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As it is often mandated by the courts, mediation is the most common form if one excludes usual inter partes negotiations. More costly private arbitration is less common, particularly where the dispute does not have an international dimension.

The National Association for the Visual Arts’ Code of Practice for the Professional Australian Visual Arts, Craft and Design Sector recommends mediation for contractual disputes between artists and commercial galleries.23 For disputes between artists and public institutions, it recommends mediation, followed by arbitration or litigation.24 The choice of the method of dispute resolution is one that requires careful consideration of the particular circumstances as none are universally applicable. The best resolutions can involve a tiered and flexible approach tailored to the participants.

The Arts Law Centre of Australia, the national community legal centre for the arts, provides an alternative dispute resolution service, offering mediation, binding expert determination and non-binding expert evaluation. This is the only alternative dispute resolution service in Australia dealing specifically with art matters, although its remit extends to other art forms such as music, film, theatre and literature.

IV FAKES, FORGERIES AND AUTHENTICATION

In the event of an acquisition of fake, forged or inauthentic art, there are various causes of action available. In McBride v. Christie’s Australia Pty Limited, mentioned in Section III, the plaintiff’s claims against Christie’s were of misleading or deceptive conduct,25 unconscionable conduct26 and deceit. The proceedings also involved a claim of misleading or deceptive conduct against the vendor, Holland Fine Arts & Cars Pty Limited, and against the director of that company for being knowingly involved in that conduct (although the claim against the director was subsequently dismissed). The plaintiff further brought claims of misleading or deceptive conduct, breach of contract, negligence and breach of fiduciary duty against her agent, Vivienne Sharpe (although the claims of breach of contract, negligence and breach of fiduciary position in respect of the painting were ultimately dismissed).

As mentioned further at Section V, the Australian Consumer Law provides certain guarantees in consumer transactions, such as the guarantee of clear title. The title guarantee applies to all such transactions, although other guarantees do not apply to sales by auction. The prohibitions in the Australian Consumer Law against misleading or deceptive conduct, unfair practices and unconscionable conduct generally apply.

Depending on the circumstances, criminal charges may also be brought against a dealer involved in the sale of forged paintings. A notorious case in Australia involved the creation and

23See https://visualarts.net.au/code-of-practice/11-commercial-galleries/, accessed 4 November 2020.

24See https://visualarts.net.au/code-of-practice/23-best-practice-standards-publicly-funded-exhibitions/, accessed 4 November 2020.

25Trade Practices Act 1974 (Cth), s52. Since the proceedings, this legislation has been replaced by the Australian Consumer Law, in Schedule 2 of the Competition and Consumer Act 2010 (Cth), which contains an identical provision in Section 18.

26Trade Practices Act 1974 (Cth), Sections 51AA, s51AB and S51AC, now see Australian Consumer Law, Part 2-2.

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sale of paintings that were forgeries of the work of the late Australian painter Brett Whiteley. An art restorer and art dealer were convicted in 2016 of obtaining and attempting to obtain financial advantage by deception, although those convictions were later quashed.27

The recent publication of Whiteley’s catalogue raisonné by Kathie Sutherland is anticipated to assist in future determinations of authenticity or otherwise of paintings attributed to Whiteley, although the publisher, Black Inc, has noted that Sutherland’s research is ongoing.28

Authenticity is a particular issue for Indigenous artworks. Various organisations, including the Copyright Agency, Indigenous Art Code and the Arts Law Centre of Australia, have been campaigning over several years to raise awareness of the sale of ‘Aboriginal-style’ artworks made by non-Indigenous people. A bill was introduced into the Federal Parliament to ban the sale of such artworks, but the Senate Environment and Communications Legislation Committee, although supportive, recommended that the Senate not pass the bill.29 More successful was the Australian Competition and Consumer Commission’s action against Birubi Art Pty Ltd (in liquidation) for making false or misleading representations under the Australian Consumer Law about the authenticity of the Indigenous-style artworks it sold. The Federal Court found that Birubi had breached the Australian Consumer Law,30 and ordered Birubi to pay penalties of A$2.3 million.31

VART TRANSACTIONS

iPrivate sales and auctions

The Australian Consumer Law provides a set of guarantees relating to the supply of goods to a ‘consumer’. A person is taken to have acquired goods ‘as a consumer’ if, relevantly, the amount paid for the goods was less than A$40,000 (increasing to A$100,000 from July 2021)32 or the goods were of a kind ordinarily acquired for personal, domestic or household use or consumption.33 By this definition, a business acquiring goods of a certain value or character would be a consumer for the purposes of the legislation.34 In terms of whether art ‘is of a kind generally acquired for personal . . . use’, there may be circumstances when a particular artwork, such as an oversized sculpture, does not have the requisite character. However, if

27‘Brett Whiteley art fraud conviction against Victorian pair quashed’, 27 April 2017, at www.abc.net.au/ news/2017-04-27/whiteley-art-fraud-convictions-quashed/8476216, accessed 5 November 2020.

28‘Brett Whiteley: Catalogue Raisonné: 1955–1992’, at www.blackincbooks.com.au/books/brett-whiteley, accessed 5 November 2020.

29The Senate, Environment and Communications Legislation Committee, Competition and Consumer Amendment (Prevention of Exploitation of Indigenous Cultural Expressions) Bill 2019. Accessible at www.aph.gov.au/Parliamentary_Business/Committees/Senate/Environment_and_Communications/ IndigCulturalExpression/Report, accessed 4 November 2020.

30Australian Competition and Consumer Commission v. Birubi Art Pty Ltd (in liq) [2018] FCA 1595.

31Australian Competition and Consumer Commission v. Birubi Art Pty Ltd (in liq) No. 3 [2019] FCA 996.

32Treasury Laws Amendment (Acquisition as Consumer – Financial Thresholds) Regulations 2020 (Cth).

33Aus Competition and Consumer Act 2010 (Cth), Schedule 2 – Australian Consumer Law, Section 3(1).

34There are exceptions if a business acquires goods for re-supply or to use them up or transform them in the course of trade: see Competition and Consumer Act 2010 (Cth), Schedule 2 – Australian Consumer Law, Section 3(2).

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artworks would otherwise be suitable for both domestic and other purposes (for example, for public display or corporate uses), they would be goods of a kind referred to in the definition of consumer and the guarantees should be taken to apply.

Where goods are sold at auction (including auctions conducted online), a limited set of consumer guarantees apply under the Australian Consumer Law, relating to title, clear title, undisturbed possession and freedom from securities or other encumbrances.35

However, if goods are sold other than at auction, the vendor also gives guarantees in respect of acceptable quality, fitness for a disclosed purpose, accuracy of description, availability of repairs and spare parts, and compliance with any manufacturer warranties.36 These are implied by statute even if not stated expressly in the terms or conditions of sale.

The Australian Consumer Law also contains general prohibitions against misleading or deceptive conduct, unconscionable conduct and unfair practices. These would apply to all sales, whether private or by auction.37

Auctions are heavily regulated in some Australian states, such as Queensland,38 but not in others, such as New South Wales and Victoria. Other than in Queensland, auction houses are not required by law to operate a trust account to keep sale proceeds separate from other funds. Several major art auction houses in Australia have called for mandatory trust accounts, after the auction house Mossgreen collapsed in December 2017. Mossgreen had mixed clients’ sale proceeds with its own funds and used those proceeds to cover its own operating expenses. Although there has been no legislative change, the industry body, the Auctioneers and Valuers Association of Australia, has included a trust account requirement in its Code of Ethics.39

The usual considerations otherwise apply to the proper drafting of private sale agreements, including provisions relating to provenance, authenticity and condition, as well as appropriate transit and insurance arrangements.

ii Art loans

The Protection of Cultural Objects on Loan Act 2013 (Cth) deals with objects that have been imported into Australia for temporary public exhibition by approved institutions, which have to satisfy the government that they have appropriate provenance and due diligence policies and procedures in place before being approved.

With some minor exceptions, the legislation protects objects temporarily on loan from overseas from seizure as a result of legal proceedings, whether in Australia or overseas, or other actions taken under Australian laws. The protection generally ceases 24 months after import or when the object is exported from Australia.

There have been no recent cases or developments in Australia involving art loans.

35Competition and Consumer Act 2010 (Cth), Schedule 2 – Australian Consumer Law, Sections 51–53. These sections are of general application, whereas the other consumer guarantees do not apply.

36Competition and Consumer Act 2010 (Cth), Schedule 2 – Australian Consumer Law, Sections 54–59.

37Competition and Consumer Act 2010 (Cth), Schedule 2 – Australian Consumer Law, Chapter 2 and Part 3-1.

38See Motor Dealers and Chattel Auctioneers Act 2014 (Qld) and Motor Dealers and Chattel Auctioneers Regulation 2014 (Qld).

39See www.avaa.com.au/avaa-code-of-ethics/, accessed 4 November 2020.

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iii Cross-border transactions

The Protection of Movable Cultural Heritage Act 1986 (Cth) regulates the export from, and import into, Australia of cultural property, including objects of ethnographic art, objects of decorative art and objects of fine art.

The National Cultural Heritage Control List40 sets out categories of protected objects in relation to export: Class A objects must not be exported from Australia (unless a certificate has been obtained from the relevant Minister in limited circumstances), while Class B objects may only be exported pursuant to an export permit. The latter category includes fine or decorative art that is at least 30 years old, has a value above a certain monetary threshold (variable depending on the nature of the work), is being exported by a person other than the creator and is an ‘Australia-related object’.41

The Prohibited Exports Register lists cultural property in respect of which an export permit has been refused. The most recent entries in this register are from 2020 – two paintings by Charlie Numbulmore, Wanjina on Coolamon and Two Wanjina on Slate, each dating from around 1970.42

The Protection of Movable Cultural Heritage Act 1986 (Cth) also prohibits imports of protected objects of a foreign country if those protected objects were not permitted to be exported from the relevant country. The legislation contains an exception if the relevant object is being loaned for up to two years to certain government bodies or collecting institutions.

There are likely to be tax consequences for the ownership, and later sale, of art overseas.43 If a taxpayer acquired an overseas artwork before that taxpayer became an Australian resident for tax purposes, they will be taken to have purchased the art at the same time as they became an Australian resident. If a taxpayer is no longer an Australian resident for tax purposes, they would be deemed to have disposed of the art when ceasing to be an Australian resident. Capital gains tax may be payable when the art is sold or otherwise disposed of. Capital gains tax applies to assets, no matter where in the world they are situated, that belong to Australian residents.

iv Art finance

In terms of jurisdiction-specific financing arrangements, the regime established by the Personal Property Securities Act 2009 (Cth) can be used to protect artists’ interests, particularly in the context of consignment. When an artist consigns artworks to a commercial gallery and registers the artist’s interest in those artworks on the Personal Property Securities Register, that interest is protected in the event of the gallery’s insolvency. This registration gives the artist priority over other creditors. In particular, a commercial consignment arrangement is a ‘purchase money security interest’, giving the consignor super-priority against earlier registered security interests. Registration can also be used to protect assets that are leased or hired out for at least two years.

This regime also enables personal property assets to be used as security for a loan, opening up additional financing options to artists and investors.

40Protection of Movable Cultural Heritage Regulations 2018 (Cth), Schedule 1.

41Protection of Movable Cultural Heritage Regulations 2018 (Cth), Schedule 1 Part 5.

42See www.arts.gov.au/what-we-do/cultural-heritage/movable-cultural-heritage/exporting-cultural-property- australia/movable, accessed 3 November 2020.

43See www.ato.gov.au/individuals/income-and-deductions/income-you-must-declare/foreign-income, accessed 4 November 2020.

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In terms of anti-money laundering laws, the Federal Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) does not currently regulate art dealers and auction houses. However, a statutory review of the legislation in 2016 recommended that options be developed for regulating high-value dealers, among other service providers.44 The Department of Home Affairs conducted consultation on possible regulatory models over the period 2016–2017,45 but legislative reform has not progressed further to date.

VI ARTIST RIGHTS

i Moral rights

Under the Copyright Act 1968 (Cth), an individual creator has the following moral rights: the right of attribution of authorship, the right not to have authorship falsely attributed and the right of integrity of authorship,46 which is the right not to have the work subjected to derogatory treatment.

In the context of artistic works, derogatory treatment means the material distortion, destruction, mutilation or material alteration to the work that is prejudicial to the artist’s honour or reputation, an exhibition in public of the work prejudicial to the artist’s honour or reputation because of the manner or place in which the exhibition occurs, and anything else that is prejudicial to the artist’s honour or reputation.47 However, the right of integrity of authorship is not infringed by the destruction of a movable artistic work if the person who destroyed the work gave the creator a reasonable opportunity to remove it.48

Each of the moral rights in respect of an artistic work continues in force until copyright in the work expires.49

Unlike moral rights legislation in other jurisdictions, the Copyright Act 1968 (Cth) does not provide for creators being able to waive their moral rights. However, creators may consent in writing to an act or omission that would otherwise constitute an infringement of their moral rights. Outside the context of film, a consent must be specific as to the works it relates to and as to the acts or omissions being consented to.50 This requires careful consideration and tailoring to the particular artwork and circumstances to be effective.

There are several cases in Australia relating to the infringement of the right of attribution and the right not to be falsely attributed in respect of photographs used in various publications.51

44Attorney-General’s Department, Report on the Statutory Review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and Associated Rules and Regulations, April 2016, accessible at www.austrac.gov.au/about-us/corporate-information-and-governance/reports-and-accountability/report- statutory-review-amlctf-act-and-associated-rules-and-regulations, accessed 4 November 2020.

45See www.homeaffairs.gov.au/help-and-support/how-to-engage-us/consultations/australias-anti-money- laundering-and-counter-terrorism-financing-(aml-ctf)-regime, accessed 4 November 2020.

46Copyright Act 1968 (Cth), Section 189.

47Copyright Act 1968 (Cth), Section 195AK.

48Copyright Act 1968 (Cth), Section 195AT.

49Copyright Act 1968 (Cth), Section 195AM.

50Copyright Act 1968 (Cth), Section 195AWA.

51Corby v. Allen & Unwin Pty Limited [2013] FCA 370; Tyler v. Sevin [2014] FCCA 445; Monte v. Fairfax Media Publications Pty Ltd [2015] FCCA 1633.

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The right of integrity of authorship has chiefly been the basis of complaints by architects when buildings they have designed are being renovated, with the most recent example being the proposed redevelopment of the Australian War Memorial.52

However, the right of integrity of authorship was referred to in defamation proceedings over an article published in The Sunday Telegraph newspaper.53 The article alleged that the plaintiff had purchased a five-panel artwork by the Australian artist Del Kathryn Barton on the condition that the five panels not be sold separately. The plaintiff subsequently sold one of the panels, which was referred to as being an infringement of the right not to have the work subjected to derogatory treatment. That there had been an infringement of the artist’s moral rights was one of the defamatory imputations alleged by the plaintiff. However, the court’s decision dealt with procedural points rather than considering moral rights and we are not aware that the artist brought any separate action in relation to the matter.

ii Resale rights

A resale royalty scheme was introduced in 2010 through the Resale Royalty Right for Visual Artists Act 2009 (Cth). The scheme applies to commercial resales of artworks from 9 June 2010, where the sale price is more than A$1,000.54 The transfer must be the second transfer of ownership since 9 June 2010 for the resale royalty to be payable, even if the work already existed as at that date.55 Private transfers (that is, transfers from one individual to another that do not involve art market professionals) are excluded from the scheme.

The artist must satisfy the residency test of being an Australian citizen, an Australian permanent resident or a national or citizen of a country prescribed as a reciprocating country.56 If the artist has died by the time of the commercial resale, the residency test applies as at the date of the artist’s death, and the successor in title has to satisfy the residency test as well as a succession test.57

The resale royalty rate is 5 per cent of the sale price on the commercial resale of the artwork.58 The liability for paying the resale royalty is shared on a joint and several basis between the sellers, the buyers and art market professionals acting as agent for either sellers or buyers.59

The resale royalty scheme is administered by the Copyright Agency.

In December 2019, the then Federal Department of Communication and the Arts released its review of the first three years of the scheme.60 It was noted that the resale royalty scheme was viewed positively by artists and artist advocacy organisations and negatively by art investors and art market professionals. The scheme was regarded by many as having had a negative impact on the Australian art market, along with the global financial crisis

52Williams, E, ‘Fears Anzac Hall to be demolished in war memorial redevelopment.’ 28 October 2018. See www.canberratimes.com.au/story/6001177/fears-anzac-hall-to-be-demolished-in-war-memorial- redevelopment/, accessed 4 November 2020.

53Vass v. Nationwide News Pty Ltd [2016] NSWSC 1721.

54Resale Royalty Right for Visual Artists Act 2009 (Cth), Sections 8 and 10.

55Resale Royalty Right for Visual Artists Act 2009 (Cth), Section 11.

56Resale Royalty Right for Visual Artists Act 2009 (Cth), Section 14.

57Resale Royalty Right for Visual Artists Act 2009 (Cth), Sections 12 and 15.

58Resale Royalty Right for Visual Artists Act 2009 (Cth), Section 18.

59Resale Royalty Right for Visual Artists Act 2009 (Cth), Section 20.

60Department of Communication and the Arts, Post-Implementation Review – Resale Royalty Right for Visual Artists Act 2009 and the Resale Royalty Scheme, 2019.

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and the changing of the art ownership rules relating to self-managed superannuation funds (see Section VII).61 Nevertheless, the review’s conclusion was that the resale royalty scheme remained appropriate.62 The review did not contain any recommendations to change the operation of the scheme.

The Resale Royalty Right for Visual Artists Act 2009 (Cth) has now been in effect for 10 years. As at 11 June 2020, the resale royalty scheme had generated approximately A$8.5 million in royalties for 1,975 artists and their estates.63

iii Economic rights

In addition to the usual exploitation of artist’s copyright in their works, the Copyright Act 1968 (Cth) provides statutory licensing schemes for copying by educational institutions64 and by government.65 Both statutory licensing schemes are administered by the Copyright Agency.

In August 2020, the federal government proposed reforms to Australian copyright legislation, including the streamlining of the government statutory licensing scheme and the introduction of a limited liability scheme for use of orphan works. Draft legislation is expected to be released in late 2020.66

VII TRUSTS, FOUNDATIONS AND ESTATES

As a matter of law, philanthropic trusts and foundations may only fund charitable projects. Accordingly, organisations seeking funding from trusts and foundations need to be endorsed by the Australian Taxation Office as a deductible gift recipient (see further below) or endorsed for charity tax concessions.

Endorsement as a deductible gift recipient is available to public art galleries and public funds that are on the Register of Cultural Organisations. The benefit of such an endorsement is that donors receive a tax deduction for their donations, provided that there is a voluntary transfer of money or property (as opposed to a loan) and the donor does not receive any benefit from the donation.

For a gift of property (such as an artwork) to be deductible, the property must be valued by the Australian Taxation Office at over A$5,000. If the property was purchased less than 12 months prior to the gift, the tax deduction would be calculated as the lesser of the market value of the property on the day the gift is made and the amount paid by the donor for the property. If the property was purchased more than 12 months prior to the gift, the tax deduction will be the value of the property at the time of the gift, as determined by the Australian Taxation Office.

The Cultural Gifts Program is another means of using the tax system to encourage people to donate cultural property to public institutions. Public collecting institutions must

61Department of Communication and the Arts, Post-Implementation Review – Resale Royalty Right for Visual Artists Act 2009 and the Resale Royalty Scheme, 2019 at 9.

62Department of Communication and the Arts, Post-Implementation Review – Resale Royalty Right for Visual Artists Act 2009 and the Resale Royalty Scheme, 2019 at 52.

63Copyright Agency, ‘10 years of Resale Royalty for Australian artists’ at www.copyright.com.au/2020/06/10- years-resale-royalty/, accessed 4 November 2020.

64Copyright Act 1968 (Cth), Part IVA, Division 4.

65Copyright Act 1968 (Cth), Part VII, Division 2.

66See www.communications.gov.au/departmental-news/copyright-access-reforms, accessed 3 November 2020.

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apply to participate in the Cultural Gifts Program. Where a gift is made to a participating public collecting institution, the donor receives a tax deduction of the market value of the gift, which can be spread across five income years. The donation is also exempt from capital gains tax.67

Gifts donated under a will or by executors of deceased estates do not receive the tax benefits under the Cultural Gifts Program; such gifts are not tax deductible.68 Nevertheless, large bequests have been made to public galleries; in October 2020 the Queensland Art Gallery received an A$35 million bequest.69

In addition to tax-deductible donations, individuals may also be interested in investing in art as part of their self-managed superannuation arrangements. However, an amendment to Australian superannuation laws in 2011 prohibits art bought through a self-managed superannuation fund to be displayed; this would be viewed as the fund members receiving a present-day benefit. Instead, the artworks would need to be leased to galleries or placed in storage. It has been claimed that the change in superannuation legislation has had an adverse effect on the market over the past decade, given that self-managed superannuation funds had been the purchasers for up to a quarter of Australian art sales and up to 40 per cent of indigenous art sales.70

VIII OUTLOOK AND CONCLUSIONS

While relatively small on a global scale, the Australian art market is mature and well regulated. The ongoing effects of the coronavirus pandemic on the economy are likely to continue into 2021, with business insolvencies likely to result in disputes over payments and ownership. Over the coming year, policy issues around Indigenous art, particularly representation

in collections, restrictions on sale of fake Indigenous art, and the preservation of cultural heritage, will continue to be debated. It is also expected that the proposed amendments to copyright legislation will be passed.

67See www.arts.gov.au/what-we-do/cultural-heritage/cultural-gifts-program, accessed 4 November 2020.

68See www.arts.gov.au/what-we-do/cultural-heritage/cultural-gifts-program, accessed 4 November 2020.

69‘QAGOMA receives transformative bequest from Win Schubert’, 10 October 2020, at https://blog.qagoma. qld.gov.au/qagoma-receives-transformative-bequest-from-win-schubert/, accessed 5 November 2020.

70Plastow, K, ‘How superannuation laws are strangling Australia’s art scene’, 29 September 2019. See https://thenewdaily.com.au/finance/superannuation/2019/09/29/superannuation-laws-hurt-art-scene, accessed 4 November 2020.

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Chapter 9

AUSTRIA

C Dominik Niedersüß 1

I INTRODUCTION

The Austrian art market generates an estimated US$2 billion of revenue per year and currently accounts for 2 per cent of the art market in the EU.2 Its significance for the Austrian economy as a whole is relatively high because – in a global context – the art industry generates more jobs per capita in Austria than it does in any other country.

Next to the large international auction houses, the market is dominated by local player Dorotheum, the largest auction house in continental Europe. Smaller auction houses and a rising number of trade shows round up the offer for fine arts.

Add a rich musical tradition and corresponding education, and an opera house and concert halls of world repute, and you get the gist of the art sector’s significance to both tourism and the national economy.

II THE YEAR IN REVIEW

The coronavirus pandemic has had a significant impact on the art industry and society as a whole. In March 2019, Austria, being a neighbouring country with strong economic ties to Italy, decided to react to the pandemic situation in northern Italy with a very strict lockdown. This resulted in cultural life being shut down entirely, and public life being reduced solely to grocery shopping for almost three months.

While this seemingly had the desired effect, it strongly affected the art market and artists. At the time of writing, the crisis is far from being over, and we are reluctant to jump to conclusions at this point. Data regarding the actual impact of covid-19 on the art market is not yet available. Traditionally, the Austrian art market has punched above its weight but the

future will tell how it has been impacted by the pandemic in the long run.

Restitution of Nazi-looted art continues to be an issue. There seems to be a tendency to publicise these cases less, and give them a lower profile, than in the past.

1C Dominik Niedersüß is a partner at Polak & Partner Attorneys-at-Law.

2Depending on the source of the estimate; the numbers available vary significantly. www.derstandard.at/ story/2000054364980/kunstmarkt-erwirtschaftet-milliarden; https://de.statista.com/statistik/daten/ studie/309409/umfrage/aufteilung-des-kunstmarkts-in-der-eu-nach-laendern/.

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IIIART DISPUTES

iTitle in art

We focus on the title and transfer of property based on a purchase contract. Other civil contract types (e.g., service contracts) or non-contractual transfers (e.g., inheritance) are, of course, also possible and common, but rarely lead to title issues.

Purchase contracts, according to Austrian law, come into force through concordant declarations of intent regarding the object and price by both buyer and seller. Determinability of object and price are sufficient. Even the mere offer to sell or purchase extends limited binding effects. In light of the principle of nemo plus iuris transferre potest quam ipse habet,3 the seller is required to either be proprietor of the good sold or authorised to dispose of the good.

Under certain circumstances it is possible to acquire property even if the seller lacks both these prerequisites. One option is the good faith acquisition of property, which requires a transaction against payment and, further, that one of three conditions set forth in the law must apply:

apurchase at a public auction;

bpurchase from an entrepreneur; or

cpurchase from a person of trust.

In practice, the most important of these is the acquisition from an entrepreneur. More precisely, the purchase has to be within the framework of his or her business. Further requirements include a technically successful acquisition of property (if property of seller were assumed). Most importantly, a transfer of ownership must take place in the sense that the modus of the transaction is effective. It does not matter which modus was chosen.

The requirements set for the good faith of the buyer are strict. Even slight negligence hinders good faith. The buyer will be considered to have acted in good faith if he or she ‘neither knew nor was supposed to know’ that the object did not belong to the seller.4 Further, good faith is presumed by law.5 Therefore, the burden of proof of its lack lies with the opposing party (i.e., in general, the person demanding restitutions). These good faith requirements pertain only to the buyer. Whether the seller is in good faith is irrelevant for the acquisition. Good faith acquisition of ownership can also take place for stolen or looted works of art.

There is a limited duty of inquiry. The information provided by the seller must be subjected to a critical assessment. However, if the buyer had to raise well-founded suspicions due to the general conditions of the purchase (low price or knowledge about the previous owner, etc.), the buyer is obligated to investigate more thoroughly. However, the extent of this obligation, and the question of whether there is a general obligation to investigate in detail, are a matter of scholarly dispute. If the suspicion is dispelled in the course of the investigation, the buyer is considered bona fide. Relevant databases of stolen or looted art help to counteract the acquisition of property in good faith.

A professional gallery owner or museum must meet higher requirements in terms of good faith than an inexperienced buyer. Gallery owners and art dealers are subject to the

3See Section 442 of the Austrian Civil Code (ABGB).

4id., Section 368.

5id., Section 328.

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