Cultural Property (Armed Conflicts) Act 2017: what do collectors and dealers need to know?

The UK Parliament has recently passed the Cultural Property (Armed Conflicts) Act 2017. Although the provisions of the Act have not yet come into force, how will this impact collectors and dealers?

On 23 February 2017, the UK Parliament passed the Cultural Property (Armed Conflicts) Act 2017, to implement the 1954 Hague Convention for the Protection of Cultural Property in the Event of Armed Conflict.  Curiously, the Act is both wider and narrower than you might expect.

For the art market, the key provisions are:

• A criminal offence to deal in "unlawfully exported cultural property" (section 17); and
• A power for the court to order forfeiture of "unlawfully exported cultural property" from anyone in possession of it (sections 18 and 20).

What is "unlawfully exported cultural property"?

"Unlawfully exported cultural property" is property that has been:

• exported:

• in breach of the laws of the territory of export or of international law (note that this may not simply mean 'without an export licence') (section 16(1) and 16(3));
• from a territory which was at the time occupied by a state party to the Protocols of the Hague Convention or which was a territory of such a state but then occupied by another state (section 16(1)); and

• imported into the UK after relevant sections come into force (section 17(2) and section 19).

Does it need to be 'cultural property'? 

In Parliament, the Government said that the property in question was meant to be "a small but very special category of cultural property", ie "property of great importance to the cultural heritage of every people" within Article 1(a) of the Hague Convention.  This has been reiterated in documents accompanying the Act as it went through Parliament.  However, even if we could be sure what that means, that is not what the Act says.  Under the Act, anything illegally exported from a relevant territory at the relevant time is caught.  So until these provisions are clarified by legislation or by the courts, collectors and dealers should assume that there are no limits on the type of object involved.  That makes it very broad indeed.

What are the occupied territories?

There is no definitive list of occupied territories and when they were occupied, although the Government can, once proceedings are started, certify whether a territory was occupied at the relevant time (section 16(6)).  That will obviously be too late to avoid committing the offence or to avoid forfeiture.  The Government was pressed in Parliament to issue a definitive list to help the art market, but refused to so do – no doubt because there might be difficult foreign policy issues involved. 

However, the requirement that the occupied or occupying state involved be party to the Protocols of the Hague Convention sets a starting date of 1956, when the First Protocol of the Hague Convention came into force.  You can find a list of the state parties to the First Protocol here and to the Second Protocol here, which also sets out when they joined.  But the requirement that any occupation be by a state also means that the number of potential candidates is limited.  Daesh / ISIS in Syria and Iraq and Islamic groups in Nigeria and Mali are not (generally considered) states – although dealing in objects illegally excavated or exported from such places might fall foul of the Dealing in Cultural Objects (Offences) Act 2003, the Export Control (Syria Sanctions) Order 2013 (as amended) or The Iraq (United Nations Sanctions) Order 2003.  So in this respect, the Act is much narrower than might at first appear.   

How can you protect yourself?

Due diligence / provenance research

The Government was clear that it did not expect reputable dealers and collectors to be doing anything fundamentally different from what they already do in terms of due diligence.  Most will follow, or expect compliance with, one or more of the industry codes of practices.  Aids might include the Collections Trust checklists and the Code of Practice for the Control of International Trading in Works of Art.

However, an offence may be committed if you only have "reason to suspect" that the object had been unlawfully exported.  This is an objective standard and does not require you actually to suspect.  "Suspect" in other contexts has also been interpreted as a very low bar by the court ("a possibility that is more than fanciful").  So it could be enough just to have sufficient information to think that there was a more than fanciful possibility that an object had been unlawfully exported.  Together with the penalty of up to seven years in prison and/or an unlimited fine, that is sufficient reason to review your acquisition and sale procedures and make sure that they are as tight as possible.

What to do if you find yourself in possession of a suspect object

The Government was keen to emphasise that a dealer or collector who took possession of an object in good faith and only later discovered that it was unlawfully exported cultural property would not commit an offence.  The Government gave no guidance as to what the dealer or collector was supposed to do with it after that, when giving it back would be an offence. 

If this happens, you should consider whether you are obliged to report it to the National Crime Agency under the Proceeds of Crime Act 2002, as the object may qualify as the proceeds of crime under the very wide definition in that Act.  You may also need to liaise with the police and, in some circumstances, apply to the court, in order to ensure that you don't commit an offence.    

Will I be compensated if anything is forfeited?

The Act allows the court to make a forfeiture order conditional on payment of compensation to the person who acquired the unlawfully exported cultural property in good faith and without knowledge of the unlawful export.  There is no guarantee that a court will order this, and no guarantee at what level the compensation will be set.  However, Article 4 of the First Protocol of the Hague Convention refers to the payment of an "indemnity".  So the usual business records of the price paid for an object and its current valuation will be useful evidence to put before the court if this should happen.  You may also wish to check your insurance arrangements to see whether they extend to this type of loss.

Is this really a storm in a teacup?