Royalty-Assessing Power Belongs to EU States

(CN) - Resale royalties are available to artists from sellers or buyers, or other professionals that an EU member state selects, the EU's highest court ruled.

Syndicat National des Antiquaires, French for the national association of antique dealers, brought the action against its competitor, Christie's France SNC, a subsidiary of the multinational auction leader, seeking to void the term an artist's "resale right."

Under EU Directive 2001/84/EC of Sept. 27, 2001, the term is defined as the right of an original artwork's author to receive resale royalties after the work's first transfer.

The right applies to all acts of resale involving art market professionals - including salesrooms, art galleries and dealers - as sellers, buyers or intermediaries, the directive states.

With Christie's France collecting, on behalf of the sellers, the resale royalties from the buyers for certain lots in its catalogs, the Syndicat National claimed that this general sale condition amounted to unfair competition.

A Paris Regional Court dismissed Syndicat's suit, however, finding that deciding who pays the resale royalty does not itself amount to unfair competition.

The Paris Court of Appeal later held that the resale right lets the seller compensate the author, whose work's value may have risen since its first sell.

It declared "resale right" void, finding that any agreement's derogation from the directive would upend its objective in standardizing resale-right protocol.

France's Court of Cassation stayed the suit upon the next appeal and asked the EU's highest court, the Court of Justice, whether the seller must always definitively bear the cost of the resale royalty, or if other arrangements may be agreed upon.

The Court of Justice ruled Thursday that "since Directive 2001/84 requires the member states to provide for a resale royalty, those states must be considered responsible for ensuring that such a royalty is actually paid, if the relevant provisions of the directive are not to be deprived of all practical effect."

"According to recital 4 to Directive 2001/84, it is necessary to provide creators with an adequate and standard level of protection," the opinion states. "If such a level of protection is to be ensured, that indeed presupposes that it is the member states alone which should designate, in their law, the person by whom the royalty is payable."

The directive further indicates "that the member states may provide for derogations from the principle that the royalty is payable by the seller," according to the ruling.

But the court further held that "if a member state decides to provide that the royalty is to be payable by a person other than the seller, it must select that person from among the professional persons referred to in Article 1(2) who are involved, as sellers, buyers or intermediaries, in the acts of resale falling within the directive's scope."

While the Spanish, French, Italian and Portuguese versions of the directive seem to distinguish the person liable for paying the author from the one who must definitively bear the royalty's cost, the Danish, German, English, Romanian, and Swedish versions do not make such a distinction, the court found.

Allowing the Member States to decide who must pay royalties "may to some extent have a distorting effect on the functioning of the internal market," the ruling states. "However, such an effect is, in any event, only indirect, since it arises as a result of contractual arrangements that are independent of the payment of the royalty to the author."

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