The Artist's Resale Rights Regulations 2006 (UK) (ARRR) came in to force on 14 February this year, heralding a new regime for the proceeds of art sales across the UK. It also brings into force in the UK a right which has existed in varying forms in the majority of EU Member States for some time.

Painting the legal background
The new legal regime is based on EU Directive 2001/84/EC (EU Directive) issued in 2001 which aimed to harmonise the law in this area across all Member States. The UK has drafted ARRR in line with this Directive and the new law will mean that the author of a work of art will have a 'resale right', entitling him to a royalty on any sale of the work following on from his initial sale or transfer. Thus the artist will not only receive money upon selling his art to an initial buyer, but will also benefit from a royalty on every subsequent resale.

The concept originates from the French 'Droit de Suite' introduced after the First World War to benefit families and orphans of artists killed in the trenches. Many artists in the UK for have advocated this model for over a decade now. It is against this background that the European Union has stepped in to legislate.

The framing of the rights

The resale right will exist from the time the piece of art is created until 70 years after the death of the artist (the same duration as copyright). Works of art are defined broadly and will include any work of graphic or plastic art, including authorised copies of an original piece of art. It does not apply to original manuscripts of writers and composers.

In order for the resale right to take effect, the buyer or seller (or both) of the art must be acting in the course of business as art dealers and the sale price must be not less than €1000. Purely private sales of art are therefore not covered.

Where the seller of a piece of art acquired it directly from the artist less than three years previously, the resale will not be caught by ARRR unless the sale price exceeds €10,000.

The amount of royalty payable to the author under ARRR is calculated on a sliding percentage scale depending on the resale price obtained. The sliding scale is set out in the regulation and provides that the first slice of the sale price up to €50,000 will be chargeable at 4%, the second slice up to €200,000 at 3% and so on. However, in any case the maximum amount of royalty payable will be €12,500.

A portrait of artists protected

Artists of any EEA State (EU plus Norway, Liechtenstein and Iceland) are protected by the ARRR in relation to resale transactions undertaken in the UK as well as artists in a number of third states set out in the ARRR. These latter countries have agreed reciprocal artists resale rights for EEA state nationals on their territory and include countries as diverse as Brazil, Iraq, Senegal and Turkey.

The ARRR sets out that the resale right is not assignable by an artist. Indeed the UK has taken advantage of leniency within the original EU Directive to delay the coming into force of measures to deal with the resale right after the artist's death. Thus any sale of art before 10 January 2010 in the UK will not attract an artist's resale right where the artist of the work in question is not living. There is even speculation that the UK will seek further delay as the EU Directive permits two more years beyond 2010 to allow economic operators to take necessary measures to implement post-death resale rights. This means that for the foreseeable future the resale right will be a luxury afforded only to the living artist.

A new legal landscape

It is hoped that the new regulations will be generous enough to encourage young artists' creativity, whilst remaining conservative enough to not stifle the buoyant British art market.