28 the claim is time-barred if the wrongdoing was not communicated to the seller within eight days of its discovery and within one year of the delivery of the item to the buyer, provided that the absence of the required quality exceeds usual tolerance limits.

dCancellation of the contract based on mutual mistake or wilful misconduct.29 The claim is subject to a five-year limitation period, starting from the date the mistake or the wilful misconduct is discovered by the claimant.

All the above remedies are likely to include damages.

Art market operators shall provide to the buyer a certificate of authenticity and provenance under Article 64 of the CHL.

The role of artists’ estates and experts in discovering forgeries (or deeming works authentic) is debated. As far as their opinion is grounded on a diligent activity of analysis, the result of their scrutiny is free due to the constitutional right of opinion,30 and these entities cannot be obliged to convene on the attribution of a work or to publish a work in a publication (e.g., a catalogue raisonné).31 Moreover, the recent Dadamaino case32 illustrates the difficulties in striking the balance between expert witnesses’ opinions and artists’ estates’ opinion of authenticity.

VART TRANSACTIONS

iPrivate sales and auctions

The European Anti-Money Laundering (AML) Directive33 explicitly includes art galleries and auction houses among the entities obliged to carry out anti-money laundering controls. Thus, art galleries and auction houses involved in transactions (single or multiple) whose values amount to €10,000 or more are subject to anti-money laundering legislation, as are the persons who either preserve or trade in works of art or act as intermediaries in the trade of works of art, when such activity is carried out within freeports and the value of the transaction (even if divided) or of any related transactions is equal to or greater than €10,000.34 Legislative Decree No. 125 of 4 October 2019 implemented the AML Directive into the national jurisdiction.

27Article 1490 et seq., CC.

28id., Article 1497.

29id., Articles 1429 and 1439.

30Article 21, Italian Constitution.

31Court of Milan, 15 February 2018, No. 4754.

32Court of Milan, 15 July 2020, No. 5070.

33Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018.

34Article 3, Paragraph 5(c), EU Anti-Money Laundering Directive.

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ii Art loans

Art loans are subject to authorisation by the Ministry of Cultural Heritage if the work of art is of cultural interest, under Article 48 of the CHL. Art-backed loans can only be granted by intermediaries authorised by the Bank of Italy and are subject to supervisory controls.

No special rule relates to immunity from seizure, notwithstanding several bills of law that have been proposed in recent years (the last of which, DLL S.358, was presented to the Senate on 18 May 2018).35

iii Cross-border transactions

Regulation (EU) 2019/880 sets forth the conditions for the introduction of cultural goods within the EU territory and the conditions and procedures for their import, to protect cultural heritage against illicit trade in cultural goods, specifically when aimed at financing terrorism. The Regulation foresees a system of import licences for specific categories of cultural goods and importer statements for other categories of cultural goods.

Cultural goods either created or discovered in the customs territory of the EU (covered by Directive 2014/60/EU) fall outside the scope of the Regulation. The import licensing system provided for by EU Regulation 2019/880 will enter into force at the date on which the electronic system referred to in Article 8 of the same Regulation becomes operational or at the latest from 28 June 2025.

Finally, the UNIDROIT Convention of 1995 on stolen or illegally exported cultural objects has been ratified by Italy by Law No. 213/1999 and is currently in force. When applicable, it obliges the possessor of a stolen cultural object to return it to its rightful owner, entitling the good faith acquirer to a compensation.36 The acquirer has to prove his or her good faith.37

Regarding recent legal developments in cross-border transactions of cultural property, see Section III.ii.

iv Art finance

Non-possessory liens

Law No. 119 of 30 June 2016 introduced the possibility for professional dealers to create non-possessory liens to secure credits related to their business activity (which are not private loans). These can only be granted over movable property intended for their business activity. This lien must be registered in the online register managed by the Revenue Agency of the Ministry of Economy and Finance.

VAT regime

The Internal Revenue Service (IRS) recently affirmed that sculptures created with 3D printers are not subject to the special 10 per cent VAT regime that benefits artworks. According to the IRS, since 3D sculptures are not cast entirely by the artist’s hand, they cannot be considered artworks, giving a narrow interpretation of the definition of artwork stipulated in Law Decree No. 410 of 23 February 1995.

35www.senato.it/leg/18/BGT/Schede/Ddliter/49597.htm (accessed on 17 September 2020).

36Law No. 213/1999, Article 4, Paragraph 1.

37id., Article 4, Paragraph 2.

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Anti-money laundering

Under the AML Directive, art galleries and auction houses have specific transparency obligations involving clients and art transactions. These include an obligation to carry out adequate verification on clients when transaction values total €10,000 or more (even in the case of multiple related transactions) and signal any suspicious activity to the Bank of Italy (the controlling authority).

VI ARTIST RIGHTS

i Moral rights

Under Articles 20 to 24 of Law No. 633 of 22 April 1941 (the Copyright Law (CL)), moral rights vest in the author from the creation of the work. Moral rights under Italian law are perpetual, non-waivable and unassignable. The rights might be enforced by the next-of-kin of the author following the hierarchy38 outlined by Article 23 of the CL, after the author’s death. The enforcement of moral rights after the author’s death might not be assigned or transferred to any third party, including artists’ estates, nor through a specific disposal of the author in his or her will. However, as the Supreme Court recognised,39 even if the artist’s estate has no moral rights, it has and can enforce its own reputational right, defined as the reputation in a specific social context of the estate, connected with the protection of the artist and diffusion of the correct knowledge of his or her work.

The right of attribution under Article 20 of the CL might be enforced in the positive or in the negative, as a right to refuse the attribution of a specific work,40 as well as by the subject indicated in Article 23 of the CL.41 Recently, the Court of Rome42 affirmed that the right to claim against false attribution might be enforced by the heirs only through the personal right to name under Article 8 of the CC, and not through the claim for declaratory judgment related to the false attribution under copyright law.

Article 20(2) of the CL finally provides a specific author’s right regime for works of architecture. While authors of architectural works may not oppose amendments carried out during the realisation of the project or incurred on the completed physical structure, they are entitled to the study and enaction of such amendments, in the case of acknowledgment of the important artistic value by the competent governmental authority.

ii Resale rights

In 2019, the Italian Society of Authors and Publishers (SIAE), which is in charge of the collection and distribution of resale rights in Italy, published guidelines on resale rights directed towards art market operators and artists. The document aims to clarify the operativity of resale rights and the definition of ‘first sale’ for the purposes of the application of the law.43

38Court of Milan, 14 July 2011.

39Supreme Court, 26 January 2018, No. 2039.

40Court of Rome, 8 March 2012.

41Court of Turin, 26 February 2010.

42Court of Rome, 26 June 2019, No. 13461. See Court of Milan, 15 February 2018, No. 4754, whose stake is the opposite, stating that the claim of a declaratory judgment of authenticity is possible if grounded on indisputable factual and scientific elements.

43SIAE – Sezione OLAF, Diritto di seguito – Vademecum, version dated 28 April 2020; available in Italian at www.siae.it/sites/default/files/SIAE_OLAF_Vademecum_DDS.pdf (accessed on 22 September 2020).

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Indeed, the applicability of resale rights in the primary market was previously unclear; for example, in the case of consignment by the artist to a professional seller with no agency.44 The guidelines affirm that if, in a consignment without agency, the consignee pays an instalment to the consignor prior to the sale to a third party, the transaction between the professional and the third party is subject to the application of resale right, since the transaction between the consignor and the consignee voids the consignment agreement and is considered as a proper sale from the artist to the professional, even if the operation as a whole was meant to be the first sale of the work from the artist to the third party.45

An interesting aspect involves the interpretation of ‘design’ in the field of artists’ resale rights. Indeed, it is debated whether a design product might have artistic value for the purpose of copyright protection (see Section VI.iii), and this reflects on its protection under resale rights. The strongest opinion is in the sense that design works might not be subject to resale right (alternatively, the project might be subject to this right as it could qualify as a figurative work drafted by the author).46 However, because Article 145(2) of the CL provides that copies of works might be protected under resale right if the copies are unique pieces or few in number, numbered, signed or otherwise authorised by the author, other authors47 have stated, when the object fulfils the requirement, they could be considered works covered by resale right. The matter is still unresolved, but the SIAE seems to follow the second interpretation.

iii Copyright

Exceptions and limitations to copyright

Under Article 15 of Law No. 37 of 3 May 2019, amending Article 71 bis of the CL, the acts of reproduction, communication and making available to the public, distribution and lending of copyrighted works are free for persons who are blind, visually impaired or otherwise print disabled, subject to their adaption in an accessible format copy.

Digital Single Market Directive

The national implementation of Directive No. 790/2019 (the Digital Single Market Directive) is still pending. Article 14 of the Directive obliges Member States to ban copyright protection for material reproductions of works in the public domain where the reproduction is not original in the sense that it is the author’s own intellectual creation.

44This is a frequent scenario in the primary market. This wording refers to the case of consignment with no power to act in the name of the consignor under Article 1705, CC.

45See SIAE (footnote 43), p. 20.

46Rosaria Romano, ‘L’Opera e l’Esemplare nel Diritto della Proprietà intellettuale’ (2001), in Pubblicazioni dell’Istituto di diritto privato dell’Università di Roma, 60, p. 39.

47Luigi Carlo Ubertazzi, Commentario Breve alle Leggi su Proprietà Intellettuale e Concorrenza (Wolters Kluwer, Milan, 2019), p. 2255.

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Jurisprudence

The sale of the physical single object does not entail the transfer of copyright, which requires an express act of the copyright holder,48 which should be proven in writing.49 Accordingly, the Court of Milan50 recently stated that the production of gadgets in an exhibition organised by a museum representing artworks under copyright requires such prior written consent by the rights holder.

Moreover, the jurisprudence of recent years has shown keen attention on copyright in relation to artworks. The general requirement of protection of artworks under Italian copyright is their originality, meaning the nature of the ‘author’s own intellectual creation’.51 Italian courts have set some specific requirements that apply to artworks, interpreting the concept of originality. In a preliminary ruling of 15 June 2017, the Court of Milan interestingly asserted that the evaluation of the artistic value shall be carried out in reference to objective parameters of the perception of the work within specific cultural environments, such as the public and institutional recognition of aesthetic and artistic qualities, the public exposition, the publication in specialised journals and the awarding of prizes. All these factors do not attribute per se artistic value but show the recognition of the work as an artistic work protectable by copyright. More recently, the Court of Bologna52 applied a similar reasoning to design objects, stating that to deem a design object protected subject matter under Article 2, No. 10 of the CL, the artistic value53 could be acknowledged through objective parameters such as the recognition of aesthetic and artistic qualities by specific cultural and institutional environments, the exhibition in museums, the publication in specialised journals, the awarding of prizes, the acquisition of an unexpected market value that overcomes functionality, or the creation by a famous artist.

In Ruling No. 2039 of 26 January 2018,54 the Supreme Court listed some specific criteria to be applied to ascertain whether a subsequent artwork constituted plagiarism of a former one with specific focus on abstract and contemporary art. The Court emphasised the following criteria:

athe creative originality, even if just minimal, of the original artwork;

bthat the judgment shall rely upon a complex and synthetic (not analytical) evaluation of the works, comparing the essential elements of the works themselves, to evaluate the holistic result, or the effect as a whole;

cthe fact that plagiarism should be excluded if two works originating from the same idea have different essential traits, which characterise the expressive form; and

dplagiarism subsists if a work does not show any semantic gap providing a different and proper artistic meaning, copying the creative elements, since mere contrasting details with respect to the original would not suffice.

48Article 109, CL.

49id., Article 110.

50Court of Milan, 15 January 2019, obiter dictum.

51European Court of Justice, 7. Infopaq International A/S v. Danske Dagbaldes Forening, Case C-5/08.

52Court of Bologna, 20 February 2019, No. 457.

53Which is required by Article 2, No. 10, CL to deem a design work protected.

54See footnote 39.

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VII TRUSTS, FOUNDATIONS AND ESTATES

Artists’ estates usually exercise their functions as non-profit legal entities, namely associations and foundations. Legislative Decree No. 117 of 3 July 2017 (the Code of the Third Sector) has introduced some fiscal advantages towards non-profit legal entities with a general interest (including cultural) purpose. Moreover, while associations and foundations are normally barred from carrying out pre-eminent commercial activity, third-sector entities may carry out such activity without incurring a heavier fiscal burden.

The CHL prescribes that cultural goods, over 70 years after their creation by a non-living artist, as described by Article 10(1) and 10(5), belonging to non-profit private entities are subject to the same conditions as publicly owned goods. Thus, when an artwork created more than 70 years ago55 by a non-living artist belongs to an association or a foundation it is automatically considered a cultural good.56

For the recognition of estates’ rights concerning reputation and moral rights of the artists, see Section VI.

VIII OUTLOOK AND CONCLUSIONS

Finally, to summarise, several unresolved issues are at stake. On one hand, the large discretionary power of the administration, whose best example lies in the non-mandatory term for delivery of the free circulation certificate, and the delay in the implementation of the reform of 2017,57 has raised uncertainties on the application of the administrative law concerning cultural goods. Indeed, the circulation of artworks suffers delays due to the lack of a mandatory term (and there is no compensation for the private party that bears the consequences of a delay by the public office), and the long-lasting absence of a general rule of law implementing the reform of 2017 has generated different interpretations by offices, increasing the confusion of art owners and market operators on the scope of the form. On the other hand, the lack of a specific provision of law on seizure of artwork in specific situations (such as in the case of Nazi-looted artwork) generates criticality in the interpretation of the principles of civil law (such as possession vaut titre or the good faith of the third-party buyer). The above-mentioned examples illustrate that, despite artworks generally being considered as common items from a civil law viewpoint, they happen to be subject to a peculiar application of the law, mostly when their cultural value is at stake. On the other hand, Italian copyright law often needs a specific interpretation by the court, to adapt to the peculiarity of artworks (and single genres) among other copyright-protected subject matter.

In conclusion, it could be questioned whether a holistic reform of the art law sector in Italy could be an effective solution to the lack of certainty that, unfortunately, affects the interpretation of the law for these special (unless common) goods.

55Or 50 years if the work shows an exceptional degree of interest for the integrity and completeness of the Italian cultural heritage (Article 10(5), CHL).

56See Articles 13 and 14, CHL, describing the procedure of declaration for goods belonging to private entities (listed in Article 10(3), CHL) and Article 12, CHL, foreseeing the procedure of verification of cultural interest for goods belonging to public entities and non-profit private entities.

57Law No. 124/2017.

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Chapter 21

JAPAN

Makoto Shimada and Taku Tomita1

I INTRODUCTION

The Japanese art market consists of the antiquities market, the modern arts market and the contemporary arts market. Products traded in the antiquities market are Japanese, Chinese and Korean antiques and traditional artworks. There are plenty of antique dealers who have expertise in a particular type of traditional art, such as Ukiyo-e, lacquerware, swords and tools for tea ceremonies, and each of these has regular customers. Arts traded in the modern arts market are Japanese and western-style paintings by past and present artists. Generally, artists of traditional and modern arts in Japan belong to one of the artists’ circles, which regularly hold publicly sponsored exhibitions. There are over 100 artists’ circles, each of which has close relationships with particular dealers, such as prestigious galleries located in Tokyo and national department stores. Most works are sold to regular customers of those dealers by private sale. Auction sales are not popular in Japan.2 Such close relationship between dealers and customers operates to stabilise the art business and market; however, it is often criticised for preventing the art market from growing and globalising. Art Tokyo Association, the organiser of Art Fair Tokyo, estimates that in 2018 the value of sales of antiquities and of modern arts was ¥104.3 billion and ¥103.9 billion, respectively, with the sales value of each market accounting for approximately 40 per cent of total art market sales (¥258 billion).3

In this century, a number of young artists, willing to create contemporary artworks freely, choose not to belong to a traditional circle. The number of contemporary art lovers is also increasing. Contemporary art accounts for approximately ¥45.8 billion in value, which is less than 20 per cent of the total sales in the art market.4

1Makoto Shimada and Taku Tomita are partners at SAH & Co.

2Art Tokyo Association, Japanese Art Industry Market Research 2019, 9 (which shows that the volume of auction sales accounted for only 6 per cent of total domestic sales in 2018).

3ibid, 8.

4ibid. The above figures are estimates provided by Art Tokyo Association based on its survey of individuals. Japanese companies also purchase high quantities of artworks, including from relatively unknown contemporary artists, to support them as part of their corporate social responsibility activities. The volume of these transactions is likely to be significant.

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IITHE YEAR IN REVIEW

iAmendment to the Civil Code

On 1 April 2020, amendments to several aspects of Japanese contract law, which affects art transactions, came into force by way of an amendment to the Civil Code.5 In the past, the right to claim payment under a sales or consignment contract was extinct by prescription if the seller did not claim this within two years of the right being exercisable. However, under the new Civil Code, this right continues for 10 years after it becomes exercisable.6 The Civil Code also provides that terms of a standard contract prepared by one party are enforceable against another party if the former party manifests the intention to apply such terms in advance.7 This provision determines the enforceability of terms and conditions prepared by auction houses against bidders in an auction.

ii Government policy towards the arts

In recent years, the government of Japan has changed its policy towards the arts, focusing on its power to develop and activate the economy and industry. In 2017, the Basic Act for the Promotion of Culture and the Arts, the law for the promotion of the arts and culture, was amended (and renamed the Basic Act on Culture and the Arts) to provide a role for the private sector to enhance and utilise the arts to activate the economy and international cultural exchange in cooperation with the government, and to clarify the government’s duty to take legislative, financial and taxation measures necessary for such purpose.8 In 2018, the Act on Protection of Cultural Property (the PCP Act) was also amended in line with this new policy.9 While the old Act was structured to protect selected valuable arts by the government, under the new PCP Act, local cities and towns play a leading role in the protection and utilisation of arts and other cultural properties in their respective regions. The PCP Act expects each city to draw up a plan and projects for practical use and preservation of regional arts following consultation with a group of people supporting such arts, obtain the government’s approval, and then carry out the projects under the supervision of the relevant prefectural governor.10 By this amendment, the objective of the PCP Act is changed drastically from ‘the protection of cultural properties by the government’ to ‘the practical use of arts by regional communities for activation of the economy’. It is expected that the measures taken under the new PCP Act will facilitate the development of the art industry.

5Civil Code (Law No. 89 of 1896) amended by Law No. 44 of 2017.

6ibid, Article 166(1).

7ibid, Article 548-2(1).

8Law No. 148 of 2001 amended by Law No. 73 of 2017, Articles 5-3 and 6.

9Law No. 214 of 1950 amended by Law No. 42 of 2018.

10ibid, Article 183-3.

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III ART DISPUTES

iTitle in art

Private sale and auction

Under the Civil Code, a buyer acquires title to property from the seller when a contract of sale is entered into unless otherwise agreed between the parties.11 In the case of auction sales, most auction terms prepared by auction houses include a title retention clause, providing that title will transfer from the consignor to the buyer when the artwork is delivered to the buyer after the auction house confirms receipt of the purchase price and commission from the buyer.

Title acquisition by good faith purchaser

A person who acquires the possession of an artwork from its previous possessor by any transaction, including sale, gift and exchange, in good faith will obtain title to such artwork even if the previous possessor is not the title holder.12 A transaction is presumed to be in good faith so long as it is carried out under the usual circumstances.13

A purchaser who owes a duty to inquire into title but has failed to do so shall not be in good faith. Whether a purchaser owes such duty or not depends on the attribute of the goods, knowledge or skill of the parties and other circumstances. In a recent case, the court held that a donee of a cultural artefact registered under the PCP Act owes a duty to inquire into the donor’s title.14 In this case, the claimant and the defendant were both Buddhist temples, and the property concerned was a Buddhism statue. The statue was stolen from the defendant’s temple, handed over through several traders and donated to the claimant’s temple. The claimant claimed title on the ground that the statue was gifted in good faith. However, the court refused the assertion, based on the fact that the statue was registered in the defendant’s name, not the donor’s. Under the PCP Act, the owner of an important cultural property shall register the owner’s name with the government. The PCP Act also requires the owner not to sell such property to a third party unless the owner first contacts the government to confirm whether it will exercise the right of first refusal.15 Taking account of such legislative restriction on sale, the court held that the claimant should have inquired into title of the donor who was not the registered owner of the artefact.

ii Nazi-looted art and cultural property

In Japan, there is no legislation or case law related to Nazi-looted art. Cultural properties are often stolen. As at 2018, there were 115 reported cases concerning stolen national treasures and cultural properties, and the majority of these have not yet been restituted.

The most famous cultural property stolen and unreturned at present is the ancient Buddhist statue, which is an important cultural property designated by the government under the PCP Act. The statue was stolen by Korean thieves from Kannonji Temple in Tsushima Island, Nagasaki in 2012. The following year, the thieves were arrested in South Korea and the statue was seized by the South Korean government. However, it was not returned to Kannonji because a South Korean temple claimed that the statue had been stolen

11Civil Code, Articles 176 and 555.

12ibid, Article 192.

13Judgment of Tokyo District Court of 24 January 2012, LLI/DB.

14Judgment of Otsu District Court of 25 January 2019, LLI/DB.

15PCP Act (n 9), Articles 32, 33 and 46.

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