Katie and Steve talk with renowned art lawyer Pierre Valentin about the EU’s new and striking import regulations on cultural goods, including fine art and cultural property, that prohibit the import of applicable items not created in the EU into the EU if they cannot be shown to have been legally exported from their countries of origin. We discuss the impetus for these regulations, the problem with discerning ownership and export history of cultural property, and the key problems with the new regulation’s successful implementation and enforcement.
Resources
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32019R0880&qid=1639488073938
Episode Transcription
Steve Schindler: Hi, I’m Steve Schindler.
Katie Wilson-Milne: I’m Katie Wilson-Milne.
Steve Schindler: Welcome to the Art Law Podcast, a monthly podcast exploring the places where art intersects with and interferes with the law.
Katie Wilson-Milne: The Art Law Podcast is sponsored by the law firm of Schindler Cohen & Hochman LLP, a premier litigation and art law boutique in New York City. Hi, Steve.
Steve Schindler: Hi, Katie. How are you?
Katie Wilson-Milne: I’m pretty good. I’m feeling healthy, and I’m feeling excited to talk about import regulations.
Steve Schindler: Well, I’m glad that you’re back. It’s nice to have you in the studio, and who better to talk about import regulations than an art lawyer who we’ve wanted to have on the podcast now for some time, Pierre Valentin? And Pierre Valentin has over 25 years of experience advising clients within the art law space. His practice focuses on contentious and non-contentious matters of ownership. It’s a very British type of thing. It’s either disputes or transactions.
Katie Wilson-Milne: Love that.
Steve Schindler: Valuation of art, fraud, authenticity and provenance, foreign nation recoveries, intellectual property, and new technologies. He has a wealth of experience in handling all aspects of complex international transactions and is well known for his experience in art finance. He’s been praised by commentators as “one of the best exponents of art law in the business,” and has been called “a veritable giant in the field” by Spear’s 500, and it’s a pleasure to welcome Pierre to the podcast.
Katie Wilson-Milne: Yes. Welcome, Pierre.
Pierre Valentin: Thank you. Thank you both. Thank you, Steve. Thank you, Katie.
Katie Wilson-Milne: So, I think we should set the scene a little better, Steve, which is that this is a sexier topic than we make it sound. I mean, as our listeners know, art is moving all over the world all the time, right? It’s moving in and out of the big art cities: New York, London, Hong Kong, Paris to some extent, the big cities that we think of. So there’s a constant movement of the most valuable art. We’ve also talked on the podcast about the deep, long, difficult problems with cultural property, both in terms of understanding the origins of cultural property, who owns items of cultural property now, and how on earth courts and governments are supposed to adjudicate these disputes in the absence of provenance documentation and even scholarly consensus about a lot of these objects. So these really hard interesting topics do all come together in how countries deal with the import and export of fine art. Countries have different ways of dealing with that. In the United States, we have customs and border patrol, and part of what they do is deal with the import and export of goods, including fine art, and that’s true all over the world as well. And so, we haven’t spent a lot of time on this podcast talking about how those import export regulations impact these other issues of stolen art and cultural property. But they obviously do, because countries do not generally want stolen property or otherwise illegally-obtained property coming in and out of their borders. It’s bad PR. It’s bad in terms of their relationships with other countries. So this is actually a really important issue, and what’s bringing us to talk about it today is that the EU is implementing new regulations of a strictness and scale that we have not seen before in terms of the restrictions on importing cultural goods, which include art and cultural property. So that’s what we have.
Steve Schindler: Yeah, that is a very sexy topic. I agree with you.
Katie Wilson-Milne: I feel excited to talk about it.
Steve Schindler: Alright, we’re excited. So, Pierre, maybe you can just set the stage as we’re starting by just explaining in the kind of a broad sense what is new in the EU? What regulations are soon to go in effect that will have this broad impact that Katie suggested?
Pierre Valentin: Right. So maybe a little bit of a historical context would be useful. It’s really since the early 1900s that countries in Europe and around the Mediterranean have started introducing controls over the export of art from their country. Now, I think it’s fair to say that for the first 50 to 70 years, there were rules on the statute books, rules that control or restrict the export of art. But the implementation or the application, I would say, was quite lax. I certainly remember, you know, when I started in the art world in the mid-1990s, you know, we knew that there were export control rules out of Egypt, Italy, Spain, et cetera. But quite frankly, well, you know, certainly the market didn’t pay a great deal of attention to that.
Steve Schindler: When we’re talking about these export rules, are you talking about export regulations in the sense of licensing requirements and also, so-called patrimony laws, you know, that we have, say in Egypt or in Turkey, which basically claim for that country ownership in certain kinds of cultural property? Are these both under the umbrella of export regulations that you’re referring to?
Pierre Valentin: This is a very important point, and the answer is no. To my mind, there are rules that determine who is the owner of a particular artwork. And you refer to patrimony laws that basically vest ownership of certain goods in the state. So, for example objects that are excavated from underground or that are found under in the sea, ownership of those goods in many countries will rest with the state. Things that are created for example, by artists, well, they will vest in the artists in the first instance and then in who buys them from the artists. So that’s really about ownership. What I’m talking about is different, something different. It’s the rules that control the removal of art and other objects from a particular country and, that’s nothing to do— generally speaking— with ownership. It’s to do with whether the state controls what leaves the country and potentially has a claim for the return of what left illegally.
Katie Wilson-Milne: But there is some overlap, right, Pierre? I mean, that’s a really important distinction. But to some degree, some of these export rules exist because of concerns— not just to collect maybe export duties, right— but to either keep track of, or control or monitor questions of ownership with respect to what we’ll call cultural property, which doesn’t even need to be ancient property. But might just be property that a state decides is valuable to its own history, and it wants to either figure out a way to keep it in the country, even if it’s not owned by the state, or, you know, at least make sure that there are no ownership questions. I mean, would you agree that there’s some connection?
Pierre Valentin: Well, as a lawyer, I’m not sure I see that overlap. There is one exception, which I’ll come to in a minute. To my mind, what’s owned by the state, well, the state decides what to do with it. And generally if it’s owned by the state, it can’t leave the country. What’s owned by private individuals in the absence of export controls, technically there’s no reason why those things cannot leave the country. But as a matter of policy, countries probably starting from the beginning of the 20th century, decided that they ought to regulate what left the country, what was in private hands and left the country. Especially source countries like Italy, Turkey, Greece, Egypt, et cetera. And those rules are there to regulate what private individuals can remove from the country and what they can’t. And then on top of that, some countries have listing systems, where they list items in private hands as cultural or national patrimony. And certainly those things can’t leave the country.
Steve Schindler: Right, and the difference between some of those are like, you could have, say, a Monet painting in France that’s very important historically. It could be privately owned, but if someone wants to export it out of France, it has to be approved by the French government and they have the right normally to buy it and to keep it—
Katie Wilson-Milne: Because of its cultural importance.
Steve Schindler: But the difference is they’re not asserting ownership. They would have to buy it in order to own it. Whereas in other countries— for example, the patrimony laws that you’ve referred to in Egypt or Turkey— anything that comes out of the ground after a particular date is claimed to be owned by that country.
Pierre Valentin: Yes, and there’s a third category. For example, in Italy, you can own an important painting as a private individual. That painting is considered national patrimony. But unlike France, Italy doesn’t have to buy it. So there are many important old families in Italy that have hanging on the walls, paintings, for example, that belong to them. But are listed as national treasures and are subject to quite extensive restrictions. They can’t be moved without the state’s consent. They can’t be loaned. They can’t be restored, and they certainly can’t leave the country without the state’s consent, yet they remain private property.
Katie Wilson-Milne: Right, so there’s quite a large spectrum of motivations for controlling exports among countries. Some is just to collect duty, to keep records, and some is really focused on these national treasures. So to get back on track— that was very helpful background. So yes, of course, there are export restrictions around the world. What was sort of the status quo? What has been the system in the EU, and we’ll say distinct from the UK and certainly the US which we’ll maybe briefly mention? What has been the status quo in the EU in terms of importing objects of cultural significance?
Pierre Valentin: Okay, so until now if you want to import an object of cultural significance in an EU country, it’s relatively straightforward. You declare it at customs in the country of import, and you pay what we call import VAT. There’s no duty or excise on artworks. They are exempt, but import VAT does apply. So you have to declare the value at import and VAT will be levied at the rate applicable in the country of import. In Europe, for now the UK has the lowest rate at 5 percent of the import value. I think the highest rate is in Hungary at 27 percent. Each country applies its own rate. But as I say, it’s relatively straightforward. That’s about to change with the introduction of this new EU regulation.
Katie Wilson-Milne: Right, so the VAT or the VAT for our listeners is sort of analogous to a federal sales tax. If— we don’t have that system in the US, we don’t have a federal sort of VAT or import tax. But the closest analogy would be what we call a use tax in every state in which an object was imported. That’s just a state sort of sales and use tax issue. So that seems fairly analogous to what we have here, minus the VAT. So you could just show up in Paris, you could bring something with you on the plane, you could have your sister send it to you, you could have your art dealer send it to you, and you wouldn’t have to do anything in advance. You’d just have to sort of fill out paperwork on arrival, pay whatever you owe, and that’s it.
Pierre Valentin: Yeah.
Katie Wilson-Milne: Okay, and that doesn’t matter if it’s, you know, an ancient relic from Cyprus or whether it’s a, you know, a modernist painting? That makes no difference?
Pierre Valentin: That’s right. Now there are special rules for certain countries that are at war. And right now in the EU, there are special rules, or there have been special rules, applying to cultural goods coming from Iraq. And since 2014, there’ve been special rules applying to cultural property coming from Syria. The reason for those special rules is because those countries have been areas of conflict, very serious conflict. And the EU decided that cultural property coming from those countries were more likely to have been looted, and therefore their importation should not be allowed unless very strict conditions are met.
Katie Wilson-Milne: Right, and we should just say briefly, I mean, we’re not going to focus on the US, but I think the US counter example is pretty simple, as we’ve alluded to, right, Steve? I mean, we don’t have special rules about importing fine art or cultural objects unless there’s sort of an ownership issue, either because we have an agreement with a source country or it’s a stolen property or—
Steve Schindler: Right, the distinction has always been that the US generally doesn’t enforce or apply the export regulations of the type that we talked about in France and Italy, to imports here. It does, of course, prohibit the importation of stolen property, which would be property that was stolen either physically in the normal sense, or because it is—
Katie Wilson-Milne: It’s deemed stolen.
Steve Schindler: It’s deemed owned by a sovereign nation, and we respect that nation’s laws. So that’s been the distinction. The other thing is, you still — even though there’s no import duty on art per se, you still, if you’re bringing art into the country, have to fill out customs forms, et cetera and you can’t lie on those forms. And some people have gotten into trouble sometimes by making false statements either about the provenance or the value of the works, you know, and it turns out that they’re not correct. And that’s also problematic.
Katie Wilson-Milne: I feel like there’s a theme on our podcast. Even when there’s no law or regulation, you still can’t do something else illegal, right?
Steve Schindler: Exactly.
Katie Wilson-Milne: You can’t commit fraud.
Steve Schindler: No. Exactly.
Katie Wilson-Milne: And you can’t possess stolen property.
Steve Schindler: Right.
Katie Wilson-Milne: So that’s, yeah, that’s—
Steve Schindler: That’s a good rule.
Katie Wilson-Milne: That’s better. Pierre, really quick, what is the status in the UK, because that is not changing under these new regulations, correct? Given the Brexit occurred.
Pierre Valentin: That’s right, so the EU regulation that we are going to talk about did form part of English law, because of the dates when the regulation was introduced. However, it was subsequently revoked by the United Kingdom. Accordingly, it won’t apply in the UK. The rules in the UK are pretty similar to what you have described. In other words, the UK will typically not enforce foreign export control rules. However, if the claimant can show that the item was stolen, for example, its ownership vested in a foreign country or in a foreign state, then the English courts will enforce that— those ownership rights.
Katie Wilson-Milne: So otherwise in the UK it’s just you declare it, you pay VAT, and that’s it?
Pierre Valentin: That’s it, right.
Katie Wilson-Milne: Correct. Alright. So we got— we’re getting to the meat. So what has changed in the EU? And I know this is the date of adoption of the law is different from the full implementation date. So there’s some process here, right. But what is— what’s coming?
Pierre Valentin: Okay, so it really started with a political decision around 2015 that the EU should be seen to fight against the financing of terrorism and money laundering. And quite quickly, the trade in cultural goods was raised as an issue in relation to terrorism and money laundering. This led to the adoption in 2019 of a regulation, an EU regulation on the introduction and the import of cultural goods. And that’s the legislative instrument that is the foundation, if you like, of this new EU importation import control regime for cultural goods.
Katie Wilson-Milne: Alright, so what is changing then in the EU?
Pierre Valentin: Well, for the first time in order to introduce or to import certain types of cultural property in the EU, you will have to obtain either an import license for the cultural goods that are considered to be high-risk. Or rather, you’ll have to sign what they call an importer declaration for other types of cultural goods that are considered to be less of a risk.
Steve Schindler: Okay. And what is a high-risk piece of cultural property? How is that defined in the regulations?
Pierre Valentin: Okay, so the regulation has at the end an annex, which is in three parts. And the goods that will require an import license are covered by part B of that annex. Essentially, they are in two, well, three main categories, I would say. The first category are the products of archeological excavations on land or under water. The second category are elements of monuments and sites, and the third category, religious icons and statues. Now, if you decide to import into the EU objects in one of those three categories, you will only require an import license if the item in question is more than 250 years old. So forget things that are made recently, 20th century, even 19th century. We’re not concerned about that. We’re concerned about ancient artworks. The value however matters not. So they can be worth $10, a million dollars, you will need an import license.
Steve Schindler: Right, and are these only objects that were made or created outside of the EU at one point? Or does it also apply to objects that were created within what is now the European Union?
Katie Wilson-Milne: But then left and came back?
Steve Schindler: Right.
Pierre Valentin: No, you’re right. This only applies to objects that were created or discovered outside the EU. Right. So Roman sculptures, Greek sculptures, Old Master paintings, German silver, all of that is not within the scope of this regulation.
Steve Schindler: Right. As long as the Roman statues were created—
Katie Wilson-Milne: In modern day Italy.
Steve Schindler: —in modern day Italy, or within the— what’s now the European Union. But presumably if the Roman Empire was broader than that and the works were created elsewhere, they would still be subject to this regulation. Is that right?
Pierre Valentin: Very good point. Absolutely.
Katie Wilson-Milne: You’re getting to a key problem here.
Pierre Valentin: Yeah. No, and that’s one of the issues we are having with this regulation, which assumes that the ancient world was made of nations with boundaries similar to national boundaries, similar as to those we know today, which of course is, as we know, not the case.
Katie Wilson-Milne: Yeah.
Pierre Valentin: So to identify whether a particular object was created, discovered in the European Union can in itself be a headache.
Katie Wilson-Milne: So just to back up, so the regulation itself doesn’t say, “only if this is an antiquity that’s more than 250 years old,” or there’s other categories we’ll get to. The regulation just says, “you cannot import property created outside of the EU if it was exported from any country illegally.” Right? That’s, the regulation. It’s not only if it’s worth this much or if it’s this old. It’s just you can’t— it doesn’t matter if it’s five years old or 5,000 years old, or $5 or $5 million, it’s just you can no longer import cultural objects if they were exported illegally, period. Right? And then what we’re talking about now is the extra regulatory requirements, administrative requirements for especially sensitive objects.
Pierre Valentin: That’s right.
Katie Wilson-Milne: Okay.
Pierre Valentin: So there is this general prohibition. You can’t introduce in the territory of the European Union cultural property removed from the territory of other countries, well, countries outside the EU if the cultural property was illegally exported from that country. And if you do, there will be criminal sanctions. Now that raises all sorts of questions, which we can come to. And one of those question is what do we mean by cultural property subject to this general prohibition? In order to find the answer, you’ve got to look at Part A of the regulation, which basically adopts the definitions of cultural property you find in the UNESCO convention of 1970. It’s a long list of almost all types of cultural property, irrespective of value for two categories of property at the minimum ages of a hundred years old. That’s for antiquities, which, you know, antiquities almost by definition are always more than a hundred years old. And furniture. And for two categories the item must be old books and musical instrument. What “old” means is a matter of interpretation.
Katie Wilson-Milne: For our listeners purposes, for our purposes, every fine art object is going to fall into this regulation.
Pierre Valentin: Correct.
Katie Wilson-Milne: Yeah.
Pierre Valentin: Fine art, antiques, and collectible items.
Katie Wilson-Milne: Right. Okay. So we have this general prohibition, which, as we’ve said, is a shift in that it is the EU saying we are going to enforce other countries’ export laws. Right? We’re not just worried about ownership. We are going to enforce export laws and we’re going to make that enforcement subject to criminal liability. So I think that’s significant, but it gets even crazier.
Steve Schindler: Right, because if I am someone who is in possession of a piece of cultural property that falls under the regulation, I live in the United States and I want to move to France, I want to take it with me. What do I now have to do? Or what will I have to do in order to comply with the new regulations? Do I have to fill out some forms? Do I have to sign things, get papers? What—
Katie Wilson-Milne: It depends.
Pierre Valentin: That’s right. It depends. It depends on what it is that you want to import in the EU. If it’s a Part B-type cultural goods, i.e. what’s what they call “high-risk.” And as I’ve said, high-risk is the product of archeological excavations on land or underwater, elements of monuments or sites, and religious icons or statues. They are considered high-risk. Irrespective of their value, if they’re more than 250 years old, you will need to obtain an import license in order to be able to import the item in the EU.
Katie Wilson-Milne: And what do you need to do to get the import license?
Pierre Valentin: Well, that’s a very good question. You will need to apply for the license. The application will need to be filed with the customs authority in the country of importation. And the application would need to be accompanied by documentation showing that the item of cultural property was lawfully exported from the country in which it was created or discovered.
Katie Wilson-Milne: Okay. So this is— it’s a worthy goal, right? We want to know that property, stolen property, is not being imported, that antiquities, religious objects, stuff from ancient monuments. This is just the kind of thing that is more likely to be looted or more likely to be subject to a country’s patrimony laws. So there is heightened sensitivity around these objects, and there has been much looting of them. But the problem with this regime, as you just described it, Pierre, addressing that problem is that it’s asking for documentation that nobody has. So I’m curious what—
Steve Schindler: Or never existed.
Katie Wilson-Milne: May never have existed, and if it did exist was not required at the time when people would’ve saved it. And so, I’m curious, Pierre, like what do you think about— we’ll get to category B, which is the middle category of restriction in a minute, where the, as you said, we don’t need an advance import license, but you do need to declare that it was exported at all times legally, which raises the same problem. It’s either you don’t have the documentation or you’re signing your name to something as an owner that you can’t possibly know anything about. So it’s a tricky situation and I’m not sure how it plays out. So—
Pierre Valentin: So you’re right. I mean, on paper it looks great and nobody can object to the intention behind the need for it, but the need to show that the item was exported lawfully— the problem is the evidence is, simply impossible to produce. The first question is how do you identify the country where the object was created or discovered? I mean, in some cases it might be obvious, but in many cases it won’t be. Take, you know, Islamic art, take tribal art, pre-Colombian art, this type of object may have been created or discovered in, you know, at least half a dozen countries, if not more. So—
Katie Wilson-Milne: This is actually a profound point that I think we certainly haven’t made enough on the podcast, and I think in discussions about cultural property and looting and ownership really isn’t emphasized enough. Which is that our modern conceptions of identity and culture defined by nation-state borders has something but sometimes little to do with prior understandings of how cultures aligned and connected and who created and owned certain cultural objects. And we don’t have a great system for going back in time and figuring that out. And so we impose this sort of modern cultural identity nation-state framework on creation that had nothing to do with those boundaries. And I don’t have a better idea, but the more you think about it, the odder it is that we sort of give the winners of whatever sort of expansion and wars and changing nation states— we give the sort of cultural and political winners of that, you know, centuries long back and forth, the right to own these objects. And it doesn’t always make sense.
Pierre Valentin: Yeah, and I’ll give you an example. I mean, you mentioned the Roman Empire. I think that’s a very good example. And some listeners will be familiar with the Sevso Treasure which came to market in the late eighties from memory and was very controversial. And that treasure was claimed by three countries as different as Hungary, Serbia, and Lebanon.
Katie Wilson-Milne: Oh my goodness. Yeah.
Pierre Valentin: That’s because the Roman Empire was so huge that this Roman treasure could have been discovered in one of those three countries.
Katie Wilson-Milne: Right
Steve Schindler: Right, and then you have the secondary problem— after you’ve identified those three or four countries— is we’re probably talking about a period of time where there were no export regulations. That’s a relatively more recent thing.
Katie Wilson-Milne: Yeah, and it wouldn’t even have to be that long ago.
Steve Schindler: Yeah, no. Right. I mean, we’ve had situations even in the art world where works of art, European art, were acquired over a hundred years ago and now of course you always have to— in selling it, you have to sort of affirm that it was not taken out of a country in violation of an export law, but there wasn’t an export law at that time. So it’s— there’s that complication as well.
Katie Wilson-Milne: Yeah, I mean, this is— right, exactly. There’s these two problems. There’s the conceptual problem of— and the historic research problem of— what is the source country, right? Where did this come from? And as we just described, that itself can be extremely difficult to figure out, and experts disagree on that question when given all the evidence, right, so that’s a fundamental problem. And then secondly, even if everyone did agree on the original source country, however long ago that was, there is likely zero documentation about its provenance travels out of that source country, including when it happened, you know, how it happened, who was the exporter. So this isn’t just a “this could be a problem.” This is a problem for almost every item like this.
Pierre Valentin: That’s right.
Steve Schindler: Yeah, with a consequence.
Katie Wilson-Milne: With criminal consequences.
Pierre Valentin: Yeah, and in order to decide whether there were export control rules at the time of the removal of the object from the country, you’ve got to figure out when it was removed. And then if you find out when it was removed, there’s sometimes a little bit of what I call legal archeology that needs to be carried out to figure out at that time what export control rules apply. And from experience, that can be tricky. And then, you know, let’s assume, you know, when the item was removed, let’s assume you have identified which export control rule would’ve applied. And let’s assume that that particular object needed an export license. In 99.9% of cases, that document will not be available. And it would be wrong to conclude from the absence of the document that the item was illegally exported. No one knows. It’s just that at the time, and even today, you know, most collectors don’t bother asking their shipper for a copy of the export papers. They lie on dusty bookshelves in shipping companies or on old computers. And until now, at least, nobody really has paid attention.
Katie Wilson-Milne: Yeah. Well, they were never required, so there was nothing nefarious.
Pierre Valentin: They never required, yeah.
Katie Wilson-Milne: Yeah, so this is an extremely problematic regulation for any of these antiquities, you know, ancient objects, categories, because I really don’t see how it can be complied with. And I guess the only good thing about this category versus the low-risk category, which we’ll talk more about in a minute, where you just need to make a declaration, is that the EU states will see pretty quickly that this documentation is not available, right? So unlike waiting for someone to make a false declaration and then a third party coming in and saying, no, we own it. And then there being some litigation or state investigation. Here, I guess the import officials of each EU country are going to see these applications and see pretty quickly, I’m guessing, that there are no documents. And I’m just wondering if that will sort of force a, I don’t know, a reconsideration.
Pierre Valentin: Well, it’s really interesting you should say that, because it’s very clear that the EU legislator did figure out that this documentation would not be available. And instead of saying, okay, well what we suggested clearly doesn’t work, so let’s scrap that and start again. They hang on to that. They said, no, no, no, no. We know that that documentation is not available generally. But we’ll keep the rule, and there will be an exemption— or a couple of exemptions— if either the country where the object was discovered or created cannot be established. Or you can show, your importer can show that the cultural object was taken out of the country of origin before 24 April, 1972. Now, if either of those assumptions is correct, then the exemption says that you, the importer, in order to get your import license, can provide evidence of lawful export from the last country in which the object was located for at least five years.
Katie Wilson-Milne: Okay. So that is a significant exception.
Pierre Valentin: Yeah. But that’s— it’s really extraordinary, because effectively EU is giving us a recipe to launder antiquities. They’re saying, “okay, we accept that what we are asking for is impossible.” So here’s the trick. You park the item in a country where there are no export control rules, or they’re pretty lax, you leave it there for five years, you present it to us for an import license, we’ll give you an import license, and once the object has an EU import license, it probably will be considered to be pretty safe.
Katie Wilson-Milne: And then it can move around. Yeah.
Pierre Valentin: Yeah, it can move around. So it’s effectively a recipe for laundering cultural property, which I think is absolutely extraordinary.
Steve Schindler: Yeah, that is extraordinary. And does that five-year period apply only to the sort of two other exception categories that you mentioned that you can’t identify where the country of origin was and that it left wherever it was found prior to 1972? Do those two things have to exist and then if those exist, you can park the item for five years in a country and then eventually after five years, move it to the EU.
Katie Wilson-Milne: And that applies to category B and C-risk objects, meaning it applies to high-risk objects and low-risk objects in terms of getting out of your requirement to get the advance import license with all that documentation and make a declaration that you know about the entire export history of an object.
Pierre Valentin: Correct. Correct. So you can see what will happen. In order to benefit from the exemption, people will be tempted either to remove any sign of where the object might have come from, its country of origin, so that one can claim, “oh, we can’t establish where it came from” and therefore the exemption is available. So that’s really making very important and relevant evidence unavailable. Or you will find probably in auction catalogs in the provenance “objects in Country X since 1973 or 1974,” again, as a way to benefit from this exemption,
Katie Wilson-Milne: I do want to talk a little about the category C. So there’s this— there’s sort of what we call category A, which is the general rule, which is, it doesn’t apply to any specific, you know, regulatory administrative steps. It’s just no importing objects, cultural goods of any kind that were exported illegally anywhere. Then we talked about the high-risk category, and then there’s this low risk category, too, Pierre, which is we call the Part C objects. And, those are, in a way, seems like it should be easier, but to me, the requirement is actually scarier because you’re saying, “I’m not going to give you the state documentation so that you’re satisfied of the legality of the import. I’m putting myself on the line as the importer to sign a declaration that I’m a hundred percent attesting that I know and promise that it was legally exported at every point in its history.” And that’s required. I think almost nobody who signs a declaration like that will actually be able to honestly attest to that for the reasons we talked about. They just— they will not have the paperwork. Right? So what is—
Pierre Valentin: That’s a significant problem, because the regulation makes it clear that in order for you to sign the importer declaration, you have to have the documentation. It’s just that for lower value items, you don’t have to volunteer that documentation. But the regulation makes it clear that on request, you must provide it.
Katie Wilson-Milne: It doesn’t seem like much lower risk. I mean, that’s not a lot—
Pierre Valentin: It’s not much . No, it’s—
Katie Wilson-Milne: And we should say these are not— these aren’t your everyday objects. This is still objects that are older than 200 years and worth more than €18,000. Right? So this is still a category of old important stuff of some value.
Pierre Valentin: Absolutely, yeah. Absolutely. Imagine you have a collection of I don’t know, original prints by famous artists. They’re all more than 200 years old and worth more than €18,000 a piece. In order to import that collection into the EU, you’ve got to sign the importer declaration, and you’re supposed to have an export license from the country of origin.
Steve Schindler: Right, so you have to attest that you actually have it. Is that—
Pierre Valentin: Yes.
Steve Schindler: That seems crazy.
Katie Wilson-Milne: It’s, well, I mean, people will just— no one will sign this, or everyone will lie and it won’t be enforced, or this regulation will really fall completely to its exceptions, right? That these sort of basic rules or, you know, main rules won’t matter at all because no one will ever be able to comply with them. And so the two derogations will be the rule in themselves.
Pierre Valentin: Yeah. Yeah, but that means that you will have to park a cultural property that falls within one of these categories. You have to park it somewhere for five years, or you’ll have to be able to show that it was parked for five years somewhere.
Katie Wilson-Milne: Right.
Pierre Valentin: And if you parked it and then exported it from that country after five years, then of course it’s within your control to get the export license. But if somebody else parked it, you may not be able to get your hands on the export license, in which case you have to wait another five years with the item parked in yet another country before you can import it into the EU. It’s a crazy system.
Katie Wilson-Milne: And just to remind people, this is not about whether the objects are stolen, right? There’s a separate regime if you’re importing either stolen, as Steve said, in the traditional sense or stolen because a country’s patrimony laws give it ownership of the object and deem it’s stolen property, right? There’s a whole separate regime making that illegal. So this is not implicating that. This is an additional requirement, even assuming that that criminal liability for stolen property isn’t at play.
Pierre Valentin: That’s right.
Katie Wilson-Milne: And that’s, I think, what— important to remember, because it’s a much more profound problem with your, you know, I was going to say normal people, but maybe not normal people, but your normal collector, right? Who’s, let’s say, moving from New York to Paris, or was relocating for a job and would like to bring their art collection with them or— you literally can’t move with your own stuff.
Steve Schindler: Right. Even if it’s not commercially motivated, because it’s— that’s not really relevant whether or not you’re bringing it there to sell, or traveling with it to live with.
Katie Wilson-Milne: So let’s talk more about the practical implications of this. I think, you know, there, as we just discussed, there are ways to get around these rules, but they’re costly and they take time. So, I don’t know. It’s kind of an interesting answer to say, “oh, sure, you can move with your own stuff, but not for five or more years while you figure out how to deal with this exception.” First, this seems incredibly expensive, right? So, true normal people, how they’re going to navigate this is beyond me. I think they won’t, for a lot of the non-category B or C objects. They’re just going to move them, right? They’re just going to be moved. And it’s going to be a question of whether there’s enforcement or anyone cares about lower value, not old objects coming in that don’t have this proof. But, you know, I think the expense for, certainly for not the wealthiest art dealers or collectors who are, you know, don’t have exceptional wealth or, you know, don’t have this expertise lined up, it can be quite onerous.
Steve Schindler: Also, if, I mean, it’s one thing if you can imagine somebody with a very valuable object that falls into this category who wants to sell it.
Katie Wilson-Milne: Right.
Steve Schindler: They’ll be able to hire a lawyer.
Katie Wilson-Milne: It’s just part of the cost of the transaction.
Steve Schindler: It’s part of the cost of the transaction. And if it’s worth enough, then it’ll be worth, you know, doing the things that you need to do. But if you’re just— again, if there’s no commercial objective, and you’re just moving something from point A to point B and you have to pay thousands of dollars to do it, then that’s going to be a problem.
Katie Wilson-Milne: Yeah, so I think there’s like the individual family person problem, right, Pierre? Just that people literally won’t be able to move their own stuff.
Pierre Valentin: That’s right. So if you move to, in order to sell it you know, you’ll have a huge incentives to selling in New York or London where these rules don’t apply. Now, there is an exemption for art fairs. So in order to show cultural property at an art fair, well I say there is an exemption. I mean, the importers still have to sign or has to sign the importer declaration, but doesn’t have to produce— doesn’t need an import license, even if it’s an antiquity or a religious icon or statue— in other words, a part B type item.
Steve Schindler: But they would still have to sign some—
Pierre Valentin: As you all pointed out— yeah. As you’ve all pointed out, because you still need to sign the import, the declaration. If you don’t have the documentation, you probably shouldn’t sign it. And the risk, if you sign it and you bring it say to Maastricht. You sell it in Maastricht to an EU buyer, at that point, you will need— you or the buyer will need an import license. And if the documentation is not available, then it’s even worse, because you are worse. Because the risk is that the item could be seized and confiscated.
Katie Wilson-Milne: Right. So that was the second sort of category of practical problems we were going to raise. So you have the individual problem, which is that a person that owns a collection cannot move with it if they are moving. And then there’s the commercial problem, which as you said, Pierre is in my mind, does this gut the auction market for these— for objects not created in the EU in continental Europe? I mean, how can an auction house function in Paris when they have to deal with this regulation for every single consignment, I guess, unless they only are going to have EU consignors who are consigning goods that are already in the EU. And— but that really shrinks the power of those sales, right? It’s not— they’re not going to be blockbuster sales, or we can’t predict—
Steve Schindler: Right, and you could have— you could have also US— you know, items from the US since we don’t have export rules relating to most things.
Katie Wilson-Milne: That are created in the US.
Steve Schindler: Right. If they were created in the US, then presumably it would be easy to comply with, you know, the law because there’s no—
Katie Wilson-Milne: You’d have to— you’d have to comply, but it would not be as risky.
Steve Schindler: It would be much easier.
Pierre Valentin: So either created in the US, or you can show that they have been in the US for more than five years.
Steve Schindler: Yeah, and I would think even— I mean, just thinking about conceptually, while it could have an impact, a more severe impact on auction houses, say in Paris, even if you think about an auction of these kinds of objects, even in the UK, it would— it would have an impact on buyers who are located in the EU. So I mean, it’s not like you could just go to London, buy something at the London auction. You still would have a problem bringing it back home. So it would eliminate not just a venue for an auction, but also—
Katie Wilson-Milne: The market.
Steve Schindler: —a category of buyers who just, unless they have a place in London, you know—
Katie Wilson-Milne: That’s really true, and as we said, you know, at the beginning, the art market is so global. So the same high-net-worth collectors are going around the world to see the same types of sales, and they’re not limited by where they live. So that really, I think, I don’t know— Pierre, does it choke the auction market in Europe and sort of redistribute those high value— a lot of the high value sales to, as you said, New York or London or Hong Kong?
Pierre Valentin: Well, I think as a seller, you definitely will not want to go through this bureaucratic nightmare in order to sell in Paris or in Germany. There will be an incentive in selling in London or New York. And Steve, you are quite right. Your EU buyers will not have an incentive to buy these objects outside the EU, because if they do and they want to bring it into the EU they’ll have to go through this nightmare. I suspect that the Swiss freeports, for example, could end up benefiting from this new legislation, because some collectors, you know, French or Germans, say, buy in London and New York and then store things for five years in a freeport in Switzerland, then they move it to the EU and out of Switzerland. Well, that should be quite easy provided they can show that the country of origin is unknown or it was out of the country of origin since 1972.
Katie Wilson-Milne: Right.
Steve Schindler: Right. But it also, I mean, what you’re saying presumes a certain type of collector who is willing to buy an object and put it in a freeport for five years
Katie Wilson-Milne: And also have the staff and the, you know, the lawyers and the accountants and to make that happen. It’s a— I mean, this is a problem in the art world in general, but this is just almost a further consolidation of elite collectors into the only people that can really participate freely in this market. Yeah, that’s an interesting point. So it’s the buyers are disincentivized, the sellers are disincentivized, because they can’t move it in or out, or they don’t want to deal with the, the admin. And then I think these European businesses, as I said before, are really, like, caught in the crosshairs of that. And I wonder if that was a concern implementing these regulations, Pierre, that European auction houses, but also smaller dealers who might sell these types of objects could be severely impacted by these regulations. And also culturally that, you know, these EU countries would accept that they’re going to lose their commercial artistic sector to some degree.
Pierre Valentin: That’s right. I mean, if you look at the tribal art market, it’s very much based in Paris and Brussels. How will these dealers thrive once this regulation is coming into force? I really don’t know, because their market will suddenly shrink to just the EU market. Both for sellers and for buyers, I would argue. Well, certainly for sellers, maybe not so much for buyers, because if you are from the US and you buy in Paris, well that’s not the end of the world because—
Katie Wilson-Milne: You can take it out.
Pierre Valentin: —will not apply. But still, you know, in terms of getting the stock, they will have a severe— there will be a severe obstacle in their way.
Steve Schindler: Right, and so let’s talk a little bit about when these go into effect, because we’ve been talking about them, they were enacted, I guess, initially in 2019. But something is—
Katie Wilson-Milne: They’re not in effect, right?
Steve Schindler: They’re not. Explain how it’s going to happen.
Pierre Valentin: Yeah, so the general prohibition to importing cultural property that’s been illegally exported, that’s already enforced. But if you want to import a collection or an object right now in the EU, you don’t need an import license or you don’t need to— or an importer statement. That will only come into force, we expect at the end of June 2025. So there is a, say, an 18-month window of opportunity to get your connection through the EU door before this regulation comes into force.
Steve Schindler: So theoretically it may not be permitted—
Katie Wilson-Milne: But you don’t have to sign your name to anything.
Steve Schindler: —but you don’t have to sign anything, you don’t have to have any documents. So you can just ignore it, I guess, if you want and bring whatever you want into the EU. And then there’s also, I understand some form of data sharing or database that’s going to go along with this. Can you talk about that a little bit, Pierre?
Pierre Valentin: Sure. So the significance of the end of June 2025 is the date when the European Commission expect to release a database that will allow customs— the customs authorities of the member states to log in documentation and exchange information that will allow them to effectively enforce this regulation. So things like items that are temporarily imported into the EU via France, well every— all customs authorities across the EU will be able to check that that item carries an EU import license. If the Spanish authority rejects an object by refusing to grant an import license, the customs authorities of other— all the other member states will know that. So if the importer having failed in Spain, tries in Austria the Austrians will be able to say, “no, you, you can’t get it in, because you were refused an import license by the Spanish.”
Steve Schindler: So this might cause also a little bit of shopping around in terms of where you choose your—
Katie Wilson-Milne: Your first point of entry.
Steve Schindler: —first point of entry. Because I assume, even though we do have a European Union and the regulation is EU-wide, we’re still actually— you’re still importing works physically into a particular country. And each of those countries has their own customs officers and regimes and sort of ways of doing business. And so they’re— it’s conceivable that individuals might try to pinpoint the less stringent entry points, I guess, if you will.
Pierre Valentin: That’s right. I mean, the issue there of course is that the less stringent entry point might be countries that have the highest rate of import VAT. So that will be a question of deciding what’s your priority.
Steve Schindler: Yeah. Well, that’s kind of an interesting point.
Katie Wilson-Milne: Yeah, I think that will happen.
Steve Schindler: Yeah.
Katie Wilson-Milne: Because those countries will smartly decide to make it easy so they can collect the VAT.
Steve Schindler: Easy and valuable for them.
Katie Wilson-Milne: So we— so yeah, of course we’ve been speculating wildly, which we do like to do of course, about what will happen. But we, I guess we will see how this implementation works in the next few years. Pierre, do you have a sense to speculate further about the enforcement capacity for these regulations? I’m just wondering, I mean, every law and regulation is only as good as how serious people take the possibility of getting in trouble. I mean what is the enforcement mechanism and capacity for giving real teeth to these regulations?
Pierre Valentin: It’s a very good question. I think the EU Commission has wildly underestimated the burden that this regulation will place on the customs authorities in the member states, because how many customs officer are trained to understand how to apply this regulation? I mean, they will have to figure out what an export license from Columbia, Papua New Guinea, and China look like when presented with one. There is an obligation on the importer, by the way, to produce or to provide customs with an official translation.
Katie Wilson-Milne: Okay.
Pierre Valentin: So that’s an added cost. That burden falls on the importer, not on the Customs authority. But still the customs authority will have to figure out what the documentation is about and whether documentation satisfies the requirements of this regulation. That will require a lot of training, in my opinion. More staff and I just don’t know how they will manage.
Katie Wilson-Milne: Right. And so, you said reasonable people can disagree about some of the history in this documentation. And so, we’re asking untrained— I mean, trained for what they do, but not trained in the art world— customs officers to interpret potentially very old, confusing paperwork that, you know, the highest paid lawyers in litigation disagree about for years and years
Steve Schindler: And art historians and anthropologists. I mean, and clearly, you know, it’s the same— it’s a little bit like the problem that we have encountered here and in London, you know, where the importation of artwork is not subject to duty generally, but objects of utility are. And so you’re, in some cases, asking customs officers to make judgements as to whether artwork, which isn’t conventional—
Katie Wilson-Milne: Like light bulbs.
Steve Schindler: —like light bulbs, and even a Brâncuși in our case, years ago, that are not really within their realm of expertise. And you can just sort of imagine how this will play out in that sort of context. It’s pretty crazy.
Pierre Valentin: Absolutely. And I suspect, you know, I’m speculating again, that some customs officer won’t understand a thing about this and will simply stamp whatever is presented to them and off you go. And then there will be the zealous customs officers who won’t understand, but that means they won’t issue the import license or they will, you know, not accept the import statement. And that will lead to a lot of frustration and probably more work for lawyers.
Steve Schindler: Right. And this was a sexy topic as it turns out.
Katie Wilson-Milne: I have— there’re so many questions. No answers and so many questions.
Steve Schindler: Alright.
Katie Wilson-Milne: That’s how we like to leave things.
Steve Schindler: Well, thank you, Pierre. This was really enjoyable.
Katie Wilson-Milne: Yeah. Thank you so much.
Pierre Valentin: Thank you for having me. I enjoyed it, too.
Steve Schindler: And that’s it for today’s podcast. Please subscribe to us wherever you get your podcasts and send us feedback at podcast@schlaw.com. And if you like what you hear, give us a five star rating. We are also featuring the original music of Chris Thompson. And finally, we want to thank our fabulous producer, Jackie Santos, for making us sound so good.
Katie Wilson-Milne: Until next time, I’m Katie Wilson-Milne.
Steve Schindler: And I’m Steve Schindler bringing you the Art Law podcast, a podcast exploring the places where art intersects with and interferes with the law.
Katie Wilson-Milne: The information provided in this podcast is not intended to be a source of legal advice. You should not consider the information provided to be an invitation for an attorney-client relationship, should not rely on the information as legal advice for any purpose, and should always seek the legal advice of competent counsel in the relevant jurisdiction.
Music by Chris Thompson. Produced by Jackie Santos.