Snapshot: buying and selling art in Switzerland

Buying and selling

When does ownership of art, antiques and collectibles pass from seller to buyer?

In principle, ownership passes to the buyer with the transfer of possession (article 714, Civil Code; article 184, Code of Obligations). Instead of a physical transfer of possession, the parties may agree that the buyer receives the means to access the art, antique or collectible, for example because it will remain stored at a freeport (article 922, Civil Code). However, the parties may also provide that the buyer takes possession of the art, antique or collectible and acquires ownership only on receipt of payment. In the latter event, the seller’s retention of title must be registered in the official debt enforcement register at the buyer’s place of residence (article 715, Civil Code).

Does the law of your jurisdiction provide that the seller gives the buyer an implied warranty of title?

Statutory law provides a warranty of title according to which the seller must transfer the collectible free from any rights enforceable by third parties against the buyer that exist at the time the contract is concluded (article 192, Code of Obligations). Buyers are therefore entitled to a legal claim if they have bought a collectible that actually belonged to a third party. No implied warranty of title exists if, at the time of the agreement, the buyer knew or should have known of any third-party rights. Actions for breach of warranty of title regarding cultural property as defined by the Cultural Property Transfer Act (CPTA) become time-barred one year after the buyer discovered the defect of title, but in any event, 30 years after the contract was concluded (article 196a, Code of Obligations). To qualify as cultural property under the CPTA, the property must:

• belong to one of the categories provided for under article 1 of the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property (the 1970 UNESCO Convention); and
• be meaningful property from a religious or secular point of view for archaeology, prehistory, literature, art or sciences.

The Swiss federal administration published a checklist to help determine whether a property can be considered as cultural property, which includes a description of categories of the 1970 UNESCO Convention and list of significant areas such as archaeology, art or science.

The implied warranty of title can be limited or excluded by contract. Such an agreement is, however, void if the seller has intentionally concealed the right of a third party. Owing to the protection of the good-faith purchaser (see ‘Good-faith acquisition of stolen art’), the warranty of title was of little practical relevance. Since the limitation period for a good-faith acquisition has increased to 30 years for cultural property, this is likely to change in the future.

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?

No. Ownership of art, antiques or collectibles cannot be registered in Switzerland, nor is there any public register or database of stolen art. Storing cultural property at freeports is subject to inventory, registering a date of deposit, description of the object, its provenance, its value and the owner’s identity.

In sale transactions whereby the buyer acquires possession of the property before payment is made, the parties may register the seller’s retention of title in the official debt enforcement register at the buyer’s place of residence (see ‘Passing of title’), but this rarely occurs in practice.

Does the law of your jurisdiction tend to prefer the victim of theft or the acquirer in good faith of stolen art?

In principle, Swiss law protects the acquirer in good faith. The acquisition in good faith of an artwork in due possession of the transferor is not open to challenge, regardless of whether the transferor lacked actual power of disposal, unless the artwork was either stolen or lost or otherwise taken from the original owner against his or her will.

In the event of stolen or lost artwork, the original owner can claim it back (article 934, Civil Code). The claim to recover cultural property falling under the definition of the CPTA is limited to one year from the day the owner discovers the current possessor’s identity and location of the object, and 30 years since the loss of the object. Before the entry into force of the CPTA on 1 June 2005, artworks and collectibles were subject to a five-year limitation period, which is still applicable for chattels other than cultural property.

For artwork sold at auction or by an art dealer, the original owner may only reclaim his or her property against the reimbursement of the price paid by the good-faith purchaser. This price does not include any increase in value of the artwork since the purchase.

The question of whether the purchaser was in good faith when buying the artwork must be determined based on the facts of the case. The good-faith purchaser must exercise the required care and attention in the particular circumstances. The Federal Court has not imposed a general duty on the buyer to investigate the seller’s ownership title. Instead, it distinguishes between businesses that are particularly exposed to the supply of goods of dubious origin and those that are not so exposed. In the latter event, the buyer has a duty to investigate the seller’s legitimacy only if any suspicions have arisen. In the former event, the buyer must be inquisitive at the outset of the transaction. Federal case law suggests that the antiquities market is considered a business that is particularly exposed to title risks, whereas the Federal Court has held otherwise for the sale of works of classical modern art from the former Soviet Union (see Federal Court decisions BGE 122 III 1 and BGE 139 III 305). More importantly, the courts take into account the buyer’s expertise and knowledge of the market to establish the requisite level of due diligence. Heightened expectations are not only held against dealers and auction houses, but also collectors. Guidelines and ethics codes of dealers’ associations may serve judges as a basis to determine the diligence required under the given circumstances. The CPTA provides further details (see ‘Due diligence’).

In terms of the burden of proof, there is a presumption of good faith (article 3, Civil Code). Hence, the party alleging bad faith bears the burden of proof (article 8, Civil Code), which can be difficult in practice.

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 period of time?

Yes, the acquirer in good faith of stolen or lost cultural property is protected upon expiry of the limitation period, that is if the original owner missed to file a claim one year after he or she knew about the current possessor’s identity and location of the object, and 30 years after the loss (see ‘Good-faith acquisition of stolen art’).

Can ownership in art, antiques or collectibles vest in the acquirer in bad faith after a period of time?

No, ownership never passes to a purchaser in bad faith (article 936, Civil Code).

Must the professional seller of art, antiques or collectibles maintain a register of sales?

Yes if the sale concerns a cultural property item with a purchase or estimate price over 5,000 Swiss francs. The dealer must record the identity of the seller or consignor (such as name, address, nationality, date of birth, etc), the location of origin or discovery of the property, a description (including information such as the kind of object, its dimensions, weight, subject matter, any inscriptions, etc), date of the sale and sale price. The Specialised Body for the International Transfer of Cultural Property at the Swiss Federal Office of Culture (the Specialised Body) may request the dealer to consult the register.

When does risk of loss or damage pass from seller to buyer if the contract is silent on the issue?

Risk of loss or damages pass from seller to buyer upon the conclusion of the contract, unless the parties have agreed otherwise (article 185, Code of Obligations). In practice, sale contracts frequently provide that risk passes upon delivery of the artwork to the buyer.

Must the buyer conduct due diligence enquiries? Are there non-compulsory enquiries that the buyer typically carries out?

Buyers need to perform appropriate due diligence in order to rely on good faith (see ‘Good-faith acquisition of stolen art’). It will typically involve consulting available stolen art registers.

Must the seller conduct due diligence enquiries?

The CPTA establishes a general and a specific duty of diligence for the sale of cultural property. Both the general and the special duty of diligence apply only to transactions involving persons active in the art trade or auction business. These are defined as persons domiciled in Switzerland and companies having their registered office in Switzerland that acquire cultural property for the purpose of reselling it for their own account or on behalf of third parties. It also applies to persons domiciled abroad and to companies having their registered office abroad, provided they conduct more than 10 transactions with cultural property with a turnover of more than 100,000 Swiss francs a year for the purpose of reselling the property for their own or a third party’s account.

Under the general duty of diligence, any seller must refrain from transferring ownership to the cultural property unless he or she can assume, under the given circumstances, that the object was neither stolen nor lost against the will of the owner or illegally excavated, and not exported in breach of a bilateral agreement (article 16(1), CPTA). This general duty of diligence only applies to art sales involving a transfer of ownership, unlike loans, storage, donations and other legal relationships. The person bearing the duty is primarily the owner of the cultural property or the intermediary acting on the owner’s behalf.

Moreover, under the specific duty, professional sellers are obliged, according to article 16(2) of the CPTA, to:

• establish the identity of the supplier or seller and ask for a written declaration from him or her of his or her right to dispose of the cultural property;
• inform their customers about existing import and export regulations of the contracting states;
• maintain written records on the acquisition of cultural property by specifically recording the origin of the cultural property, to the extent known, and the name and address of the supplier or seller, a description as well as the sales price of the cultural property; such records must be stored for 30 years; and
• provide all necessary information on fulfilling this duty of diligence to the Specialised Body.

Art collectors who do not act as professionals pursuant to article 16 of the CPTA may be subject to criminal sanctions should they sell, import, distribute, procure, acquire or export cultural property stolen or otherwise lost against the will of the owner (article 24, CPTA).

Further due diligence requirements are provided by anti-money laundering provisions and import and export laws.

Does the law provide that the seller gives the buyer implied warranties other than an implied warranty of title?

An implied guarantee of authenticity exists in art sale agreements provided the price paid is commensurate with the price that would have been paid for an original. It allows the buyer to rescind the sale because the artwork is a fake, was attributed to the wrong artist or was wrongly dated.

The seller may expressly or impliedly exclude any liability for authenticity (article 199, Code of Obligations). Such disclaimers are void for defaults that the seller fraudulently concealed from the buyer.

If the buyer discovers that the art, antique or collectible is a forgery, what claims and remedies does the buyer have?

The buyer of a forgery may rescind the sale agreement either on the grounds of a fundamental mistake or under the seller’s liability against defects. Under a mistake claim, the seller must allege that the description of the object at sale, which is part of the contract, differed from what the object actually is - a typical example is the sale of a forgery (article 24, Code of Obligations). However, should the buyer have known about the art object’s attribution, the court will likely reject his or her claim based on the principle of fairness in commercial transactions.

Liability against defects is a cause of action specific to sale contracts. Upon the delivery of the object buyers must immediately verify its condition and notify the seller of any defects. The buyer may then cancel the sale contract and request the reimbursement of the price paid plus interest and expenses against the restitution of the artwork.

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?

Sellers may rescind the sale agreement based on a mistake claim. A cause of action for mistake arises when the seller misconceived the art object’s attribution, such as believing the painting to be by a follower instead of the master painter. The seller must show that, had he or she known about the true situation, he or she would not have concluded the sale agreement (or at least not under the same subject terms of the contract). Courts further assess whether any third party hypothetically placed in the position of the claimant would have considered the mistake to be decisive to such an extent that it would not have concluded the agreement, or at least only under different conditions.

Law stated date

Give the date on which the information above is accurate.

6 February 2020