Malcolm Taylor writes on mediation and how it fits into the world of art and cultural heritage.

The art market guidance on the 5AMLD has been published by the British Art Market Federation (BAMF).
10 February 2020

The Art of Mediation

Originally published on the 36 Art Group News Section, accessible here.

Disputes can arise in the commercial, private and family arenas and traditionally have resulted in formal court action for resolution.  This can be very expensive, time consuming, emotionally challenging and often conducted in very public forums.  The parties can be exposed to substantial costs, negative or harmful publicity, personal stress and a substantial call on their time. The courts have, in reality, relatively limited remedies, usually purely financial and this can restrict the range of outcomes that might more readily reflect the needs and aspirations of the parties involved.

Mediation is a form of “ADR” (Alternative Dispute Resolution) that can offer a pragmatic, cost effective, flexible and confidential option for dispute resolution, outside the formal court process.

So how does Mediation fit into the world of art and cultural heritage?  Disputes are just as common in this area as in any other and can involve commercial parties (dealers, auction houses, shippers, insurers, museums), private individuals (artists, collectors, experts), family disputes and challenges from more esoteric interests such as indigenous communities.  Issues in question could relate to sale and purchase contracts, provenance or attribution disputes, copyright infringement, claims for restitution of stolen art, damage during transit, or issues of a religious, cultural or political nature relating to the ownership or display of artefacts.  Some claims may be substantial in value, some less so, but in all cases the potential advantages of a mediated settlement should be considered.

Formal litigation is hugely expensive – even the cost of issuing proceedings can now run into tens of thousands of pounds (depending on the value of the claim) and the expense of taking a case to trial, with the involvement of solicitors, barristers, experts and advisors could easily reach hundreds of thousands of pounds.  The losing party in a trial usually ends up having to pay not only their own costs but the bulk of those of their successful opponents.  That could be ruinous and in reality a gamble, given the inevitable risks of litigation where certainty of outcome can almost never be fully predicted.  There are other issues too.  Litigation is, essentially, public and open to the press and general scrutiny.  The acquisition and possession of art is often a highly private and confidential matter and parties may not want the exposure of a trial.  Indeed, disputes relating to the professionalism of parties (dealers, auction houses etc) or as to attribution or provenance of a piece of art, could be ruinous in terms of the reputation of the parties and may well have a negative impact on the value of the artwork.  In many cases, parties to a dispute may wish to maintain an ongoing professional (or indeed personal) relationship and litigation is highly likely to damage that, purely by reason of its aggressive and destructive nature.  A private, discretely conducted Mediation is far more likely to lower the temperature and facilitate a settlement of the dispute on terms that can allow the relationships to continue.

Courts have, in reality, fairly limited remedies that they can impose (essentially financial) and this might not best reflect the outcomes sought by parties to a more sensitive cultural or religious dispute.  Mediation offers a host of other options, remedies and settlements that can be mutually agreed, which can reflect differing interests and aspirations and which might involve shared custody, recognition of ownership, sensitivity of display and so on.

Mediation can be very flexible and cost effective.  The parties themselves can select the mediator(s), agree the format and timing for the process and play a significant role in the structure of and input into the proceedings.  The costs are relatively low – generally a day’s fee for the mediator(s) shared equally between the parties to the dispute.  Finally, the mediation is not only private, but is “without prejudice”, which means that even if not successful, the issues raised and information disclosed during the mediation are confidential and cannot be revealed should litigation then follow (subject to the normal rules of court).  Mediation can take place at any time during the “lifetime” of a dispute – before or during formal proceedings and, if unsuccessful, will not prevent such proceedings continuing.  It is therefore always an option available to the parties as part of the wider process.

Most importantly of all, Mediation is a mechanism to allow the parties themselves to agree the terms of any settlement.  The Mediator(s) merely facilitate the discussions and negotiations and, hopefully, a settlement, but any final outcome is only reached by agreement between the parties.  A Mediator cannot impose a settlement and so by definition Mediation allows the parties themselves to resolve the dispute amicably and in a manner which is acceptable to all.

ADR generally and Mediation specifically, is particularly suited to disputes in the art market, offering a private, discrete, flexible, and low cost alternative to formal litigation and potentially opening the door to creative and imaginative outcomes.