CHINA Law and Practice Contributed by: Yingzi Liu, Tsaopei Wei, Han Zhou, Peng Lan and Kexin Yan, Hylands Law Firm
the circulation of the artwork, maintain artist market stability and prevent short-term drastic price fluctua - tions. These clauses collectively ensure the security and legality of art transactions, both reflecting the specificity of art transactions and adhering to the general principles of sales contracts. 6.2 Issues in Cross-Border Art Sales According to the 2026 Law on the Protection of Cul - tural Relics and its accompanying Measures for the Administration of the Examination of Cultural Relics Entry and Exit, any artwork predating 1911 and works by modern masters included in the national restricted exit list are strictly prohibited from permanent export. Temporary export for exhibitions requires a declara - tion to the NCHA and the payment of a deposit, with the requirement of re-entry within the statutory period. In a sales contract, if a relic is privately transported abroad without a Cultural Relics Exit Permit, the con - tract is void for violating mandatory provisions, and the seller and logistics provider may be suspected of the crime of smuggling cultural relics. Addition - ally, artworks involving CITES-listed species (such as antiques containing ivory, tortoiseshell, or rhino horn) face near-absolute embargo risks in interna - tional trade; buyers and sellers must clearly stipulate customs obligations and the risk of illegal seizure in the contract, otherwise they may face severe adverse consequences. 6.3 Gallery and Auction House Liability for Fake Art Galleries, as primary market sellers, are subject to the warranty against defects under the Civil Code. If a forgery is sold, even if the gallery owner claims to have been deceived, they must bear the responsi - bility for returns, refunds and damages to the buyer. While auction houses, as intermediary agents, enjoy the right to issue disclaimers under the Auction Law, recent judicial interpretations have further restricted the abuse of such clauses: if an auction house makes misleading statements in catalogue descriptions or fails to perform “reasonable and prudent” due dili - gence on provenance, it cannot be exempted from liability. Specifically for “plagiarised works”, if a gal - lery or auction house organises a sale while knowing or having reason to know that the work infringes on another’s copyright, it constitutes joint infringement
and bears responsibility for ceasing the infringement and joint and several liability for compensation. 6.4 Pre-Sale Checks for Auction Houses and Galleries Current laws and industry regulations have set a legal bottom line of “provenance legality verification and truthful disclosure of defects”. However, there are still no unified national mandatory detailed regulations on the specific steps and verification standards for provenance chain checks. In practice, industry-stand - ard verification centred on original invoices, exhibi - tion records and authoritative publications has been formed. 6.5 Role and Responsibilities of an Art Adviser An art adviser is generally considered a “commission agent”” or an “intermediary agent”. Their core respon - sibility is to provide clients with acquisition advice, value assessments and provenance verification based on professional knowledge. The core of legal liability lies in the duty of loyalty and the disclosure of conflicts of interest. If an adviser, through gross negligence, causes a client to purchase cultural relics with illegal sources or forgeries with significantly inconsistent val - ues, they must bear liability for damages. 6.6 Anti-Money Laundering Regulations and the Art Market The current Anti-Money Laundering Law only explicitly lists “dealers engaged in spot transactions of precious metals and gemstones above a specified amount”, as specific non-financial institution obligors; it does not yet include regular art auction houses or galler - ies in the statutory list. However, the law includes a catch-all provision granting authorities the power to determine other institutions required to perform AML obligations based on money laundering risk condi - tions. In practice, art business institutions involving large cash transactions or cross-border transactions may be required by regulatory departments to per - form customer due diligence based on risk prevention requirements.
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