Member states must decide on re-sale royalty burden, says CJEU
Europe’s highest court has clarified that EU member states should determine who is liable for paying royalties based on the re-sale of a work of art.
In a decision handed down yesterday (February 26), the Court of Justice of the European Union (CJEU) said that although under EU law the seller should “in principle” pay the re-sale royalty, the cost could actually be borne by the buyer.
The court was ruling on a reference from France’s Court of Cassation, which was seeking clarification on the EU’s Resale Right Directive (Directive 2001/84), which allows artists or their heirs to claim royalties from the re-sale of their work.
According to the directive, member states should provide a re-sale right for the benefit of the creator of an original work of art. This includes the right to receive a royalty based on the re-sale price of the work; in France this system is called ‘droit to suite’.
Article 1(4) of the directive states: “The royalty shall be payable by the seller. Member states may provide that one of the natural or legal persons referred to in paragraph two [which includes sellers, buyers or intermediaries and art market professionals, such as salesrooms, art galleries and dealers in works of art] other than the seller shall alone be liable or shall share liability with the seller for payment of the royalty.”
The dispute started when auction house Christie’s France changed its terms and conditions so that the buyer, not the re-seller, became liable to pay the royalty fee to the artist.
Christie’s decision was challenged by the Paris-based Syndicat National des Antiquaires (SNA), a union of antique dealers, at France’s Court of Cassation. The SNA claimed that, by placing the royalty burden on the buyer, Christie’s France’s general conditions amounted to unfair competition.
The court decided to stay the proceedings and seek guidance from the CJEU on whether only the re-seller should bear the cost of the re-sale royalty.
In its question to the CJEU, the court asked: “Must the rule laid down ... on the re-sale right for the benefit of the author of an original work of art, which makes the seller responsible for payment of the royalty, be interpreted as meaning that the seller is required definitively to bear the cost thereof without any derogation by agreement’s being possible?"
In its decision, the CJEU said that EU member states alone may determine who should be liable for the royalty payment.
“Although Directive 2001/84 provides that the person by whom the royalty is payable is, in principle, the seller, it none the less allows for a derogation from that rule and leaves the member states at liberty to specify another person,” the court said.
It added: “The person who has been designated as the person by whom the royalty is payable may agree with any other person, including the buyer, that that other person will definitively bear, in whole or in part, the cost of the royalty, provided that a contractual arrangement of that kind does not affect the obligations and liability which the person by whom the royalty is payable has towards the author.”
France’s Court of Cassation will now need to rule on the case.
Christie’s did not respond to a request for comment.
