What changes were introduced and how did it impact the participants of the German art market?
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by Carlotta Rohrbach and Laurens Kasteleijn
October 25th 2020 - Art Law Services B.V., Amsterdam
On the 6th of October 2016, a new law in Germany on cultural goods protection and trade, the ‘Kulturgutschutzgesetz’ (“KGSG”)[1] entered into force, similar to the Dutch ‘Erfgoedwet’. Just as its predecessors, the introduction of the new German law was controversially discussed between actors in the art world and the government[2]. Art dealers and gallerists claimed that the new law would render the German art market less attractive on the international, as well as on the national stage[3]. The German ministry of culture however sticked to the belief believed that the new law would redress dysfunctionalities in the art market and thus would enhance the international standing and attractiveness of Germany’s art market[4]. Now, four years later, the question arises: did the new law work?
In this article we will explain briefly the German government’s decision to modernise the law on cultural goods protection and trade new law. Furthermore, we shall provide a brief overview of the changes that got introduced by the KGSG, and lastly, a personal assessment of the impact of the new law on art dealers and private collectors will close this paper.
According to the German Cultural Ministry, there were two major reasons to modernize the cultural protection law. Firstly, the old legislation[5] proved to be incoherent, incomplete and unclear and ineffective, especially in the field of the protection of national cultural goods[6]. As assessment schemes have revealed, the meaning of the ‘Listenprinzip’ (listing principle)[7] made it nearly impossible for foreign states that claimed, with regard to their national heritage, the return of important cultural goods, to succeed in their attempts and meet the high requirements of the old law[8]. Such legal constellation alleged by the German government itself[9], made Germany a popular hotspot for the import of unlawfully exported and stolen national arts from all over the world. Secondly, Germany was already behind with the implementation of the 2014/60/EU EU Directive[10].
What actually changed with the introduction of the KGSG? In short, the legal framework became more uncluttered, but also stricter. The KGSG united all of the three previous laws on cultural protection in one act of law, and it incorporated a host of definitions[11] and procedural clarifications[12]. Besides, it abolished the much criticised listing principle[13]. By setting clear requirements and introducing licensing instead of listing, it corrected shortcomings of the old legal provisions, and thereby enhanced the level of safeguard that only goods which are lawfully, and in awareness of the country’s of origin government, being imported to Germany[14]. Furthermore, the KGSG introduced new provisions in the field of claims of returns by lowering the thresholds for such claims[15].
Also, the export rules of cultural goods from Germany were renewed: from 2016 onwards, all exports of cultural goods need to be lawfully licensed by the federal German authority unless they fall within the category of exemption as in §24(2) KGSG[16]. For actors who are regularly circulating their entire inventory or specific single artworks throughout the European Union, the new law introduces possibilities of long-term licenses[17]. Regarding the unlawfully trade with national cultural goods, the new law includes new security provisions for art owners and buyers by introducing a so-called ‘negative test’[18] for art works, which were thought to increase the transparency of the German art trade[19].
Special attention is to be given to §24(8) KGSG, which incorporates the so-called ‘laisser-passer principle’. If certain criteria are met, artworks - which haven’t stayed longer in Germany for more than 2 years – are exempted from [the requirement of] an export license when being relocated within the EU.
With regard to the conduct of art dealers, the most crucial modernization is probably their newly introduced ‘duty of care’[20]. In dependency of the value of the artwork and the economic status of the individual selling the artwork, dealers have to keep track of records of origin[21], provide substantive information to the buyers and ensure themselves that the artwork on sale complies with the export and import provisions of the KGSG.
Finally, it seems important to note that the new legal requirement of the German government to set up an informational website for the art world including a list of current legal provisions concerning art dealing as well as the legal status of artworks are published[22].
So, coming back to our main query: How is KGSG affecting art dealers and art owners? As noted above, art dealers and collectors didn’t welcome the new law[23]. The well-known art gallery owner Johann König went even so far as to predict a complete displacement of the art market from Germany[24]. More recently the media however revealed that the very generally and only broadly founded first general effects out to be positive rather than negative and this not only from the perspective of the administrators, but also of the museums and the dealers[25].
As a governmental evaluation of the law will be undertaken in 2021, to make statements of the explicit and more in-depth effects of the new KGSG[26], the art world has to wait another year until the outcome is released.
Even though the KGSG imposes new responsibilities and higher hurdles for art dealers when selling and buying art and aggravates their duty of care regarding the origin of the work of art, the increased certainty and transparency of the legal status of artworks are bound to outweigh the higher bureaucratic burden. Also, the introduction of the new governmental information portal for the German art market will compensate the extra work on the seller’s side.
In comparison to other EU Member States, Germany lags behind with the implementation of the EU Directive into domestic law and thereby provided German collectors and dealers a less regulated trading floor for a considerably longer time than the other countries. Still, now that Germany finally adopted the EU legislation, it grants the art world a less strict art-trading floor than the general EU provisions[27]. Hence, instead of complaining that the newly introduced KGSG will hamper the art market unduly and introduces inappropriate measures, we take a more optimistic view feel that within the European market standard, the German art market will remain to provide a flourishing and accommodating market for art dealers and collectors.
For more information or knowhow of the German art market, do contact Carlotta or Laurens Kasteleijn at info@artlawservices.com
[1] Weiler-Esser, J. (2017), The German Act on the Protection of Cultural Property – A better protection for archaeological heritage in Germany and abroad?, The Journal of Art Crime, https://www.researchgate.net/publication/322581350, 5. [2] Ibid, 8-9. [3] Ibid, 8. [4] Die Beauftragte der Bundesregierung für Kultur und Medien (2017), Das neue Kulturgutschutzgesetz, Handreichung für die Praxis, http://www.kulturgutschutz-deutschland.de/SharedDocs/Downloads/DE/HandreichungKGSG.pdf?__blob=publicationFile&v=2, 5-6. [5] Act to Prevent the Exodus of German Cultural Property, Act Implementing Directives of the European Communities on the Return of Cultural Objects Unlawfully Removed from the Territory of a Member State and Amending the Act to Prevent the Exodus of German Cultural Property, Act on the Return of Cultural Property. [6] Die Beauftragte der Bundesregierung für Kultur und Medien, (n 4) 6. [7] Meaning of the ‘listing principle‘: the states that requested the restitution of their cultural artwork were required to list the concerning object in a publicly accessible list prior to making their claim in Germany, countries which were not having such lists themselves were not able to request restitution (see Weiler-Esser, (n 1) 6. In this regard) [8] Weiler-Esser, (n 1) 6., Die Beauftragte der Bundesregierung für Kultur und Medien, (n 4) 14. [9] Die Beauftragte der Bundesregierung für Kultur und Medien, (n 4) 6. [10] Weiler-Esser, (n 1) 7., Die Beauftragte der Bundesregierung für Kultur und Medien, (n 4) 6-7. [11] See article 6 and 7 KGSG in this regard [12] Die Beauftragte der Bundesregierung für Kultur und Medien, (n 4) 7. [13] Weiler-Esser, (n 1) 5. [14] See in this regard §§28-30 KGSG [15] See in this regard §§49-57 KGSG, Weiler-Esser, (n 1) 7. [16] See article §§21-27 KGSG in this regard [17] See §§25-26 KGSG in this regard [18] A so-called ‘negative test’ is a administrative act, which can be claimed by the owner of the cultural object with the objective of receiving a proof from the competent German authorities that this object will not be listed as a national cultural good and will in addition not fall under any other constraining paragraphs of the KGSG (Die Beauftragte der Bundesregierung für Kultur und Medien, (n 4) 156.) [19] See in this regard §§14(7); 10(7) KGSG [20] See in this regard §§40-48 KGSG [21] See however the exceptions to these incorporated in §§42(2),(3); 43 KGSG [22] Weiler-Esser, (n 1) 7., Die Beauftragte der Bundesregierung für Kultur und Medien, (n 4) 32, 25. Website: http://www.kulturgutschutz-deutschland.de/DE/Home/home_node.html [23] Weiler-Esser, (n 1), 8-9. [24] Recife, E. (2016), Cultural Property Protection Law comes under fire in Germany, The New York Times, https://www.nytimes.com/2016/09/29/arts/international/cultural-property-protection-law-comes-under-fire-in-germany.html [25] DPA. Ruhe nach dem Sturm - ein Jahr Kulturgutschutzgesetz, Westfälische Nachrichten, 01.07.2014, https://www.wn.de/Welt/Kultur/2885335-Umfrage-Ruhe-nach-dem-Sturm-ein-Jahr-Kulturgutschutzgesetz; Weiler-Esser, (n 1) 9. [26] See §89 KGSG in this regard [27] This is referring to the setting of lower thresholds for the permit requirement of export to the Internal Market compared to the standard which was initially set in the Directive (see §24(1) Nr.2 KGSG in this regard), Die Beauftragte der Bundesregierung für Kultur und Medien, (n 4) 24.