Arts Council England not competent authority for export where artwork imported into the UK unlawfully (R (on the application of Simonis) v Arts Council England)
Private Client analysis: The Court of Appeal considered the identity of the competent authority with jurisdiction to govern the 'dispatch' of a cultural item from a Member State.
Resolving this issue turned on the meaning of ‘lawful and definitive dispatch’ under Article 2(2)(b) of the Export Regulation (Regulation (EC) 116/2009). The court held that the phrase refers to the national law in the Member State of physical dispatch, not the Member State of receipt and therefore, the competent authority with the relevant jurisdiction was the Member State from which the item was last lawfully and definitively exported. The case also confirms that a court can rule on the compatibility of a Member State’s national law with superior EU law and make a reference to the European Court of Justice, the highest court in the European Union. However, the decision to refer lies within the court’s discretion and the court must act with considerable caution.
R (on the application of Simonis) v Arts Council England  EWCA Civ 374
What are the practical implications of this case?
First and foremost, the judgment confirms that the phrase ‘lawful and definitive dispatch’ in the Regulation (EC) 116/2009 refers to the law of the state of physical dispatch. This is common sense and consistent with Regulation (EC) 116/2009’s purpose to set up a system for a single national competent authority to be responsible for granting licences to export from the EU. The intent is not to harmonise national laws. States should have the right to determine their own cultural values and so in this field there is a primary role for national law. The case highlights that such issues can be resolved by basic principles of interpretation. Reaching an alternative conclusion, that the legality of a physical action performed in one state is governed by the law of a different state would make the law wholly unpredictable. Further, it could mean that the possessor of an item successfully smuggled out of a county, could by virtue of that unlawful conduct, evade the law of the state whose laws have been contravened.
The judgment also clarifies that a court does have jurisdiction to rule on the incompatibility of a Member State’s national law with EU law and to make a reference to the European Court of Justice. However, even if a court considers that it could make a reference on the illegality of a Member State’s law in the circumstances, the court must be extra vigilant when making such a decision as the courts of one Member State may not be best placed to be making decisions about the laws of another Member State and in any event it is within the court’s absolute discretion.
What was the background?
The case concerns an oil painting, acquired at auction in Florence in 1990 as by an imitator of the master painter Giotto di Bondone (Giotto). The painting has been the subject of considerable litigation in Italy and the UK. For the purposes of this case analysis, the focus is on the appeal brought by the Crown on the application of Mrs Simonis, the owner of the painting, against the Arts Council of England. The first instance judgment in the case of Simonis v Arts Council England  EWHC 1822 (Admin) was handed down in July 2018.
Under Italian law, and in accordance with Regulation (EC) 116/2009, the export of important cultural objects is controlled by a system of time-limited licences and free movement certificates whereby during the period of validity, the object can be moved to another EU country without further formality. Upon application for a licence, there is a 15-day ‘waiting period’ designed to ensure that the authorities can assess the cultural importance and value of an object so that they can seek protective measures from the court to prevent removal if necessary.
From 1992 to 1999, the painting was exported to the UK, Switzerland and the USA and reimported into Italy on several occasions, mostly for restoration works, under valid licences obtained from Italian authorities. When the painting validly was reimported into Italy to be cleaned in 1992, painting under the over layer was revealed that was attributed to Giotto himself, but the painting was not declared as attributable to Giotto.
When the painting was reimported into Italy in February 1999, the Italian authorities issued a further five-year import licence, without the possibility of extension. On 19 February 1999, MIBAC, the competent authority in Italy, released a report confirming the painting’s attribution to Giotto and the Italian authorities unsuccessfully purported to annul the licence then in force on the basis that the painting was of exceptional cultural and historical importance.
On 14 February 2007, Mrs Simonis dispatched the painting from Italy to London. Mrs Simonis did not seek to extend the expired licence for this export as was required under Italian law and therefore, this export was unlawful.
Mrs Simonis’ Italian lawyers subsequently unsuccessfully argued that the 1999 licence had been automatically extended by the operation of law due to the court decision in Italy that sought, but failed, to annul the licence then in force.
Mrs Simonis then wanted to remove the painting from the UK to Switzerland, a country outside of the EU and so she sought an export licence from the Arts Council England. On 8 May 2017, the Arts Council decided that because it was apparent on the face of it that the painting had been unlawfully exported to the UK under an expired Italian export licence, it was not the competent authority with jurisdiction to grant a licence for export from the EU. Instead, it was the MIBAC in Italy.
What did the court decide?
The Court of Appeal rejected the appeal and upheld the trial judge’s decision.
The judge in the first instance was correct to conclude that the phrase ‘lawful and definitive dispatch’ refers to the law of the state of physical dispatch, in this case Italy. This is because ‘lawful’ concerns the dispatch of the Member State and there are no rules on ‘dispatch’ in Regulation (EC) 116/2009 that regulate the removal of a cultural item from a Member State. The precondition for the competent authority to be the Member State in whose territory the cultural object is located was that the earlier dispatch was lawful. It did not make sense that the legality of a physical action, the dispatch, performed in Italy should be governed by the law of the Member State where the item ends up, the UK. As Mrs Simonis dispatched the painting from Italy without first obtaining a licence as required under Italian law, the dispatch was in breach of Italian law and the Arts Council was not the competent authority to grant the licence to export requested. The Arts Council could only grant a licence to export outside of the EU following a lawful dispatch but they could grant a licence to dispatch the painting back to Italy and as things stand this remains the only option available to Mrs Simonis.
The court also concluded the judge in the first instance correctly recognised that the court can rule on the legality of the Italian law on export licences but this involved a difficult balancing act and required considerable caution to be exercised. In any event it was a matter of discretion as to whether the court decided to do so. The court held that there was no arguable case that the Italian law is invalid, a reference was not justified and even if it was it would have exercised its discretion not to make such a reference.
• Court: Court of Appeal, Civil Division
• Judge: Underhill VP, Green and Arnold LJJ
• Date of judgment: 13 March 2020
This article was first published by Lexis®PSL on 07/04/2020