The artist resale right (ARR), also known by the French term droit de suite, is the inalienable right of the artist and his estate to receive a royalty on any resale of his artworks.
Unlike other creators, such as musicians, screenwriters, and authors, artists earn money only from the initial sale of their works. However, artworks are often actively traded on the secondary market and may witness price increases over time. The ARR was introduced to ensure that artists benefit from the subsequent economic value creation of their artworks.
On an international level the ARR was introduced in article 14ter of the Berne Convention for the Protection of Literary and Artistic Works (1948). However, it was optional and many contracting states did not implement the ARR into their national laws.
The Situation in the EU:
On 13 October 2001, the EU adopted the Directive on the resale right for the benefit of the author of an original work of art (2001/84/EC) in order to harmonise the ARR. Member States then had over ten years to fully implement it (until 1 January 2012).
The 2001 Directive sets out the following key provisions:
- The ARR does not apply to any resales executed between two individuals acting in their private capacity, i.e. neither party is an art market professional;
- Member States have to define a minimum sale price triggering the ARR, which must not exceed EUR 3,000;
- Calculation of the ARR is based on the sale price (and not adjust the profit versus the previous sale);
- Royalties are calculated on a sliding scale from 4% to 0,25% of the sale price and are capped at EUR 12,500 per sale;
- Royalties are normally borne by the seller;
- The ARR is enjoyed not only by the artist but also by his estate for a period of up to 70 years following the artist’s death (the same term as copyright in the EU and Switzerland).
According to art. 7 para. 1 of the 2001 Directive, the ARR is subject to the rule of reciprocity. This means that artists who are non-EU nationals only benefit from resales of their artworks in the EU if the legislation in the non-EU country also grants royalties to EU-artists.
The Situation in Switzerland:
Although Switzerland is a signatory to the Berne Convention, it never implemented the ARR under its national Copyright Act. As a result, Swiss artists do not collect any royalties when their artworks are resold, neither in Switzerland nor in the EU.
Despite being the subject of several parliamentary requests, Switzerland has repeatedly decided against the introduction of the ARR. The key requests are summarised below:
(i) Postulate of Doris Morf
When the Swiss Federal Copyright Act was comprehensively revised, the Federal Council’s dispatch of 29 August 1984 did not discuss the ARR.
As a result, the parliamentarian Doris Morf, by way of a postulate dated 9 March 1988, requested from the Federal Council that the ARR was to be included in the parliamentary discussions on the revised Copyright Act. Ms Morf stressed the necessity to equally treat Swiss artists with other qualified creators that enjoy royalties under Swiss law.
The Federal Council approved the postulate and the Council of State – one of the two legislative chambers of the Swiss parliament – had even agreed on a wording for the ARR (royalties of 5% payable on any resale price exceeding Swiss Francs 10,000). However, the National Council – the other legislative chamber – did not approve. Since in Switzerland, a change in law requires the approval of both legislative chambers, the ARR was not included in the revised Copyright Act. It’s worth noting that a number of famous Swiss artists publicly opposed the concept of ARR.
(ii) Motion of Regine Aeppli Wartmann
In the wake of the next partial revision of the Copyright Act, the parliamentarian Regine Aeppli Wartmann put forward a motion on 22 June 2001. She highlighted the developments in the EU and requested the introduction of the ARR in line with the 2001 Directive. Ms Aeppli Wartmann emphasised that artists should participate in the economic success of their oeuvre.
The Federal Council agreed that a re-assessment of the ARR in Switzerland was justified and commissioned the Swiss Federal Institute of Intellectual Property to set up a working group to look into the matter. However, the working group which consisted of representatives of artists, the art trade, and the Swiss royalty collecting society (ProLitteris), did not come to an agreement. In the dispatch on the partial revision of the Copyright Act dated 10 March 2006, the Federal Council came to the conclusion that the supporters of the ARR did not put forward any new arguments that would justify bringing this to the parliament’s attention again.
(iii) Interpellation of Anitha Thanei
A renewed attempt to introduce the ARR was made by Anitha Thanei on 20 July 2007 by way of interpellation. She criticised the stark discrimination of Swiss artists to artists of the EU.
On 21 September 2007, the Federal Council pointed out that the ARR had already been discussed extensively in Switzerland and deliberately omitted from the comprehensive revision of the Copyright Act in 1992. The Federal Council saw no grounds to question the parliament’s decision. Furthermore, it stated that the current legal situation resulted in a commercial advantage vis-à-vis the London art market. The introduction of the ARR would also deteriorate the competitiveness of the Swiss art market, in particular vis-à-vis New York where there is no ARR.
(iv) Motion of Werner Luginbühl
Following the EU-wide implementation of the ARR in 2012, supporters launched yet another attempt to introduce the ARR. On 5 December 2013, the parliamentarian Werner Luginbühl, by way of motion, requested the Federal Council to prepare a report outlining how the ARR is implemented in other countries and under which circumstances it could be introduced in Switzerland. Interestingly, Mr Luginbühl proposed that the ARR is only applicable “if the sale price in question is higher than the last achieved sale price”.
Opponents have criticised that the ARR, as implemented in the EU, is due regardless of whether the artwork has actually achieved a higher resale price. In addition, they have raised the following points:
- The international art market is highly competitive and transactions might be increasingly shifted to countries without an ARR regime in place, such as the US and Hong Kong;
- The implementation of the ARR would increase the financial and administrative burden for auction houses, galleries, and dealers;
- The ARR benefits mainly a small number of already established artist and, to an even larger extent, their heirs;
- Introducing an ARR might have a negative implementation on the primary art market as potential buyers will price in the cost of future royalties.
The Swiss Federal Institute of Intellectual Property is currently working on the report, which it expects to publish in spring 2017.
It remains to be seen whether supporters, in this fourth attempt, will succeed in putting forward new and convincing arguments for the ARR in Switzerland.
(Please refer to the following link for an overview of the different forms of parliamentary intervention in Switzerland.)