Cultural Property (Armed Conflict) Bill [Lords]

Written evidence submitted by the British Art Market Federation (CPB 06)

1. The British Art Market Federation (BAMF) represents the leading elements that make up the UK’s art and antiques market. In 2015, the British art market accounted for a share of 21% of the global market by value, second in size to the US (with a 43% share) and just ahead of China (19%). It supports over 41,000 knowledge-intensive and gender-balanced jobs in 7,850 businesses, most of which are SMEs. Its expenditure on specialised ancillary services amounted to £3.6 billion, contributing to a further 101,880 jobs.

2. The British art market is highly dependent on cross border trade. In 2014 the UK accounted for 24% of all global art imports and 28% of global exports. In order to compete successfully in such a globally challenging and mobile market, the UK must provide an environment for art sales which is attractive to overseas sellers and buyers. Any confusion and uncertainty will inevitably undermine the competitive position of the UK to our overall economic detriment. It is because we are worried that the wording of this Bill will increase risk and uncertainty that we are making this submission to the Bill Committee.

3. BAMF emphasises that it fully supports the aims of the Cultural property (Armed Conflicts) Bill, but we are concerned that some aspects of the Bill will create avoidable uncertainty and ambiguity so that honest well-intentioned dealers and auction houses will run the risk of a possible criminal prosecution when making judgements relating to due diligence

4. The aspects of the Bill that concern us are (a) The broad definition of cultural property as worded in Article 1 of the Hague Convention (and incorporated in clause 2 of the present Bill); (b) The absence of precise information on occupied territories since 1954; and (c) The low level of mens rea in clause 17 (1) of the Bill. We set out our concerns about these in more detail below.

5. By way of background, a draft bill with the same objective as the present Bill and in very similar form was published by the then Government in 2008 and was the subject of an enquiry by the House of Commons Culture, Media and Sport Select Committee at that time. BAMF gave evidence to the Committee, commenting particularly on the three points of concern set out in 4 above. In its report (HC 693) the Committee recommended that the bill should include a requirement upon the Secretary of State to draw up a list of territories occupied since 1954 with the periods of occupation defined. The Committee also reflected BAMF’s concerns about the level of mens rea , commenting that its preferred option would be ‘for the draft bill to be amended so as to adopt the wording of the Dealing in Cultural Objects (Offences) Act 2003 which requires an element of dishonesty in the dealing offence if an offence is to have been committed’.

6. In its response to the Select Committee (Cm 7472) the Government rejected the suggestion of a list of occupied territories with their dates of occupation on the grounds that any dealer who carried out due diligence checks would be unlikely (our emphasis) to have the necessary mental element to be convicted of a criminal offence.

7. The Select Committee’s suggestion that a dishonesty element should be added to the mens rea of the offence was rejected by the Government without detailed explanation, beyond the fact that the suggestion had received careful consideration.

8. We mention this background because the present Bill does not differ from the 2008 draft in respect of the key issues raised by BAMF at that time. We had hoped that the suggestions put forward by BAMF and supported by the Select Committee would have been taken into account in the wording of the present Bill. However, in the key areas of concern, the present Bill is unchanged from the earlier draft. Given that we did not have access to the text of the Bill until two and a half weeks before its second reading in the Lords, and that the committee stage took place only ten days later, we did not have time to consult among our members and take legal advice in order raise substantive points on the floor of the House or to craft specific amendments to put forward. We did, however, engage in discussions with the minister responsible and with the DCMS, in which we shared the counsel’s opinion we had been able to obtain in the short time available. We mention this as ministers have questioned why we did not raise these points in detail in the House of Lords.

9. In order to explain the difficulties we face with some aspects of the Bill, we consider that an explanation of the process of due diligence might be helpful to the Committee. BAMF members are committed to conducting due diligence on artworks before they are sold. This may involve written evidence of provenance, consultation where necessary with external bodies, including databases of stolen objects and inquiries of the vendor. It is rare, however, that an artwork, particularly an older one, has an unbroken chain of provenance going back to the time it was created. It is also rare that there is comprehensive documentary evidence to support provenance, particularly the further back in time it goes. Either documentary evidence has been lost with the passage of time, or it never existed in the first place as it was not considered to be necessary. Until very recently, owners very rarely retained copies of export licences, as they were surrendered to customs authorities at the time of export, and even the authorities themselves did not retain such records beyond a limited time. Objects that were legitimately exported many years ago, even from the UK, routinely will lack the documentary evidence to prove it. The retention of documents or records started to assume importance in the late 1990s when claims began to be made for the restitution of works of art looted in World War II.

10. The absence or paucity of documentary evidence by no means necessarily indicates that an object is of illicit origin. Due diligence therefore usually comes down to making honest judgements on the legality of an object and therefore on whether it can be sold.

11. The present Bill adds to the factors that must be taken into account when conducting due diligence. This in itself might not present undue difficulties provided there is sufficient precision in the framing of the Bill so as to eliminate avoidable uncertainty. A list of occupied territories subject to the Bill would undoubtedly be of great benefit, but this has not been forthcoming.

12. The definition of the types of object covered by the Bill is very broad. The minister said in the second reading in the House of Commons that ‘the dealing offence applies only to a very small but very special number of cultural objects – those which are of great importance to the cultural heritage of all people’.

13. This is not clear from the Bill’s wording. The offence of dealing relates to all objects as defined in Article 1 of the Hague Convention (see Schedule 1, Article 1 (a)). The precise way Article 1 is worded and, in particular, how it is punctuated, does not support the Government’s assertion that it is limited to ‘movable and immovable property of great importance to the cultural heritage of every people’. This appears to be one criterion, but others are added such as books, manuscripts and works of art, without any qualification as to their importance.

14. An example may serve to illustrate the uncertainties created by this Bill. An old master picture that has changed hands on the legitimate open market in Europe in the past few years is sent to London for sale by auction. Due diligence is carried out. Its known provenance is investigated, as is its sale history and checks are made that it has not been stolen. The picture is then included in an auction catalogue, which is published several days before the sale. An allegation is then made that it was removed from an occupied Eastern European country in the 1960s. Time is necessarily short to investigate whether this is true or not. Attempts to resolve the matter beyond doubt before the day of the auction do not succeed, and, even though it may well prove groundless, the allegation itself represents a reason for suspicion under the terms of this Bill. Not wishing to run any risk of prosecution, the auction house has no alternative but to withdraw the picture from the auction, to the disadvantage of its owner, who at best will have to wait for another auction and, at worst will face financial loss as marketing it for a second time may adversely affect its value. The rarer and more valuable the picture is, the greater the risk that its successful sale will be prejudiced by a withdrawal from an auction. In time, the allegation may prove groundless, but the damage will have been done. If a similar situation arises at present– for example someone claimed title to the picture – the auction house, in consultation with the vendor, will assess the facts and make an honest judgement as to whether or not to proceed with the sale.

15. How is the auction house or dealer to respond if an assertion is made on social media or a blog that an object is illicit under the terms of the Bill? The allegation may subsequently be proved to have no foundation, but no auction house is likely to run the risk of possible criminal prosecution and if, as in the example above, there is no time to investigate its veracity, there will be no choice but to remove it from the sale to the obvious disadvantage of the seller. It is not hard to see how this could open the way to irresponsible or purely tactical claims aimed at disrupting the market. The same considerations apply also to art fairs which are of short duration and liable therefore to the same time constraints as auction sales.

16. Ministers have sought to assure us that it is unlikely that criminal prosecution would happen. The minister in the House of Lords commented that ‘the definition of "unlawfully exported" used in the Bill does not necessarily equate (our emphasis) to whether or not an item has an export licence’. These statements give little reassurance to those who would face criminal prosecution if they make the wrong judgement. It may be right that a jury would not convict such a person, but we contend that no member of BAMF will want to run the slightest risk of a prosecution being brought. The result will be that legitimate objects, which may be at risk of ill-founded claims and allegations, will be sold elsewhere than in the UK.

17. This could be remedied by amending the mens rea in clause 17 (1) to eliminate the objective test of ‘having reason to suspect’ and to reflect the mens rea in two of the major statutes that govern the criminal law relating to moveable property – The Theft Act 1968 and the Dealing in Cultural Objects (Offences) Act 2003. Both of these statutes require the mental element of dishonesty, meaning that a dealer with honest intent and conducting reasonable due diligence is highly unlikely to run the risk of prosecution unless it is shown that he wilfully acted dishonestly.

18. BAMF has put this point to the Government and has made available legal opinions in its support. The Government’s response has been to draw comparison with the Syria and Iraq Sanctions Orders, both of which incorporate reason to suspect in the mens rea of the dealing offence. We continue to believe that the two Acts of Parliament are more relevant comparators than the Orders in Council. First, because the Orders were not subject to consultation and parliamentary scrutiny – had they been, BAMF would have made the same point about the mens rea as we made to the select Committee in 2008. Secondly, the Orders were introduced to enforce United Nations and EU sanctions and are therefore by their nature likely to be short term and will no doubt be annulled when the sanctions are lifted; and thirdly, they do at least have precision lacking in the present Bill, both in terms of geographical location and the relatively recent dates of application.

19. BAMF has also pointed out to the Government that there is nothing in the Hague Convention that requires the UK to apply a lower level of mens rea in respect of objects illegally removed from occupied territories than is applied to the serious crime of handling stolen goods, or indeed to objects looted from sites overseas under the 2003 Act.

20. The Government has asserted that the requirement in the Hague Convention to ‘adopt such legislative, administrative or disciplinary measures as may be necessary’ to suppress the illicit trade in cultural property unlawfully exported from an occupied territory requires it to create an offence with a lower level of mens rea. We would dispute this and the decision appears to contradict the minister’s (Baroness Neville-Rolfe) assurance given in the second reading that ‘in introducing this legislation, the Government intends to do only what is necessary (our emphasis) to meet our obligations under the convention and its protocols’.

21. It is notable that the UK acceded to the UNESCO Convention 1970, which places many obligations on dealers in cultural goods, without the need to introduce new legislation or to amend existing legislation. By opting for a lower level of mens rea in the present Bill, than that which applies in the Theft Act and the Dealing in Cultural Objects (Offences) Act, we consider that the Government is going beyond what is necessary to comply with the Hague Convention and is effectively gold plating its obligations under the Convention.

22. It has been suggested that, by opposing clause 17 (1) in its present form, we are either attempting to obstruct the Bill or to ‘water it down’. Neither is true. BAMF wholeheartedly supports the aims of the Bill and we have no wish to obstruct its passage into law. But if ‘watering down’ means making the law fair, unambiguous and worded in a way that does not risk subjecting honest dealers and auction house staff to an avoidable risk of criminal prosecution, then we make no apologies for doing so.

23. By amending clause 17 (1) to: ‘It is an offence for a person to deal in unlawfully exported cultural property, knowing or believing that it has been unlawfully exported’, the risk to well-intentioned and innocent people would be removed, and the Bill would unambiguously target those with criminal intent.

24. The future success of Britain’s art market will depend upon our ability to continue to attract objects from owners throughout the world for sale here in the UK. It is of little comfort that this Bill will only apply to objects imported after it comes into force if it has introduced risks and uncertainties absent in rival markets.

25. We therefore urge the Bill Committee to give careful consideration to the points we have raised and to give their support to what we believe is an uncontroversial amendment

November 2016

Summary

1. The British Art Market Federation (BAMF) supports the aims of the Cultural Property (Armed Conflicts) Bill

2. BAMF’s concerns are centred on the uncertainties created by the Bill in its definition of the cultural objects within its scope and with the lack of information concerning the territories occupied since 1954 and their dates of occupation. We seek greater clarity on these key considerations.

3. The effects of these uncertainties in the context of the complexities involved in conducting responsible due diligence are magnified by the low level of mens rea in clause 17 (1) of the Bill, which will risk subjecting honest and well-intentioned dealers and auction house staff to the possibility of criminal prosecution.

4. We ask that clause 17 (1) should be amended to: ‘It is an offence for a person to deal in unlawfully exported cultural property, knowing or believing that it has been unlawfully exported’. This would remove the risk to honest people and would unambiguously target those with criminal intent.