HONG KONG SAR, CHINA Law and Practice Contributed by: Angus Forsyth, Angus Forsyth & Co.
6.3 Gallery and Auction House Liability for Fake Art If the purchaser of the artwork is reliably informed that the purchased work is inauthentic or fake, and the artwork does not conform to the description made of it by the seller, then action can be taken for damag - es, often related to the cost paid by the purchaser to the seller but also possibly for aggravated damages, which might include a possible loss of profit for the purchaser on the possible intention of resale. 6.4 Pre-Sale Checks for Auction Houses and Galleries Checks and verification should be made by auc - tion houses and galleries in respect of all aspects of authenticity and ownership to be fully satisfied in any particular case before offering an artistic good for sale. 6.5 Role and Responsibilities of an Art Adviser Art advisers play an intermediary role between the prospective purchaser of an artwork and the prospec - tive seller, being either an auction house or a sale gal - lery. The responsibility of the art adviser depends very much on a specific contract with the proposing pur - chaser, which will be best advised to include at least a shared specific liability for inauthenticity and failure to achieve delivery of the artwork in question at the time of successful purchase by the buyer. 6.6 Anti-Money Laundering Regulations and the Art Market The four ordinances applicable to money laundering in Hong Kong are: • the Organized and Serious Crimes Ordinance; • the Drug Trafficking (Recovery of Proceeds) Ordi - nance; • the United Nations (Anti-Terrorism Measures) Ordi - nance; and • the Anti-Money Laundering and Counter-Terrorist Financing Ordinance. The Organized and Serious Crimes Ordinance defines money laundering as dealing with property that is known or believed to represent the proceeds of an indictable offence. A person doing this commits an offence if they deal with such property while knowing
or having reasonable grounds to believe that the prop - erty in whole or in part, directly or indirectly, represents the proceeds to any person of an indictable offence. There are technical defences to a charge under this section but if the charge is validated then the com - mitting of the offence makes the committor liable on conviction upon indictment to a fine of HKD5 million and imprisonment for 14 years, or on summary con - viction to a fine of HKD500,000 and imprisonment for three years. It is further provided that references to an indictable offence include reference to conduct that would con - stitute an indictable offence if it had occurred in Hong Kong, so any such offence occurring outside Hong Kong is also caught. It is further provided in the Drug Trafficking (Recovery of Proceeds) Ordinance that a person commits an offence if they deal with property that they know or have reasonable grounds to believe represents, in whole or in part, directly or indirectly, any person’s proceeds from drug trafficking. Again, a person committing an offence is liable on conviction upon indictment to a fine of HKD5 million and impris - onment for 14 years, or on summary conviction to a fine of HKD500,000 and imprisonment for three years. In order to avoid any such liability, there are obvious cautionary steps that must be taken in any aspect of the art market and usually by way of full knowledge of the source of any funds or of the proceeds of transact - ing any dealing with an artwork, and it is clearly the responsibility of all parties to any particular transac - tion to be well aware of the wide extent and possible global impact of these money laundering provisions. 7. Collections 7.1 Legal Status of Collections There is no cultural heritage protection for collections. 8. Photography 8.1 When Are Photographs Protected as Art? Under Section 5 of the Copyright Ordinance, “artistic work” means (inter alia) a graphic work, a photograph, a sculpture or a collage, irrespective of artistic qual -
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