The matter at hand

The French subsidiary of auction house Christie’s included a term in its general conditions of sale which allowed it to collect a sum, for and on behalf of the seller, in respect of any piece of art subject to the resale right which is marked in its catalogue with the symbol ‘λ’, which sum Christie’s will then pass to the collecting agency or to the artist himself. The French national association of antique dealers (SNA), whose members are direct competitors of Christie’s France, were of the opinion that the aforementioned term amounted to unfair competition, now that it was placing the onus of payment of the resale royalty upon the buyer, making the buyer ultimately responsible for the resale right.

Article 1(4) of the Resale Right DirectiveDirective 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benefit of the author of an original work of art provides that the resale right shall be paid by the seller, but that Member States are allowed to provide that an art professional involved (not being the seller, but an intermediary) shall alone be liable or shall share liability with the seller for payment of the royalty. The French Court decided to ask the ECJ whether Article 1(4) of the Resale Right DirectiveDirective 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benefit of the author of an original work of art must be interpreted as meaning that the seller is required to ultimately bear the cost of the resale royalty or whether any derogation by agreement is possible.

The judgment of the ECJ

The ECJ first of all recalls the ratio behind the resale right, being to ensure that authors of graphic and plastic works of art share in the economic success of their original works (paragraph 15). Subsequently, the ECJ observes that the Member States are responsible for ensuring that the resale right is actually paid. This responsibility also implies that the Member States may determine, within the framework of the Resale Right DirectiveDirective 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benefit of the author of an original work of art, the person liable for payment to the author (paragraphs 18-19).

Several language versions of the Directive however seem to contradict each other with regard to the question who is ultimately liable. There is question whether Article 1(4) – in short – indicates the seller/intermediary as ‘the person responsible for the royalty’ or as ‘the person who must ultimately bear the cost of the royalty’. The ECJ holds that this seeming contradiction should be resolved by looking at the context and purpose of the Directive (paragraph 26). In doing so, the ECJ establishes that the Resale Right DirectiveDirective 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benefit of the author of an original work of art ''makes provision about certain matters relating to (the amount of the levy), the transactions subject to payment of a royalty and the basis of calculation, (but that) it is silent about the identity of the person who must definitively bear the cost of the royalty.'' (paragraph 27).

The ECJ further holds that one of the objectives is ''to bring to an end distortions of competition on the art market'' (paragraph 28). To be able to achieve this objective, the ECJ finds it necessary that  ''provision  be made as to the person liable for payment of the royalty (...) and as to the rules for establishing the amount of the royalty(, but not) with regard to the question as to who, definitely, will bear the cost of the royalty.'' (paragraph 30).

In view of the foregoing, the ECJ concludes that ''in a situation where a Member State adopts legislation which provides that the seller or an art market professional involved in the transaction is to be the person by whom the royalty is payable, the Resale Right DirectiveDirective 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benefit of the author of an original work of art does not preclude those persons from agreeing, on the occasion of a resale, with any other person, including the buyer, that that other person will ultimately bear the cost of the resale royalty due to the author, 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'' (paragraphs 32).