Reform of the resale right of authors of original handwritten, graphic and plastic works (Law 1.526 of 1st July 2022)

Law No. 1.526 of 1st July 2022 on the Resale Right (“droit de suite”) (published in JDM No. 9599 of 15 July 2022), is the result of Bill No. 1044 submitted on 14 September 2021 and passed on 15 June 2022. It amends Law No. 491 of 24 November 1948 on the protection of literary and artistic works.

Purpose of the reform:

The resale right (born in France on the initiative of the deputy André Hesse with the Law of 20 May 1920 imposing a right, for the benefit of artists, on public sales of art objects) is a specificity of the manuscript, graphic and plastic arts. Authors of original works in this field (paintings, collages, drawings entirely executed by the artist, engravings, prints, etc.) cannot benefit from the right of reproduction or representation.

Thus, the resale right is the remuneration they receive when their works are resold by an art market professional. This right allows them to benefit from the value of their works, whose price generally increases over time, according to successive resales and the author’s increased reputation.

The Berne Convention for the Protection of Literary and Artistic Works of 9 September 1886 as revised in Paris on 24 July 1971 was made enforceable in Monaco by Sovereign Order No. 5.501 of 9 January 1975. Its Article 14ter relating to the resale right on works of art and manuscripts provides that this protection is optional, subject to reciprocity, and that the modalities and rates of collection are determined by each national legislation.

Prior to this reform, Article 11-1 of Law No. 491 of 24 November 1948 on the protection of literary and artistic works (resulting from Law No. 1.035 of 26 June 1981) provided that “authors of graphic and plastic works shall have, notwithstanding any transfer of the original work, an inalienable right to share in the proceeds of any subsequent sale of that work made at public auction”, set at 3% of the sale price.

Reasons of attractiveness compared to neighbouring countries underlie the reform of the resale right, which corresponds to the artist’s right to be remunerated when an art market professional resells his work.

Law n° 1.526 establishes conditions in Monaco equivalent to those governing other European art markets. The regime and the amount of the resale right have therefore been recast in the light of Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benefit of the author of an original work of art, with adaptations in favour of the art market in Monaco.

It should be noted that at the same time, Bill No. 1045 on the Recognition and Regime of the Ownership of Intellectual Works was tabled, which envisages replacing Law No. 491. The proposed provisions are also inspired by European Union legislation. They would specify the definition of copyright as well as the prerogatives conferred on the author, with the objective of supporting cultural and artistic activity in Monaco and its international influence. In addition to the legal creation of related rights, the activity of foreign authors' societies on Monegasque territory would be regulated.

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IN DETAIL

Law No. 1.526 amends Law No. 491 on the Protection of Literary and Artistic Works and the Civil Code:

— Definition. Operations subject to resale right (art. 11-1 para. 1 Law No. 491):

The resale right, which benefits the author or his successors in title notwithstanding the transfer of the original work, is defined as “an inalienable right to share in the proceeds of any sale of a work after the first transfer of the work by the author or his successors in title, where a professional of the art market acts as seller, buyer or intermediary.”

Thus, not only auctions (as before the reform), but also sales by art galleries or antique dealers fall within the scope of resale right. The resale right is not applicable to sales made by persons acting in a private capacity.

— Works of art concerned (Art. 11-1 para. 2 and 3 Law No. 491):

The resale right is extended to original handwritten works (taking into account the fact that original manuscripts can also be traded at substantial prices on the art market), in addition to graphic or plastic works, which include works created and produced by the artist himself or herself, but also copies which he or she has executed in limited quantities or which have been executed under his or her responsibility (often the case of bronzes or signed photographs).

A non-exhaustive list of the works concerned has been introduced: original texts of literary or musical works, paintings, collages, drawings, engravings, prints, lithographs, sculptures, tapestries, ceramics, glassware, photographs, plastic creations on audiovisual or digital media, etc.

By providing that the graphic or plastic work, subject to the payment of a resale right, may have a digital medium, the law opens the door to the development of NFTs, which have a growing share in the art world (non-fungible tokens, a tool for authentication and traceability of works: the buyer receives a verified digital token proving that the work is an original). The resale of an NFT associated with a work of art may result in the payment of a resale right.

By way of derogation, the resale right does not apply when the seller has acquired the work directly from the author less than three years before this sale and the sale price does not exceed a threshold value, the amount of which is fixed by Sovereign Order (art. 1, figure 3 of Directive 2001/84/EC sets this amount at €10,000).

— Resale right rates (Art. 11-1 para. 4 and 5 Law No. 491):

Law No. 491 now provides for a system of degressive rates by price bands. The objective is to reconcile the various interests at stake in the market of original works of art and to reduce the risk of relocation of sales.

In order to increase the attractiveness of the market, the rates and the ceiling are slightly lower than those provided for in Article 4 of Directive 2011/84/EC (which refers to sales prices excluding taxes).

Without being able to exceed an amount of €12,000 (€12,300 Directive 2001/84/EC), the amount of the resale right is fixed as follows in Monaco:

• 3% for the first €50,000 of the sale price (4% Directive 2001/84/EC – by way of derogation, Member States may apply a rate of 5%);
• 2% for the portion of the sale price between 50,000.1 and 200,000 € (3% Directive 2001/84/EC);
• 0.5% for the portion of the sale price between €200,000.1 and €350,000 (1% Directive 2001/84/EC);
• 0.25% for the sales price bracket between € 350,000.1 and € 500,000 (0.5% Directive 2001/84/EC);
• 0.15% for the sales price bracket above €500,000 (0.25% Directive 2001/84/EC).

The sale price above which sales are subject to resale right is specified by Sovereign Order (Directive 2001/84/EC provides that the minimum sale price above which sales are subject to resale right may not exceed €3,000).

— Payment of the resale right. Prior administrative authorisation for collective rights management organisations (Art. 11-1 para. 6 et seq. Law no. 491):

The resale right deducted from the sale price is payable by the seller (who realizes the capital gain).

The professional responsible for the payment of the resale right is:

• either the professional involved in the sale,
• or the seller if the sale is made between two professionals.

The professional responsible for the payment of the resale right is obliged to inform the persons likely to benefit from it of the sale of the original work when he knows their identity. Failing this, he must take the appropriate publicity measures by any means so that these persons can come forward.

Art market professionals (acting as seller, buyer or intermediary) are obliged to provide the author (or the organisation for the collective management of droit de suite) with all information for the settlement of sums due under the resale right for a period of three years from the sale.

The collection of the resale right by a collective rights management organization is subject to the latter obtaining prior authorization from the Minister of State. If the organisation has its registered office abroad, this authorisation may only be issued if it is represented in Monaco:

• either by a natural person of Monegasque nationality with domicile in Monaco,
• or by a legal entity having its registered office in Monaco and managed by a person of Monegasque nationality.

The conditions applicable to collective rights management organisations aim to provide better protection for the art market and to anchor the activity in the Principality.

In case of failure to comply with their obligations, the professional buyer and seller may be ordered jointly and severally to pay damages to the beneficiaries of the resale right (Art. 33-1 Law No. 491).

The publicity measures and the methods of calculating the right to be collected are specified by Sovereign Order.

— Duration of protection of the resale right vested in the heirs, legatees or successors in title (Art. 12-1 law n° 491):

The term of protection of the resale right is aligned with that of Directive 2001/84/EC, and thus extended to 70 years after the death of the author (previously 50 years).

— Transfer of the resale right upon death (Art. 14, para. 2 and 3 Law No. 491; Art. 791, para. 3 Civil Code):

The author can now dispose of her or his resale right by will, to the benefit of a foundation for example, but subject to the rights of the rightful heirs. It should be noted that Monegasque law does not confer the status of rightful heir to the surviving spouse. The resale right can be granted to the surviving spouse either by the effect of the rules of devolution provided for by the Civil Code in the absence of a will, or by the effect of a legacy in his or her favour.

If there is no heir and no legacy of the resale right, it would go to the universal legatee (a person unrelated to the deceased to whom the ownership of all her or his property is given by will) or, failing that, to the holder of the moral right.

The rules for assessing the amount of the resale right are specified (in order to avoid the difficulties observed in French law on this point): the value of the resale right is determined in relation to the value of the work on the date on which the succession is opened.

These provisions are applicable to successions opened:

• from the entry into force of the law,
• or before the entry into force of the law, when at the close of the liquidation of the estate there is no heir who has been duly vested with the resale right in application of the rules of transmission on the day of death, and only for sales made after the date of entry into force of the law.

— Conditions applicable to foreign authors and co-authors to benefit from resale right (art. 34-1 Law n° 491) :

The benefit of the resale right is open in Monaco to foreign authors and co-authors, and their successor in title, under the condition of reciprocity, i.e. if the legislation of their country of nationality protects the resale right of Monegasque authors and co-authors (and their heirs).

Foreign authors and co-authors who have been domiciled in Monaco for at least 5 years may apply for the resale right protection under Law No. 491 under the conditions defined by Sovereign Order. The condition of participation in the life of the art in Monaco for at least 5 years, originally provided for, has been removed as it was of a subjective nature and could be a source of legal insecurity, and has been replaced by this condition of residence in the Principality.