Due diligence / Good faith

It is important that museums, libraries, archives and art dealers continue to be able to develop their collections. Nevertheless, they should ensure that their collections are built up in accordance with universally recognised moral principles. They must take precautions to ensure that they acquire or borrow only ethically acceptable items and reject items that might have been looted or illegally exported. 

 

Definition

According to ICOM Code of Ethics for Museums, due diligence means all the required endeavours to establish the facts of a case before deciding a course of action, particularly in identifying the source and history of an item offered for acquisition or use before acquiring it. In other words, the due diligence implies all the necessary verifications regarding the legal provenance of a cultural object, i.e. its full history and ownership from the time of its discovery or creation to the present day, through which authenticity and ownership are determined.

The issue of provenance being one of the most important concepts when addressing the mobility of collections and the transfer of ownership of cultural property, due diligence is therefore one of the best practices for preventing the illicit trade of cultural objects.

In this regard, people and organisations involved in transactions concerning cultural objects should apply high ethical standards of due diligence, but many heritage professionals and art dealers are not made aware on due diligence concept and requirements, and its ethical framework.

 

Legal and ethical framework

Due diligence is one of the core concepts of the 1995 UNIDROIT Convention. It is clearly mentioned in article 4.1 as a prerequisite for the payment of reasonable and fair compensation in the case of the return of a stolen cultural object. The text further details the elements subjected to due diligence in its article 4.4: the circumstances of the acquisition, the character of the parties, the price paid, the consultation of a register of stolen cultural objects and any other relevant and accessible information, and the consultation of an expert’s advice.

Due diligence is also clearly mentioned in the article 10 of the EU Directive 2014/60/UE, with provisions similar to the UNIDROIT Convention.

These two instruments introduce the legal importance of the proven practice of due diligence in determining the good faith and the potential innocence of the purchaser of a tainted object.

It is also indirectly mentioned in the UNESCO 1970 Convention, where we can find requirement for State Parties to introduce export certificates and to prohibit the exportation of cultural property unless accompanied by the above-mentioned certificate (article 6). The text also calls the States Parties to take necessary measures to prevent museums and similar institutions from acquiring cultural property that has been illegally exported (article 7), and to oblige antique dealers top maintain registers (article 10).

A number of international codes of ethics or conducts provide provisions on due diligence, with a variable level of details: the ICOM Code of Ethics for Museums, the UNESCO International Code of Ethics for Dealers in Cultural Property, the AIAD Code of Conduct, the Rules of the IADAA, the CINOA Code of Ethics or the ILAB Code of Ethics.

Furthermore, international guidelines on due diligence have been developed by organisations such as the International Association of Dealers in Ancient Art (IADAA), the International Foundation for Art Research (IFAR) or the Basel Institute on Governance.

 

Due diligence as a good practice

Nevertheless, due to the lack of control and overview of objects acquisition and lending procedure by competent State authorities, the variety of documentation required from each state for object acquisition and lending, and the unequal transposition of Code of Ethics and international conventions into national laws, due diligence still remains a practice based on the good will, despite the existing legal and ethical framework.

States are encouraged to adopt the ethical framework of the UNIDROIT Convention as a guiding principle for the matter of acquisitions of cultural goods and the practice of due diligence, as well as the 1970 Convention’s provisions on acquisitions, export authorisation and obligations for dealers. They are also invited to incorporate or adopt provisions from the ICOM Code of Ethics for Museums  and other codes of ethics or conduct that are relevant to due diligence.

In accordance with these principles and provisions, countries and institutions are encouraged to promote transparency in the acquisition procedures and the lending process, introduce a scheme for overviewing the acquisition procedure, an import policy (along with an import certificate) and the use of registers by institutions and individuals.

With regards to the identification of potentially stolen objects, concerned authorities are expected to use more than one database for stolen objects before proceeding with the acquisition of an object, and to make sure that their own data of stolen objects are incorporated into the Interpol’s database.

 

The due diligence process

Despite the unequal level of details provided in the different normative instruments, the study of the existing tools proves the prevalence of a consensus on common standards and procedure to be followed concerning the required documentation and verifications before the acquisition of a cultural good. 

The following guidelines should help buyers be ensured that they acquire and borrow items only if they are legally and ethically sound, and reject illicit material. They should be used in conjunction with other national and international standards and rules. In accordance with these guidelines, the purchaser of a cultural object should reject an item if there is any suspicion about it, or about the circumstances surrounding it, after undertaking due diligence. These guidelines apply for both acquisitions and loans, as well as to contemporary material from countries that restrict its trade or export.

Before processing to due diligence verifications, it is necessary to inform the vendor, donor, or lender that the purchaser is unable to acquire or borrow items unless due diligence has been satisfactorily undertaken.

First evaluation and documentation to be requested

The person should first verify the market price, the identity of the vendor/donor, its qualification, the reliability of his organisation, in order to ascertain if his account can be accepted. This information will help the purchaser decide whether the vendor/donor’s story is convincing.

After first verifications concerning the price of the object and the identity of the seller, the next step is to check the provenance of the item. Purchasers must be able to establish where it came from, and when and how it left its country of origin and any intermediate country. It is of primary importance that the account of the provenance of the object should be supported by documentary evidence.

The different types of documents that can be requested are listed as follows:

  • Export licence from country of origin
  • Publication in a reputable source (annotated catalogue, exhibit or auction catalogues, etc.)
  • Will / inventory
  • Certificate of authenticity
  • Export documents
  • Photographic evidence
  • Family correspondence
  • Excavation field notes
  • Etc.

The greatest precaution is recommended against fake documents, as well as the consultation of relevant authorities in the country of transaction and/or the country of origin in case of doubts, and the refusal of any suspicious document.

Nevertheless, documentation is not sufficient. A proper due diligence process should include further verifications and considerations.

Further examination

Although it is not always possible, it is best practice to examine the item at first hand to determine several things. A thorough examination of the object (aspect, marks, etc.) should first help determine if the object has been illegally excavated, restored, taken from a larger item, from another collection or a storage room.

If there is nothing obviously suspicious about the physical appearance of the item, there are further considerations concerning the origin of the object. It is therefore important to determine if the object comes from an area subjected to illicit traffic. The use of documentation such as the ICOM Red Lists and further research are recommended in this regard. Should the object comes from an area “at risk”, extreme diligence should be made, since certain categories of items have almost certainly been illicitly traded.

It is also necessary to check the situation of the object regarding the legal framework of the country of origin (ratification of international conventions, bilateral agreements and national legislation), and any other legislation applicable at the time the item was exported.

It is considered mandatory to thoroughly check on INTERPOL and other databases of stolen cultural objects.

It can be also useful to seek for the assistance of specialists from several individuals, institutions or organisations, depending on their field of expertise about the object’s category: experts, museums, universities, embassies, ICOM, UNESCO, national authorities, legal advisers, etc. Experts can advise about the area and the object, as well as possible evidences of provenance. Some museum and art professionals can also provide information about the reliability of the vendor/donor. However, advisers cannot be held responsible for the purchase of the object and its consequences.

Enhanced due diligence

Enhanced due diligence can be initiated if the provenance or the authenticity of the art object itself raises serious doubts. Enhanced due diligence involves, at least, the following efforts:

  • Obtaining additional independent expertise
  • Consulting expert committees and gathering second/further opinions
  • Checking of additional databases, registers and listings
  • Professional background check on the seller (previous art trade activities, information requests to law enforcement authorities, etc.)

Conflict of interest

It has to be reminded that an expert’s opinion is invalid if there are any doubt regarding his/her professional independence. The terms of his financial remuneration should not prevent the full disclosure of information (example of the success fees). The mandated expert should also agree to disclose his commercial or financial relationship with all the parties involved in the transaction.

 

Taking the right decision

Should the due diligence process result with any doubt, it is strongly recommended not to proceed with the acquisition.

The ethical status might be acceptable in two cases:

  • There is a plausible account of the item’s history by the vendor and other evidence that the object has been legally exported, and an accurate examination of the object has been done.
  • The ethical status is clear, but without any documentation. Should the national legislation allows so, the purchaser should ask for a sworn statement (affidavit) prepared by a lawyer.

Having thoroughly evaluated the situation, the decision to acquire the item is the full responsibility of the purchaser. Should there be reasonable causes to believe that a criminal offence has been committed, it is also his responsibility to report it to the police.

In case of acquisition, and if the verification of provenance proves satisfactory, it is recommended that a file on the object be created and conserved in a safe place, including the precise details on the means by which due diligence has been exercised, and all the related documents. In the absence of documentation or affidavit, the reasons why the object has been purchased should be clearly explained.

 

Checklist for due diligence

This checklist is not an official document. It can help examine an object carefully and ask the right questions about its origin. Potential purchasers are not expected to be able to cover everything, particularly for smaller items; it is simply an indication of the types of questions that could reasonably be asked. Heritage professionals should also be aware that record keeping in the field is constantly improving, but that it simply may not be possible to see all historical records related to an object.

First verifications

Do you feel that you are acquiring with confidence from a reputable source? Have you evaluated the account given by the vendor?

Verify the identity of the seller, its qualifications, its specialty and whether or not he or she belongs to a merchant’s association

Make sure the price given corresponds to the current market price

Initial examination of the object

Ask what was the last location of the object was and its country of origin

Does it show signs of certain types of ingrained dust or dirt or has annotations (old labels, inscriptions or other marks) which may demonstrate it has been on display, used or stored as part of an older collection?

If it does carry such marks and labels, have you checked that they are not forged or, if genuine, transferred from other items?

Does it have a distinctive type of mount, mounting or binding that is likely to be from a particular period? 

Has it been mended, partially restored or changed from its original condition (restoration work)? Can you tell from the restoration / conservation done on the object the period in which is was treated? 

Check the item in published lost / stolen works of art databases (INTERPOL, Carabinieri…)

Are there any signs that the object has been recently excavated and thus more likely to be illicit? 

Are there any signs that the object has come from a larger object or from a building or monument? 

Check the ICOM Red Lists

Further considerations

Does the item come from an area of the world which has experienced a significant amount of illicit excavation in recent years?

Is the item from a category of objects considered `at risk’ such as certain sorts of African, Latin American and Asian artefacts? 

Have you taken advice from experts in the field either in this country or from the country of origin? 

Documents to be requested

Request proof-of-provenance (annotated catalogues, exhibit or auction catalogues, inventory, and correspondence)

Ask if there is a certificate of authenticity

Request to see the export documents

Precautionary measures to be taken when paying

Ensure that a  correct and fully legal receipt has been provided by the seller

Ensure that the invoices, receipts, sale notes or extracts of public sale minutes mention the specifications that the professional has provided regarding the nature, the composition, the origin or the age of the sold object

Request that a picture be added to the object’s receipt

Pay by cheque or account-to-account transfer (credit card)