This piece has been authored by Shivalika Singh, Third year law student at Jindal Global Law School
The Indian Art market is currently valued at a turnover of over 144 million dollars, with recent trends anticipating further growth in the future. However, with such a rise, the industry is also witnessing a surge in legal disputes involving diverse stakeholders and complex transactions, underscoring the need for effective dispute-resolution mechanisms. Since most of these disputes prioritize confidentiality, Arbitration is gaining gradual traction in the country. For instance, the Delhi High Court in a recent case upheld an arbitral award pertaining to a sale agreement for a five-piece artwork, rejecting any supersession of arbitration proceedings by subsequent agreements. While international forums such as CAfA (Court of Arbitration for Art) have emerged, this article contends that effective mechanisms tailored to the unique needs of the Indian art industry are essential. Further, this exploration aims to assess the viability of Indian Arbitral Jurisprudence in navigating these disputes and the need for reforms to enhance the efficacy of this evolving industry.
Tracing the problem in the Legislations-
The Antiquities and Art Treasures Act, 1972 was enacted by the Indian government to operate in conjunction with the Arbitration and Conciliation Act, 1996 and serve as a regulatory framework for the trade of antiquities and artwork in the country. Firstly, Section 26 of the Arbitration Act traditionally allows parties to appoint experts during proceedings. However, as per Section 24 of the Antiquities Act, the power to determine whether an article is an antiquity[ss1] or not has to be referred to the Archaeological Survey of India (ASI), impacting the autonomy conferred by Section 26 of the Arbitration Act. Moreover, the Supreme Court in the case of Department Of Customes vs Sharad Gandhi Proprietor ruled that the provisions of the Antiquities Act possess an overriding effect over any conflicting statutory measures. Such a decision in effect makes the appointment of experts less influential when compared to the authoritative stance of ASI on the antiquity status of the article and ultimately, relegates the arbitration provision to a secondary role.
Secondly, in the Booz-Allen & Hamilton Inc vs Sbi Home Finance Ltd. & Ors case, the court drew a distinction stating that disputes which arise from “right in personam” are arbitrable whereas, those originating from “right in rem” are not since they are reserved for resolution in public forums owing to public policy considerations. This distinction presents a significant issue, particularly in cases where an arbitral decision may be invalidated due to the sole authority of a specific legal jurisdiction, particularly if the issue falls exclusively under that jurisdiction’s control. Further, the Arbitration Act does not provide a precise definition of “public policy“, resulting in substantial judicial intervention and conflicting judgments. For instance, the Bombay High Court, in Eros International Media Ltd. v. Telemax Links India Pvt. Ltd., opined that copyright and trademark disputes can be arbitrated, contrary to the decision in Indian Performers Right Society Limited v. Entertainment Network Ltd., where the court mandated such suits to be brought before the District Court and prohibited arbitration as per Section 62 of the Copyright Act 1957. This ambiguity surrounding exclusive jurisdiction creates challenges for the maintenance and enforcement of arbitral awards. Section 34 and Section 48 of the Arbitration Act are frequently used by parties to invalidate awards, which further complicates the arbitration procedure. This dilemma becomes further difficult due to the varying opinions of judges about jurisdiction and emphasizes the need for more precise rules to improve arbitration’s efficiency in settling conflicts.
The conundrum of Resale Royalties-
India complies with the principle of resale royalty as stipulated in Section 53A of the Copyright Act, having ratified the Berne Convention. This clause states that artworks valued more than Rs. 10,000 must include a resale royalty. Notably, the word “may” in the section gives the Commercial Court the power to determine the royalty percentage, raising an important interpretive dispute on whether the clause becomes mandatory or discretionary once the threshold is exceeded.
A jurisdictional challenge is introduced by the transfer of authority from the now-dissolved Intellectual Property Appellate Board (IPAB) to commercial courts. Operational inefficiencies ranging from lack of resources to postponement of essential judicial appointments led to IPAB’s collapse. Even yet, there may be a delay in the procedures due to the transfer to commercial courts, which are already overburdened. Arbitration might have been an option but in cases such as Data Infosys Ltd. and Ors. v. Infosys Technologies Ltd., shows, that arbitration may be precluded by the exclusive jurisdiction of commercial courts, similar to the former IPAB. This underscores the need to introduce arbitration as a viable alternative for settling royalty disputes and expediate the resolution process.
Future trends and the way forward-
To enhance efficiency, a transition from conventional arbitration clauses to advanced smart arbitration clauses can be performed with the help of blockchain technology. Because smart contracts streamline and automate many aspects of intellectual property contracts, especially those that deal with licensing and other art-related issues, they present a way to improve the efficiency and transparency of dispute resolution. While the practical implication of this new development is yet to be explored, it promises to bring about a new shift in the realm of art law arbitration.
Finally, it can be concluded that the existing landscape of arbitral jurisprudence for art disputes in India is still surrounded by ambiguity. Hence, the establishment of additional legal precedents could help in establishing definitive guidelines within this domain. Furthermore, there is a clear need for development of a robust legal framework to foster sustainable growth of the art market and ensure that arbitration awards not only align with the industry needs but also contribute to the growth of the art sector.
[ss1]https://www.indiaculture.gov.in/sites/default/files/acts_rules/TheAntiquitiesandArtTreasuresAct1972_12.03.2018.pdf