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Artists Resale Right Regulations are not fit for purpose
Irish artists are experiencing serious and ongoing difficulties in collecting the royalties to which they are entitled. The Directive which introduced the right across the European Union in 2006 was improperly transposed into Irish law via a statutory instrument rather than legislation. The weak regulations have resulted in a low level of compliance from the art market profession, in particular from galleries and art dealers, many of whom have largely ignored or avoided the right. The regulations do not provide an effective mechanism for the collection of royalties due to artists and their heirs. This has led to a continuing and unacceptable loss of income to artists.
The EU Directive gave member states a considerable amount of freedom in how they implemented certain elements of the Directive. Member states could for example, choose the threshold at which a royalty was due, they could set the royalty % rate, and, most importantly, dictate how the right would be managed.
Unfortunately, instead of introducing the Resale Right through legislation, Ireland missed the deadline and rushed the implementation through a statutory instrument. The various options in the EU Directive which would have made the Resale Right more meaningful to artists could only be adopted through legislation. This has had a significantly negative impact on the benefit of the resale right for Irish artists.
IVARO is currently acting on behalf of over 1,500 artists in relation to the resale right. In order to maximise the efficient implementation of the resale right we make the following recommendations:
- The resale right should be fully implemented through primary legislation to benefit artists and their heirs.
- The minimum threshold of the resale to which the right applies should be lowered from €3,000 to €1,000.
- That legislation requires compulsory collective management as a means of collecting, administering and distributing the artists’ resale right.*
- That legislation should place an obligation on both the seller and intermediary to share the responsibility of payment.
- That the royalty rate should be set at 5% for resales below €50,000
* Compulsory collective management is the method by which the right was implemented in most EU States. This means that the royalty is collected at the source of sale and is distributed by a dedicated artists collecting society on behalf of all entitled artists.
A submission by the Arts Council to the Government’s recent review of copyright law supports our position:
“The Arts Council would advocate that a review of the [copyright] Act is an opportunity to incorporate the Artists Resale Right into legislation which would supersede SI 312/2006. In doing so the Arts Council advocates for compulsory collective management and a lower threshold of €1,000.”
Submissions to Government
IVARO met with Sean Sherlock, Minister of State, Department of Enterprise, Jobs and Innovation on 22 March 2012. IVARO used this meeting to highlight the ongoing difficulties which artists and their representatives are experiencing with the Artists Resale Right Regulations.
These difficulties are outlined in IVARO’s numerous submissions to the Government. Our most recent submission was made in June 2012 to the Copyright Review Committee which was established by Minister Richard Bruton.
Extract concerning the Artists’ Resale Right (Droit de Suite)
A legislative issue which affects our members relates to European Communities (Artist’s Resale Right) Regulations 2006 to give effect in Ireland to Council Directive No. 2001/84/EC. The improper transposition of this Directive into Irish law requires urgent attention.
On 13 June 2006 then Minister Micháel Martin introduced Statutory Instrument No. 312 of 2006, with the intention that this would provide a temporary mechanism to allow for the collection of the artists resale right in advance of full implementation through primary legislation. When announcing the introduction the Regulations the Minister made the following commitment:
“I am now taking those interim steps which are open to me in the present Regulations. The intention is to revisit some aspects, such as the exemption threshold value for eligible works and the duration of the right, in the proposed Bill. While the minimum art value threshold is being set at €3,000, for now, it is intended that this will be lowered in the primary legislation. The Directive raises some other optional issues and these can only be addressed in the proposed Bill also.”
IVARO is mandated to collect the artist’s resale right on behalf of its members in Ireland. It is also mandated through its reciprocal rights agreements to collect the royalty on behalf of the members of foreign societies who are entitled to this royalty in Ireland.
Article 3 of the Directive provides that works sold at €3,000 and above are subject to this royalty. Member States are allowed to impose a lower threshold for eligible works. Many Member States have a threshold of €1000. This option was taken up by the UK, our nearest neighbour and Europe’s largest art market. Ireland implemented the right at the maximum threshold of €3000 which has resulted in a relatively small number of artists benefitting from the right. IVARO collected resale royalties on behalf of 54 artists in 2010. In Ireland nearly 98% of art sells at auction for less than €50,000 and 50% sells for less than €1,000.A threshold of €1,000 will benefit a much wider constituency of artists and be a further stimulus for artists to create new work. This is also important for foreign artists whose works resell in Ireland due to the fact that the threshold is much lower in many countries.
In addition to this, under the Directive the minimum rate applicable to the portion of the sale price up to €50,000 is 4%, which is the rate Ireland implemented. Member States are given the option of applying a rate of 5%. This is a preferable rate for Ireland, bearing in mind that most Irish art sales do not exceed €50,000. Increasing the lower band rate will provide proportionally higher royalties to less well-established artists.
Problems with collection
The collection of this royalty has proven problematic for artists and for IVARO who collects this royalty on behalf of its members. As it stands, artists have to be aware of any of their works which sell over the threshold. They then must seek information on the seller from the art market professional for that specific sale. The art market professional has 90 days in which to respond to this request. The artist, or in many cases IVARO, must then apply to the seller for payment of the royalty. It is a laborious, time-consuming and difficult task, especially for individual artists. This system could be streamlined with the introduction of compulsory collective management which would include reporting of qualifying sales.
Article 6.2 of the Directive allows that Member States may provide for compulsory or optional collective management of the royalty. The Irish Regulations S.I. 312 make no provision to assist or encourage collective management in Ireland. The EU Commission’s Communication on copyright managementcomes to this conclusion: “Collective management appears also to be the de facto basis for the operation of artists’ resale right under Directive 2001/84/EC, even if it is not mandatory.” 
In preparation for the implementation of the Resale Right in the UK, the Arts Council of England commissioned research into best practice for collecting and distributing royalties. The report made the following recommendations:
- Collection of Droit de Suite should be carried out by one central institution to maximise efficiency and ease of reporting and minimise administration and other collection costs
- Where possible, the collection agency should be the national authors’ society, to make the most out of cost savings from economies of scale.
- To meet the mandatory requirement of the Directive that Droit de Suite is administered on a reciprocal basis between all Member States, all collection societies should belong to a network or umbrella organisation to enable reciprocal exchanges of rights and funds for artists internationally at a low cost through the use of common administrative systems.
If compulsory collective management was introduced and a collecting society was appointed this would mean that resale royalties would be automatically collected on behalf of all rights holders, whether or not they are members of the collecting society. Art Market Professionals would be required to supply the collecting society with data after each sale. The collecting society could then collect the royalty from the seller and distribute the proceeds to the rights holder without delay. Royalties for foreign artists whose work is resold in Ireland would also automatically be collected ensuring that Ireland complies with it’s obligation to “ensure that amounts intended for authors who are nationals of other Member States are in fact collected and distributed.” – Article 28, EU Directive 2001/84/EC.
 An Investor’s Guide to the Art Market by Dr. Clare McAndrew. Published by Liffey Press.
 “The management of Copyright and Related Rights in the Internal market” COM (2004) 261 final
 Implementing Droit de Suite (artists’ resale right) in England. Arts Council of England Report. Dr. Claire McAndrew & Lorna Dallas-Conte, 2002.