Monday 14 May 2012

Could the Schiele case affect the protection of a good faith purchaser?

Egon Schiele's
"Seated Woman with a Bent Left leg (Torso)",1917
An Egon Schiele drawing from 1917, Seated Woman With a Bent Left Leg (Torso), has been the center of a legal battle since 2005, in which US collector David Bakalar and Austrian art collector Franz Friedrich Grünbaum’s heirs (Czech citizen Milos Vavra and the New York resident Leon Fischer) are fighting to establish ownership. 

Grünbaum’s heirs claim that the Nazis stole the painting from their ancestor (Grünbaum fled Vienna in 1938 and died at the Dachau concentration camp in 1941), while Bakalar argues instead that Grünbaum’s sister-in-law, Mathilde Lukacs, sold the drawing to the Swiss dealer Eberhard Kornfeld of the Galerie Gutekunst in 1956. Then, Kornfeld sold the piece to the Galerie St Etienne in New York and, in 1963 Bakalar bought the work from the Manhattan dealer in “good faith”. 

In 2005 and 2011 the courts ruled in Bakalar’s favor, but renewed uncertainties as the case reaches an appeals court prompted the Art Dealers Association of America (ADAA), the Society of London Art Dealers (SLAD), and the UK dealer Richard Nagy to lobby in support of Bakalar’s claim.

The trio has filed an amici curiae statement (a “friends of the court” supporting brief), urging  the court to uphold the portion of the law that protects “good faith” purchases and, in particular, the laches doctrine, which safeguards purchaser showing that a claimant delayed unreasonably in pursuing a claim.

The group is worried because of the new legal arguments the Grünbaum’s heirs are seeking : firstly, that the “duties of diligence relevant to a laches defence inquiry trigger only after the true owner learns of the location of the stolen chattel”, secondly, that the “knowledge or actions of a claimant’s ancestors cannot be imputed to the claimants when determining if laches should apply”. 

If the Court accepts this new interpration, the application of the laches doctrine will be dramatically affected according to the group. The trio argues that this doctrine, which forms a major part of Bakalar’s defence and  is commonly used in disputes over titles to works of art, constitutes the only defence a good-faith purchaser has against a claim.   

The group deems that without such protection, time for claimants or for their heirs to file a recovery action will be limitless and collectors might take their business to other States where “the laws are more favourable to good-faith purchasers”. 

But Vavra and Fischer's lawyers counterclaim that their clients do not want to eliminate this protection but emphasise that the onus should be on “purchasers to show that they have exercised due diligence".

In your opinion should be favored the good faith purchaser?

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