Withers Worldwide

The UK Department for Culture, Media and Sport has proposed to introduce legislation which would provide that works of art on loan from other countries to UK museums are immune from seizure for the duration of the loan.  The objective of the legislation is to address the concern of foreign lenders that art they loan to UK institutions might be seized by third parties whilst on UK territory.

This legislative initiative was precipitated by an attempt to seize a collection of art from the Pushkin Museum in Moscow.  Noga, a creditor of the Russian State, attempted to seize paintings which had been on loan to a Swiss foundation.  Noga obtained an order from the Swiss Court authorizing the seizure and the paintings were seized as they were leaving Switzerland to return to Russia.  The Swiss Federal Government intervened by overriding the decision of the Court and allowing the paintings to leave the country.  Nonetheless, the Russian government was not placated.  They have sought reassurance from host countries that their national courts will not entertain requests to seize art on loan, failing which the Russian government will refuse to authorise loans to those countries in the future. 

This is a more widespread issue.  Foreign States and individual lenders increasingly insist that loans are made subject to a guarantee of "safe return".  Taiwan, Romania and Greece have refused to loan works of art to UK institutions in the absence of such a guarantee.  Unless legislation is introduced, the UK may be unable to attract loans of important works of art.

Why would a third party seize art on loan in the UK?

There are three main types of situation where a third party may wish to seize art temporarily on UK territory.

The first situation arises where an individual or company (like Noga) is a creditor of the owner of the art on loan.  It may be difficult for the creditor to enforce a judgment or arbitration award in the country where the art is habitually situated.  The creditor may be advised that the English Courts will enforce a judgment or award against the debtor's assets located in the UK, and the creditor may decide to take advantage of the English Court's jurisdiction by seizing art on loan belonging to the debtor and selling it to recover its debt.

The second situation arises where there is an ownership dispute over the art on loan.  The claimant may be advised to bring an ownership claim before the English Court, and the presence in the UK of the art subject to the claim will help to establish the jurisdiction of that Court.  If a claim is made, the institution that borrowed the art will usually be unwilling to return the art to the lender until the ownership claim is resolved.  This could take months, if not years, and in the meantime, the lender is deprived of possession.

A third situation may arise where in the context of a criminal enquiry, the police or HM Revenue & Customs decide to seize works of art on loan in the exercise of their powers to preserve evidence. 

Does the lender of art to a UK museum have no protection against seizure at the moment?

The State Immunity Act 1978 provides limited protection for works of art lent to exhibitions in the UK where such works are owned by a foreign State.  Protection may not be available where, when making the loan, the State is pursuing a commercial activity, or where the lending institution although State owned is constituted as a separate entity.

Which other European countries have adopted legislation to protect art on loan against seizure?

Germany, Austria, France, Belgium and most recently Switzerland have legislation providing a level of protection to works of art on loan to national institutions.  The conditions of protection differ from country to country.  In most cases, protection is not automatic.  The borrowing institution must

apply for protection in advance of the exhibition.  Certain countries such as France limit protection to works that are publicly owned, thus excluding works coming from private collections. 

What next?

The Department for Culture, Media and Sport issued a public consultation.  The period of consultation expired in May 2006.  The consultation suggests that the Government supports the principle of awarding immunity from seizure to works of art loaned to UK museums.  The purpose of the consultation is to seek views principally on the extent of that immunity and the circumstances in which immunity should prevail.

The Department is currently considering the responses to the consultation and has advised that it will publish a summary of those responses on its website in the next few weeks.  Efforts will then be made to put a Bill forward for adoption by Parliament, most probably in the first half of 2007.