Caillebotte storm is quelled, twice over

Posted on: April 17, 2019 by

Last June, a Federal Court decision in Canada caused quite a stir. It related to the export control system that applies in Canada for cultural property and the definition of the term ‘national importance’. As we reported in September, the case involved the attempted export from Canada of an oil painting by French Impressionist Gustave Caillebotte called Iris bleus (1892). The painting was caught by the export system, having been deemed by the Cultural Property Export Review Board (CPERB) to be of ‘outstanding significance’ and of ‘national importance’. The exporter challenged the Board’s decision in judicial review and last June a Federal Court quashed the decision, holding that the Board’s interpretation of ‘national importance’ had been unreasonable. But that Federal Court decision has now been overturned itself, meaning the Board’s original decision will stand.

The CPERB is made up of ten members in total: one chairperson, four representatives of the museum sector, four representatives of the art trade (including collectors), and one member chosen from the public at large. This is provided for in the governing legislation, the Cultural Property Export and Import Act (CPEIA), at section 18. It is thus a well-balanced body with a great deal of expertise in assessing the value and importance of a work of art. It was chiefly for this reason – the Board’s high level of expertise – that the Federal Court of Appeal overturned the first court’s ruling.

Gustave Caillebotte’s Iris bleus (1892), oil on canvas, the work at the centre of the export dispute in Canada.

According to the appellate court, when reviewing an administrative body’s decision like that of the CPERB a court should show due deference. In fact, the standard of review to be used should be that of ‘reasonableness’ – this means that an administrative decision will not be upset unless it is found to be unreasonable. This is generally considered a high threshold that courts must abide by, in comparison to the other standard in Canadian administrative law, that of ‘correctness’, which allows courts to interfere much more freely with an administrative decision, on the basis that a particular decision was incorrect. The Federal Court of Appeal yesterday held that the CPERB, due to its highly-skilled membership and nature, and the fact that it was interpreting ‘national importance’ in its own governing statute, should have been given greater deference by the first court. Instead, according to the Federal Court of Appeal, the lower court had been using the correctness test in disguise as a reasonableness test. Though it spoke the language of deference, the first court had been too willing to meddle in the actions of the CPERB.

In terms of the thorniest issue of the day, that of defining ‘national importance’, the Federal Court of Appeal found that the term, as it exists in the CPEIA, is open-ended and not ‘a mandatory recipe’ for the Board to follow identically in every instance (see paragraphs 33 to 34 of yesterday’s decision). The relevant provision is found at subsection 11(1)(b) of the CPEIA and reads as follows:

11.(1) […]

(b) whether the object is of such a degree of national importance that its loss to Canada would significantly diminish the national heritage.

Unlike the Federal Court, the appeal court found that this particular use of ‘national importance’  in the Act allowed for a ‘broad range of options based on the Board’s expertise’ (citing the Court’s earlier jurisprudence, para 33). Parliament had intended a broad discretion for the Board when rendering its decisions on ‘national importance’. Considering the makeup of the Board and the various factors that it must take into account when hearing export applications, the ability of the Board to have a certain amount of running room in rendering decisions does make sense.

Not only was the Board’s interpretation of ‘national importance’ deemed reasonable by the Federal Court of Appeal, so too was its determination that the Caillebotte painting had fit this definition. That particular determination had not been to simply over-extend the application of ‘national importance’ based on the diversity of Canada (an argument earlier upheld by the first court), but rather to take into account a number of highly specialised features affecting the painting and its value within the Canadian context. Rather helpfully, the Court of Appeal listed what had been taken into account and – if nothing else is retained from these reasons going forward – this can serve as a helpful guide to the Board of the elements to consider when rendering export decisions in the future. This involved discussing “the provenance of the object, the impact of its creator, its origin, its authenticity, its condition, its completeness, its rarity or uniqueness, its representativeness, its documentary or research value, as well as contextual associations that it may have” (para 38 of the Board’s decision, cited with approval at para 41 of the Federal Court of Appeal’s decision).

But this wasn’t the only attack on the Federal Court’s decision from last June. As noted in our earlier post from September, the knock-on effect of the decision was to harm the ability of donors of art to classified museums to gain tax credits. This is due to the particular architecture of the CPEIA, which requires the Board to use the same ‘national importance’ criterion for assessing works of art for tax certification. The raising of the standard by the Federal Court in June meant that it would be harder for donors to convince the Board that the works they were donating to museums were of ‘national importance’ and thus harder for museums to attract important donations.

In order to nullify this particular outcome of the decision, the Canadian government introduced in its March 2019 Budget an amendment to the CPEIA that would simply remove the ‘national importance’ requirement, though only for tax certification purposes. The Budget change, which will likely be passed over the weeks to come, would do nothing to change the export system. Such a change makes sense for a Budget, which is usually limited to legislative changes affecting the tax system; any change to the export controls would have gone beyond the prerogative of the government for this particular purpose. But the Federal Court of Appeal’s decision yesterday renders the (proposed) Budget change largely unnecessary. The result will be that for both exports and tax certification, the approach that had been in operation for the last two decades will continue to operate once again.

Despite my earlier indication that the Federal Court decision appeared sound on its face and would be unlikely to be overturned (I was wrong!), I do think that yesterday’s decision highlights something rather important about art, and indeed about all cultural property. It is this: that it is not necessarily limited or restrained by international boundaries. It goes without saying that the art world operates at a global level. This is true not just for the art market, where artworks are constantly crossing international borders as they are bought and sold, but also for the museum world where traveling exhibitions and international loans are now practically de rigueur for most museums. In this particular case, the Caillebotte – a work by a French artist painted in France – could still have ‘national importance’ in Canada, a country Caillebotte never visited, and frankly probably never contemplated.

This is reminiscent of another court decision, this one from a different jurisdiction and a very different legal context, but underscoring the same international aspect of the art world. In 2000, the European Court of Human Rights delivered a decision involving a work by Vincent Van Gogh, Le Jardinier (1889). This work had been compulsorily purchased by the Italian Ministry of Culture from a Swiss collector and dealer, Ernst Beyeler, under the premise that it was a national treasure to Italy. The irony that this was a painting by a Dutch artist of a French peasant owned by a Swissman, and yet claimed as a treasure by Itay, was lost on no one. And yet, despite the fact that the European Court of Human Rights came down on the side of the Swiss collector, it first stated categorically that the State, in this case Italy, had a legitimate role in controlling the art trade, even of those works that may not have originated in Italy. Here is what the European Court stated in Beyeler v Italy (at para 113): ‘in relation to works of art lawfully on its territory and belonging to the cultural heritage of all nations, it is legitimate for a State to take measures designed to facilitate in the most effective way wide public access to them, in the general interest of universal culture.”

The sentiment here, indeed the principle of the universal value of art of great importance, is echoed in yesterday’s decision from the Canadian Federal Court of Appeal.