INDIA Law and Practice Contributed by: Roshnek Dhalla, Bijal Ajinkya, Moin Ladha and Shailendra Bhandare, Khaitan & Co
6. Sale of Art Objects Domestically and Abroad 6.1 Key Clauses in Art Sale Contracts An art sale contract should include: • the description of the work; • a photograph of the artwork; • details of payment; • representations and warranties; and • details of storage, insurance, title, inspection and governing law. A key clause that one should not miss (especially if representing the buyer) is the rescission clause, which, once triggered, requires the sale to be undone, the artwork returned to the seller and the purchase price refunded. On the other hand, if representing the seller, to avoid this problem the seller should attempt to negotiate their art sale contract to require the dealer, gallery or auction house to obtain an independent analysis that justifies the buyer’s rescission request before execut - ing the rescission, or at least articulate a reasonable determination of liability and provide such determina - tion to the seller. When the authenticity of the artwork is in question, the rescission clause can be a valuable inclusion in the art sale contract. 6.2 Issues in Cross-Border Art Sales Section 7 of the (Indian) Foreign Exchange Man - agement Act 1999, as amended from time to time (FEMA), allows an exporter to export goods subject to the requirements set forth by the Reserve Bank of India (RBI). In terms of Section 7 of FEMA read with the Foreign Exchange Management (Current Account Transactions) Rules 2000, the RBI has formulated the Master Direction on “Export of Goods and Services” dated 1 January 2016 (the “Export Direction”). Any exportation of goods (which in the authors’ view includes objects of arts, sculptures, etc) are covered under the requirements of the Export Direction. While any exportation will have to comply with all applicable requirements under the Export Direction, a significant requirement to note here is that the full value of the goods exported from India is required to
sites and remains, and treasure troves. For instance, the government has separately reserved its right under Section 20E of the Ancient Monuments and Archaeo - logical Sites and Remains Act, 1958 to prepare “herit - age by-laws” for each protected monument declared to be of national importance under said Act. 5.2 Cultural Heritage and Adverse Possession It is unusual for a cultural heritage item to be subject solely to adverse possession; rather, it is more often claimed to have been devolved as part of inheritance and ancestral ownership. To address any apparently legitimate claim, Indian law broadly provides for an agreement between the private entity and the govern - ment to capture the restrictions on use, maintenance and disposal of the cultural heritage item by the pos - sessor. In cases where individuals have claimed and litigated ownership and managerial rights on heritage proper - ties (for instance, temples), the Indian Supreme Court has conducted judicial diligence rejecting individuals’ unverified claims of continuous and uninterrupted possession. Thus, Indian courts have, time and again, rigorously scrutinised claims of adverse possession when made against heritage property of public inter - est. 5.3 State Rights to Cultural Heritage While most cultural heritage items are immovable, art treasures and antiquities are movable items that may be discovered by an individual. Indian law accordingly provides for such items to be returned to the gov - ernment treasury, and reserves the right of the gov - ernment to compulsorily acquire antiquities and art treasures under the Antiquities and Art Treasures Act. Under Section 14 of the Antiquities and Art Treasures Act, antiquities held by private entities have to be spe - cifically registered with a government-appointed reg - istering officer for “better appreciation of cultural herit - age”. Further, the Indian government also exercises its right to designate archaeological sites for excavation of antiquities – for instance, Sinauli in northern India, whereby remains of war chariots and copper artefacts (to name a few) have been unearthed by the State in the past two decades.
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