The art industry is a dynamic and complex market, with disputes arising from a variety of issues such as transfer of title, repatriation of artefacts, authenticity of works, art loans, and ownership and succession of estates. With the proliferation of art contracts, the need for effective and efficient dispute resolution has become pressing in the Indian art industry. The Court of Arbitration for Art (CAfA) under the auspices of the Foundation Authentication in Art and the Foundation Netherlands Arbitration Institution has emerged as a revolutionary step forward in the field of alternative dispute resolution for art related disputes.
What is the background of art and cultural heritage disputes?
Art and cultural heritage disputes have become increasingly time-sensitive and demand specialized knowledge of the relevant field. This has resulted in the proliferation of arbitration institutions and the emergence of specialised forums. Art disputes combine the characteristics of quasi-judicial proceedings with the capability of resolving specialized and highly specific subject matter disputes. This adaptability is advantageous in art and cultural heritage disputes as parties frequently come from diverse cultural backgrounds with vastly specific issues.
What makes art disputes unique?
Art disputes are unique because they involve not only rights and obligations, but also sensitive cultural, religious, historical, and moral considerations. Additionally, parties can be both public and private entities, often from various geographical locations and cultures.
Why is effective dispute resolution important in the Indian art industry?
Effective dispute resolution has emerged as one of the most pressing issues in the Indian art industry. Disputes have become a major hindrance to art investment in India due to the proliferation of contractual relationships and the absence of effective governing regulations. Litigation is expensive and the lack of specialized tools and confidentiality in court proceedings work as a disincentive for people to sue unethical practices, hindering the growth of the industry.
What is the Court of Arbitration for Art (CAfA)?
The Court of Arbitration for Art (CAfA) is a revolutionary step forward in the field of alternative dispute resolution for art-related disputes. Under the auspices of the Foundation Authentication in Art, based in Hague and the Foundation Netherlands Arbitration Institution, based in Rotterdam, CAfA endeavors to provide a confidential, effective, and efficient resolution of art disputes. CAfA provides a tribunal composed of art experts addressing the major problems associated with judicially-administered
art disputes globally.
What is the importance of the CAfA in resolving art disputes in India?
The CAfA offers an option to include a CAfA arbitration clause in art contracts, which will likely gain popularity in resolving the rising art disputes in the USD 2 Billion Indian art industry. However, it is important to understand the legal landscape in India to address this opaque yet dynamic market.
What is the basis of the question of arbitrability in India?
The Apex Court in India laid the foundation for the question of arbitrability in Booz Allen & Hamilton Inc v. SBI Home Finance, ruling that based on the ‘nature of rights’ involved in a dispute, rights in rem (right of a person against the world at large) and disputes reserved exclusively for public forums are non arbitrable while rights in personam (rights against specific individuals) are arbitrable. In the recent decision in Vidya Drolia v. Durga Trading Corporation, the Supreme Court laid down a “four-fold”
test to determine the arbitrability of disputes.
The CAfA aims to provide confidential, effective, and efficient resolution of art disputes by offering a tribunal composed of art experts. Its advent has the potential to increase the popularity of arbitration in resolving art disputes in the Indian art industry, which is valued at USD 2 Billion. However, it is important to understand the legal landscape in India, particularly with regards to the arbitrability of disputes in the field of art and cultural heritage. The recent decision by the Supreme Court in Vidya Drolia v. Durga Trading Corporation lays out a four-fold test to streamline the process of determining the arbitrability of a dispute in India. The test includes four circumstances where a dispute shall not be arbitrable: (i) when it relates to actions in rem, (ii) when it affects third party rights and has an erga omnes effect, (iii) when it relates to inalienable sovereign and public interest functions of the state, and (iv) when it is non-arbitrable as per mandatory statute.
By acknowledging that subordinate rights in personam arising from actions in rem are arbitrable, the SCI paved the way for private adjudication of statutory claims in India. This includes disputes arising from landlord-tenant relationships, governed by the Transfer of Property Act, which were ruled to be arbitrable.
Hence, the ‘four-fold’ test must be taken into consideration when dealing with art disputes in India.
