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The Artist’s Resale Right: Practical considerations for art market professionals
Introduction
The Artist’s Resale Right Regulations 2006 (ARR) give artists and their estates a legal right to receive a royalty when their original work is resold through an art market professional. For galleries, dealers and auction houses operating in the UK, understanding the ARR and how it works in practice is essential. The ARR regime imposes statutory obligations that can expose art market professionals to liability if overlooked, but it also contains ambiguities that complicate compliance. As a result, the ARR is a source of frustration and target of criticism for many art market professionals, whilst simultaneously praised for providing a vital source of financial support for artists.
This article outlines the legal framework, highlights common pitfalls, and offers practical guidance for those operating in the UK art market.
Legal Foundations
ARR was introduced into UK law in 2006 to implement the EU Resale Right Directive 2001/84/EC (“Directive”). The Directive sought to harmonise the disparate Artist Resale Rights that existed in certain member states and was the product of ten years of negotiations, which provides an insight into the practical challenges underlying the ARR regime. Following Brexit, ARR was retained under domestic UK law and has only been subjected to minor amendments.
With regards to duration, ARR endures for as long as copyright subsists in the work, generally 70 years after the artist’s lifetime.
When does ARR apply?
The ARR broadly applies to the resale of original work in the UK with a value of at least £1,000 involving an art market professional. When seeking to assess whether ARR applies, it is worth considering the ARR’s guidance on the meaning of key terms:
- meaning of ‘resale’. – resale is interpreted widely under the ARR, and a sale will be considered a resale even though the seller did not purchase the original work. For example, a “resale” following a gift by the artist would qualify.
- “original work”. – the ARR confirms that original work means “any work of graphic or plastic art such as a picture, a collage, a painting, a drawing, an engraving, a print, a lithograph, a sculpture, a tapestry, a ceramic, an item of glassware or a photograph”. For works in which copyright does not necessarily subsist, such as prints and reproductions, these would need to be assessed on a cases by case basis.
- “art market professional” –any party acting in the course of a business, whether as a seller, agent or buyer will be deemed an art market professional. For that reason, sales between private individuals or museums would not typically be caught under the ARR.
- £1,000 – This threshold applies to the sale price, net of any taxes and applies irrespectively as to whether the resale is made for a loss.
- The artist must also be a qualifying individual, meaning the artist must be a national of the UK or a jurisdiction that provides ARR rights to UK (for example, the EU). There are various jurisdictions that do not provide equivalent ARR regimes include the US and China.
How much ARR is payable?
ARR royalties are calculated on the basis of a sliding scale:
- Up to £50,000 - 4%
- £50,000.01 - £200,000 - 3%
- £200,000.01 - £350,000 - 1%
- £350,000.01 - £500,000 - 0.5%
- Above £500,000 - 0.25%
The maximum sum of royalties payable under any single transaction £12,500, meaning the sale price would need to be £2 million or more.
Liability and contractual allocation
The obligation to pay ARR arises at the point of sale. The allocation of ARR liability will depend on the structure of the transaction:
- The default position is that the seller and the seller’s agent (for example, the auction house) are jointly and severally liable for paying ARR.
- If the seller does not have an agent, liability sits jointly and severally with the seller and the buyer’s agent.
- If there are no agents involved, the seller and the buyer are jointly and severally liable.
A crucial point around ARR liability is that it cannot be transferred or waived. However, the economic cost of ARR can be allocated to another party:
- Auction houses often include terms that require the buyer to pay ARR, in the same way they may be responsible for import duties or other transaction costs.
- Galleries can state whether ARR is included or excluded in the purchase price. For example, some dealers may adopt a policy that all prices include ARR.
- The ability to pass the cost to the buyer has been confirmed under EU case law and remains common commercial practice in the UK.
Consequently, sellers and agents remain legally liable to pay ARR royalties even, even if the where the contract allocates the cost to the buyer. For that reason, contracts of sale should therefore be clear around ARR obligations by, for example, setting out which party will bear the ARR cost, and which party will be responsible for administering the payment.
Finally, ARR is inalienable, meaning that artists cannot waive or forego the right, and any agreement purporting to do so is ineffective.
Enforcement and collecting societies’ powers
In the UK, DACS (Design & Artists Copyright Society) and ACS (Artist’s Collecting Society) administer and enforce ARR. Both DACS and ACS have investigatory powers are broad and they may:
- request any information necessary to secure payment of the royalty and determine the amount due.
- Make information requests up to three years after the transaction.
- Address requests to a buyer, seller or agent, though in practice they are often sent to the relevant art market professional.
Maintaining accurate records for at least three years is therefore essential in order to comply with information requests. Records should include all information that may be relevant to establishing whether ARR is payable, including artist’s name and nationality, date of sale, sale price and the related parties to the transaction.
Recipients must do “everything within their power” to respond within 90 days. If there is no response, DACS or ACS can apply for a County Court order compelling disclosure. Persistent non compliance carries both enforcement risk and reputational consequences, as evidence by the DACS & ACS v Ivor Braka Ltd proceedings [QB-2021-003258].
DACS& ACS v Ivor Braka
In 2021, DACS and ACS brought proceedings against well-known art dealer Ivor Braka, on the basis that it had not responded to information requests or paid any ARR royalties since 2006. The case settled before a defence was filed, so it does not provide judicial guidance. However, the proceedings demonstrate that DACS and ACS are prepared to issue proceedings, and also shed light on the art market’s criticisms of ARR and the reputational risks around non-compliance with ARR.
At the time of proceedings, DACS and ACS issued statements justifying the ARR regime and the claim:
- “ACS and DACS have made repeated requests to art dealer Ivor Braka and his company Ivor Braka Limited to report sales on which the royalty is due, to which Mr Braka has refused to respond in breach of his legal obligation to do so.”
- “ARR royalties provide an invaluable form of financial aid for thousands of artists and their beneficiaries across the UK.”
- “ACS and DACS are hoping this case will set a precedent for Court action to address non-compliance with the ARR and disclosure of sales information.”
Ivor Braka duly responded with a statement setting out his position on the dispute and the reasons why he fundamentally disagreed with the introduction of the Artists’ Resale Right, which included:
- “favours artists with an active market” and “raises money for very wealthy artists or estates”;
- targets art market professional when “many so called collectors these days are the biggest traders”; and
- that ARR can apply even when a work is resold at a loss: “when you buy for £5,000 and sell for £3,000, you are still liable to pay the levy. This makes no sense at all.”
Key takeaways
- ARR imposes legal obligations on art market professionals to pay royalties where due and to respond to information requests within 90 days.
- Contracts should make clear if the ARR cost is passed to the buyer and, critically, who will administer payment to the collecting society and manage reporting.
- Maintain accurate sales records for at least three years, and preferably six, to address requests and limitation uncertainty.
- Court guidance remains limited, but enforcement action demonstrates that collecting societies will pursue persistent non compliance.
- There is no current indication of reform. Treat ARR as a settled feature of the UK market and build compliance into pricing, terms and internal processes.
