by Amineddoleh & Associates LLC | Oct 23, 2021 |
As a leading law firm in the NFT space with expertise in both art and intellectual property law, Amineddoleh & Associates LLC was selected to draft Monax’s template for the purchase and sale of NFTs.
Amineddoleh & Associates LLC is pleased to announce that it is working with Monax to further the company’s mission to deliver a comprehensive and cutting-edge digital contract platform that meets discerning users’ needs. Monax is a major player operating in the smart contracts market. It allows users to access and track agreement templates, as well as manage their contractual obligations throughout the life cycle of the contract. The model uses a combination of smart contract programming, blockchain technology, and business process modeling to offer users a unique, sophisticated tool to streamline and automate business contracts. It also reduces the likelihood of confusion and friction between contractual parties because the language is clear and accessible.
As part of this initiative, our team was hired by Monax to create a template agreement for the sale of Non-Fungible Tokens (NFTs). NFTs are a new digital asset class ranging from artwork to GIFs, memes, Tweets, and even video clips of sporting events. Because they are tied to blockchain and cryptocurrency, NFTs straddle the divide between traditional and emerging property types, requiring a new way to deal with such transactions. As a result, Monax has implemented our one-of-a-kind template on its website as a resource for users who are buying and selling NFTs. NFTs identify and certify digital assets as unique items. While the digital image can still be duplicated, the NFT monetizes the images by allowing a buyer to purchase the unique token and, with it, ownership of the original digital object. There has been a growing market for art collectors who are buying and collecting NFTs like they would art, and in some cases, buying them for millions.
However, because NFTs are such innovative assets, collectors, purchasers, artists, and sellers all need contracts that protect their rights and accurately describe what is being included in the transaction. For instance, the purchase of an NFT does not automatically grant the buyer intellectual property rights in the original image (or video). An NFT agreement also offers artists the opportunity to obtain future royalties and exert greater control over their work. Depending on the parties’ specific needs, and the type of NFT in question, a more simple or complex contract may be required.
CryptoPunks NFTs (Larva Labs)
As a law firm specializing in art and intellectual property transactional and litigation matters, we were hired by Monax to draft its template, one of the first of its kind, because of our in-depth knowledge resulting from our continued work with artists, buyers, and sellers in the art world. As this new market continues to boom, we were pleased to draft the company’s novel template that is now available for future NFT buyers, sellers, and creators. Please note that our NFT template created for Monax is only a template, not a final agreement. Every sales transaction is unique and requires specific legal analysis necessitating nuanced transactional documents. We advise all artists, buyers, and sellers to consult with legal counsel prior to entering into an arts transaction.
In addition to the Monax template, our firm reviewed intellectual property terms and conditions for highly popular NFT marketplace Nifty Gateway, and we are currently developing other exciting NFT projects, such as a creative collaboration between a visual artist and well-known musician. As NFTs continue to evolve and grow within the digital marketplace and the art world, we look forward to participating in more projects and expanding our reach in this exciting new space.
If an effort to educate art market professionals about NFTs, Leila A. Amineddoleh will be discussing NFTs, luxury goods, and emerging technologies during the Art Law & Provenance module of the EXECUTIVE MASTER IN ART MARKET STUDIES at the University of Zurich.
by Amineddoleh & Associates LLC | Oct 17, 2021 |
The following article was contributed to Amineddoleh & Associates LLC by Emily A. Thompson, AAA. Ms. Thompson is an art advisor and qualified appraiser certified by the Appraiser’s Association of America (AAA) in post war, contemporary and emerging art. She serves on the membership committee of the Estate Planner’s Council of New York (EPCNYC) and maintains an adjunct faculty position with Sotheby’s Institute of Art.
As art fairs cautiously return and the auction season gears up, increased sales and acquisitions warrant a re-examining of due diligence in art transactions, both online and in real time. According to best practices suggested by non-profit initiative RAM (the Responsible Art Market initiative), “due diligence” is commonly defined as “action that is considered reasonable for people to be expected to take to keep themselves or others and their property safe”.[1] While there are companies proclaiming to eliminate art market risks via software programs, collectors should ask probing questions. Working with a seasoned advisor with art expertise can be invaluable because that person can spot inconsistencies in paperwork, investigate the validity and reputation of a source, and flag concerns for a collector’s attorney or tax advisor.
An independent advisor may represent a collector in the sale of a work or group of works, or in acquiring art for a new or nascent collection. His or her role should be to aid clients not only by homing in on aesthetic goals, educating them about art and saving them money, but also by minimizing risk and keeping clients safe. Of primary importance, the advisor should abide by a code of ethics whereby they serve the needs of the client and are compensated by one party only. Art advisors may be compensated on a retainer basis, being paid an annual sum by the client based on the anticipated purchases during the year, or on a percentage basis per transaction, or a combination of both. If operating on a percentage basis, a sliding scale is often instituted, with a lower percentage charged by the advisor when the final sales price is above a certain threshold. Whatever the agreed upon arrangement, the payment structure and term of engagement should be outlined in a written contract or agreement letter prior to any acquisition or sale, with clarity on fee structure established at the outset, to ensure transparency and obligations.
The Object and Ownership interest
When evaluating object(s) in question, steps are required to verify the validity of what is being bought or sold and who has the legal authority to do so. On the buying side, it is not uncommon in the art world for an advisor to be offered the same picture by multiple parties – an image and some cataloguing information is no guarantee that the party offering the artwork has the authority to act on behalf of the legal owner. An experienced art advisor will work to confirm the ownership interest of the seller by determining how and when the artwork acquired by the seller. If a work is being sourced privately from an auction house or broker, is there a consignment agreement with the legal owner in place? Where is the work located? Is the artwork free of any liens against it which would affect the passing of clear and legal title? If the ownership structure is overly complex or opaque, or answers to ownership questions cannot be answered satisfactorily, an attorney may need to be consulted.
Due diligence should also be conducted on the object itself. Basic cataloguing describing the artist, medium, size and date of the piece(s) should be provided. The physical condition of an object should be clearly stated and checked, with a physical inspection conducted by the advisor or a contracted, third party, such as a conservator. Is the condition as represented and is it appropriate for the artist or object in question? Have there been extensive restorations or repairs? When reviewing item cataloguing, are there significant gaps in provenance, missing documentation, or lack of dated inventories? Databases such as the Art Loss Register and Interpol’s Stolen Works of Art can be searched to confirm that a work has not been previously lost or stolen. What are the appropriate authentication requirements set forth by market standards? For example, does the work require a certificate of authentication, a letter or ID number assigned from the artist or artists’ foundation or heirs for it to be sold? Is there a catalogue raisonne or established monograph to be consulted? Price databases such as Artnet can be searched for comparable sales as well as previous offerings of the subject work, which may have been omitted from a provided provenance (purposefully or not) and auction house catalogues, printed or now digitally online, can provide valuable information as to relevant literature and the correct expertise for confirming authenticity.
Depending on the collecting category, country of origin or materials may pose serious issues regarding the looting and illicit trafficking of cultural property. An artwork or object originating from known “source nations,” such as Greece or Italy, along with areas of increasing concern, such as Iraq and Syria, may be subject to trade restrictions. Items that were known to be in Europe between 1933 and 1948, in Eastern Europe and in the Soviet Union during the Communist era (between 1949 and 1990) or in Cuba during the revolutionary period (between 1953 and 1959), to name only a few, should be screened for potential title disputes. Also, some artworks incorporate restricted materials or material from endangered species, such as ivory or snakeskin, which may prohibit their legal trade.
If the art professional offering the piece cannot satisfactorily establish the country of origin of the object and the circumstances under which it left, an attorney specializing in these areas may be needed to consult on the purchase.
Traditionally, the art market is one that has favored secrecy, but recent scrutiny by law enforcement agencies on the use of antiquities and high value art to launder money or evade sanctions has resulted in major implications for dealers, collectors, and anyone else engaged in the art trade. The 2020 enactment of the 5th European AML Directive in the EU and UK and the Anti Money Laundering Act of 2020 (AML Act) in the US have meant new compliance obligations across the industry aimed at increasing transparency in transactions and reducing risk for all parties involved. Collectors should expect to be asked to provide documentation verifying their identity, if buying or selling a work of art, such as a passport, driver’s license, or national ID card, as well as recent proof of residence, such as a current utility bill or bank statement.
Considerations at the transaction level include questioning whether a sale price is artificially low – or high. Are the payment terms suspect in any way (e.g., requests of cash-only transaction or sale proceeds paid to someone other than the seller)? While a contract – from the advisor or with a third-party vendor – will often include language pertaining to confidentiality and privacy, it should be an essential part of an advisor’s business practice to keep his or her own records and to ensure the client is aware of the information necessary to comply with increased regulations. It is also possible to have each side in a transaction reveal its identity to the other’s legal advisors, who can vet the other party and conduct the appropriate reviews.
Post Transaction Duties
Finally, an art advisor’s role should not end with the purchase or sale. On the contrary, additional responsibilities often include reviewing post-sale invoices for errors or omissions, supervising shipping, installation, and cataloguing to ensure that the work is adequately documented for their collection records. An advisor should ensure that the client’s insurance broker is alerted to a new acquisition so that the piece can be added to their scheduled policy and that, once professionally installed, risk factors in the space (high traffic areas, exposure from direct sunlight) are identified and minimized as much as possible.
Art advisors should not be in the business of giving tax advice, the particulars of which can be very complicated and case specific. However, advisors should be aware of possible tax implications for their clients at given points during and post transaction. In the US, sales tax differs by state, so a purchase made away from home could necessitate different filing protocols. Use Tax – when a purchase is made out-of-state and directly shipped to another – also varies by location and must be paid on the purchase in the receiving state.
When selling a work or works from a collection, estate or capital gains tax, the amount owed on the profit of an appreciated asset, may apply. If sold less than one year after its original purchase, income tax, which can be as high as 37%, may be applicable. Depending on the ultimate sale or purchase price, the tax implications for a client can be significant, so it is always good practice for an art advisor to direct their client to their CPA to ensure that there are no unanticipated surprises down the road.
The nature of the art market means ever changing sources, players, and directives. Professional advisors must work to keep pace with regulations and maintain a lawful, unbiased practice in all their dealings, performing the due diligence necessary to serve their clients in the most transparent and ethical manner possible.
by Amineddoleh & Associates LLC | Oct 13, 2021 |
Our founder, Leila A. Amineddoleh, is serving as Chair of the New York County Lawyers Association’s 13th Annual Art Law Institute: New Insights in Art Law. The association’s annual conference has long been a highlight of the art law calendar each year. It’s typically been a full-day conference, but (like last year) it will be held over two half-days, October 21 and 22, via Zoom.
Leila organized this year’s conference and she will be speaking about the application of Foreign Sovereign Immunities Act in art and antiquities disputes. Associate Claudia Quinones will also be presenting during the conference, discussing ownership disputes in the ever-popular “What’s New in Art Law” panel. Please join us for the conference by registering (for either one day or for both days) HERE.
by Amineddoleh & Associates LLC | Oct 5, 2021 |
Indian relief seized from the Nancy Wiener Gallery in Manhattan.
(Photo Credit…Manhattan District Attorney’s Office)
Our founder, Leila A. Amineddoleh, spoke with the New York Times today about important revelations from statements submitted to the New York County Supreme Court by antiquities dealer Nancy Wiener during the pending criminal case against her. After pleading guilty to charges of conspiracy and possession of stolen property in connection with the trafficking of looted treasures from India and Southeast Asia, Ms. Wiener filed an allocution statement that reveals the inner workings of the antiquities market. (After pleading guilty, a defendant is often offered an opportunity to address the court in a so-called allocution statement to accept responsibility, express remorse, and explain circumstances that might be considered favorably in sentencing.)
Ms. Wiener and her late mother sold works to the New York elite. They are credited with growing the market for Southeast Asian art, selling works to John D. Rockefeller III, Igor Stravinsky and Jacqueline Kennedy. Works from their gallery also appear at major museums nationally and internationally. In March 2015, Ms. Wiener reimbursed the National Gallery of Australia over a million dollars for a Buddha she had sold the institution in 2007, after it was discovered that the export of the item may have violated India’s laws.
National Gallery of Australia’s Seated Buddha (Photo Credit: Chasing Aphrodite)
In 2016, federal officials and the Manhattan District Attorney’s Office raided a number of galleries during Asia Week in New York. One of those galleries belonged to Ms. Weiner. The government seized objects from her gallery, arrested Ms. Wiener, and filed a felony complaint accusing the dealer of working with stolen objects for decades. Amineddoleh has spoken about the criminal case against Ms. Wiener in the past, including in 2017 when she was invited to speak during a conference for the National Trust for Historic Preservation.
The charges allege that Ms. Wiener obtained millions of dollars’ worth of stolen artifacts from international smugglers and sold them illegally — often through major auction houses. She is alleged to have laundered the illicit items by procuring restoration services to hide damage from illegal excavations, using straw purchases at auction houses to create sham provenances, and inventing and disseminating false histories to circumvent international patrimony laws that prohibit the exportation of looted antiquities. Upon her mother’s death, Ms. Wiener allegedly inherited hundreds of illicit items, discarded their records, and fabricated provenances. She then consigned hundreds of lots for sale at auction for millions of dollars.
In pleading guilty to these allegations, Ms. Weiner’s allocution statement reveals a great deal about the antiquities market. She characterizes that market as “a conspiracy of the willing,” saying that antiquities are often sold or consigned despite having suspect provenance — or no provenance at all. She also admits in detail to committing the common (and illegal) practice of fabricating provenance information to facilitate the sale or consignment of looted items. Despite claiming that her actions were motivated by her “passion” for the “great beauty” of historical objections, Ms. Weiner acknowledges that “it is not the right of any individual or institution to decide how to handle the cultural patrimony of another nation.”
Read more about the case in this article by Tom Mashberg.
by Amineddoleh & Associates LLC | Oct 4, 2021 |
The past couple of weeks have brought several positive developments for the protection of Greek cultural heritage at the national and international levels. First, the US Ambassador to Greece, Geoffrey R. Pyatt, and the Greek Minister of Culture and Sports, Lina Mendoni, signed a bilateral memorandum of understanding renewing protections for Greek cultural heritage imported into the US. This occasion marks the 10th anniversary of the original bilateral agreement between the US and Greece dedicated to combatting the illicit traffic of archaeological, ethnological, and ecclesiastical material, as well as the 200th anniversary of Greek independence. Ambassador Pyatt stated that by renewing the agreement, the US is maintaining its firm commitment to protecting these treasures from looting and trafficking and following the principles established in the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property. These two nations are cooperating in attempts to protect and preserve humankind’s cultural heritage against a number of threats, including illicit trafficking.
Second, UNESCO’s Intergovernmental Committee for Promoting the Return of Cultural Property (ICPRCP) recently urged the British Museum to return the Parthenon Marbles. The Marbles’ worth is priceless, as they are an international treasure of great cultural and historical significance to the Greek people and all of humankind. The UNESCO Committee called on the United Kingdom to review its ongoing position (The British Museum has refused to entertain Greece’s repatriation demands and the museum has also rejected the possibility of a loan to Greece, although the museum has loaned the marbles in the past). The UNESCO Committee also recommended that the British Museum enter into discussions with Greece as the latter has “a valid and legal claim to demand the return of the sculptures to the place of their birth.”
The controversy over the marbles has been at a standstill for decades. Greece has opted for diplomacy rather than litigation in asserting its claim to the marbles, and the British Museum maintains that the United Kingdom obtained them legally. It remains to be seen whether UNESCO’s decision will be taken into consideration by the United Kingdom, but it is an encouraging step towards highlighting the importance of returning significant cultural heritage items to their countries of origin.
Amineddoleh & Associates LLC is proud to represent the Cultural Ministry of Greece in cultural heritage matters in the US, and we look forward to continued collaboration in order to effectively protect and preserve Greece’s rich cultural heritage, for both present and future generations. We remain dedicated to fighting the illicit traffic of antiquities and returning looted objects to their rightful owners.
