Italy has one of the oldest cultural heritage laws in the world. “I won’t necessarily say that it should be considered an example, because there are a few things that do not really work properly, but at least it’ s definitely a model to be considered”, - Giuseppe Calabi said to ArtLaw.club There is a transcript of our interesting talk with the senior partner at CBM & Partners, Mr.Giuseppe Calabi, on the Italian cultural heritage laws and artwork export license regime.
- CBM & Partners has a solid Art Law department. Can you please elaborate a bit on it?
- Yes, we have a strong Art Law department in my firm, which was set more than 20 years ago. This kind of practice was not initially planned, because 20 years ago there was no such thing as Art Law and nobody actually talked about it. Of course, the law did exist, but there was no Art Law practice almost anywhere around the world. We started by chance like it often happens in legal profession. I became a legal advisor to a major international auctioneer. I was helped by my classical education background and my interest in the arts. Just as important driver for me was my wife, who is a very prominent American art historian and curator. These three factors have certainly helped in picking up what is now an Art Law practice, which addresses all the art law related matters within the country and across the board: we provide transactional advice, represent clients in litigations, we have developed an expertise in respect to different cultural heritage issues. Our client base is formed by collectors, museums, intermediaries, galleries, art advisors, companies involved in the logistics, shipping companies, artist foundations, non-profit organizations. We also provide legal advice to banks, offering financial facilities secured by cultural property objects, and insurance companies (even though artfinance as such is not that much developed in Italy). So, in respect to the client base it is very diverse kind of practice.
- You are currently working on the projects concerning the reform of Italian Heritage laws and artwork export license regime. Why was it necessary to setup a working group? What are the main problematic issues in the existing legal norms?
- This project is called Apollo. It started about 4-5 years ago. The major Italian business newspaper organized a big conference in Milan on cultural heritage and art market issues where I was invited to give a talk. During this conference I met a country manager of Christie’ s, who had major experience in circulation of artworks in and out of Italy and all the related requirements. Few days later she called me up and said maybe we should try to do something in order to improve Italian legal framework. It was the very beginning. So, we put together a group formed by trade associations, in particular Antique dealers’ association, Modern and contemporary art galleries association, the Auctioneers association, the major international auction companies, including Sotheby’s, Christie’s and others. We developed a position paper that was submitted to the government. The first attempt was simply to notify the regulatory regime about the existing problems. We started with the secondary level legislation – ministerial decrees, instructions, rules, that have been issued throughout the years (more than a century from the initial adoption of the first legislative act covering Cultural Heritage issues in 1909. Even though there were many amendments afterwards, the core issues remained unchanged). One of the issues addressed was the absence of a unified central authority in Italy granting an export license. There are 18 export offices, each of them goes pretty much their own way. This is quite a big issue in terms of potential forum shopping cases and desired unified interpretation of the law across the country. Then we tried to change the guideline for export license, but this did not take us anywhere. So, within our first attempt we communicated our ideas to the bureaucracy, which, as it is typically the case, was very conservative, happy with the existing situation (even though it was complicated and cumbersome) and unwilling to change anything. This bureaucratic position is very notable in the field like this, when you try to make the existing regulation more efficient, but it is perceived as detrimental to the power of control.
Later there was a second attempt where we managed to raise an issue at an upper level, where the legislative reform was thought, and started a dialogue with the then Minister of Cultural Heritage. He understood the issues and was interested in the project, so the working group achieved a tangible result. It took four years altogether and in 2017 the law was finally approved. It is not a radical change, we requested more that we have obtained, but after all it is better to have a moderate reform then no reform at all.
- What are your main achievements?
- The main achievements are at three levels. The first one is that the relevant age to be considered in order to qualify a certain object as culturally relevant has been extended from 50 to 70 years from the creation of the object by a non-living artist. Previously the threshold was 50 years. The increase for 20 years had important implications since previously most of the post-war Italian artifacts were covered. So, the artworks created by a non-living artist less than 70 years ago need no export license any more, they can leave the territory of Italy based on filing, but it do not require a license.
The second achievement is that for the first time in the Italian Cultural Heritage law a monetary threshold was introduced. This is a sort of de minimis provision, since it is the very low threshold, if compared to the ones effective in other countries, like France or the UK. The monetary threshold is 13,500 euro, whereas the European regulation on the export license provides for much higher monetary thresholds (for instance, for paintings it is 150 000 euro). So, the Italian threshold is more than 1/10 less than the European one and it is fixed for all objects. 13,500 euro is very little if you think of, for instance, contemporary modern art, but it is very high for other items, like books or coins. For the latter this is quite a relevant amount. This was the compromise we were able to reach with the government.
It should be also noted that a working group drafting these amendments, that were later approved by the Ministry, comprised of industry participants, which is quite unusual for Italy. In our country the implementing regulations approved by the parliament are normally made by the relevant ministry officers without really consulting the market or industry participants.
Altogether there were two working groups working on the amendments in the cultural heritage regime, and I was honoured to be part of both of them. The one was working on the new guidelines for export licenses (approved in December of 2017), the other was working on modification of more practical aspects of regulation of objects circulation regime for the works which have foreign provenance and were introduced into the Italian territory, and the list of documents that you need to file with the Italian Ministry for works which are less than 70 years old (the previous regulation on the necessary documentation was of 1914, more than 100 years old).
These were the main achievements we were able to achieve. There are some drawbacks however, since the monetary threshold, which is in any case very modest, was declared to be not applicable until the end of the current year. This delay is not justified, and we have started a new dialogue with the new minister. The state officials want to modify the online system and the apps, before introducing the monetary threshold, which is to be done by the end of the year. The is a very formal justification. In my opinion the real point is that the bureaucracy does not actually like the reform as such and want to postpone it. Moreover, in Italy implementation of the law approved by the parliament frequently requires implementing decrees by the government, and in some cases due to this provision the law is destined to failure because the implementing decrees may never follow and the law only remains on paper.
Due to the above the working group regathered the previous fall in order to communicate these considerations to the new minister, and we did it the last Monday in Rome with the head of the legal department of the Ministry. What we are going to do in the next months is to write a new position paper, submit it to the minister and insist on full implementation of the 2017 reform. We will certainly make also the proposal to make more efficient the unified interpretation of the law by all the authorities in the Italian state. This is our agenda for the months to come.
- What is considered to be cultural heritage by the Italian state? What are the main restrictions/limitations related to these objects?
- As a very broad outline, cultural heritage is anything that is older than 70 years of age created by a non-living artist (author) that presents a cultural interest. This is a very open-ended category (works of art, anything that has historic interest, presents interest to the collector, etc.) It is not confined to movable items only, but extends also to buildings and real estate assets.
I will give you an example related to international circulation of cultural objects. Imagine that you have a painting hanging on the wall of your house that was made by your grandmother and that presumably does not possess any cultural interest (according to your assessment). However, if your grandmother was an unknown artist but was discovered later and considered an important artist than your painting may be classified as presenting cultural interest to the state. Therefore, in any case of doubt, you are advised to file for an export license. In Italy the failure to apply for an export license entails the application of criminal sanctions.
- Who is the one determining whether the particular item does or does not present the cultural interest?
- The State. In case the object is owned by private individuals the State determines that a particular item presents cultural interest. Everything that is owned by the State, municipalities or even private foundations, which are equaled to public entities owned by the state in this respect, is presumed to have cultural interest. This is the reason why deaccession is virtually impossible when it comes to State collections.
Talking about privately owned works, if you want to take it out of the country you need to file for an export license. As far as you want to keep it at home you are allowed to do so, of course, up to the moment when the State gets to know about the existence of the object. It may happen, for instance, when you are requested to give the object on loan to the museum. Therefore, at any point of time when the State receives information about the particular object and declares it as having a cultural interest, the object will no longer be permitted to be permanently exported. If you want to sell it you have to offer the State the right of first refusal, if you want to restore it you need to ask a State permission, if you want to move it from a location A to the location B normally you need to receive an authorization from the State. The State wants to know everything about the work, including the exact location thereof from the moment when the cultural interest has been notified to the owner. This status to the object is conferred forever, meaning that even in case of succession, the heirs will not receive the object free from this inherent obligation. The heirs are obliged to inform the State about the succession event. If they do not do it, they are subject to criminal sanctions.
- Are there any restrictions applied to the items younger than 70 years old? Is the monetary threshold then applicable?
- For the time being application of the monetary threshold is suspended. In any case the monetary threshold is relevant only when you want to export a work. According to the current wording of the law (which hopefully will be implemented by the end of this year), if you want to export an item older than 70 years and having a value below the monetary threshold, you are not obliged to get an export license. This, however, only applies to the items not classified as cultural property beforehand. In case the state classifies the item, which value is below the threshold, as cultural property whenever it gets to know about its existence, the threshold is no more applicable and the item is forever denied of being exported permanently. Therefore, the monetary threshold is not applicable in 100% of cases and does not limit the right of the State to forbid the export of a particular item.
Afterwards, replying to your question, the items less than 70 years old cannot be normally classified as those possessing cultural interest. However, there is another exception, which will let you understand how complicated the Italian law is. According to the reform, the Ministry agreed to extend to 70 years from 50, therefore confirming that for the item below 70 years there is no interest from the State, with one exception though: for the works between 50 and 70 years old (the time frame which was the result of compromised extension), the State may declare these works of being of cultural interest if the State proves the relevant work presents an “exceptional interest for the integrity and the completeness of the national cultural heritage”. The wording is different from what is normally required, because in order to classify your work as cultural heritage it is sufficient to show that the certain object presents a “particularly relevant” cultural interest. So, from “particularly relevant interest” for the works from 70 years and older the level was upgraded to “exceptional interest” for the works from 50 to 70 years old. Obviously, “exceptional interest” is higher than “particularly relevant interest”, but there is no clear definition in the law of those two terms. It remains pretty subjective, even though the motivation for each of the statuses is required. Nevertheless, despite these terminological difficulties, during the last two years after the reform was approved, the State has applied its rights to declare exceptional interest in a very moderate and limited fashion. There have not been many cases where culturally relevant objects were declared of exceptional interest.
- How can a potential buyer of an artwork make certain that the particular item he is going to buy will be allowed to be exported into another state?
- The buyer can never know, he should always apply for an export license.
Even if a person is lucky enough to have a house in Paris and wants to move his/her own object to another domicile abroad he/she still needs an export license. At this stage the object previously unknown to the state is evaluated as to having or not having the cultural interest and therefore allowed or rejected the exportation. This situation of course can be foreseen in the sales agreement. Generally, the major auction houses do not include the risk of denial of the export license as a condition precedent to the sale agreement, but you should also be aware that if the export license is denied, the work will automatically be classified as the one having cultural interest and never be able to leave the country. Moreover, the value of the work which has been declared of having this cultural interest, will generally be reduced by 2/3. In this case the private owner does not receive any indemnity.
- Are there any anti-seizure regulations targeted at short-term incoming cultural objects and artworks?
- There are no anti-seizure regulations, and this is what we have discussed with the legal department as well. Under Italian law any loan to an Italian institution is a potential subject to risk of being seized, unlike legislation in many other countries. However, I can barely remember any case where this right of seizure was ever implicated by the Italian authorities.
- What were the most memorable art/cultural heritage related cases in your practice?
- I am currently dealing with a very interesting case which has had quite a substantial press coverage. It has nothing to do with art, but rather with the books and an archive. You certainly know Umberto Eco, who was also a very serious collector having an exceptionally large modern library with an important archive. The family wanted to leave all these assets to the public, in particular they wanted to donate the modern books to the University of Bologna along with the archive and to sell the ancient books to a state-owned library in Milan - Brera National Library or Braidense Library - that was founded by Maria Theresa of Austria in the 18th century. It is one of the most important libraries of the country. Everything was already negotiated, the terms and the price, and then out of the blue last year the direction of the archives in the Ministry classified everything as cultural heritage. As a result of this classification it is impossible to pursue the author’s wish as to his assets. So, there is currently a litigation pending against the state, and we hope we will be able to find a settlement arrangement. Otherwise we’ll have to wait for the decision of the court.
In the other case we have represented several artists foundations in cases where authenticity opinions were challenged by collectors. I must say that in Italy, like in France, there is a very favourable legal framework for artists foundations, because under the principle of the freedom of expression of opinions they can express their opinions without the risk of being sued, if their opinions are not favourable to the collector.
Besides, most recently I have been involved in a very important art sale transaction of a work of a French artist Daniel Buren, who is a conceptual artist. In the way his artworks have been managed he is quite similar to the other famous American artist Sol LeWitt, famous for his wall drawings. Buren (like LeWitt) does not physically create the artworks himself, but he rather gives instructions, in French – avertissments. Then the people instructed by the artist make the artwork. The artwork generally is immovable (since it is on the wall of your apartment). So, in order to move it you would need to destroy it and the buyer would need to agree on the terms of these avertissments (instructions or warnings which limit from the outset the prerogatives of the buyer). This is an interesting way to transfer the artworks as opposed to a more common way when the artwork is a movable object. Moreover, it also involves an active role by the artist in sale transaction (and after his death, a role by his estate) who is generally not the party of the sale contract, while the parties are a gallery and a collector.
- How do you evaluate the current standing of the Italian art market?
The Italian art market unfortunately is very small. It represents only 1% of the global art market. And there is a number of reasons for it. One of which definitely is the very complex legal framework related to artwork circulation in and out of Italy. Plus, there are some tax disadvantages. Even though we do not have a capital gain tax in art sale transactions, the import duties in Italy are 10%, while in the UK these are 5%, in France this is 5,5%. I might say the art market in Italy plays a role of Cinderella, if compared to more energetic counterparts like the American or French art markets. We have art fairs, in my opinion too many of them. There is an important one in Milan, but there also is one in Bologna, one in Torino, one in Modena… this makes it difficult to create a common understanding and pursue a common interest in Italy.
- Would you like to add something for our readers?
- As a closing remark, I would like to mention that it was a real miracle that within the Apollo project we were able to make so many parties sit around the same table. The auction companies are normally saying that they have a different interest from galleries, galleries see the auction houses as competitors, Italian auctioneers look at major auction houses like Sotheby’s and Christie’ s as competitors, and neither of them would normally agree to sit around the same table. It was a really big achievement to convince all these people to join forces to start a constructive dialogue with a ministry.
 Under condition that this is a private deal and sale of artworks does not constitute commercial activity of the seller