This past year was an exciting one for Grossman LLP, as we continue to build on more than a decade of groundbreaking litigation in the art-law arena.

For years now, we’ve been following the legal fallout resulting from a rancorous dispute between Russian billionaire Dmitry Rybolovlev and his onetime art dealer, Swiss businessman Yves Bouvier.  The feud has resulted in legal proceedings in multiple countries, and other art world players have become entangled in the fray as well.  In one of those spinoff disputes, Rybolovlev has sued auction house Sotheby’s, alleging that it aided Bouvier’s machinations.  Earlier this month, a federal court rejected a number of those claims, but other claims will proceed to trial unless the parties can reach a settlement in an upcoming mediation.

There has been a lot of buzz—okay, that’s an understatement—about NFT art lately, and it may feel confusing to those who hail from the more “traditional” art world.  Here at Grossman LLP, we’ve been intrigued by this phenomenon, and now this post aims to discuss some of the basics about NFTs and some widespread misconceptions about them.  We also offer some thoughts on how they may potentially impact the art market going forward.  

Over the last few years, we’ve been following legal developments involving a rash of apparently forged Old Master paintings that have been discovered on the European art market.  This month, one litigant has indicated its intent to appeal a UK court’s decision regarding who should bear the brunt of the financial fallout from one of those fakes.

A recently filed lawsuit by the artist Pat Lipsky highlights an often-overlooked risk for New York galleries and auction houses exhibiting works online:  running afoul of New York’s Artist’s Authorship Rights Act (“AARA”).  That law—a precursor to the federal Visual Artists Rights Act (“VARA”) of 1990—gives artists in New York the legal right to claim or disclaim authorship of a work of art, and object to its display, publication or reproduction in an altered, defaced, mutilated, or modified form that could damage the artist’s reputation.  Unlike VARA, AARA protects not just the artist’s interests in the work itself, but also any reproductions of the work, even if no physical change has been made to the original work.

In late December, a New York state court granted summary judgment in a dispute over an art deal that fell apart.  The decision is likely to be of interest to many dealers and collectors, as it addresses important contract and agency law issues, against a backdrop of dynamics that are not uncommon in art transactions. 

As the new year begins, we write with some brief updates on two significant stories we’ve been following for some time.  One involves the ongoing issues arising out of the discovery of several forged Old Master works on the European art market.  The other involves a bitter, globe-spanning feud between a mega-collector and his onetime dealer.  And both of these complex situations will continue to reverberate throughout the art ecosystem.

This fall has seen developments in two cases we’ve been following.  Each case raises unique substantive legal issues, but the recent developments also serve to highlight the costs and complexity of litigating art disputes in court.

A trial is now imminent in a years-long, trans-Atlantic dispute over who is the rightful owner of a massive diamond.  The case, Angiolillo v. Christie’s et al. (Case No. 650871/2015, N.Y. Co.) is of interest to the art world because it implicates some of the same themes that often crop up in art title cases—questions ranging from whether a claimant has unreasonably delayed in asserting its rights, to how much an auction house is required to do to verify the title of an item it plans to auction.

An arbitrator recently ordered a sister company of auction giant Christie’s to pay nearly $1.8 million in damages to another auction house, Heritage Auctions, based on Heritage’s claims related to alleged theft of its auction data.  The case serves as a reminder that art businesses depend on information, and may need to consider how they should collect, protect, and appropriately use valuable confidential data.

For years now, we have followed the bitter dispute between Dmitry Rybolovlev, a Russian billionaire, and his onetime art dealer, Swiss businessman Yves Bouvier.   Now, a new ruling permits Rybolovlev-affiliated entities to move forward with claims that auction house Sotheby’s facilitated Bouvier’s purported fraud.  (The news comes on the heels of last month’s announcement that Sotheby’s is being acquired by French-Israeli businessman Patrick Drahi, in a deal that will take the auction house off the publicly-traded stock market and put it back in private hands.)

We have written on several occasions (see here, here, and here) about the tangle of disputes that have arisen from the discovery of multiple suspected forgeries of Old Master artworks.  Now, one such dispute has reached a settlement, and another has resulted in a judgment for Sotheby’s; but other questions about these works, and the Old Master market generally, remain.

A lawsuit pending in the United Kingdom continues the ongoing debate about how much due diligence buyers must perform when purchasing artwork, including whether such buyers must investigate price histories.   

Earlier this week, Justice O. Peter Sherwood of the New York County Supreme Court rejected collector Hubert Neumann’s attempt to prevent Sotheby’s from auctioning off Jean-Michael Basquiat’s monumental work, Flesh and Spirit.

On April 19, the European Parliament—the legislative body of the European Union—adopted the 5th Anti-Money Laundering Directive.  The new legislation will significantly affect Europe’s art market, and prominent members of the art world have already expressed their concerns about the practical consequences of the Directive.

In November, we wrote about increasing scrutiny of multiple Old Master artworks that have recently come under suspicion as potential forgeries.  And in January, we posted about a federal lawsuit Sotheby’s has filed in connection with the scandal; in that suit, Sotheby’s seeks to recover sale proceeds from a collector who sold one of the fake works at a 2012 Sotheby’s auction.  Now, the fallout continues; in February, Sotheby’s filed a second suit over another artwork, this time in the U.K. court system; as with the first suit, the auction house’s goal is to claw back the proceeds of a sale of a work sold through Sotheby’s that has since been shown to be a fake.

In the fast-moving and often-opaque art market, information is power—as seen in a recent lawsuit between rival auction houses over allegedly pilfered sales data. A complaint was filed last week in Texas federal district court by Heritage Auctions, a major U.S.-based auction house. The defendants are auction giant Christie’s and its subsidiary Collectrium (which Christie’s acquired in 2015).

The art world is watching with concern the unfolding story of a fake Frans Hals painting; facts are still developing as of this writing, but it’s possible that the work may not be an isolated forgery but rather the harbinger of a larger group of well-executed fakes that could shake up the Old Master market.

We have previously covered the litigation arising out of the 2007 sale of a Rothko masterpiece; the work’s seller sued the buyer and an intermediary dealer over alleged violations of a confidentiality provision in the sale contract, after the buyer and dealer resold the piece in a highly publicized 2009 auction.  In late September, the Fifth Circuit Court of Appeals issued a decision in favor of the defendants, in an opinion that serves as a reminder about the importance of clear contracting in art transactions.

We have written before about a long-running legal battle between the Norton Simon Museum in Pasadena, California, and the heir to a Jewish Dutch art dealer who fled the Netherlands in 1940.  The focus of the dispute is a diptych (two painted panels) titled Adam and Eve, painted around 1530 by German Renaissance artist Lucas Cranach the Elder.  A recent district court decision dealt a possibly fatal blow to the claims by plaintiff Marei Von Saher, although she plans to appeal.