The resale royalty right benefiting the author of original
artwork, traditionally known as the droit de suite, is, as its
name implies, the right of visual artists to remuneration in the form of a
royalty on subsequent resale of their works. The purpose of this right is quite
clear: to enable artists to profit from the economic success of their works
and thereby offset any disproportionate difference between the price at which
works are sold by an artist and the price subsequently fetched at resale
involving art market professionals.
This
right has traditionally existed in the legal systems of most European Union
countries, and a Directive to harmonize the right was issued in 2011 (Directive 2001/84/EC). The purpose of the Directive was two-fold: to ensure that
visual artists effectively benefited from the right in all EU countries and to
eliminate differences in the laws of the EU countries that resulted in
different treatment of artists depending on where their works were sold, which
ultimately was a factor contributing to distortion of the functioning of the
internal market. Nevertheless, Community harmonization did not encompass all
aspects of the operation of this right. Such issues as the beneficiaries of the
right, the transactions and artworks subject to the right, the calculation
basis, and the persons responsible for payment were addressed, but the
Directive did not define, or did not clearly define, who was ultimately liable
for bearing the cost of the royalty. Article 1.4 of the Directive provides
that: "The royalty shall be payable by the seller. Member States may
provide that one of the natural or legal persons referred to in paragraph 2
other than the seller shall alone be liable or shall share liability with the
seller for payment of the royalty."
In this situation a clause in the general conditions of sale of
the French art auction house Christie's France SNC for 2008 stipulated that the
buyers were required to pay the house a sum equivalent to the royalty due on
sales made through the said auction house that were subject to payment of the
royalty Christie's France SNC took the
money on behalf of the seller and subsequently paid it to the collective
management organization in charge of collecting the royalty. A competing
association, the SNA, claimed that sales made by Christie's France under the
aforesaid contested clause constituted unfair competition and were in breach of
national law regulating the resale royalty right. The clause was voided by the
Paris Cour d'Appel, and Christie’s appealed to the Cour de Cassation, which
stayed the proceedings while it referred the question of whether Article 1.4 of
Directive 2001/84 should be interpreted to mean that it is the seller who is
definitively liable for bearing the cost of the royalty to the CJEU for a
preliminary ruling.
The key issue underlying
the CJEU's ruling (Case C-41/14) is doubtless the difference between the person liable
for payment and the person who must definitively bear the cost. According to the CJEU, the Directive merely makes
provision specifying the first issue, whereas it is silent about the second. In
this regard the CJEU has held that a clause like the one in Christie's France's
general conditions of sale stipulating that the cost of the royalty is to be
borne by the buyer is not contrary to Community law. Basically what the CJEU
has held in this judgment is that the essential objective of harmonizing the
droit de suite in the Community is to ensure that artists effectively
receive remuneration, and the issue of who may or should in actuality
definitively bear the cost is left to the discretion of the Member States.
Author: Patricia Mariscal
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