Articles and Interviews
10. 5. 2019
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Buying and selling
Passing of title
When does ownership of art, antiques and collectibles pass from seller to buyer?
Under Czech law, ownership of a movable asset is generally transferred from seller to buyer on the effective date of the purchase agreement (usually the date that all the parties enter into the agreement or a later date specified in the agreement). The parties may agree otherwise (eg, ownership passes on the date the artwork is handed over) or they may conclude an ‘ownership title reservation’ under which ownership passes to the buyer once the purchase price is paid in full to the seller.
Implied warranty of title
Does the law of your jurisdiction provide that the seller gives the buyer an implied warranty of title?
The seller shall enable the buyer to acquire full ownership to the artwork, implying that the title is good and free of any encumbrances that might affect it. The seller must not limit the scope of its liabilities for defects in advance. The buyer is entitled to waive his or her rights resulting from defects in the contract (in writing). The warranty may also be indirectly limited by the seller’s explicit declarations in the contract informing the buyer of all the defects to the title of which the seller is aware. Any defects to the title must be claimed immediately after the buyer realised or could have realised their existence with due care, but no later than within two years from the handover of the asset (as regards hidden defects) unless the seller knew about the defect at the time of the handover.
Can the ownership of art, antiques or collectibles be registered? Can theft or loss of a work be recorded on a public register or database?
The ownership of art, antiques or collectibles is not registered in a public register; if there is a pledge established over them, they may be entered in the pledge register maintained by the notaries public. Artworks that have been stolen may be recorded with the Czech police, which makes evidence available to the public to a certain extent.
Good-faith acquisition of stolen art
Does the law of your jurisdiction tend to prefer the victim of theft or the acquirer in good faith of stolen art?
In general, if a buyer unknowingly acquires stolen art (ie, if he or she had a convincing, objective reason to believe that he or she did actually acquire ownership of the artwork in good faith), he or she may become the owner of the artwork by ‘prescription’ after three years of uninterrupted faithful possession of it if there is a legal title favourable for the possessor under which ownership would have otherwise been acquired if the seller were the owner of the artwork. If the legal title does not exist but the buyer is still the good-faith possessor, the period is prolonged to six years. If the artwork was acquired from any other good-faith possessor, its faithful possession is accounted for in this period. The prescription period is interrupted if the possession is not executed for more than one year. The law presumes that there is good-faith possession unless proven otherwise by the victim. Case law provides that the good faith may be lost when the possessor begins to doubt whether he or she is the owner of the relevant object. The criteria must be objective, so the buyer’s inexperience is not relevant. If there is a legally effective judicial decision confirming the ownership right of the victim or the buyer’s possession as illegal or unfaithful, the buyer is considered a bad-faith possessor and, as such, he or she cannot acquire the ownership by prescription.
Acquiring title to stolen art through prescription
If ownership in stolen art, antiques or collectibles does not vest in the acquirer in good faith, is the new acquirer protected from a claim by the victim of theft after a certain period?
As mentioned in question 4, after a certain period of time the acquirer in good faith may become the owner of the artwork. The periods of possession of the artwork by all the previous good-faith possessors count in the period for prescription.
Can ownership in art, antiques or collectibles vest in the acquirer in bad faith after a period?
If the buyer knew (ie, the deceitful intention is proved to it) that the artwork had been stolen, or if the buyer believed without a convincing, objective reason that he or she had acquired ownership to the artwork or had doubts about it, he or she is not a good-faith possessor and cannot acquire the ownership title; therefore, the victim is protected. The bad-faith possessor is obliged to return the artwork to the owner together with any proceeds from it and compensate the owner for all damages incurred. The bad-faith possessor is entitled only to limited necessary costs incurred during the possession. The burdens of proof of bad-faith possession and the rightful ownership of the artwork lie on the victim.
Risk of loss or damage
When does risk of loss or damage pass from seller to buyer if the contract is silent on the issue?
The risk of loss or damage passes from the seller to the buyer by law upon the handover (or, if the buyer refused to take over the artwork, at the moment the seller enabled the buyer to take over the artwork). The parties may agree otherwise, for example on a date after the delivery, after the handover or after the payment of the purchase price in full.
Must the buyer conduct due diligence enquiries? Are there non-compulsory enquiries that the buyer typically carries out?
The buyer is not obliged to conduct due diligence enquiries, but it is highly advisable to do so, typically with respect to the existence of ownership, the right to dispose of (sell) the artwork, the originality and provenance of the artwork, rights of third persons to the artwork (eg, pledges, author rights, the pre-emptive right of the state; see question 42), potential litigation or enforcement proceedings, export conditions, the condition of the artwork itself or review of stolen artwork registers.
Must the seller conduct due diligence enquiries?
The seller is not, in principle, obliged to conduct due diligence; however, when the contract is concluded, the seller must be the owner of the artwork or the contract may be deemed invalid. Therefore, it is advisable that the seller performs due diligence on the provenance of the artwork, its authenticity and all the potential encumbrances on it to avoid liability for defects and, in addition, damages liability. The seller (as entrepreneur) should also perform the anti-money laundering review if the seller is the obliged person in this case and, if so, fulfil the relevant obligations.
Other implied warranties
Does the law provide that the seller gives the buyer implied warranties other than an implied warranty of title?
The law requires that the artwork that is handed to the buyer by the seller must meet the required standards of quality and performance, and be of the dimensions specified. If the standards of quality and performance are not agreed then the standards that fit the particular purpose of the contract apply. The quality of the sold object should fulfil the quality or characteristics specified in the description in the contract; if not, there is a defect in performance. The warranty may be excluded by a specific written waiver of the buyer. In practical terms, the implied warranties may also be limited by a declaration of the seller notifying the buyer of all the defects of the artwork of which the seller was aware at the time the contract was concluded. The warranty does not apply to defects that were evident and noticeable with the appropriate level of attention at the time of conclusion of the contract unless the seller explicitly warranted to the buyer that the sold artwork is free of any defects or, if such defect was concealed by him or her maliciously. The buyer is obliged to examine the sold object promptly after the transfer and shall ascertain its quantity and quality (it is advisable to do it before the transfer).
Voiding purchase of forgeries
If the buyer discovers that the art, antique or collectible is a forgery, what claims and remedies does the buyer have?
If the defective performance is of fundamental importance, which would be true in most cases, the buyer has the following options for a claim:
- immediate termination of the contract;
- removal of the defect by repair;
- delivery of the new movable asset without defects; or
- an appropriate discount on the price.
In most cases of forgeries, the only claim available in practice would be the immediate termination of the contract (and to claim the return of the purchase price against the work). The buyer must announce its choice without undue delay after notifying the seller of the defect (it is feasible to do both together). In addition, the buyer may seek damages to the extent not covered by the claims from the seller’s liability for defects. The defects must be claimed immediately after the buyer realised or could have realised their existence with due care; otherwise, the defect rights cease to exist (such cessation, however, will be upheld by the court only upon an objection raised by the seller), but no later than within two years from the handover of the asset (as regards hidden defects) unless the seller knew about the defect at the time of the handover (in such a case the seller is not entitled to raise such objection).
In addition to defects liability claims, under certain circumstances, the buyer might be entitled to claim the disproportionate shortage of fulfilment that equates to the difference between the purchase price actually paid and the real price of the forgery, if the seller knew or should have known with respect to its expertise that he or she was selling a forgery, provided that such a claim is raised in court within one year from the conclusion of the contract. The result of the claim is the nullity of the contract (and the return of the purchase price against the return of the work). The buyer may further consider filing a suggestion for the commencement of criminal proceedings.
Voiding inadvertent sales of works by masters
Can a seller successfully void the sale of an artwork of uncertain attribution subsequently proved to be an autograph work by a famous master by proving mistake or error?
Under certain circumstances, the seller might be entitled to claim the disproportionate shortage of fulfilment provided that such a claim is raised in court within one year from the conclusion of the contract. The result of the claim is the nullity of the contract (and the return of the purchase price against the return of the work) unless the buyer pays the seller the difference between the purchase price actually paid and the real price of the artwork. Nevertheless, this type of claim is quite limited as the burden of proof lies with the seller, which must prove that the buyer knew or ought to have known of the relevant circumstance.
Export and import controls
Are there any export controls for cultural property in your jurisdiction? What are the consequences of failing to comply with export controls?
The export of certain categories of art is subject to a permit issued by the relevant art institution or the Ministry of Culture. If the artwork is a cultural treasure, a specific regime applies (see questions 41 to 44). Original artworks by living authors and artworks that were imported temporarily into the Czech Republic are not subject to a permit. The export permit may be issued upon the application of the owner of the artwork (the art dealer or the auction house may file it only upon a power of attorney) for permanent export or temporary export. For permanent export, the artwork must not be, among other things, a declared national treasure (or have the characteristics of such), be protected within the scope of a museum collection or fall within the category of historical books. Artworks that require a permit are divided into categories of age and price, as follows:
- any painting other than a sacral object older than 50 years and worth more than 30,000 Czech koruna;
- any drawings other than sacral works older than 50 years and worth more than 10,000 Czech koruna;
- sacral cultural objects older than 50 years;
- collages and assemblages older than 50 years and worth more than 30,000 Czech koruna; and
- sculptures older than 50 years and worth more than 30,000 Czech koruna.
The relevant institution must decide within 21 days from receiving the application whether to issue the export permit. If it refuses to issue the permit, it will submit an application together with a proposal to declare the relevant artwork as a cultural treasure to the Ministry of Culture, which in turn has another three months to consider the proposal and either issue the permit or refuse to do so. If the permit is issued, it is valid for three years. If the artwork is exported outside the European Union, an additional permit must be obtained from the Ministry of Culture, the application for which shall be made together with the above permit; the additional permit cannot be issued without the previous general permit.
If the permit is not issued, the owner cannot export the artwork. If he or she, or someone on his or her behalf, attempts to do so, a fine of up to 5 million Czech koruna may be imposed, and customs may seize the work until it can be examined by the relevant art institution. If the attempt to export the artwork is considered a criminal offence and the owner is found guilty, the artwork may be permanently seized from him or her.
Other than in relation to endangered species, are there any import controls for cultural property in your jurisdiction? What are the consequences of failing to comply with import controls?
Unlike export, import of cultural property in the Czech Republic is not specifically regulated; however, general conditions for import as well as export conditions of the relevant jurisdiction of the country of origin must be fulfilled. The general rules for the import of goods from countries outside the EU also apply to cultural goods.
The Czech Republic is a party to the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property, based on which it is obliged to control whether there is any illicit import of cultural goods into the Czech Republic. If this happens between the Czech Republic and a member state of the EU, the Act on Restitution of Illicitly Exported Goods applies to the cultural goods that constitute cultural heritage of the Czech Republic or the other member state, respectively. Under the conditions specified by law, cultural goods may be ordered to be deposited in the custody of the state authority if the condition of the work is endangered. Based on the court ruling, if several conditions are fulfilled, the cultural goods may be exported in the requesting country that must, however, provide the owner of the artwork with adequate compensation if the owner acted with due care. The ownership, however, is not affected by such ruling. The period for the exercise of the right for restitution by the member state is subject to prescription; it must be executed within three years from the time the member state became aware of the location of the cultural goods at stake and of who its owner is, at a maximum of 30 years (or 75 years in the case of religious property or public collection) from the illicit export.
Export and import tax
Does any liability to pay tax arise upon exporting or importing art, antiques or collectibles?
Depending on the circumstances, the export (or supply to another EU member state) of art, antiques or collectibles, as well as their import (or acquisition from another EU member state) can be subject to 21 per cent value added tax (VAT), or can be exempt from VAT. Related input VAT recovery may be available again depending on the circumstances.
Direct and indirect taxation
Outline the main types of tax liability arising from ownership and transfer of art, antiques and collectibles.
If an artwork is sold by an individual outside his or her business activity, a rate of 15 per cent personal income tax applies on the income unless the exemption outlined in question 17 applies. If an artwork is sold by an individual as a part of the individual’s business activity, the 15 per cent personal income tax on the income applies, as well as a solidarity surcharge of 7 per cent (applicable if the annual total income of this person exceeds 1,569,552 Czech koruna (2019)). Social security and health insurance contributions are also charged on the income.
If an artwork is sold by a legal entity, the 19 per cent corporate income tax rate is applicable.
Unless the special regime described below applies, a general 21 per cent VAT rate shall be applicable to the sales price (but in general only if the seller is a VAT payer, unless there is a reverse charge to a Czech buyer if imported to the Czech Republic from the European Union. In this case, VAT may be due from a Czech buyer who does not normally pay VAT in specific situations (see question 15).
Outline any tax exemptions or special conditions applicable to art, antiques and collectibles.
If an artwork is sold by an individual outside the individual’s business activity and the individual is not an art professional, the sale should be exempted from personal income tax .
Under certain circumstances, a special VAT scheme is applicable to art merchants, which is a category that includes art dealers – the general 21 per cent VAT rate does not apply to the full price but only to the margin of the art dealer.
Gifts to certain charitable or public entities for a particular purpose can be exempt from corporate income tax.
Borrowing against art
Types of security interest
In your jurisdiction what is the usual type of security interest taken against art, antiques and collectibles?
The typical security interest would be a pledge over the movable asset that may be established either by registration in the Pledges Registry administered by the Czech Chamber of Notaries based on a written agreement made by the notary public in the form of a notary deed or by delivery of the movable asset to the pledgee or to the custodian.
If the borrower borrowing against art assets in your jurisdiction qualifies as a consumer, does the loan automatically qualify as a consumer loan, and are there any exemptions allowing the lender to make a non-consumer loan to a private borrower?
If the borrower qualifies as a consumer and does not demand the loan as an entrepreneur for the purposes of his or her business activities, the Act on Consumer Loans applies. The case law specifies that, even if the parties agree in the loan documentation that the loan is a commercial loan, but it is evident that the financial means shall not be used for the borrower’s business activities, the loan shall be deemed a consumer loan and all relevant consumer protection provisions shall apply.
Register of security interests
Is there a public register where security interests over art, antiques or collectibles can be registered? What is the effect of registration? Is the security interest registered against the borrower or the art?
Yes, the Pledges Registry. A pledge is registered against the artwork and is perfected by registration based on the pledge agreement in the form of a notary deed. After registration, the collateral may remain in the borrower’s possession. An advantage of registration is that, if there are more pledges over the artwork, a registered pledge has priority over a pledge that is not registered. For the rank of the registered pledge, the moment of registration is relevant.
Non-possessory security interests
Can the lender against art collateral perfect its security interest without taking physical possession of the art?
Yes, the security interest can be perfected without handover of the artwork to the lender by means of: (i) registration of the pledge in the Pledges Registry – the pledge is perfected by registration; (ii) the handover of the collateral to the custodian; or (iii) by marking the collateral as subject of the pledge – however, only if so stipulated in the pledge agreement.
Sale of collateral on default
If the borrower defaults on the loan, may the lender sell the collateral under the loan agreement, or must the lender seek permission from the courts?
In principle, the parties may agree on the means of enforcing the security interest including the direct sale of the collateral in writing in the loan documentation. The lender (the pledgee) must proceed with due care and sell the collateral at the price for which comparable collateral can usually be sold at that time under comparable circumstances; the collateral may never be sold within a grace period of 30 days after the notification of the sale to the borrower and the registration in the Pledges Register (if applicable). If the borrower does not qualify as a consumer or a small or medium-sized enterprise the parties may also agree that the lender may acquire the ownership over the collateral for an arbitrary or predetermined price. If the written agreement on a private sale was not concluded then the lender may sell the collateral only by judicial sale or public auction, which requires an enforceable court judgment unless the borrower agreed in advance, in the form of a notary deed, that his or her obligations arising from the loan will be directly enforceable.
Ranking of creditors
Does the lender with a valid and perfected first-priority security interest over the art collateral take precedence over all other creditors?
The law establishes the priority of the subsequent security interest over a pledge already established (by a pledge agreement) but not yet registered in favour of the liens over movables established by an administrative decision of the state authorities (such as tax authorities to secure payment of due taxes) or the statutory liens over movables. In addition, the retention right of the commission agent on stored items to secure the outstanding payments from the consignment agreement take precedence over the pledge irrespective of whether the pledge has already been perfected.
Intellectual property rights
Does copyright vest automatically in the creator, or must the creator register copyright to benefit from protection?
Under Czech law the copyright vests automatically in the creator. However, industrial rights, such as trademarks, patents or industrial designs, have to be registered in the relevant public register for their protection.
What is the duration of copyright protection?
Generally, the proprietary rights of the creator last for the lifetime of the creator plus 70 years after his or her death, while the moral rights terminate upon the death of the creator. However, there is an exception in the case of anonymous or pseudonymous copyrighted work, where the proprietary rights last 70 years from the time the work has been lawfully made public.
Display without right holder’s consent
Can an artwork protected by copyright be exhibited in public without the copyright owner’s consent?
Generally, the exhibition of protected artwork is not possible without the owner’s consent (because it is one of the proprietary rights to the copyrighted work), but the borrower does not infringe the copyright by lending the original or a reproduction of a copyrighted artwork to a third party who exhibits the work or provides it for exhibition free of charge, unless such use was excluded during the transfer of ownership.
Reproduction of copyright works in catalogues and adverts
Can artworks protected by copyright be reproduced in printed and digital museum catalogues or in advertisements for exhibitions without the copyright owner’s consent?
Yes, according to the Copyright Act, the copyright will not be infringed if a visual image of it and a reference is included in the catalogue of an exhibition, auction or fair to the extent necessary for such an occasion; the owner’s consent is also not needed for using the visual image in the reproduction and dissemination of the catalogue. It is always necessary, however, to indicate the name of the author, unless the work is anonymous, or the name of the person under whom the copyrighted work is being introduced in public, along with the title of the copyrighted work and the source.
Copyright in public artworks
Are public artworks protected by copyright?
Yes, if the public artworks meet the definition of copyrighted work according to the Copyright Act, they are also protected by copyright. However, this copyright is not infringed by anybody who records, renders or expresses that copyrighted public artwork by drawing, painting, graphic art, photography or film, or by anybody who further uses it.
Artist’s resale right
Does the artist’s resale right apply?
Yes, according to the relevant provision of the Copyright Act, where the original work of art (that has been transferred by its author to the ownership of another person) is subsequently sold for a purchase price of €1,500 or more, the author (or his or her heirs for the duration of the proprietary rights of the author) shall be entitled to royalties from any resale of the work as set out in the Annex to the Copyright Act, provided that a gallery operator, auctioneer or any other person who consistently deals in works of art takes part in the sale as a seller, purchaser or intermediary. The royalty ranges from 0.25 per cent to 4 per cent of the relevant part of the purchase price (depending on the amount of the purchase price), but the total amount of the royalty may not exceed €12,500.
The persons liable to pay the royalty shall be the seller and the dealer jointly and severally, who pay it to the relevant collective administrator, the Authors Copyright Protection Organisation – Association of authors of works of art, architecture and visual components of audiovisual works.
The right to royalties shall not apply to the first resale if the seller obtained the original work of art directly from the author less than three years before that resale and if the purchase price of the original work, when resold, does not exceed 250,000 Czech koruna.
What are the moral rights for visual artists? Can they be waived or assigned?
The artist (author) has the following moral rights provided by law, which cannot be waived, transferred or assigned to a third person:
- the right to decide about making his or her copyrighted work public;
- the right to claim authorship, including the right to decide whether and in what way his or her authorship is to be indicated when his or her copyrighted work is made public and further used;
- the right to the inviolability of his or her copyrighted work, in particular, the right to grant consent to any alteration or other intervention in his or her copyrighted work, unless otherwise stipulated in the Copyright Act; and
- the right of supervision over another person’s right to use the copyrighted work (ie, the author’s supervision), unless its nature or its use implies otherwise, or unless it is not possible to fairly require the user to enable the author to exercise his or her right to supervision.
All the moral rights last for the lifetime of the author, but after his or her death, no one may arrogate authorship of the copyrighted work. The copyrighted work may only be used in a way that shall not detract from its value, and the name of the author must be indicated (unless the copyrighted work is anonymous).
Accounting to the principal
Does the law require the agent to account to the principal for any commission or other compensation received by the agent while conducting the principal’s business?
Under an agency agreement, the agent generally acts for the principal to allow the principal to conclude the relevant transaction. In such a case, the agent should not act for the other party to the transaction and should not accept the provision. If the agent does so, then it should be agreed in the agency agreement with the principal or at least not forbidden by the agreement; otherwise, the agent may lose his or her right to commission from the principal. If the agent expects to receive commission from the other party, he or she should explicitly agree this with the principal in the agency agreement.
Disclosed agent commission
Does disclosure to the principal that the agent will receive a commission allow the agent to keep the commission unless the principal objects?
The agent should be entitled to keep the commission received while conducting the principal’s business, if it is not contrary to the agency agreement.
Undisclosed agent commission
If a third party pays a commission to an agent that is not disclosed to the principal, can the principal claim the commission from the third party?
If it is contrary to the agency agreement, the principal may not request a commission paid by a third party, but it may refuse to pay the commission to the agent based on the agency agreement.
Protection of interests in consigned works
How can consignors of artworks to dealers protect their interest in the artwork if the dealer goes into liquidation?
Artwork entrusted to an art dealer based on a consignment agreement remains in the ownership of the consignor until the third person acquires the ownership of the work. If the art dealer goes into liquidation (ie, bankruptcy) in the meantime, the insolvency trustee should not be entitled to include the consigned artwork in the insolvency estate; if the trustee does so, the owner may file a petition to the bankruptcy court claiming that the relevant artwork should be excluded from the bankruptcy assets.
Are auctions of art, antiques or collectibles subject to specific regulation in your jurisdiction?
Public auctions of art conducted in an auction house are subject to the Act on Public Auctions; the persons involved must be physically present, or use audiovisual means to attend the auction. Ownership is acquired by the fall of the hammer. Online auctions usually allow an unspecified number of people who are not present to bid and for the price to increase within a certain time limit; the auctioneer is replaced by electronic means, and the Act on Public Auctions is not applicable. Ownership to the work is acquired by offering the highest price that is accepted by the seller, and the contract is concluded, which may take the form of a consumer contract.
May auctioneers in your country sell art, antiques or collectibles privately; offer advances or loans against art, antiques or collectibles; and offer auction guarantees?
Auction houses usually also operate as galleries (ie, they sell privately those artworks not sold in an auction or even independently of the auction upon a consignment agreement with the owner). In order to operate these services, auction houses require a specific licence, usually for the sale and purchase of cultural goods, and for holding the auction. However, the auction houses do not usually offer loans against the art or auction guarantees because they would need to obtain the relevant financial services licences.
Spoliation during the Nazi era
Claims to Nazi-looted art
In what circumstances would the heirs of the party wrongly dispossessed typically prevail over the current possessor, if a court in your country accepted jurisdiction and applied its own law to a claim to art lost during the Nazi era?
The Czech Republic enacted the Act on the Alleviation of Certain Property Injustices caused by the Holocaust. This Act allows for the restitution of work of art that was dispossessed between 29 September 1938 and 4 May 1945, and the transfer was declared invalid by presidential decree No. 5/1945 Sb., or Act No. 128/1946 Sb. and is in the ownership of the Czech Republic. The original owners (natural persons), the surviving spouse or their offspring should address their requests for the return of property to the organisation administering the particular work of art on behalf of the Czech Republic (typically the relevant state authorities or museums).
Is there an ad hoc body set up to hear claims to Nazi-looted art?
The claims for restitution are resolved by Czech courts.
Lending to museums
Responsibility for insurance
Who is responsible for insuring art, antiques or collectibles loaned to a public museum in your jurisdiction?
Generally, public museums borrowing art are responsible for concluding insurance agreements for the object on loan – they are entitled to insure the relevant artwork only based on the loan agreement concluded with the owner of the artwork that must contain, among other things, the insured value, the duration of the loan and security, and logistical and other conditions for the protection of the relevant object. However, it may be agreed with the owner that the object is insured by the owner’s insurance during the loan (the public museum may compensate the owner with a proportionate part of the insurance fee). The state indemnity may be provided instead of insurance subject to specific conditions imposed by law if a written agreement on provision of the indemnity is concluded between the state and the public museum.
Immunity from seizure
Are artworks, antiques or collectibles loaned to a public museum in your country immune from seizure?
The Czech Republic ratified the United Nations Convention on Jurisdictional Immunities of States and Their Property on the basis that the relevant implementing national legislation was enacted in 2011. Under this legislation, an object that has the character of a cultural treasure (eg, all artworks of artistic value) that was loaned to the Czech Republic by a foreign state that declared that such an object is under its ownership is immune from seizure (including enforcement or preliminary ruling).
Is there a list of national treasures?
Yes, there is a state record called the ‘Central list of cultural treasures’, which includes cultural and national treasures. The specification that cultural treasures can be declared national treasures is rather vague: they shall exemplify the most important part of the national cultural heritage without stating any particular characteristics. The owner of the national treasure is obliged to keep it in good condition, protect it against damage or theft at its own costs, and notify the Ministry of Culture of any intended or realised change in its ownership, its replacement or management, or its use (and must inform the acquirer of its character as a national treasure). Further, the state has a pre-emption right to national treasures as well as movable cultural treasures.
Right of pre-emption
If the state is interested in buying an artwork for the public collections, does it have a right of pre-emption?
The state has a pre-emption right to movable cultural treasures and national treasures (for payment) unless the sale is made between relatives or co-owners. The owner is obliged to notify the Ministry of Culture of the sale in advance, and the Ministry may decide within three months whether it wishes to acquire the work. After this period, the pre-emption right ceases to exist towards the owner (but applies again in the subsequent sale). If the transfer is not notified to the Ministry in advance, the transfer may be declared invalid by the Ministry within the next three years. In addition to this right, in enforcement proceedings, cultural treasures and extraordinary artworks must first be offered to state institutions, which have 30 days to accept the proposal and pay the relevant price.
Automatic vesting in the state
In what circumstances does ownership in cultural property automatically vest in the state?
Archaeological discoveries are put under the ownership of the relevant region and must be transferred to the state upon the request of the Ministry of Culture. This may also be the case when the deceased owner has no heirs or testament.
Illegally exported property claimed by foreign states
How can a foreign state reclaim in your jurisdiction cultural property illegally exported from its territory?
The Czech Republic ratified the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property. To transpose the EU legislation, the Act on the Return of Cultural Goods was enacted. This Act covers the situations concerning an illegal export or import from another EU member state after 31 December 1992. The member state must file an application to the Ministry of Culture that notifies the owner or the possessor of the concerned asset of such request. The courts will entertain the claim that must be raised with them within three years from the date the requesting state gained knowledge of where the asset is and who the owner is, but no later than within 30 years from the illegal export of the asset. If the claim is successful, the current owner, or the possessor if the owner is unknown, is entitled to compensation adequate to the circumstances if the owner proves that it executed due care when acquiring the asset.
What are the anti-money laundering compliance obligations placed on the art trade?
In the art trade (ie, sale of art, acting as an intermediary in the sale of art, assets without evidence on the acquisition of ownership and the acceptance of these goods), the entrepreneur must, before concluding the relevant contract, identify the parties and the subject matter in accordance with the Anti-Money Laundering Act, and screen the client (including, among others, the ultimate beneficial owner) in cases specified by the Anti-Money Laundering Act – namely if a politically exposed person is involved, the involved person is from a country considered by the EU as a high-risk country or the value of the transaction exceeds €15,000. Under certain circumstances, the entrepreneur, as the obliged person under the Anti-Money Laundering Act, must refuse the deal and notify the relevant financial authorities. The obliged person shall keep evidence of this data for 10 years, including the date on which the agreement was concluded.
Is your jurisdiction a party to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES)?
The CITES Convention came into force for the Czech Republic on 1 January 1993 (adopted for the Czech and Slovak Federative Republic on 28 May 1992). To implement the CITES Convention and the corresponding EU legislation (namely Council Regulation (EC) No. 338/97), the Act on Trade in Endangered Species (No. 100/2004) and its supplemental Decree were enacted. The Ministry of the Environment is responsible for issuing the relevant CITES permits and enforcing the EU Wildlife Trade Regulations.
Is the sale, import or export of pre-CITES endangered species subject to a licence?
No licence is needed for the sale, export or import of pre-1947 worked items, which means ‘specimens significantly altered from their natural raw state for jewellery, adornment, art, utility, or musical instruments, more than 50 years before the entry into force of EU Regulation (3 March 1947) and acquired in such conditions.’ These items may not undergo any further carving, crafting or manufacture within the European Union. It is also necessary to prove the date of acquisition. If the item is sent outside the European Union, an export or import permit is still needed.
Is the sale, import or export of post-CITES worked or antique endangered species authorised? On what conditions?
This depends on whether the relevant species is listed in Annex A, B, C or D of Council Regulation (EC) No. 338/97. The conditions specified in Council Regulations (EC) Nos. 338/97 and 865/2006 for export, import, sale and exemptions with respect to the European Union or trade outside the European Union apply to the full extent in the Czech Republic.
Specific endangered animal products
Are there any special rules for works of art made of elephant ivory, rhino horn or other specific endangered animal products?
As stated in question 48, the conditions specified in Council Regulations (EC) Nos. 338/97 and 865/2006 apply in this respect. The Czech Republic further follows the Commission Guidance governing intra-EU trade and re-export of ivory. In addition, the Ministry of the Environment decided to suspend the issuance of the CITES permit for re-export of elephant ivory from the Czech Republic and the import and re-export of rhino horn from South Africa.
In what circumstances may consumers cancel the sale of art, antiques or collectibles?
The consumer has the right to withdraw from the contract within 14 days without giving a reason. However, this right only applies for contracts concluded away from business premises or at a distance (ie, sales on the telephone, by email, text or social media, or online). The consumer does not have this right in the event of face-to-face sales.
If a consumer has not been advised by the seller of his or her right to withdraw from a contract (as stated above), the consumer may withdraw from the contract within one year and 14 days from the beginning of the time limit for withdrawal. If the consumer has been advised of his or her right of withdrawal within this time limit, the 14-day time limit for withdrawal commences on the date on which the consumer received the advice.
Duties of businesses selling to consumers
Are there any other obligations for art businesses selling to consumers?
There are no specific conditions for art businesses selling to consumers. Generally, the seller is obliged to provide the consumer with a wider range of information in the event of sales on the telephone, by email, by text or social media, or online, such as the right of the consumer to withdraw from the contract.
Authors: Tereza Ditrychová, Daniela Kozáková