Authors: Subhash Bhutoria,* Sima Ghaffari** & Amin Motamedi***
International Institutions and Rules
Institutional and Administered Arbitration
Disputes, in the present times, have become complex and more often than not, are time-sensitive and require field expertise. This necessity has led to the multiplication of arbitration institutions and development of specialized forums like the Court of Arbitration for Sport (CAS) and Business and Human Rights Arbitration (BHR). The paradigm shift from the court-based resolution is also taking place in rather less commercial domains, such as art and cultural property. The Court of Arbitration for Art, popularly known as CAfA, Netherlands, is such a step in light of a new erafor art law disputes.
In this regard, a notable milestone for the international art market is the recent joint initiative of the Netherlands Arbitration Institute and Authentication in Art which led to the foundation of the CAfA in 2018 as the first tribunal devoted exclusively to art disputes. Initially CAfA was established given the technical nature of art disputes, particularly the authentication disputes and thereafter expanded to include all types of art disputes. Hence, the detail characterizing disputes can include issues like the evidence of the authenticity of an artwork, fair use and copyright infringement, droit de suite, chain of title, loan, insurance agreements and etc. This article is focused on the key features of the CAfA’s arbitration rules and the entirety of the rules will not be analyzed.
BACKGROUND TO CAFA
Detailed analysis of the courts’ approaches to art law cases from different jurisdictions around the world shows the shortcomings of the litigation. The Plough case, the longest-running case in art law (1918-2018), deals with the forgery and sale of multiple paintings. This case is indicative of the incompetence of judges, lawyers and art experts when it comes to the identification of authentic works and expert evidence. In fact, the lack of confidentiality and expertise in traditional litigation would affect the value of artwork negatively. Greenberg Gallery, Inc. v. Bauman shows the inconsistency between the courts and market by demonstrating the influence of the experts regardless of the court’s decision. Although the court ruled that the work was authentic, it remained unsold following the expert’s assertion regarding its forgery. Additionally, the lack of art market expertise of courts is visible in the Peter Doig case in Chicago. Given these shortcomings, in the Looted Art case, the parties referred the disputes regarding restitution of the “Woman in Gold” paintings to arbitration in 2005 after their unsuccessful litigation experience. In addition to the foregoing, art disputes requires “an attentive consideration of delicate matters, fairness and other non-legal factors” rather than strict adherence to the law by the judges.
Thus, the viability of arbitration for art disputes results from its flexibility, confidentiality, certainty and expertise. Here, art lawyers do not need to explain the ABC of the art market in courtrooms. ADR would minimize these drawbacks and art disputes would be most satisfactorily resolved through arbitration. Nonetheless, there would be some challenges related to the capability of some art disputes to be settled by arbitration. In fact, art law is an amalgamation of many laws and some disputes may deal with the intellectual property rights. Here, there are some concerns as to the arbitrability of IP disputes particularly when the legal protection is granted through registration in some jurisdictions.
The previous initiative in terms of art law is the World Intellectual Property Office (WIPO) Alternative Dispute Resolution for Art and Cultural Heritage service, established in 1994. It mainly deals with galleries, producers of artistic performances, museums, artists and indigenous communities. However, WIPO does not exclusively deal with art disputes and does not provide examples of the art disputes settled through their center. The number of art-law related cases already filed with the WIPO Arbitration and Mediation Center is not disclosed but it seems that the WIPO has not provided practical avenues for addressing the main features of art disputes. Given the lack of critical attention paid to art law disputes, CAfA is gaining increasing international consideration by providing out-of-court options for art law related disputes.
SALIENT FEATURES OF THE CAFA ARBITRATION RULES
CAfA’s arbitration rules came into force in 1 January 2019. CAfA has put in place an Arbitrator Pool composed of international lawyers with demonstrated experience in litigating or counseling clients in art law disputes and/or international arbitration. This is due to the specific nature of art disputes related to this niche practice of law. For instance, in authentication disputes, it should be determined whether a work is a fake or a forgery and this leads to filtering out the frauds from the real deal. Arbitrators should be strictly selected from the closed list of arbitrators vetted by CAfA. However, in case of compelling reasons with the consent of the administrator, the arbitrator can be appointed from outside the pool. The language of article 11 is vague since there is no clear definition of “compelling reasons” and it is not clear in which circumstances the exceptions are applied. The concept of the closed list of arbitrators is similar to the closed list arbitrator appointments in the CAS. It seems that the selection of arbitrators in these institutions is according to objective qualifications rather than lack of bias. The closed list systems reduce the problems regarding the inability of the parties to make rational decisions for appointments. Regarding the number of arbitrators, the amount of the dispute affects the number, namely the hearings shall be conducted before three arbitrators for objects of art valued at or above € 1,500,000.
Another marked difference is that CAfA’s arbitration rules mandate examination of any forensic or provenance related issue only through its pool of renowned experts due to the increasing level of complexity of the disputes. This means that evidence from party-appointed experts will be admissible on all other issues under article 28. In that light, this feature avoids the battle of experts and makes the process of evidence-gathering less adversarial. To this effect, CAfA is also able to maintain impartiality and fairness in the proceedings. In comparison, the CAS considers both party-appointed and tribunal-appointed experts and the parties may call such experts whom they have specified in their written submissions. In BHR arbitration, the Hague Rules reflects the approach of the UNCITRAL Arbitration rules as to the expert appointed by the tribunal.
Much-needed efficiency and accuracy in decision is also achieved as CAfA allows for physical inspection of the disputed artwork upon request of any of the parties to the dispute or by the tribunal on its own motion. It is worth noting the issue of the possibility of “On-site inspection” under the Rules. Per Article 30, the Tribunal has the power for on-site inspection of the object of Art in dispute. However, there is no clarity on how Article 53 discretion will be applied by the tribunal. To facilitate expeditious dispute resolution, CAfA allows for framing rules to expedite urgent disputes. It also provides for provisional relief and summary proceedings, provided that the place of arbitration is in the Netherlands. Being inspired by the NAI rules, article 36 of CAfA deals with summary arbitral proceedings in detail and accordingly disposing of straightforward cases is provided. The summary procedure is also recognized in a few arbitral institutions with some differences.
Since confidentiality and secrecy are critically important in the art community, CAfA responds to this need under articles 6, 13 and 51 in order to avoid potentially unfavorable publicity. As a default rule, the NAI can publish awards in an anonymous form (without stating the names of the parties and other information that might reveal the parties’ identities) in the Tijdschrift voor Arbitrage arbitration journal, provided that the parties do not object to the publication of the award with the administrator within two months of the date of the award. Nonetheless, the name of the object may be revealed. The logic behind the article, in our view, is to balance market legitimacy and confidentiality, one of the main inherent elements of arbitration. In fact, if the award is not going to be available to the third parties, a fake piece would be recirculated. Accordingly, this feature mitigates the areas of concern as to the forgery cases. What is visibly absent from the existing framework regarding confidentiality is whether revealing the mere identity of the art piece can be objected by the parties or not. By way of analogy, other arbitral institutions do not address any exception to confidentially provision applying to the subject matter of the case. All institutional rules favor confidentiality; the scope is different though. For example, the LCIA obliges parties to keep the awards, materials and documents presented confidential; the SCC briefly addresses the obligation of confidentiality of arbitration and award and the HKIAC can publish any award if the parties and the identifying information are deleted and no party objects to such publication.
Another noteworthy aspect of CAfA’s arbitration rules is that while the proceedings are governed by the applicable governing law, the decision must also be based on the industry practice in the art business domain. CAfA does not provide for any appellate body and can only allow the review of ‘manifest error’ in decision in accordance with article 47. What is more, in accordance with Article 10.6, in case of a challenge to the arbitral tribunal on the ground of lack of jurisdiction, the NAI can still administer the case.
As to the recent developments, to date, no award has been officially announced to be issued by CAfA. A webinar titled “Dispute Resolution in the Art World” was held in 19 November, 2020 by the NAI. Some experts from different jurisdictions had an interactive discussion on dispute resolution in the art world. The difficulties of litigating art disputes in national courts were addressed by speakers by providing different examples from their practices.
A cursory look into the CAfA’s objectives shows that by an exclusive focus on accommodating art-related disputes, CAfA is increasing the market acceptability of the outcome of disputes. The rules undoubtedly contain some beneficial aspects for the efficient resolution of complex art disputes. As noted above, the existence of a pool of experts and arbitrators is CAfA’s defining feature and in practice, it depends on the process of onboarding trusted specialists. It remains to be seen in practice how CAfA will change the art market and how the players of the art industry like artist, auction houses, art galleries, insurance companies and etc. rely on the Center. In this sense, in order to answer the question of the title of the article (CAfA: evolution or revolution?), in our view, the answer is the latter.
 Łukasz Gembiś, Are We Dealing with the Trend of Specialised Arbitration?, Kluwer Arb. Blog (May 9, 2016), http://arbitrationblog.kluwerarbitration.com/2016/05/09/are-we-dealing-with-the-trend-of-specialised-arbitration/?doing_wp_cron=1595712620.2998149394989013671875.
 Court of Arbitration for Art, https://www.cafa.world/cafa/about_us/ (last visited Jan 10, 2021).
 Kadhim, Noor, Arbitration In The Art World And The Court Of Arbitration For Art: Heading Towards A More Effective Resolution Of Arts Disputes?, 24 Art Antiquity & L. 223 (2019).
 WIPO, Alternative Dispute Resolution (ADR) for Art and Cultural Heritage, https://www.wipo.int/amc/en/center/specific-sectors/art/.
 Oliver Spapens, Address at AiA Authentication in Art Congress 2018: The Plough 1918-2018: Longest Running Forgery Case in the History of Art (June 7, 2018), available at https://authenticationinart.org/pdf/papers/plough-lecture-aia.pdf.
 Greenberg Gallery, Inc. v. Bauman, 817 F.Supp. 167 (D.D.C. 1993).
 “Extremely Rare” Authenticity Case Causing Concern Among Art Law Experts, Boodle Hatfield: Art Law & More (Aug. 11, 2016), https://artlawandmore.com/2016/08/11/extremely-rare-authenticity-case-causing-concern-among-art-law-experts/.
 Felicia R. Lee, Arbitration Set for Case of Looted Art, N. Y. Times (May 19, 2015), https://www.nytimes.com/2005/05/19/arts/design/arbitration-set-for-case-of-looted-art.html.
 Maria V. Altmann v. Republic of Austria (Ad hoc, 1996), https://plone.unige.ch/art-adr/cases-affaires/6-klimt-paintings-2013-maria-altmann-and-austria/arbitral-award-5-klimt-paintings-maria-v-altmann-and-others-v-republic-of-austria-15-january-2004/at_download/file.
 See Quentin Bryne-Sutton, Arbitration and Mediation in Art-Related Disputes, 14 Arb. Int’l 447 (1998).
 Katalin Andreides, Alternative Dispute Resolution for Art-Related Disputes (Corvinus Law Papers (CLP), No. 1/2017).
 WIPO Alternative Dispute Resolution (ADR) for Art and Cultural Heritage, WIPO, https://www.wipo.int/amc/en/center/specific-sectors/art/ (last visited Jan. 10, 2021).
 A few anonymized case summaries can be found at WIPO, Arbitration Case Examples, https://www.wipo.int/amc/en/arbitration/case-example.html.
 Explanatory Notes AIA/NAI Adjunct Arbitration Rules ¶ 2.1
 CAfA Arbitration Rules art. 11(6).
 CAS Code: Procedural Rules R33.
 Jane Parsons, Claire Morel de Westgaver, A New Arbitral Institution for the Art World: The Court of Arbitration for Art, Kluwer Arb. Blog (June 17, 2018), http://arbitrationblog.kluwerarbitration.com/2018/06/17/a-new-arbitral-institution-for-the-art-world-the-court-of-arbitration-for-art/.
 CAfA Arbitration Rules art. 28.
 CAS Code: Procedural Rules R44.
 The Hague Rules on Business and Human Rights Arbitration art. 34.
 Explanatory Notes AiA/NAI Adjunct Arbitration Rules ¶ 7.3(D).
 CAfA Arbitration Rules art. 30.
 Id., art. 53.
 Explanatory Notes AiA/NAI Adjunct Arbitration Rules ¶ 9.6.
 CAfA Arbitration Rules art. 35.
 Id., art. 36.
 M. Kartikey & Rishabh Raheja, Recognition of Summary Procedures under the ICC Rules: Considerations, Comparisons and Concerns, Kluwer Arb. Blog (Dec. 4, 2017), http://arbitrationblog.kluwerarbitration.com/2017/12/04/booked-iccs-new-rules-summary-dismissal-kartikey-mahajan/.
 CAfA Arbitration Rules art. 6, 13, 51.
 Court of Arbitration for Art, Arbitration, https://www.cafa.world/arbitration/.
 Id., art. 51.
 LCIA Arbitration Rules (2014) art. 30.
 SCC Arbitration Rules (2017) art. 3.
 HKIAC Administered Arbitration Rules (2018) art. 45.
 Explanatory Notes AiA/NAI Adjunct Arbitration Rules ¶ 9.
 CAfA Arbitration Rules art. 47.
 Id., art. 10(6).
 Jean-François Canat et al. at CAfA Webinar: Dispute Resolution in the Art World (Nov. 19, 2020).
* Subhash is an arbitrator at CAfA and an attorney specialized in laws and practice relating to art law, intellectual property rights, contracts and internet law. He is also the founder of the intellectual property rights and art law practice at a leading law firm in India, Krida Legal. Subhash has represented leading art galleries, creative professionals, publishers, fashion and lifestyle brands to name a few.
** Sima holds a L.L.B, L.L.M and B.A in English translation from ATU University of Tehran. She is legal advisor at Ferdowsi Legal and a project assistant at the UNESCO Chair in Tehran. She is also one of the authors of the ICCA Yearbook Commercial Arbitration for the updates of Iran’s decisions regarding the New York Convention (to be added to the Kluwer database in February 2021). Sima represented her university in several international moot court competitions.
*** Amin is a PhD student in international law at ATU University of Tehran, a project assistant at UNESCO Chair in SBU, and researcher in the field of art law. He is also the director of Youth Committee of Iranian Association for United Nations Studies (IAUNS). Amin represented his university in several international moot court competitions.