The world of art recovery

7 Sep 2018 , 12:54pm

General counsel James Ratcliffe is custodian of the Art Loss Register, the largest of its kind in the world, numbering over half a million items of lost and stolen art, artefacts, watches and luxury items. He talks to Jodi Bartle about the art of the heist whilst managing a slimline legal department.

Dealing with the dealers

In February this year, James Ratcliffe, general counsel and director of recoveries at the Art Loss Register (ALR), a London-based company that holds the world’s largest private database of lost and stolen art, flew to the National Museum in Beirut for a ceremony to celebrate the return of two antiquities looted in the Lebanese civil war in the 1980’s. James, whose background lies in archaeology and commercial litigation, describes the return of the two looted pieces (returned amongst a long-lost and mourned group of five taken at the same time) as the ‘last big restitution’ he has been involved in. “We found one of the pieces through the Art Loss Register and I had to negotiate its release, because legally there wasn't a good claim to get it returned. Rather than piling in and going to the police where you wouldn't get anywhere, I discussed it with the dealer and convinced him to return it.”  

Why would a dealer agree to give something like that up? “It’s a mixture of things,” James says. “A dealer won’t want the negative publicity; it isn't in his or her interest to have a big fight and get a reputation for selling contentious items.” Business case aside, it no doubt helps that James has recently trained as a mediator with CEDR.

Ethical versus legal

In restitution, a central crux are the notions of what is ethical and what is legal. “They are very separate ideas,’ James notes. “They have little to do with each other and rarely align.” He says sometimes returning an item is the right thing to do, but not everyone would see it the same way, and nor is every situation clear cut. “Even if it seems like a simple case of Nazi looted art, it can become complicated very quickly. If, for instance, the Nazis came and took a painting for Goering’s office, then that’s definitely Nazi looted art. What about a scenario whereby a Jewish silver dealer was told to sell all stock and liquidate because he wasn’t allowed to run a business, receiving the proceeds of sale but against his will - is that Nazi looted art?  Or what about a picture you took out of Germany when you were forced to flee and you had to sell it in Switzerland to help pay for your escape to the US; is this a scenario where restitution is appropriate?”. 

Few precedents

There are few precedents that James can rely on, and says he suspects this is true of the luxury goods market as a whole. “Certainly within the art market it is very rare to have legal precedent to reply on because everyone does everything they possibly can to avoid going to court; it damages the brand, regardless if you win or lose. There are very few scenarios where you are better off in the long term, even if you make a short term financial gain, so usually things get settled.”

Exchanging knowledge

The return of the Lebanese looted antiquities was the third time that James has been to Beirut; on previous occasions he has travelled to meet Lebanese, Syrian, and Iraqi archaeologists and lawyers “to share our knowledge of how the trade works and what they need to do to protect and report things, because there can be a lot of misunderstanding. If you are a lawyer or an archaeologist or a museum curator in Iraq, you mightn’t know how the art market works here in London or, indeed, how the law works in London.” These interactions are organised by an NGO in Lebanon, called Biladi, and funded by the Norwegian embassy. This is globalisation on an authentic and necessary scale.

Two levels

The Art Loss Register, headquartered in London but working internationally and fuelled by a diverse team, functions in two parts: initially requiring people to record their interest in an item on its database, and then searching against the database via auction catalogues, art dealers, fairs, private individuals, police and Interpol to identify valuable items as they resurface. “This gives us an opportunity to match items moving through the market with those that might be subject to a claim against them,” explains Ratcliffe. “When we find something, we will notify the person who registered it and offer to represent them in the recovery.” The Art Loss Register is the biggest of its kind in the world, numbering over half a million items of lost and stolen art, artefacts, watches and luxury items. 

Growing content

The content in the Register is growing, particularly on the restitution side and on Nazi looted art because it continues to be a “really big issue and almost impossible to clear up”. But how does an owner know a work in his or her possession was potentially looted or stolen. “Unless you have expert knowledge, then generally the things that seem a red flag to us people wouldn't pick up on. Just like you need a doctor to diagnose illness, you need a researcher to identify which aspects of an item are potentially problematic.” What can owners look out for? James says that he and his team look for any transactions between the years 1933-45, especially in Germany or France, and for any red flag names involved. “But you don't always get the whole history. If you only get as far back as a collector selling in 1955, then we ask where they got it from, and try to work back. A buyer may innocently end up holding it, especially if it was acquired 30 years ago. People weren't asking these questions then.”

Hollywood gets interested

But they are now, James says, in the wake of some “pretty bad” films, and the well publicised Gurlitt collection of stolen art, as well as the fact that “pictures are hitting the market now which might have been in a private collection for the last 30 or 40 years, bought in the ’70’s, disappeared onto the walls of a private house and are now coming back into the market; these were maybe the last artworks that were bought without any questions being asked.”

So far, so The Thomas Crown Affair. Or, for that matter, so Monuments Men, The Goldfinch, the Ocean’s Eleven franchise, the Indiana Jones’s. It turns out we have an appetite for heist, for intrigue, for international locations and shady informants, all centred on expensive and beautiful trophies that are the cornerstone of the luxury sector, whether ancient or something classy to wear on your wrist. A newish trend has been the move to watches, notes James. Increasingly a target for thieves, watches are incredibly portable, easy to steal, they retain their value and are enormously popular: “it’s one obvious place you can spend tens of thousands of pounds and show it off wherever you are.”

Tracing watches

Because they have serial numbers, James says it is very easy for the ALR to trace the rate at which they turn up in the market after they are stolen. He cites the example of a Rolex snatched off the wrist of a Swiss tourist by a thief on a Vespa in Naples, with the watch turning up in New York in a week later. “Handbags are the next thing to look at, not so much snatched from the street but from houses. If you are a smart thief, you’d move to where the money is, and get cash from handbags and watches on the second hand market rather than target art. Brands like Rolex and Hermes have a solid value, effectively becoming their own currency where the value is absolute, wherever you are in the world.” 

ALR's legal team

The ALR’s team numbers about a dozen people and James’ legal team is a slim-lined, international one. He works alongside an assistant who is a dual qualified English/Israeli solicitor, a paralegal and German-qualified lawyer and says it is “brilliant to have that extra knowledge from colleagues who have a different take on things. It is one thing for me to look at the law in another country but I am not a lawyer in that country, and so I need someone to form a view on it with different training. That also helps me determine when need outside counsel.” He asserts he tries not to use them much, because, as he says, when you are arguing about single assets with a finite value, once you get lawyers involved you are chipping away at that value and things can become harder to resolve. 

External law firms

He namechecks Withers, Constantine Cannon and Boodle Hatfield as firms he will go to, specifically for the lawyers there that he knows personally. “I work in such a niche area, and there are only one or two people who know it well and therefore my loyalty is to them. Although the firm is relevant because of its support and structure, for the expertise, it is about the individual.” He tends to be more likely to use outside counsel for issues abroad, for litigation, complicated trusts matters or if they are representing someone who wants their lawyer involved as well. “Sometimes that’s helpful and sometimes, well…now you've got lawyers involved.” 

Risk factors

As to what keeps him up at night? “GDPR, the same as everyone else. I have spent so much of my time on it and so much is uncertain about it; it worries me about what we've missed.” Beyond that, he says Brexit still looms large, particularly in terms of employment issues and VAT. “We have a lot of foreign employees, and anything that makes immigration more difficult or makes the UK a less attractive place to live is going to be bad for us as a business. If you are from Europe, you could live and work here and still be in Europe but you are not anymore; the environment and the atmosphere has changed.” In terms of how Brexit impacts the art market, he points to uncertainty regarding VAT on the import and export of art. “The rules are shifting and no one knows what it will mean after Brexit. At the moment a lot is bought and sold in London and then goes into Europe, but what happens if you create a border there?”.

Emerging markets

While the art market has long been global and he says he see changes in what’s popular, James asserts that doesn't really affect him in terms of what the ALR does. “It will be interesting to see how the art market in India and China develops. China, historically is a very closed market but is opening up rapidly.” The art market, with its Impressionists, Old Masters, Warhols and Lichtensteins is driven by fashion, and there is a finite supply of such pictures. I don't see Chinese artists taking the market share of western artists, so much as each growing their markets side by side, with Chinese artists seeing a growing presence in the west, and a wider range of western art gaining traction in China. The art market is not necessarily about pushing anyone out but growing as a whole, with new buyers coming through, and it will be interesting to see how the trading brands, the auction houses and the dealers will deal with making the jump into China and India.”