To the modern collection, those working in collection management are no more or less important than those who work as curators. Both are essential. For the institution to operate with maximum effectiveness, each must understand and respect the needs of the other, for neither are there to serve their own interests. The responsibility of every staff member is to the public purposes of both the collection and the institution.

This is a book about the legal issues that arise in the daily life of collecting institutions such as archives, galleries, libraries and museums. Although its subject may be expected to be dry, it is written for the professionals working within collecting institutions. If ‘dry’ means that there aren’t many car chases, it is dry. However there are lots of intellectual labyrinths that you will find fascinating. If I am right, there will be many sections that will make you think, ‘Ah, that’s how that works’ or “So that’s how it can be done!’

This book is a personal approach. It is a result of many years working for collecting institutions and seeing the difficulties that arise and noting how those problems can be resolved, or even better, avoided in the first place. Some readers will disagree with some of my comments. That is as it should be. Experiences differ and the evaluation of experiences is a subjective affair. I hope that through the way that the project has been developed, these differences will work to enrich and improve the book.

The project started when, some years ago, I proposed the project to the National Museum of Australia. It was greeted with great enthusiasm and support, but politics and people changed. Then the Collections Council of Australia became the publisher and it was during this period that the project took its current shape. With the closing of the CCA, the National Gallery of Australia has agreed to support, publish and maintain the work. It is about to move to a new home.

It is important to appreciate that Collections Law has placed its roots strongly in the collection community. While I devised the table of contents, those subject areas were debated within and approved by the both the National Museum and later, the Collections Council of Australia. Each area has a number of experts from the profession who have volunteered to read drafts and make comments. These experts have been an extraordinary resource for it is their experience and skill that ensures that the material is professionally accurate and relevant.

The experts give me their comments; I take them in (or not) and then, after copyediting, a discussion draft is put on the website. At this stage the material is available to all – both for use and for comment. The design of the website allows users to either download a PDF file of each chapter or to view the chapter online and make comments. This is not a blog. Those who comment should not expect to be engaging in debate; it is just a further opportunity for readers to ask for clarification, give examples and generally improve the usefulness of the book.

In some chapters, I have invited an expert to be the author or co-author. These are subjects on which I do not have sufficient experience, to thunder and pontificate.

When all of the chapters are complete the book may be published in paper form. It may remain a digital creature. That decision is not wholly mine.

So much for process. Now a last word about purpose. Collecting institutions are unusual in that they own and administer assets worth many millions of dollars. Yet they do so without the support of much legal expertise. Smaller organisations often rely on the generous voluntary support of lawyers from their local community. The large state and federal institutions have access to their government legal services. A few institutions now have in-house lawyers and that is an excellent and recent development. In general, very few collecting organisations have ready access to lawyers who are experienced in collections law or the collections environment. When I was a student, a lawyer told me that the need for specialisation was a deceit: ”Just tell me the facts and I’ll tell you the Law!” Those days, like that lawyer, are gone. The collections world is a very specialised environment in which very sector-specific legal issues arise. Yes, the issues are all tackled by the application of general legal principles but prudent legal problem-solving demands knowledge of the practices, standards, expectations and limitations of the sector. Still, I hope that this book will also be useful to your advisors so that they can work more effectively with you.

Remember, the most lucrative client is the ‘bush-lawyer’. The best client is an informed one who doesn’t pretend that they know it all.

The purpose of this book is to give you information so that you can do what you do, better. Don’t think of the Law as seeking to inhibit, restrict or forbid. Look at it as enabling. It is my hope that this book will provide you with knowledge and understanding as to the legal tools that you can bring to enhance your own performance and, in so doing, promote the public benefits that flow from vibrant and effective collections.

Shane Simpson

April 2010

10.1 Introduction

Digital technology now makes it possible for all types of information (including images and sounds) to be reduced to a complex and easily transmittable pattern of ones and zeros. Application software that achieves this is both available and cheap.

Combined with the right equipment, complete interactivity is possible – that is, one is now able to de-materialise (up-load), access, view or listen to and download that image or information. Once downloaded, this material may be reproduced perfectly in its original form – that is, perfect quality reproductions.

In addition, digital technology provides a simple and seamless method of manipulating those digitised images and materials – by adding material to them, by simply sampling specific parts of them and incorporating those parts into new images or in combination with samples from other original artworks, or by simply re-arranging or cropping the subject matter of the image itself. All things are possible – and with great speed and quality.

In other words this same technology also permits:

1. the extraction or sample of certain parts of the material;

2. the manipulation or adding to the material or parts of it; and

3. the seamless integration of any sampled parts of the original material.

The technology continues to develop quickly. Both the public and most collecting institutions have become active users.. Collecting institutions have become important creators, providers and distributors of digital content and their digitisation programs have become a core tool in the granting of access to their collections. The institutions are able to make a vast range of material accessible for viewing at any one time – unlimited by the amount of physical exhibition space available. Similarly, the digitised collection material can be used to enhance the experience and the value of an individual exhibition for it can be used to present additional educational materials or allow public visitors to ‘browse’ through the other works related to the exhibition not actually exhibited due to lack of exhibition space.

With digitisation, the collection material and its associated educational and merchandising products become dissociated from the physical museum and its geographical location. Digitisation is not just a technological issue. It is that. But it is also a financial, legal, administrative and philosophical issue.

10.2 What are digital rights?

The law does not have a particular category of rights called ‘digital rights’. They are merely an application of the usual rights of copyright, applied in a specific technological medium.[1] In practice, however, digital rights include:

· the right to reproduce material in digital form;

· the right to store and archive in a data base;

· the right to permit the public to access and retrieve on a computer monitor;

· the right to transmit, distribute or otherwise make available (whether via Internet, Intranet or CD-ROM).

Technology permits all of this. Whether one is authorised to do it is another matter. Essentially, there are two core elements to the right to digitise.

1. Do you have the right of access to the item? Without access to the item, the ability to digitise the original is limited. You do not have to own it: mere possession (for example, as a borrower) will do.

2. What is the copyright status of the item? This is no hurdle where the material is not the kind of material in which copyright subsists, or is so old that copyright either never subsisted in it,[2] or has expired. If there is no copyright, the only issue is access. Similarly, if the institution owns the copyright outright, it also has the digital rights. However, where the institution has only been granted limited rights of copyright, it may or may not have the digital rights. This usually depends on the wording of the documentation.

The warning for museums is that they must review all copyright licences obtained in the pre-digital era for they are very likely to be inadequate for use in digital format or environment.

10.3 Digital rights management

Modern collecting organisations are in the business of rights management. The ability to manage this new ‘resource’ or ‘asset’ is of growing importance and requires a sound knowledge and understanding of:

· the technology;

· the material held in the collection;

· the purpose for which digitisation is undertaken;

· the extent of the rights enjoyed by the museum;

· the ability to clearly identify the digital object; and

· the business principles.

Design of the database

This is not just a new distribution system. It is also a new access system. If you are going to give clients access through the Internet to your databases, you will have to review your existing protocols.

In setting up any such database, you should never lose sight of the following fundamental questions.

1. What level of access do you want to provide to third parties?

2. What use do you want them to be able to make of the data obtained from this access?

3. What design factors need to be built into the data base to promote your aims and minimise the attendant dangers?

4. What hardware and software systems can be built in?

Digital Object Identification

It is crucially important that the owner of the digital object that is to be used or licensed is able to precisely identify the digital object. It must also be able to attach digital information to that object so that the digital object carries with it, as part of its very being, information that identifies the owner of the rights in it and the terms upon which it can be used or traded. One example of such systems is called the Digital Object Identifier (DOI). It is like an invisible, digital barcode. It is a hugely important development for it will be part of the mosaic of enablers that will allow digital rights to be identified, described, communicated, traded and audited. Each digital object will have its own DOI Material that is made up of an assemblage of works (such as a page of a text book that contains several licensed paragraphs of text and various charts, illustrations and photographs) will have a DOI for each of its constituent parts and for the page itself. The bonus of DOI is that it allows a great degree of ‘granularity’: you can license the book, the chapter, the page, the paragraph, the sentence – provided each has its own DOI.[3]

It is important to note that DOI is just one if the available systems that provide this functionality. For example the National Library of Australia devised its own scheme of Persistent Identifiers.[4]

Maintenance and training

When you go digital the administration doubles. Now you must also know:

• what material you have in your digital library;
• where to find it;
• which rights you have to that material, and
• how you can exploit the digital material.

The planning of this information architecture so that it is easy to navigate and retrieve is essential to efficient digitisation. It is often forgotten that many of the apparent cost savings in digitising collection material is eaten up with the additional costs of administering the new resource. One of those costs is the on-going training for employees – both those who establish and maintain the digital repository and those who need to use it.

Planning

It is of fundamental importance to plan early and to implement effective and easily maintained rights management systems for material that might be or is to be digitised.

Getting the right information at time of accession

At the very least, accurate cataloguing and records will be crucial. These must include details of:

· creator’s name

· circumstances of creation (commissioned, employee etc)

· copyright status

· whether it has been published (in the copyright sense) and where

· copyright owner

· rights/licences acquired by the museum

· whether there is any licensee or agent from whom copyright permissions have to be obtained[5]

· duration or term of those licences

· any specific restrictions on use or access

· renewal dates or triggers for extending term of licence(s)

· licence fees or royalties (if any) payable

when (eg quarterly/half-yearly)?

to whom?

by whom?

We are used to these requirements in an atom-based environment. Most collections now routinely maintain such records. Those that don’t capture this essential information when accessioning material are falling far short of professional best practice: not only are they exposing their institution to legal liability, they are restricting the use that the collecting institution will forever be able to make of the accessioned item.

10.4 How to acquire digital rights

If it is necessary[6], there are two ways toacquire a licence of digital rights:

· identify the rights owner and obtain a direct licence; or

· get a licence from one of the collecting societies that represent digital rights owners.

For example, if the work is literary, the first stop would be the Copyright Agency Limited (CAL);[7] for fine art, Viscopy;[8] for artistic works such as plans, diagrams and illustrations, CAL; for audio-visual material such as films and television programs, Screenrights;[9] for compositions, APRA/AMCOS;[10] for sound recordings, it will either be PPCA[11] or the individual record company owners.

Where you are seeking to license collective or multi-media works such as a website (which may contain thousands of individual pieces of copyright material in various media) there is no single collecting society or joint venture of collecting societies that can assist. Unless the museum is unable to rely on a ‘fair-dealing’ or ‘library and archive’ provision of the Copyright Act 1968 (Cth), the process is going to be long and painstaking. Each piece of material will need to be broken down into its component parts; each component will need to be described, each owner will need to be identified, the extent of their rights determined, the licence sought, the purpose of the licence explained, and, after all that, the licence granted (or refused). Then the licence and its details must be recorded and administered. This process must be meticulously repeated for each copyright component. And now for the good news.

10.5 Orphan works

Orphan works are works that are still in copyright but the copyright owner cannot be found.[12] This is a particularly difficult problem with some collection material (such as manuscripts) where the copyright period does not start running until the work has been ‘published’. For example, say you have in the collection, a diary written in 1910 in The Kimberley. You know the name of the author but can find no other information on her. You have no idea as to who her heirs were. In some cases, the information could possibly be uncovered – but only at the cost of an amount of time and resources that would make seeking a licence completely impractical. In others, no matter how much you expended, you couldn’t unearth the identity of the current owner of the rights.

Many collections have large holdings of orphan works and all want to be able to digitise and reproduce this material. After all, not knowing the identity of the rights owner does not affect the importance of the material.

Management has three choices:

1. do nothing with it;

2. use the material in accordance with a risk management strategy;

3. use the material relying on s 200AD of the Copyright Act 1968 (Cth).

The first option is undoubtedly the safest – but at what cost? You have saved the organisation any danger of having to pay legal costs and damages but in doing so have lost the opportunity to further the public interest aims of the collection.

The second option is commonly (and sensibly) used in Australian collecting organisations. For example, the National Library digitised all sheet music published prior to 1940, except where there was known to be an active musical estate.[13] This approach enabled the digitisation of some 40 000 items for the National Library’s well-known and highly used Music Australia service. Despite getting something like two million page views per annum, no copyright owner has emerged with a complaint of unauthorised breach of copyright through the Library having digitised its sheet music collections. (If they did, the Library would immediately take down the material in question, while it negotiated an agreement with the claimant.) Had the Library not taken this approach, it would have digitised very little of this material, and expended a huge amount of staff resource in the probably fruitless search for copyright owners who might be approached for permission for digitisation. The risks with this material were low: The works were old catalogue; they did not involve active estates; if there is a claim the material will be readily removed until the claim is sorted; and the potential financial liability for breach of copyright is minuscule.

The third option is to rely on s 200 AB of the Copyright Act 1968 (Cth).

10.6 Section 200AB

Because of the particular difficulties faced by collecting organisations in clearing rights, an important amendment has been made to the Copyright Act 1968 (Cth). Section 200AB is extremely useful and much under-utilised. While it is dealt with in detail in the copyright chapter of this book, it is worth noting that the library, museum, public gallery or archive is able to digitise its collection material if it can show that the use:

· does not conflict with a normal exploitation of the material by its owner; and

· does not unreasonably prejudice the legitimate interests of the owner of the copyright; and

· is made by or on behalf of the body administering a library or archive; and

· is made for the purpose of maintaining or operating the library or archives (including operating the library or archives to provide services of a kind usually provided by a library or archives); and

· is not made partly for the purpose of the body obtaining a commercial advantage or profit.

This is the provision that allows collecting organisations to digitise their collections for the purposes of conservation, storage and archive, ease of access and retrieval, and even education programs – both internal and external. It is the provision that permits the collection to display digital copies of its holdings on its website.

Each of the conditions must be fulfilled. Consequently, it is important to consider the desired use against each of the requirements. For example, because of the requirement that the reproduction does not conflict with the normal exploitation of the rights by the owner, it is important the that reproduction put on the website is of low resolution; people wanting to use the image commercially will need a high resolution image and will not be able to use the web version for their commercial purpose. They will need to go back to the rights owner and obtain a licence in the normal way.

10.7 How to realise the potential of your digital rights

Where you own the digital rights, you do not maximise their value merely by selling them to Mr Gates. You must make the new media an integral part of the delivery of museum services. Digitisation provides another means of delivering the museum experience and services to your public. At the very least, it creates new messaging channels that will reach new ‘customers’. As such, it can be an effective and cost-effective tool to increase public awareness of your museum and your collections – especially to the younger members of the public (for they are very active users of this technology). This in turn has the potential of leading to:

· membership increase

· visitors increase

· business and commercial opportunities

· educational opportunities

The challenge is not merely how to embrace the technology. Rather, it is how to use this communication medium to further the public interest purposes and policies of the museum.[14]

10.8 Further reading

Reference should be made to the materials made available at the AMOL site on Digital Collections Standards[15] and the excellent paper delivered by Dr Timothy Hart entitled ‘Digitisation: An Australian Museums’ Perspective’, Collections Council of Australia, Digital Collections Summit, 17 August 2006.

[2] For example, where the material came into existence prior to the copyright laws.

[3] For further information contact the Copyright Agency Limited, which was the first DOI registry in Australia.

[4] See <http://nla.gov.au/initiatives/persistence.html>.

[5] For example, Viscopy, CAL.

[6] See discussion of s 200AD of the Copyright Act 1968 (Cth) at Chapter 10.6.

[7] <http://www.copyright.com.au>.

[8] <http://www.viscopy.com>.

[9] <http://www.avcs.com.au>.

[10] <http://www.apra.com.au/Licence/LicIntro.htm>.

[11] <http://ppca.com.au>.

[12] For information about the way that various countries are dealing with the problems arising from orphan works, see the Australian Copyright Council article at <http://www.copyright.org.au/information/specialinterest/g101.htm>.

[13] Such as that of the composer Jack O’Hagan, who was particularly active in the early decades of the twentieth century, but only died in 1987. Where the estate is active, the works are not ‘orphan works’ because the rights owners are easily identified.

[14] Later in this book, there will be an extensive discussion of licensing your collection material.

[15] <http://sector.amol.org.au/reference/standards_and_guidelines/digital_collections_standards>.

Introduction

Customs is an integral part of the process of international lending, borrowing, and acquiring museum collections. The Australian Customs Service (ACS) collects the duty and tax on all goods imported into Australia. Fortunately some, or all, of these costs can be waived if the material is being imported for temporary exhibition or being acquired for a public collection.[1]

Overall the collections sector has a broad range of interactions with the ACS. For these to be effective, three things are essential:

• a good understanding of the institution’s regulatory obligations under the Customs Act 1901 and the Customs Tariff Act 1995; and
• the maintenance of good record keeping systems; and
• conduct regular checks of import activity on order to retain a high degree of Customs compliance.

The ability to import material temporarily, exempt from tax and duty, is an important provision in customs law for collecting institutions. Without it, the substantial amounts of tax and duty applicable on cultural material would inhibit the ability of most, if not all, institutions to borrow from international collections.

When a public collecting institution acquires collection material from an international source, generally, there is no import duty payable (although GST must be paid ).[2] To achieve this, particular care must be paid to the tariff line stated in the Customs Declaration. ‘Tariff lines’ are the internationally recognised categorisation system that defines every type of product and its applicable duty and tax. This duty exemption is a significant aspect of customs law that enables the purchase of international material by public collections without incurring prohibitively high expenses at the time of import.

It is important to remember that collecting institutions also import material that does attract duty and tax. Many departments import machinery and equipment, published material, retail stock and other goods on which tax and duty must be paid. Again, the tariff class into which the material is entered, determines the amount of duty payable.

The Customs Act 1901

The Customs Act 1901 is the key piece of legislation that governs the import and export of material to and from Australia. This legislation is substantial, covering every type of import and export scenario, so it is unrealistic for museum staff who occasionally delve into importation to be fully conversant with this legislation in its entirety.

A useful reference is the Australian Customs Documentary Import Declaration Comprehensive Guide and Information for Exporters. It is available online.[3]

The Customs Tariff Act 1995

The Customs Tariff Act 1995 defines tariff lines and determines rates of duty. The Schedules to the Act are enormous, listing and categorising every type of product into a tariff line. The tariffs change regularly due to the availability of new products so it is fortunate that the full working tariff is available online[4].

Importing

Types of Customs entries

The Australian Customs Services treats items differently depending on the purpose that they are brought into Australia. There are two main types of customs entry that collecting institutions usually use:

• Home consumption

For Customs purposes, an item that is purchased or gifted from an international source and that will permanently stay in Australia once imported, is entering the country for ‘home consumption’.[5] Items that typically fall into this category include acquisitions and gifts for permanent collections, machinery and equipment, and stock for retail outlets.

• Event Status

Event Status is a special provision that allows items to be brought into Australia free of duty and tax for a temporary event.[6] This is used both for the temporary exhibition of material borrowed from an overseas source, and for some collection development loans that are used for short-term research and display.[7]

Customs brokerage

As the owner or borrower of items that are imported from overseas, an institution will need to engage a licensed customs broker to act on its behalf. A customs broker will prepare and lodge a Customs Import Declaration, which involves providing the Australian Customs Service (ACS) with the relevant information to determine any applicable tax and duty payable and to make an assessment of border security risks. It is also used to provide information to the Australian Bureau of Statistics on trade activity.

Many collecting institutions may not have a direct relationship with customs brokers as it is usual practice to employ a freight forwarding company that offers a complete freight and customs service. There are two types of freight forwarders offering these services:

• companies, such as Fedex, who have licensed brokers on staff to carry out the Customs reporting for the material that they transport; and
• companies that subcontract the brokering function to a third party, a specialist customs broker.

The institution is ultimately responsible to the ACS for the information that is declared to Customs, so it is important that the staff involved in the importation of any goods from overseas have enough knowledge of Customs legislation to provide the correct information to their broker, and so that they can check the accuracy of the information that their broker is declaring to Customs. Such checks are important and must be made regularly.

Information declared to Customs

The key information required by a customs broker to complete a Customs Import Declaration is as follows in this table.

Other specific information such as the owner’s contact details, the delivery address, the importer’s ABN, and particular technical details relating to specific types of shipments will also be required. A full list of all the fields on an Import Declaration is listed in the Australian Customs Documentary Import Declaration Comprehensive Guide.

Documentation

Museums need to keep clear documentation of their Customs activity in a form that can be easily retrieved for auditing purposes. Customs runs a rigorous compliance program and can audit organisations at least every five years. Key documentation should be retained for a minimum of seven years. It includes:

• Copy of the Customs Importation Declaration;
• Invoice for goods being purchased (or Pro forma Invoice for material that is being borrowed);
• Airway Bill or Bill of Lading;
• Any contracts or correspondence detailing the terms of the purchase or loan (particularly those clauses relating to who will pay for which aspects of the freight, packing, insurance and any applicable tax and duty);
• Proof of payment for the goods, freight, packing and insurance (invoices, bank statements & remittance receipts);
• Any Illustrative Descriptive Material used to determine tariff class, and any written proof of origin of goods (this may include curatorial statements and publications);
• In the case of material brought in with special provisions such as Event Status, copies of the applications and approvals.

The ACS requires that all documentation must be in English otherwise a translation must be provided.

Museums should regularly check that the information that their broker has declared to Customs correctly matches the documentation relating to the transaction, and ask for amendments to be made if errors are found.

Event status

Section 162A of the Customs Act 1901 allows the temporary importation of material for museum exhibitions, free of import duty and GST. This is known as Event Status.

An application for Event Status is submitted to the ACS through a specialist freight agent or directly to the ACS. A single application can be made for an exhibition rather than individual applications for each shipment or item. The application form, covering letter and pro forma invoice that form part of the application must include specific information about the material being imported, including details of any material that is subject to Quarantine restriction, the value, any movement within Australia (if it is touring to several venues), and the timeframe for departure. It must be submitted a minimum of seven to ten days before the shipment arrives so that clearance can be secured in advance of the shipment arriving, therefore mitigating any Customs inspection at the airport.

While the loans are in Australia the material remains under the control of the ACS. It is important that the material is identifiable on import and export; that it must be re-exported within a 12-month period unless otherwise negotiated; and that the material can not be sold or further lent without the permission of the ACS. The key to a successful and straightforward relationship with the ACS is keeping it informed of all plans relating to the movement of the material well in advance.

The ACS grants Event Status subject to the following conditions:

Click HERE to view a PDF of the following information.

(a) The number or quantity of articles is reasonable, having regard to the purpose of the importation.

(b) A complete list of items (including means of transport) must be supplied to Customs prior to the commencement of the Event.

(c) A Form 46AA – Application for Permission to take delivery of Goods upon Giving a Security or an Undertaking for the Payment of Duty must be lodged with Customs for every shipment;

(d) All goods are subject to import and re-export inspections unless otherwise waived by Customs

(e) It is essential that all goods are identifiable on import and export, a short form copy of the import declaration MUST be forwarded to the events officer for each item imported under the event status;

(f) The goods must be re-exported within such period, not exceeding 12 months, after the date on which the goods were imported as is notified to the person who imported the goods by the Collector when he or she grants permission to take delivery of the goods (as specified on Form 46AA), or within such time as allowed by the CEO may decide;

(g) Goods that are intended for sale must be entered for home consumption prior to transfer to the exhibition;

(h) Goods that are included in the "event" list are not to be loaned, sold, pledged, mortgaged, hired, given away, exchanged or otherwise disposed of or altered in any way;

(i) Should it eventuate that some of the goods are to be sold, they must not be sold without prior permission from the Australian Customs Service in accordance with regulation 125B of the Customs Regulations 1926;

(j) Where permission has been given and some goods have been sold during the exhibition, then there must be duty and GST paid and released only at the conclusion of the "event";

(k) Your attention is drawn to Regulation 125B of the Customs Regulations 1926:

Where goods are, in accordance with Section 162A of the Act, brought into Australia on a temporary basis without payment of duty, the person to whom the goods are delivered under that section shall not, except with the consent of the CEO, lend, sell, pledge, mortgage, hire, give away, exchange or otherwise dispose of or part with possession of the goods or

in any way alter the goods.

(l) Goods that are stolen during temporary admission are not entitled to

exemption from duty and GST.

(m) Small "give away" samples which are representative of foreign goods displayed, printed matter, catalogues, price lists, advertising posters etc, that are in accord with Article 5 of Annex B1 of the Convention, will be admitted duty free under Items 32A (By-Law 9640088), 32B (B/L9640098), 33A (B/L 9640093) and 33B (B/L 9640102).

Amending Event Status entries

Customs Import Declarations for material brought into Australia temporarily under Event Status cannot be amended once the Event Status has expired. Any amendments must be made while the material is in Australia.

Extending Event Status

As a standard rule, the ACS allows material to enter Australia for 12 months under Event Status after which time the material must be exported or an extension to the Event Status must be sought. The ACS will usually allow extensions to the Event Status as long as the request for an extension is made in advance of the Event Status expiring.

Acquitting Event Status

Collecting institutions must ensure that their Customs broker and/or freight agent acquits the Event Status once all of the material has been exported.

Acquiring material that has been imported under Event Status

If material brought in under Event Status is acquired during the duration of the loan or the Event Status period, the GST and any other applicable duties must be paid to the ACS. It is important to note that the GST payable is based on the amount declared on the original temporary import permit.

For example, if an item is brought into Australia using Event Status with a declared value of $10,000, and is subsequently purchased for $8,000, the GST will be based on the $10,000 declared at the time of import. It is also worth noting that if an item is gifted it still attracts GST based on the declared value at the time of import.

Issues to avoid with Event Status

Customs is a strictly administered process with clear guidelines that work as long as communication with Customs officials is kept open. Usually issues are encountered when the exit of the material from the country is not properly considered before the material is imported. Many scenarios may affect the planned exit of the material – a tour venue may be added to an exhibition, or the museum may decide to acquire the work through gift or purchase.

All too often, museum staff or lenders bring loan items into the country in their luggage without notifying Customs and gaining pre-clearance. This is not good practice. Not only are there obvious issues as the physical care of the material and possible inspection on arrival in the airport. It also has financial implications when the material is shipped back to the country of origin: Customs authorities in the country of origin will require tax and duty (as a percentage of the value) to be paid on re-entry of the material as they will have no record of the initial export.

Some material that may be imported for temporary exhibition may be retained on a long-term loan after an exhibition is complete. It is important to avoid setting up expectations with the lender that the loan is ‘permanent’ or ‘indefinite’ as Event Status requires that the item will be returned within the 12-month period. The ACS may extend the Event Status on a year-by-year basis, but this is discretionary and will not be extended indefinitely.

Destruction or loss of material under Event Status

There are no specific provisions in the Customs Act 1901 that deal with the total destruction or theft of goods brought into Australia under Event Status. As a result, the ACS deals with these situations on a case by case basis. In theory, an item that is stolen or destroyed is no longer in control of the ACS and thus, the tax and any applicable duty is payable. In practice, the ACS has discretionary powers and is unlikely to demand payment if the institution can prove that it carried out due diligence in protecting and caring for the Event Status goods.

Event status and touring exhibitions

With the increasing number of touring exhibitions that are all, or partially, borrowed from international sources, customs legislation affects the contractual arrangements between the organisation that originally applies for the Event Status and the venue that disperses the exhibition/item back to its country of origin.

Event Status can only be taken out by one institution. It cannot be jointly held by touring venues or transferred between touring venues. If the holder of the Event Status is not directly in control of the re-export, in its contract with the venue responsible for administering the re-export, it must pass on the obligation to properly acquit the Event Status obligations.

Sample agreement for acquittal of Event Status

The key aspects of this type of contract should include:

• The timeframe for re-export;
• The dispersing venue’s liability in relation to the terms of the temporary import permit, i.e not to sell or further lend the items;
• Clearly defined responsibility for liability and costs relating to the acquittal of Event Status;
• Clear jurisdiction and conflict clauses.

Example contract clauses for acquittal of Event Status

Click HERE to view a PDF of the following information.

This agreement (Agreement) is between the Fictitious Art Gallery (the Gallery) and the Fictitious Museum (Museum) in relation to art-work from the Fictitious Art Gallery exhibition (the Works) listed in Attachment A.

The Museum has an agreement with the Overseas Owner in New Zealand to exhibit the Works in Adelaide from 30 June to 24 September 2006.

The Gallery imported the Works for their own exhibition and was granted Event Status by the Australian Customs Service (ACS). The Event Status expires on 30 September 2006.

Both the Gallery and the Museum are of the understanding that if the Museum arranges for the Works to be exported to New Zealand by 30 September 2006 then no liability will be owed by the Museum to the ACS. The Museum acknowledges that if the Works are not exported to New Zealand by 30 September 2006 then the ACS is likely to impose taxes, fines and/or costs upon the Gallery.

The Museum hereby undertakes to the Gallery that it will export the Works to New Zealand by 30 September 2006, and that if for any reason (other than a reason caused by the Gallery) it fails to do so the Museum agrees to accept liability for any taxes, fines and/or costs imposed by ACS as a consequence of the Museum’s failure to export the Works by the specified date.

The Museum agrees:

• that it has entered into an agreement with the Overseas Owner and will provide a copy of the agreement confirming this arrangement to the Gallery by 21 April 2006;
• that it will cover all insurance, packing, and freight costs relating to the transfer of the Works from the Museum to the Overseas Owner ;
• that it will export the Works to Overseas Owner by no later than 30 September 2006;
• that if the Museum fails to export the Works by 30 September 2006, it will pay any taxes, fines and/or costs (based on the value of the Works specified in Attachment A) imposed by ACS as a consequence of that failure;
• that it will not sell, lend, mortgage, hire or deal with the Works in any way without the prior written consent of the Gallery;
• that it will comply with the terms of the Event Status as it relates to the Works.

This Agreement may be terminated by the Gallery if it becomes aware that the Museum has breached this Agreement or any of the terms of the Event Status in a material way, and in such an event, the Museum will upon instructions export the Works and pay all reasonable and legitimate fees, charges and taxes as applicable.

This Agreement is governed by the laws of …………………………… and both parties agree to submit to the jurisdiction of the Courts of that State.

Signed on behalf of the Museum:

Signed on behalf of the Gallery:

Acquisitions

Items of historical or cultural significance and original works of art acquired internationally by Australian institutions are exempt from customs duty - but still attract GST. Occasionally when assessing a duty exemption the ACS will ask for evidence of the significance of an item being imported, and the onus is on the importing museum to provide the necessary written documentation.

The most common method of customs entry for Australian institutions purchasing items internationally is to buy a work for ‘home consumption’ in the same way that would purchase anything from an international source and use the Australian Tax Office’s (ATO) deferred GST scheme that many institutions have in place.

To defer GST institutions must apply to the ATO to use the scheme, and once approved they provide their ABN to Customs through their specialist freight agent and/or customs broker. Customs then reports to the ATO on the import activity of the museum and the GST is reconciled through the museum’s monthly Business Activity Statement.

Exporting

Export Declarations

Exporting goods from Australia is more straightforward than importing into Australia because the onus is on the overseas buyer or borrower to fulfil the requirements of the Customs authority in their own country. That said, the overseas importer will rely on the Australian lender to provide the correct information on which to base their Customs Declaration.

For goods worth over AUD2000[11] an export must be declared to the ACS.[12] This can be completed manually by the owner/vendor but due to the technicality of much of the information it is preferable that it is completed electronically by a freight forwarder on behalf of the institution. In its most basic form the declaration states (but is not limited to):

• who is lodging the declaration (the owner or an agent);
• the intended date of export;
• whether the goods are currently under Customs control (most commonly for museums under Event Status);
• export type (one of three different codes);
• goods type (one of six different codes);
• port of loading;
• currency of the invoice;
• total of the Free on Board (FOB) value (value of the goods including all costs to get them to the port of loading including any export charges);
• currency of the FOB value.

In addition to this overall information about the consignment, further information must be provided about each of the item lines listed in the import which includes the goods description, origin, and value; their tariff classification; and information about their weight per unit and gross[13].

Export Documentation

Remember that the tariff classification and terms of trade rules apply internationally. The information you have to provide to the local authorities is the same information that will be required by an overseas buyer or borrower.[14] This key information needs to be conveyed to the buyer or borrower in a Commercial Invoice (for selling) or a Pro Forma Invoice (for lending). A commercial invoice or pro forma invoice should, at the very least, contain the following information:

• details of both the owner/vendor and buyer/borrower (and consignee if acting on behalf of the buyer);
• name of freight forwarder or agents responsible for the logistical arrangements;
• details of the vessel/aircraft and ports of loading and destination;
• description of the goods;
• quantity of goods, number of packages, weight of packages, gross weight of consignment;
• terms of trade – Incoterm;
• price or value per item, and for the total consignment.

Further information may be required by the overseas importer specific to the type of goods being exported from Australia. This is particularly important for prohibited material such as weapons and material that is subject to the Protection of Movable Cultural Heritage Act 1986.

[2] Customs Tariff Act 1995 Schedule 3, Section 21, Chapter 97/3.

[3] Documentary Import Declaration Comprehensive Guide: http://www.customs.gov.au/webdata/resources/files/DocImpDecGuide.pdf

Information for Exporters: http://www.customs.gov.au/site/page.cfm?u=4784

[4] http://www.customs.gov.au/site/page.cfm?u=5663

[5] Customs Act 1901 Section 68

[6] Customs Act 1901 Section 162

[7] Event status will be discussed in greater detail in Sections 2.4 - 2.10.

[8] An application for Tariff Advice (B102) is available from http://www.customs.gov.au/site/page.cfm?u=4533

[9] Contact details are available at origin@customs.gov.au,

[10] For a plain English explanation of Incoterms, see ‘International Trade – A Practical Introduction’, R.Bergami (3^rd ed.), Eruditions Publishing, Melbourne 2009. A reference table of Incoterms can also be found http://www.customs.gov.au/webdata/resources/files/FS_Incoterms.pdf

[11] This is based on the Free on Board value of the goods which is calculated as all costs to the airplane or ship excluding the international freight and insurance costs.

[12] Customs Act 1901, s.113

[13] A full list of the mandatory fields that needed to be completed for an Export Declaration can be found at http://www.customs.gov.au/webdata/resources/files/FS_ExportDeclarations.pdf

[14] See discussion above at Information declared to customs.

Introduction

Those on the outside tend to think of insurance as a legal form of gambling: The company bets the insured that certain events will not happen; if the events occur, the company loses; if they don't, the insured loses. The amount of the premium represents the odds of the event occurring. If the odds are high, so are the premiums. If the chances are low, so are the premiums.

All right, that is overly crude. The reality is subtler. Perhaps insurance is better described as a form of ‘risk exchange’ where the insured is able to divest itself of unacceptable risks at terms that are acceptable and the insurer takes on these risks at terms that are acceptable to the insurer. Provided the terms have been set equably then both parties should win. (Certainly this last sentence makes it clear that there is a great difference between using the ‘gambling’ analogy and the ‘risk exchange’ description.)

Insurance is a risk management tool. It does not replace the usual obligations of reducing the dangers of loss or damage in course of operating the organisation. The role that insurance should play will vary according to the individual circumstances of each collecting organisation – but what it does not do, is relieve the board and the administration of its responsibilities of care. Insurance does not protect a collection item: It protects its financial value.

Insurance is a contract. The parties to the contract are the insurance company and the named party in the policy. It does not provide protection for any third party (unless that third party is specifically named in the contract). For example, the visitors to a community museum are not directly protected by the insurance taken out by the museum; if injured, they have no claim against the insurance held by the museum. Insurance only protects them to the extent that if they suffer injury and sue the museum, the museum’s ability to pay damages is not restricted by its own limited resources. Insurance is protection for the museum. It means that in the event of loss, theft, damage or injury, it will be better able to meet its liabilities without endangering its ability to continue operations.

This chapter does not purport to cover all issues that arise with insurance, nor all kinds of insurance. It raises the difficult question of whether to insure at all; it summarises the kinds of insurance that should be considered by collecting organisations, and lays out some of the commonly occurring issues that arise in many forms of cover.

To insure or not to insure

An ownership issue

If the organisation is the absolute owner of the work or object, there is no legal obligation to insure it: The decision is essentially one of governance. However, most collections also contain material in which ownership is less than absolute. For example, it may have been donated or bequeathed to the organisation for specific purposes[1] or with specific instructions[2]. It may be on loan or so-called ‘long-term’ loan; it may have been bought in partnership with another organisation and be jointly owned; it may have been bought by money specifically provided by a sponsor for the purpose (and there may be contractual obligations attaching to the sponsorship). In these cases, the organisation may well have a financial exposure that it should insure.

Accordingly, in making the decision ‘to insure or not to insure’, it might be useful to ask: ‘Who owns the material?’ ‘Are we the absolute owners?’ ‘If not, what are our obligations to the other party?’ You might crosscheck this by then asking: ‘How did we acquire the material?’ ‘Was there anything about the acquisition that may create an obligation or that may limit or qualify our ownership?’

When the risk affects others or affects your obligations to others, prudence often requires that the risk of loss be mitigated by taking insurance.

A governance issue

Whatever the policy adopted by the board, there will be foreseeable (if uncertain) consequences for the organisation and the board’s governance obligations can reasonably be expected to extend to identifying those consequences and implementing prudent plans to meet them.

For example, if the board decides that the organisation should ‘self-insure’ its collection, it must acknowledge that there is still a risk of loss or damage to collection material and must implement a strategy to meet that foreseeable event. So, it might decide to budget for insurance premiums and actually appropriate that sum and invest it. All too often the money not spent on premiums is merely allocated to other pressing needs rather than being applied to minimisation or mitigation of the particular risk.

If it decides not to insure its collection at all, the board is making a very serious decision affecting the future of the collection. It may be that the board should at least consider taking out ‘annual aggregate cover’ or ‘cover in excess of an annual aggregate deductible’. For example, the institution and the insurance company may agree that if claims exceed a total of $250,000 in a year or $50,000 on any single loss, the company will cover the amount of the loss in excess of those amounts. Similarly, the use of ‘deductibles’ (discussed later) may reduce the premiums to manageable sums.

One thing is certain: the board has a heavy legal burden to protect the organisation, including its assets, workers and visitors. It is a brave board that fails to give deep thought to (i) the reasonably foreseeable risks that the organisation bears, and (ii) how the duties that attend those risks should be addressed.

What to insure

Deciding which risks must or should be insured is part of the risk management strategy of any prudently managed collecting organisation. The material that follows first looks at the non-collection material insurances and then at those issues specific to collections and exhibitions. [3]

The building

Whether it is prudent to insure the buildings, in which the collection and administration is housed, is a common issue faced by boards. Is the organisation the owner? If not, it is likely that the lease will require that the building be insured. If it is, what would the organisation do if the building were destroyed? Can it afford not to insure?

The premium will vary considerably according to the location of the building, the construction materials, its age, the accessibility of fire extinguishers or the installation of sprinkler systems, even whether people are allowed to smoke on the premises.

It is wise to make sure that the cover will meet replacement costs and that there is no deduction for depreciation. Moreover, if an ‘agreed amount’ cover can be negotiated, this will eliminate the trap of a ‘co-insurance’ penalty. (For explanation of ‘co-insurance’, see later).

Contents (excluding the collection)

This is an issue faced by all homeowners with contents insurance: getting an inventory of all of the contents, assembling and organising the documentation and estimating the replacement value. Even collecting organisations that apparently have very little by way of furniture, fittings and equipment will be surprised when they do an audit of these items: lighting systems; display systems; shelving; furniture; security, conservation and maintenance equipment. These all add up to a considerable, if often hidden, asset.

Standard ‘all risks’ insurance should be taken out. There are two types of cover:

• actual cash value (that is, replacement cost less depreciation);
• replacement cost (that is, no deduction for depreciation).

Make sure you know what you are buying. Regular checks should be made of the inventory to ensure that the amount of cover is sufficient. Coverage is usually written on the basis of ‘cash value’, that is, replacement cost cover (with no deduction for depreciation). Replacement cost cover (with no deduction for depreciation) will also be available but will obviously cost more. It should also be noted that many policies exclude the property of employees, volunteers and members of the public (for example, the cloakroom). This should be checked.

Workers' compensation

Employers are legally obliged to take out workers' compensation insurance for all employees.

The cost of workers' compensation insurance takes account of the dangers inherent in the employee's job. Thus, a museum administrator will cost less to insure than a salesperson, who in turn will cost less to insure than a van driver.

Premiums are calculated on the number of employees, their occupations and their gross salaries at the time of taking out the policy. During the year the complement of staff may change considerably but this is simply noted at the end of the insurance period and the next year's cover will be accordingly adjusted.

Public liability

Public liability insurance is essential. All collecting organisations should have it, without exception. If an organisation invites the public to its premises it must protect both itself and its invitees. It is not a legal obligation, but a social obligation. It is not uncommon for Australian courts to award in excess of $2,000,000 to seriously injured plaintiffs. Those sums are awarded not to punish the negligent but to compensate the injured. While premiums have increased dramatically in recent years, public liability cover is still relatively cheap.

It is also prudent business practice. Visitors are always likely to trip, fall and hurt themselves and just that simple incident can threaten the financial resources of the organisation and endanger the personal assets of the board and management.

Goods in custody cover

This policy is designed for organisations that hold goods on consignment or loan. This allows an organisation to insure objects that do not belong to it, thus protecting both itself and the owner.

If operating a museum, gallery or library shop, one might purchase a package which may cover say, $30,000 stock and $5,000 goods in custody. A declaration of actual stock and goods in custody must be made monthly and the premium will vary monthly depending on the actual variations reported each month. Similarly, where the institution is the temporary bailee of material, for example where it is considering acquisition or is undertaking identification or valuation services for the public, this kind of cover should be considered. The risks may be tempered by the use of documentation that includes clauses that contractually limit liability for loss or damage to such material but experience indicates that, because the risks attending temporary custody are high, it may be worthwhile to minimise exposure by using both insurance and contractual limitations of liability.

Transit cover

Common carriers do not treat culturally or historically significant objects as a separate category. They usually offer a general insurance policy costing about $4.50 per $600 cover. This is usually automatically added to the freight cost. It is also totally inadequate for the transport of cultural material.

Collecting organisations must use specialist carriers because they will pack and handle the collection material correctly, thus reducing the chance of a loss or damage. All of these carriers have their own contractual terms and these should be considered with care.

Plate glass insurance

Plate glass is expensive and some property owners may elect to insure themselves against its breakage. However, where the organisation rents buildings the lease agreement usually obliges the tenant to take out plate glass insurance. If the glass has painted lettering or burglar systems attached these additional expenses can also be insured.

Trustees and officers

Given the increased personal liability imposed on trustees, board members, officers and senior management, it is common practice that the organisation take out insurance to cover them from legal liability. If this were not the case, it would be difficult to attract top quality people to these important roles. Provided that the insured has acted in good faith, this insurance gives protection against any direct loss arising from actual or alleged error, misstatement, act or omission and breach or neglect of duty.

Volunteers

Volunteers are not covered by workers’ compensation insurance because they are not employees. Nor are they covered by public liability, for they are more than ‘mere’ members of the public. Volunteers must be covered for personal injury.

One must also make sure that the other insurance policies protecting the museum and its collection cover situations in which the loss is caused by a volunteer.

For further discussion of volunteer liability, statutory protection and insurance, see Chapter 37 Volunteers.

The permanent collection

It is a matter of considerable debate as to whether collecting institutions should take out insurance on their permanent collections. In brief, the argument against says that, as museums largely collect the irreplaceable, insurance is pointless. The argument for insurance, stresses that:

• only some kinds of collections are irreplaceable;
• only some items in the collection are irreplaceable and the insurance will enable the replacement of those which can be replaced; and
• new material will have to be found and this will also have to be paid for.

There is no legal obligation to insure the collection. Where the collection remains permanently within the collecting institution’s premises, it may be arguable that the money is better spent on security of the premises and better internal care and control of the material. But when the material leaves the immediate control of the organisation, the risks increase and, with it, the prudence of insurance.

Whether the organisation should insure or not, and if so - what to insure, for how much, and subject to what conditions - are all matters for decision by the board. These are important matters of institutional policy and governance. They are the board’s responsibility.[4] Once the over-arching issues have been decided by the board, then it is up to the organisation’s administration to do the scoping, selection, negotiation, implementation and administration required by the insurance strategy.

When considering this cover it is important to consider the subject and extent of the cover. For example, where the institution contains a permanent collection and a study collection, the decision may be made to insure only the permanent collection because it is the more valuable. Conversely, it may be decided to insure only the study collection because the risks to its damage are higher due to the use to which it is put. Such decisions are unique for each institution.

Of course, it is unwise to focus exclusively on the risk of complete loss. Where the material is damaged you will have the costs of restoration and conservation. ‘If one has certain items that are unique and could not be replaced with something similar, but which form an intrinsic part of the collection and that one either does not wish to view as an asset, or cannot do so due to ownership constraints, then one might wish to insure solely against restoration costs. By speaking to recognised conservators it should be possible to establish the maximum probable expenditure per item to restore major damage. There is obviously a point beyond which it is not possible to restore but one should work to a point as near that as possible in calculating the cover required to fund restoration costs.’[5]

There are now policies available that relate specifically to collecting organisations. The collection is usually – and ideally should be – covered by a type of insurance known as ‘all risks’, that is, it covers all risks of physical loss or damage including fire, theft, storm, flood, escape of water, accidental damage etc subject to specific exclusions. (Although transit cover and goods in custody insurance are set out below as separate categories, a good specialist “All Risks” policy should incorporate both these elements.)

Again the insurance company will assess the risks in determining the premium. Factors other than market value may include: security measures deployed, frequency, manner and expertise of handling, special characteristics of the objects (such as fragility or attractiveness to thieves), storage and environmental controls (such as humidity, light, dust, heat).

Once a claim is made, the burden is on the organisation to prove that the amount claimed is a fair market value for the loss. This may be easy if there are comprehensive registration records maintained and if expert valuers (or auction records) substantiate the claim. This is rarely a problem for major institutions, but is commonly more difficult for organisations that do not maintain adequate records or collect material that, while being socially and historically significant to the local community, does not have an established market value.

You avoid this difficulty if the basis of the insurance is ‘agreed value’. This avoids any ambiguity with regard to quantum in the event of a total loss since the values are agreed between both parties at the beginning of the contract. This does however mean that an up-to-date valuation of specific items needs to be maintained, so it is best used for the more important items in the collection, the balance being insured on an indemnity or market value basis.

Other collections

Many large collecting organisations maintain collections other than the permanent collection, such as collections that are made available for research, loan, educational purposes etc. These are often of lesser value and lesser rarity than the permanent collections. These create an interesting conundrum because, although they may be of modest financial value or consist mainly of duplicates, the way that they are used (indeed their very purpose) exposes them to a greater likelihood of loss or damage.

There is no one answer. The organisation must consider each collection, the use that it is put to; the rarity of the material; its financial value; the ease of replacement; and even the way that its uses are administered,[6] to determine whether insurance is prudent. But if you want to replace the collection in the event of its destruction, you will need money - and that suggests that insurance may be prudent.

Temporary loans and travelling exhibitions

The usual practice is to insist that the ‘borrower’ will meet all insurance needs. The issue of who should arrange and pay for insurance should always be set out in the loan agreement.

The standard requirement is that the material will be covered for ‘all risks’ both at the museum and while in transit. In these instances it is usually advisable to take an ‘agreed value’ policy rather than a ‘market value’ policy.[7] It is also desirable to consider whether ‘deductibles’ are desirable, for although they keep the cost down, it means that the borrowing museum will be liable to make up the difference and it may not have the resources to do so. If that were to occur both parties would be in a difficult position.

The conditions of the loan agreement must always be consistent with the requirements of the insurance policy.[8] This is a fundamentally important consideration in the drafting of the loan agreement. Indeed, it is advisable for the borrowing institution to check its insurance policy and include in its standard loan agreement any restrictions or requirements imposed by its insurance policy.

Where both the lender and the borrower have their own insurance policies, the parties are best advised to compare the terms of the policies to see which is the more favourable. For the borrower, because there are likely to be many loans, it is administratively easier if its own policy is used. However, if the lender insists that the loan be covered by its own insurance, the prudent borrower institution will insist that:

• a premium quote is given;
• it is named in the policy as an additionally insured party or the insurance company’s right of subrogation against the borrower is waived;[9]
• either a certificate of insurance is delivered to the borrower or that the loan contract specifically excludes the borrower from any obligation to insure or liability for not insuring;
• the borrower will not be liable for any error or deficiency in information provided by the lender to its insurer or for any lapse by the lender in coverage.[10]

Insurance issues affecting collections and loans

Exclusions

Common exclusions include ‘wear and tear, gradual deterioration, inherent vice, damage resulting from any repairing or restoration process, war on site, terrorism on site and nuclear reaction’.

International lenders sometimes insist that the insurance policy covers war and terrorism. Both of these are difficult to obtain.[11] Sometimes these demands may be waived if the lender is satisfied that the security measures taken by the borrower are sufficient.

Sometimes, during the course of the loan the insurance company may advise the insured that the exclusions have been varied. If this occurs, the insured must advise the other party immediately and provide a revised certificate of insurance.

Sole recovery

The agreement should state that in the event of loss, theft or damage of the loaned material, recourse to the insurance cover will be the lender’s sole remedy.[12] This puts the focus clearly upon the need to get a proper agreed valuation for the loan.

Further, in a related but distinct point, the loan agreement should explicitly state that the borrower will not be liable for any sum over and above the insured amount (that is, that the insured value is the deemed ‘total loss’ value. Malaro helpfully suggests adding a clause to the following effect: ‘Any recovery for depreciation or loss of value shall be calculated on a percentage of the insured value specified by the lender in the agreement.’

Insured value

Loans should be insured for their agreed value: neither too high nor too low. Where the lender sets a value for insurance purposes it is essential that this figure be examined by the curator for the borrower and its appropriateness will be determined by its likely market value.[13] Where the value put on the item by the lender is not considered defensible by the lender, the borrower must attempt to negotiate the figure down to an objective value that is verifiable by reference to the market. If the parties are unable to agree on the value, the loan should not proceed as the borrower is exposing itself to liability for the gap between the contracted value of the item and the amount that the insurance company will pay in the event of its loss, theft or damage.[14]

The issue with insuring permanent collections is slightly different. ‘On large collections it is obviously not practical to list each and every item and to assign it a value, but one may wish to list everything with an individual value in excess of, say, £2,000 and insure for a block figure representing the value of all the remaining items in that category, that is, ‘all remaining Chinese porcelain £65,000’.

With regard to what value one places on an object, this depends entirely on the context, but for insurance purposes the main options tend to be: retail replacement cost, replacement cost at auction or net asset value. It is perfectly possible to insure for a lower agreed value, but in order not to negate the point of insuring the item, there should be a reason for doing this, such as the example of an item being used as collateral where one only wants to insure for the amount of the loan.[15]

Even though an exact replacement may not be possible (for example, in fine art or other one-off material), cover can be arranged so that you receive an adequate sum to cover the cost of purchasing a similar object. You should be careful to take into account dealer’s mark-up or auctioneer’s commission and other potential acquisition expenses when setting the amount insured. Because of these expenses, the replacement value will usually be more than net asset value.[16]

Absence of insured value

Where the lender fails to provide a value for insurance purposes it is important that the borrower either (i) make a reasonable estimate of value and submit that to the lender for inclusion in the agreement, or (ii) obtain a complete waiver of all liability arising from the loan, or (iii) include a term by which the value of the item shall be deemed to be that reasonably determined by the insurance company.

If the borrower puts forward an estimate of the insurance value it is important that the agreement explicitly states that the estimate is not an appraisal of market value and is not to be used by the lender for any other purpose. While it is unlikely that the borrower will want to obtain independent third party valuations for this purpose, such estimates are often fairly easily obtainable through discussion with the curator of the exhibition or relevant department and from sales records.

Replacement versus restoration

Where the item is made of material that is made of materials that may be replaced or exchanged, the borrower will usually insist that it be insured for its replacement value. For example, assume that a gallery borrows a Janet Laurence work made of grasses, wood, soils and sand. If the grass component dies or is damaged, the insurance cover is likely to deem that the damage amounts only to partial loss and that it can be repaired. In such case the policy would meet the cost of restoration of the fungible material plus any loss of value - or the insurance company could consider the grass component that died as ‘inherent vice’ and therefore an exclusion under the policy.

The Replacement v. Restoration dilemma often arises in loans of new media and digital objects. For example, with new media works, the borrower would be prudent to borrow a ‘display copy’ and not the ‘master copy/original artwork’. In the event of damage to the ‘display copy’, the insurer would meet only the cost of replacing the copy. Because of this, it is important to establish the value of the ‘display copy’ early on in the loan negotiations as this is always much less than the value of the ‘master copy/original artwork’. Another example arises when borrowing digital photographs. If the general public get close to the work during the display period it may end up damaged by fingerprints. While the artist/lender considers the work to have been damaged, an insurer is likely to treat the value of the claim as the cost of reprinting the photograph.

Sometimes, because of the unique nature of the piece, or because of its particular family, religious or cultural significance, its value lies in that significance rather than its monetary value. In such cases the cost of restoration may exceed the value of the item but the lender insists on a term in the policy that obliges restoration. There is no easy answer to this. An open chequebook is never a good idea and will be antithetical to your insurer. Usually the answer lies in negotiating with the insurer and the lender to arrive at an agreed cap.[17]

Waiver of obligation to insure

Sometimes the lender agrees to waive the borrower’s obligation to insure. Sometimes this may be because the overall value of the material is so small or because the material is already covered under the lender’s own blanket policy. There is no easy answer for the borrower – it depends on the circumstances. For example, if the borrower agrees that the value of the material is miniscule (and that value is reflected in the agreement), it may decide to take the risk and remain uninsured. Where the value is high, it may be prudent for the borrower institution to take out its own insurance or, at least, obtain in the loan agreement a complete waiver of all liability arising from the loan.[18]

Cost

Nick Brett, of the London-based insurer AXA Art Insurance Ltd, has the following advice as to costs:

The rate charged by an underwriter is made up of various different components. They need to charge for the likelihood of loss from various perils, i.e. fire, water, accidental damage, theft, malicious damage etc as well as allow a margin for the expense of underwriting the risk, carrying out surveys and a modest margin for profit.

One should always start on the basis of insuring against ‘All Risks’. The difference between the rate for All Risks cover and the rate for limited perils cover is likely to be relatively slim, particularly from a specialist insurer who will want to provide a decent scope of cover to their client.

It is also the case that those perils which are most remote will only account for a tiny fraction of the rate, and those perils which represent major risks (i.e. fire, water and theft) will account for the bulk of the rate.[19]

What should the policy include?

Brett goes on to advise that a policy covering collection material differs in several ways to a general property insurance policy: It should ‘include provision for specific risk management, valuation and conservation advice; it should include cover for depreciation; it should operate on an agreed value basis where possible; it should not contain inappropriate single article limits; it should provide for an appropriate claims service including referrals to specialist loss adjusters and restorers’. Gold dust advice.

General insurance issues

‘Co-insurance’ and ‘average’

‘Average’ and ‘co-insurance’ are often used as though they were synonyms. Actually, they are slightly different. ‘Co-insurance’ is where more than one party takes a share of the risk and that party could be the insured themselves, either because they wish to or because the insurer insists upon it.

‘Average’ is where the sum insured is found to be an inadequate representation of the value at risk and so the insured is obliged to bear a share of the loss commensurate with the amount of under-insurance deemed to have taken place. It is a contractual means whereby the insurer penalises an insured who under-insures property. The insured is considered to be a self-insurer for the amount under-insured, and will also have to bear a rateable share of partial losses (in proportion to the extent of under-insurance). In other words, through the ‘average’ principle, you would be treated as a co-insurer.

A simple example will make this clearer:

Because you have only insured the item for 50 per cent of its actual value, in effect, you would be self insured for 50 per cent of the full value and thus 50 per cent of any claim.

Administrators must be aware of the dangers of the ‘co-insurance’ clause. This clause takes effect if the collection is under-insured. For example, if the collection is worth two million dollars it may be insured for only one million (on the basis that it is unlikely that more than half of it would be wiped out in any disaster). In such a case the payment made by the insurance company will be reduced by the same percentage as the under-insurance. So, in the above example the payout would be reduced by 50 per cent.

Although the company will allow a ten per cent margin, collecting organisations are usually better off having the co-insurance clause deleted altogether. A ‘deductible clause’ will help keep the costs down.

A ‘deductible’ is the agreed amount that will be subtracted from the payout in the event of a loss. For example, the institution may agree to meet the first ten thousand dollars of any loss. This cover will be cheaper than one in which the insured organisation meets only the first five hundred dollars.

Deductibles may be structured in a number of ways. For example, they may relate to individual items, to all losses resulting from a single occurrence, or even all losses within a specified period. It is crucial to examine the exact terms used in the contract.

Exclusions

All policies, even ‘all risks’ policies, include exclusions. These must be carefully considered as they often require negotiation so that the cover obtained matches the real risks. There are some exclusions that are usually non-negotiable such as ‘fair wear and tear’, nuclear explosion, terrorist attack, war, insurrection, revolution, attacks by vermin, natural deterioration caused by the nature of the material and so on. Some policies even exclude flood. It is important to read these carefully. What is precisely meant by such words? For example, if there is a flood exclusion will it treat claims for damage caused by a plumbing disaster in the same way as damage caused by a flooding river?

Exclusions are included by insurers to limit their liability. They are a crucial component of the insurance company’s risk management strategy. They are a reflection of the extent to which the insurer’s interests conflict with those of the insured. You should only accept exclusions where such exclusions are compatible with your own assessment of the identified risks. After all, you take insurance as part of your risk minimisation strategy so it is essential that the real risks are covered and not excluded.

Read the policy

The insured should always insist upon being given a draft of the policy and an opportunity to examine discuss consider and negotiate it. It is essential to have a complete understanding of all its terms. If in doubt, ask.

Always insist on receiving a copy of the final insurance contract. It is the only way that one can be sure that the policy has actually been issued and is the only way to be sure of the exact terms of the protection that has been bought.

Further information

The Museums Australia website has an excellent resource for collecting organisations that wish to obtain further information.[20] That site also contains information on likely costs of various kinds of cover that small collecting organisations are likely to face. The large institutions negotiate individually shaped and costed insurances.

Government indemnity schemes

The Commonwealth and State governments all have insurance or indemnity schemes. They vary in ease of use and practicability and this is not the place to analyse them all. This isn’t a handbook for the collection or exhibition manager who needs to be expert on government indemnity schemes. The starting point of enquiry might be the summary of indemnity schemes set out in Appendix C of the 2001 Commonwealth inquiry entitled, ‘Covering Your Arts: Art Indemnity in Australia’.[21]

So that the reader can get a flavour of these schemes (rather than purporting to be a handbook on them), the following sections provide a brief summary of just two: The Victorian and the new Commonwealth schemes.

The Cultural Exhibitions and Fine Arts Indemnification Scheme (Victoria)[22]

This Indemnification Scheme provides indemnity cover for the temporary display of objects of material culture for the benefit of Victorian audiences and is managed by Arts Victoria. The scheme provides Government-backed, fully insured indemnification to approved exhibitions organised by Victorian cultural institutions.

Insurance arrangements for the Indemnification Scheme are made by the Victorian Managed Insurance Authority (the VMIA). The VMIA arranges all Victorian Government insurance, and due to its whole-of-Government buying power is able to provide insurance premiums at extremely competitive prices.

The Indemnification Scheme aims to facilitate the presentation of significant temporary exhibitions throughout Victoria by removing the potentially prohibitive cost of insurance. It also aims to promote best practice in exhibition management across the gallery and museum sectors.

The Indemnification Scheme accepts applications from organisations within Victoria that have undergone a risk management and site accreditation assessment. Indemnified exhibitions may be:

• drawn from local, interstate or international sources;
• presented at one accredited venue only;
• toured to several accredited venues within Victoria;
• toured both within Victoria and interstate, in which case indemnification covers only the Victorian component of the tour and the transits to and/or from the interstate venues.

Applications are assessed by a Ministerially-appointed Indemnification Committee. The Committee includes representatives from regional and metropolitan galleries and museums, conservator and representatives of the major State agencies. The Committee meets four times per year, or as required, to assess and prioritise applications against the Scheme’s objectives and assessment criteria described in the application guidelines. Applications must be submitted at least eight weeks prior to the requested Indemnification start date. There are four application rounds each year.

Priority is given to exhibitions which:

• are from organisations that have undergone a satisfactory risk management and site accreditation assessment through VMIA;
• will make a significant impact on the applicant organisations;
• show evidence that all security, transport, packing and handling will be carried out according to the Security Checklist found in the application guidelines;
• have a confirmed itinerary;
• have a budget and marketing strategy commensurate with the scale of the exhibition.

Other matters for consideration during the assessment process include:

• legal status of the management organisation;
• proposed itinerary, including specific accredited venues;
• exhibition budget;
• identification of the objects for display.

Security, packing, transport and courier arrangements (in all instances professional standards must be met, specific requirements must be decided for each exhibition)

All organisations applying for indemnification or presenting indemnified exhibitions must undergo a risk management and site assessment. Galleries and museums are rated against a range of industry benchmarks and given a rating of gold, silver or bronze. This rating corresponds with the level of excess payable in the event of any loss or damage to an indemnified exhibition at the gallery/museum.

What will not be indemnified include:

• touring exhibitions while at venues that have not undergone a risk management and site assessment and/or are outside Victoria;
• the transit or display of works that are being purchased by an institution;
• exhibitions with a value of more than $55 million;
• commercial endeavours that include works for sale;
• incomplete applications may not be considered;
• wear and tear. A basic exclusion of the insurance policy that underpins the Indemnification Scheme is ‘ordinary wear and tear’. Exhibitions with components that are interactive can be covered for the total loss of those objects, but not for their repair if they break down or are otherwise damaged through use.

The Indemnification Scheme will not cover damage to didactic or promotional panels, nor can it be used to insure crates for exhibitions.

The Commonwealth scheme

In the 2009 Federal Budget the Commonwealth Government announced that as from 1 July 2010 it would replace the present Art Indemnity Australia program with a new scheme – the Australian Government International Exhibitions Insurance Program (AGIEI). It heralds a completely new approach whereby the Government will provide funding for eligible organisations to purchase their own commercial insurance.[23]

When the still current scheme, Art Indemnity Australia (AIA), was introduced, it was hailed as removing from galleries the financial burden of seeking commercial insurance. The new scheme recognises that when dealing with exhibitions valued at more than $50 million, insurance is best treated as a commercial and budgeted cost of mounting major exhibitions. The $50 million threshold is increased from the $20 million threshold under the current scheme.

This is a major shift of philosophy: When the AIA first started in 1979 the Commonwealth self-insured against the risk of loss or damage to indemnified works of art. In 2001, this policy changed and the Commonwealth took commercial insurance to reinsure its risk. Now, with the new scheme, the Commonwealth has removed itself from potential legal liability and from the administrative burden (except where collecting institutions choose to use Comcover as their insurer). In its new, simplified role it will merely provide funds to enable exhibition promoters to obtain their own cover to cover their own risks. The original approach was sensible. The new approach is sensible. The current one never was.

Applicants to the AGIEI are limited to:

• Commonwealth, State or Territory Government collecting institutions;
• incorporated not-for-profit Australian collecting organisations; and
• incorporated not-for-profit organisations that have experience in developing and touring international art and cultural exhibitions[24].

This is a huge expansion of access. Previous governments attempted to manage their exposure by limiting access to the scheme to just two organisations: the National Gallery of Australia and Art Exhibitions Australia Ltd. This made sense in the days in which those organisations were probably the major promoters of blockbuster shows but over the past thirty years other organisations, in particular some of the State Galleries, have become experienced presenters of mega shows. Notwithstanding this, when the AIA was reviewed in 2001, the Commonwealth continued to exclude the State institutions from direct participation in the AIA[25] saying that the State institutions should either partner with one of the managing organisations or rely on their own State government indemnity schemes. Thankfully, that thin-lipped state/federal tension is not reflected in the new scheme.

However, it should be noted that there will be some caveats on the ability of state-based organisations to access the program. Single-venue exhibitions in the home state/territory of the applicant, where that state/territory has its own indemnity or insurance scheme will not be eligible. This places an emphasis on touring exhibitions to more than one venue and ensures that the Commonwealth scheme is seen as an addition to, not a replacement for, state government funding.

While the above is a step forward, the description of eligible applicants might have some interesting consequences. For example, most regional collecting institutions will not be eligible to apply because most of them are not, themselves, incorporated. They are owned by local councils. A few, however, are incorporated[26] and would clearly be eligible provided they have exhibitions valued at $50 million or more. Still, the details of the new scheme are yet to be released and small anomalies such as this can easily be dealt with as the program evolves.

In general, the AGIEI is a completely new policy direction and is an initiative that will be widely welcomed by the sector.

The Department of Environment, Water, Heritage and the Arts will administer the program. At time of writing, all we know is that applications for funding under the AGIEI Program will involve two stages: an initial application for in-principle approval and a final application at least 60 business days before the exhibition is to commence. Initial applications for in-principle approval for funding under the AGIEI Program will be due on 1 March each year for exhibitions commencing on or after 1 January of the following year.[27]

However, there will also be an interim arrangement for exhibitions commencing between 1 July and 31 December 2010 with applications closing on 31 October 2009.

[2] For example, ‘to be used for the benefit of the collection’.

[3] The variety of insurance cover available is limited only by the needs, imagination, and resources of the parties. Other policies not discussed here include: boiler insurance; computer insurance; library, valuable papers and records insurance; vent insurance; all risk floaters; accounts receivable insurance; money and securities insurance; products liability insurance; contractual liabilities insurance; publishers liability insurance; and many others. It is important that the organisation and its broker discuss at length the needs of the individual collecting organisation, before settling for any particular policy or company.

[4] As with other governance obligations, the board’s liability only extends to giving the issue its diligent consideration. It is not required to get the answer ‘right’.

[5] Nick Brett, AXA Art Insurance Limited, Works of Art: Their Financial Protection (unpublished).

[6] For example, if a natural history collection lends a collection of hundreds of rock samples or butterflies to an academic researcher, is there a system by which the loaned material is condition reported and counted before the loan and upon return? If not, there is little point in insuring the material for loss of damage when on loan because the claim would not be able to be substantiated.

[7] See ‘Insured value’ below.

[8] The prudent borrower will not agree to any demand that it will be liable ‘to the full extent of insurance coverage’. It is none of the lender’s business what that full extent may be. To disclose that can, in some cases, even be in breach of the insurance policy. It does have a right to be contractually insured that the borrower’s insurance is sufficient to cover the value of the loaned item.

[9] ‘Subrogation’, is the right of the insurance company that has paid out on a policy to ‘stand in the shoes’ of the indemnified party (the insured) and to then seek redress against the party responsible for the loss. For example if an employee of the borrowing institution is negligent and causes damage to the insured material, the lender’s insure will pay out the owner but would have the right to then chase the employer of the negligent employee (the borrowing institution) to recover the amount of the payout. In this way, it is clear that the lender’s insurance provides no protection to the borrower unless it is either a named additional insured or the rights or subrogation are explicitly waived.

[10] M. Malaro, Managing Museum Collections (2nd ed), Smithsonian, at 242.

[11] Indeed terrorism insurance was so problematic in the USA that the bush administration introduced the Terrorism Risk Insurance Extension Act which was a temporary mechanism intended to provide certain cover until the private insurers could develop their own responses to the terrorist threat in the USA. Unless extended, the Act expires on December 31, 2007. See http://www.treas.gov/offices/domestic-finance/financial-institution/terrorism-insurance/

[12] See M. Malaro, Managing Museum Collections (2nd ed), Smithsonian, at 241-242.

[13] Note that the agreed value is just that. Reference to likely market value is only one consideration that can be helpful in working out what that agreed value should be.

[14] There is also an ethical issue for the borrower institution. In agreeing to an over-valuation it is permitting its reputation to be used to ramp the value of the item. Subsequent potential purchasers of the item may/are likely to be shown the value that was agreed by the borrower institution and rely on the supposed care, attention and expertise implicit when it signed off on the ‘agreed value’.

[15] Nick Brett, AXA Art Services Limited, Works of Art: Their Financial Protection (unpublished).

[16] See Fn 15.

[17] In such a situation it is prudent also to include a term whereby any liability for claim over and above the agreed cap is expressly excluded.

[18] Make sure that the waiver includes liability for ‘gross negligence’ as it is well established that where one party attempts to exclude liability for its own negligence, the courts are inclined to disallow reliance on an exclusion clause where the negligence has been ‘gross’. If your sense of pride forbids excluding your own gross negligence, get insurance.

[19] See Fn 15.

[20] Risk Management and insurance for museums and Galleries: <http://www.museumsaustralia.org.au/site/page233.php>. This provides a directory of related websites and a very useful article Insurance Issues at the opening of the 21st Century, J. Edwards & B. Robertson, History Matters, Vol 14, Number 3, Nov 2004.

[21] <http://www.aph.gov.au/House/committee/cita/arts_indemnity_australia/artreport.html>.

[22] The following information has been obtained from the Guidelines and Application Forms available on the Arts Victoria website: <http://www.arts.vic.gov.au>.

[23] See <http://www.arts.gov.au/collections/agiei-program>.

[24] For example, Art Exhibitions Australia Ltd.

[25] The AIA was last reviewed in 2001, ‘Covering Your Arts: Art Indemnity in Australia’; see <http://www.aph.gov.au/House/committee/cita/arts_indemnity_australia/artreport.html>.

[26] Such as the Wollongong City Gallery which is a company limited by guarantee.

[27] <http://www.arts.gov.au/data/assets/pdf_file/0006/88665/agiei-factsheet.pdf>.

Author’s note [1]

Introduction

To start a discussion about repatriation, a touch of lexicological candour may be helpful: Not everyone agrees what ‘repatriation’ is. There seem to be two different approaches: one is to focus on the subject matter of the claim; the other is to focus on the legal rights that underwrite the claim.

In Australia, we typically use the word when referring to the return of human remains and sacred objects, but it is sometimes also used to refer to other artefacts – both sacred and secular. Some would say that the former is ‘repatriation’ while the latter is really ‘restitution’.

As you will see from the discussion that follows, there is one kind of claim that is quite different from the others in that it is dependent on proving which party has the superior claim to legal ownership. If the argument is really about property rights, the claim is more properly described as one of ‘restitution’ rather than ‘repatriation’.

Still, because most of the learned commentators seem to use these terms interchangeably, this chapter first describes repatriation in its broadest sense[2] before concentrating on the repatriation exercises most likely to be experienced by Australian institutions – those involving Indigenous human remains and sacred objects. True repatriation.

Types of repatriation claim

Many different types of material may be the subject of a claim. At its simplest, it is useful to distinguish between at least three kinds of material:

• property that was legally obtained or collected but where the circumstances of collection breach traditional beliefs or ethical principles;
• property that has been legally obtained but disposed of illegally; and
• property that has been illegally obtained or collected but is legally held.[3]

Each of these can be broken down into sub-categories and indeed it may be useful to do so. These classifications are important because there is no reason why all claims for different types of material should be treated the same. Indeed, if each claim is to be dealt with in the most effective manner, they should not be.

Planning effective strategies requires that each repatriation event be considered individually, for repatriation is only a generic term for a range of demands and a range of desired outcomes. Accordingly, it is useful to unpick what we mean by the word ‘repatriation’ in each individual circumstance so that we can adopt the most appropriate strategy for handling it. The following is just one way of analysing these claims:

Type I repatriation claims

This occurs where the material was legally obtained or collected but where the circumstances of collection, breach traditional beliefs or ethical principles.[4]

The most obvious examples of this category are the collections of human remains held within collections. Most of these will have entered the collection when there was no question as to the legality of the means by which they were either gathered or acquired. It is just that the ethics of collection acquisition and management have evolved: What was viewed by the collectors and the institutions as socially, morally or scientifically appropriate has become inappropriate.[5]

The managers of collections containing human remains and sacred objects face the consequences of this ethical evolution in their daily practice: What is it appropriate to hold? What is it appropriate to display or use? All that the lawyer can reliably say is that these kinds of collection management issues are not really legal in nature but rather, ethical.

Human remains

Is it possible for material to have been illegally collected but legally obtained? Well, yes and no. Or more precisely, it depends.

Legal argument

As you can see from the discussion of ‘legal title’ in Chapter 7, the general rule is that no one can pass on to another better title than he or she enjoys. There are various statutory exceptions to the rule and any legal dispute about the ownership and restitution of chattels[6] will canvass these. In the case of human remains, the general position is more complex.

Once the corpse is buried, the general rule is that it ‘forms part of the land in which it is buried and the right of possession goes with the land’[7]. It is non-property.

Three important lines of authority qualify the general rule:

• There are several cases that establish that the executor[8] (or where there is none, the deceased’s spouse or parents[9]) has the right to possession of a body for the purposes of its proper disposal[10]. This is not a right of ownership; rather it is one more akin to guardianship, but it has little to do with ownership.
• Because of the grisly history of burial site abuse, all Australian jurisdictions now have statutes that control burial sites and confer various consent rights on executors and heirs – but they don’t give them ownership of the human remains.[11]
• In Doodewarde v Spence, the High Court held a corpse could be treated as property in certain circumstances:

When a person who has by the lawful exercise of work or skill so dealt with a human body or part of a human body in his lawful possession that it has acquired some attributes differentiating it from a mere corpse awaiting burial, he acquires a right to retain possession of it, at least as against any person not entitled to have it delivered to him for the purpose of burial, but subject, of course, to any positive law which forbids its retention under the particular circumstances.[12]

Similarly in England, a court held that body parts may be property if they ‘have they have acquired different attributes by virtue of the application of skill, such as dissection or preservation techniques, for exhibition or teaching purposes’.[13] It is this third reservation to the general rule that has resonance for museums in that it is the basis upon which they are able to claim legal ownership of their collections of human remains. This is a characteristic of Type I repatriation claims - assuming the museum is able to withstand a claim that it acquired the collection material unlawfully, then the only basis for the return is one based on Ethics, not Law.

Ethical argument

Is there is a valid distinction to be made between ancient human remains and modern remains?[14] Should we treat Egyptian mummies the same as we treat human remains from the 19th and early 20th centuries? In other words, does the proximity of the deceased to his or her living family members make any legal or moral difference to the way that a repatriation claim should be treated? It may usefully be argued that the younger the remains, the lesser the right to treat them as collection objects and the greater the right of relatives and communities to obtain their return and deal with them in accordance with belief, tradition, and love.

Perhaps all we can really say is that the moral claim of those seeking repatriation of non-ancient human remains is the strongest, and that there is some, undefinable line in the sand[15] at which we are more inclined to say that the claim has become weaker.

But if we substitute Mungo Man[16] for the Egyptian mummy, does our answer change? If Mungo Man were in the British Museum, would we view it like the mummies and say that it should stay in that collection, far from its place of discovery; its home? Does a 40,000-year age difference allow us to think of them differently? Perhaps we subconsciously distinguish between them on the basis that one is packaged as art history or beautiful social history whereas the other is so starkly devoid of embellishment. [17]

Perhaps it is more profound than that: Perhaps it is because Australian Indigenous people claim a continuous living culture based on continuity of ancestry, place and traditions whereas this is not the case for most Old World burials which have occurred in parts of the world that have seen waves of conquest and cultural change.

Sacred and significant objects

Objects that are sacred or otherwise culturally significant also frequently subject to Type I repatriation claims. The return of these objects is perhaps less easily argued than that of human remains. After all, the essential character of the latter is easily established: The remains are either human, or they are not.[18] With sacred or significant objects it is not so easy. Degrees of sacredness are subtle matters. Objects may fall anywhere along a cline of sacredness, from secret sacred (therefore highly restricted and usually not to be viewed by a general audience), through to sacred but public (which is the bulk of sacred objects, used in public ceremony), and finally to secular. Repatriation is mostly concerned with restricted secret/sacred objects.

How are we to gauge ‘sacredness’? With indigenous material we can ask those for whom it is sacred. But is there a difference in the sacredness of a Mesopotamian god-form, a mediaeval chalice or crucifix, and an indigenous churinga?

If so, what is that difference based on? The temporal distance between use of the object as sacred object and its use as collection object?[19] The geographical distance between the place of sacred use and the location of the collection? The degree of cultural separation between the source culture from the collection culture? The political or diplomatic pressures of any particular age? Whatever the reason, sacredness is not a constant quality.

Indeed, some objects are not sacred at all but are hugely significant and are accordingly treated with similar respect. Commonly, these are objects that gain their significance because of their association with a particular place, person or event. The Elgin Marbles are not sacred but they are certainly significant.

Type I repatriation claims can rarely be based on legal principles; nor can their solution. The issue is one that will be largely determined by the degree of respect that the owner accords to the claimant’s spiritual or cultural beliefs.

In Type I claims:

• Ownership is commonly not in contest. It is usually acknowledged by the claimant that the institutional owner is the legal owner;
• Claims are based on a recognition of rights that is ethics-based, not law-based;
• Although a financial component of the claim may constitute part of the claim, claims are not really about monetary compensation. They are about things for which monetary compensation makes little sense, because they are about the soul rather than the value.

Type II repatriation:

Type II repatriation occurs where property has been stolen, exported illegally from its country of origin or imported illegally into Australia and where there is a relevant treaty between the country of origin and Australia.

Most of the countries that signed the 1970 UNESCO Convention[20] have legislation that seeks to control or inhibit the export of culturally significant material. Such powers override of the rights of the current ‘owner’ of the property.

In Australia that legislation is the Protection of Movable Cultural Heritage Act 1986 (PMCH Act). It gives foreign governments the right to request the Australia government to seize and return movable cultural heritage objects that have been stolen or illegally exported. The PMCH Act only came into operation on 1 July 1987 and accordingly, the right to request return only applies to material that entered Australia after that date. But that is not the end of the matter:

• Where the requesting country is a Party to the 1970 UNESCO Convention, the date of the illegal export of the objects must be after 1 July 1987; and
• Countries that are not a Party need to have relevant cultural heritage protection legislation in place at the time the material was exported.

In these claims:

• current ownership is irrelevant;
• they are based on international treaty obligations as effected by the local legislation. Accordingly, legal argument is restricted to the applicability of the Act and compliance with its terms;
• the claims are nation-to-nation and cannot be brought by individuals;
• they are not about monetary compensation. They are about protecting the cultural patrimony.[21]

Examples of type II repatriation

The PMCH Act has importance for every collecting institution. As is discussed in Chapter 11, this legislation allows the government to seize material that has been stolen or illegally exported from another country in contravention of the cultural heritage laws of that country. No collection manager, CEO or board member, wants to be advised that the acquisition of a collection item was tainted by illegality and that the material is to be removed from and lost to the collection. It is the stuff that can affect the good standing of the institution and the professional reputation of those responsible for the acquisition.

Just in the past five years, 750 kilograms of illegally imported dinosaur, mammal and reptile fossils were returned to the Chinese government; 130 kilograms of dinosaur and plant fossils illegally exported from Argentina were returned; 16 Dyak Skulls returned to Malaysia; and an Asmat human skull from Papua returned to Indonesia. In 2008, the Australian Government returned a rare 15th century Ulm Ptolemy map of the world, stolen from the National Library of Spain, to the Spanish government.[22]

These few examples illustrate the need for undertaking rigorous due diligence as to provenance before agreeing to the acquisition of collection material. The dangers can be subtle: it is not likely that you will be approached by a man in a pub and offered 750 kilos of dinosaur fossils. Often, by the time the offer is made to the collecting institution, the origins of the material have been coated with a veneer of respectability. We want the story to be true but unless we are prepared to lose the object to a claim under the PMCH Act, due diligence is essential.[23]

Type III repatriation

Type III Repatriation cases occur where (i) there is some illegality that affects the chain of title in the property, thus affecting the present owner’s right to claim ownership, and (ii) the PMCH Act does not apply.

These cases are complex because they are an application of traditional legal analysis of property rights. They may be brought by governments[24] or by individuals.[25] In such claims, amongst many other things, the claimant must show that:

• the claimant can prove that the property was been stolen, looted or otherwise unlawfully acquired;[26]
• the claimant has the right to bring the claim;[27] and
• there are no procedural or other bars in bringing the claim.[28]

Perhaps the best-known examples of these claims are the so-called ‘despoliation cases’, but these claims go far beyond those arising from armed conflict. Type III repatriation cases potentially affect every acquisition that turns out to be stolen, notwithstanding that it may have passed through several hands and been the subject of due diligence as to provenance.

In these claims,

• ownership is commonly in contest. It is rarely acknowledged by the claimant that the institutional owner is the legal owner;
• the claims are based on the application of the law of property rights;[29]
• they are often about monetary compensation. When individuals bring the proceedings rather than communities or nations, the main driver is often monetary rather than cultural benefit. If there were to be a law passed that no repatriated cultural material were able to be resold, we would see which of these cases was about the money and which were about cultural and spiritual significance. The point is not that one is better or worse than the other: simply, they are different – and as such require different policy approaches.

Because of the characteristics described above, Type III repatriation cases are more properly referred to as examples of restitution rather than repatriation. Learned commentators seem to use the terms casually but it might be more helpful if we were careful to distinguish Type III claims from the others.

An example of type III repatriation

Let’s illustrate this by looking at a non-despoliation hypothetical. Museum A holds Indigenous human remains. It acquired them in 1947. A claimant seeks the return of those remains. She is doing so on ethical and moral grounds and is not seeking financial restitution. What would she have to prove?

If it is a type III claim, the road will be hard. At the very least, she will have to prove beyond reasonable doubt:

• the identity of the remains;
• that she is the lawful heir or legal representative of that person;
• that she has a better legal right to the ownership of the remains that that of the museum;[30] and
• that she is not procedurally time-barred from bringing action.

This is not an action with high prospects of success if pursued as a Type 111 claim. It is most probable that the claimant will lose if she approaches it as a legal claim. It is really a Type I claim and is best treated by both parties as such. This is an issue that is more likely to be resolved by understanding and negotiation than by litigation. If litigated, the museum would likely win – but the core ethical or moral issue will not be resolved.

Role of law in resolving repatriation claims

Introduction

Two initial and over-arching legal questions confront every organisation facing a repatriation claim:

• Ownership: Is the institution the legal owner of the material? Can it prove its ownership of the material? Or perhaps more correctly, does the evidence of its ownership outweigh any contradictory evidence that the claimant can adduce in court?
• Power: Does the institution have the legal power to deaccession the material from its collection and hand over the legal ownership of the material to the claimant?[31]

Then what follows rather depends on what type of restitution claim it is. When faced with any claim of repatriation it is important that the institutional owner quickly considers what type of repatriation claim it faces. This will help determine the appropriate strategy. Types I and II are lawyer-lite. Type III is lawyer-max.

Role of lawyers in type I repatriation claims

When we look at the three characteristics of Type I Repatriation claims, we see that the problem is essentially not a legal one. Provided that the rights of ownership are established and it can be proved that the institution has the right to deaccession and transfer legal ownership, in Type I repatriation there are really very few legal issues. While lawyers may be useful as part of the back-up team, in Australia the core issues to be resolved are ethical, not legal.

The notable exception to this is when the claimant chooses to adopt a legal strategy. It is unusual, because it requires the claimant to mount its claim on grounds that permit it to overcome the obvious ownership hurdle. It requires finding another ground upon which to fight and the cultural property statutes provide the most obvious opportunities.[32]

Role of lawyers in type II repatriation claims

From the four characteristics of type II repatriation claims it can be observed that there is a preliminary role for the institution’s lawyers – but this is really restricted to issues concerning the applicability of the legislation. Once it is determined that the Act applies and that the request has been properly made, the issue is an inter-government one.

Role of lawyers in type III repatriation claims

Type III claims are very different. The problem is essentially legal. At its heart, it is nothing more that a dispute about the legal ownership of property. Lawyers will be, and need to be, involved as soon as the claim arises. Lawyers will be central to the analysis, passage and resolution of the claim. The administration should not take any steps without doing so in accordance with the advice of their legal experts.

The Dja Dja Wurrung claim

In 2004, the Melbourne Museum mounted an exhibition called ‘Etched on Bark 1854’. Included in the show were three objects on loan from the Royal Botanic Gardens, Kew and British Museum. One was a ceremonial emu figure made from river red gum and decorated with red and white ochres, and there were two etchings on Box Bark, one showing a hunting scene and the other, slightly larger, showing men dancing in a ceremony.[33] These were secular, not sacred, objects that had been obtained with free and informed consent and by means that did not violate tradition.

The Museum’s Aboriginal Cultural Heritage Advisory Committee was consulted before negotiations began with the overseas museums, and the Museum’s ‘Roving Curator’ and other staff had a number of more informal discussions with members of the Dja Dja Warrung and other community groups.[34] As is usual, under the loan agreements, at the end of the loan period, the borrower was required to return the objects to their owners.

The objects entered Australia with Certificates of Exemption under the Protection of Movable Cultural Heritage Act 1986 (Cth). (Certificates of Exemption allow Australian protected objects, including Class A objects, which are currently overseas to be imported into Australia and subsequently re-exported. Overseas owners of Australian protected objects are encouraged to repatriate them to Australia for exhibition or sale but the Certificate of Exemption provides security that the objects will be able to be re-exported on completion of the exhibition, or if a sale to a resident of Australia is unsuccessful.)

In an attempt to prevent the re-export of the material, the Dja Dja Warrung people of Victoria applied to the under s.21 of the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth) requiring the Minister to return the remains to their traditional (rather than the legal) owners.

The legislative history that produced the anomaly that permitted this claim is fascinating – but its telling can wait for another time. Politics had caused the original legislation to be amended in 1987 to make a particular exception for Victoria.[35] It was this that provided the basis of the claim – a claim that could not have been brought in any jurisdiction other than Victoria. The claimants sought and obtained a series of rolling court orders forbidding the export of the artefacts.[36] Eventually these claims were dismissed.

The Dja Dja Wurrung Native Title Group asked the Minister to use his powers under the Commonwealth legislation to make a declaration of preservation over the artefacts, to prevent their return to Britain and to compulsorily acquire them. He declined to do so, based on advice that no overseas museums would be likely to lend to Australian collections if the power was exercised in this way.

Although the legal case was lost, some small benefits were politically delivered: The Victorian government announced that it would establish a $250,000 fund to help buy-back cultural material held in private hands and that it would provide $50,000 to fund a feasibility study to investigate a Boort Dja Dja Wurrung Cultural Interpretive Centre. Not a big win. Elizabeth Ellis, the curator at the centre of the controversy, managed to articulate a positive analysis of the consequences:

‘What are some of the results of the Barks case? The London museums have been alerted, in a very dramatic way, to the significance of their collections from Indigenous Australians. The Dja Dja Wurrung have become aware of an artistic cultural tradition that they had not known about before, and young Aboriginal artists have begun making bark etchings in a similar style to that of their ancestors. The community at Boort, both Aboriginal and non-Aboriginal, have re-discovered a part of their local history, and plan a new Interpretation Centre to tell Indigenous and settler stories. And I hope to be able to continue to work at discovering the provenance of early Indigenous collections, and to tell histories which may contribute, perhaps only in a tiny way, to healing and reconciliation.’[37]

Indeed, a glass half full.

On the other hand, after the Dja Dja Warrung litigation many overseas collections expressed the view that they would be reluctant to lend Aboriginal material to Australian institutions for fear that they would be subjected to similar treatment. In response, in 2006, the Commonwealth government amended the Aboriginal and Torres Strait Islander Heritage Protection Act to repeal the anomalous Victorian exception that had permitted the action to be brought[38] and to provide that a Ministerial declaration under s.12(1) of that Act could not prevent the export of an object where there is a Certificate of Exemption in force under s.12 of the Protection of Movable Cultural Heritage Act authorising its export.[39]

Because of this, it would be impossible to mount the action again – but some overseas owners don’t worry about fine legal distinctions: They remember the aggravations suffered by the lenders in this case and are reluctant to walk into what they perceive to be a foreseeable ambush.

This was a legal action doomed to failure. The claim was treated as though it were a type III claim whereas it was always a type I claim. This case illustrates that a defendant institution has little control over the tactics of the plaintiff party but it also illustrates that if a party wrongly analyses the nature of the claim (or deliberately adopts a litigious approach for essentially political purposes), the result is enormous financial expense and, perhaps more importantly, the feeding of fearful and recalcitrant positions and the destruction of much trust and good-will.

Repatriation of human remains and sacred material[40]

In Australia, the repatriation of Aboriginal and Torres Strait Island human remains and sacred objects is informed and influenced by government legislation and funding programs, museum profession ethical guidelines, and institutional policies – but the courts have played no part in it. In this section, where we consider the way that Australian museums handle claims for the repatriation of this kind of material, it is important to remember that these are type 1 repatriation claims: situations which are not resolved by legal analysis and disputation but rather by the resolution of competing public interests.

The resolution of competing public interests

Even where the claimant can establish a strong moral basis for repatriation, there is inevitably a competing public interest claimed by those objecting to the repatriation. For example, when the repatriation of human remains is sought, the argument of the claimant is that the remains should be handed over to their family or community so that they can be treated with respect in accordance with their own customs and beliefs. For the owner-institution the argument usually is that ‘the collection should be available for scientific research that will contribute knowledge as to the sociology, geography, anatomy and physiology of humans generally or of particular classes of humans’. These are both valid, although competing, community interests.

If this conundrum is to be resolved, it is important that both sides recognise that there is no law or science on the side of those seeking repatriation of human remains and sacred objects: the claim is ethical and moral. It is unhelpful for the institutional owners to argue that the claimants have no legal right over the material. Everyone already knows that. To argue the Law is to miss the point and to miss the opportunity to find alternate ways to resolve the dilemma.

Indeed, it is important that the owner avoids falling into the trap of conceiving of such claims as a ‘legal dispute’. Such categorisation will inevitably create a psychology whereby the matter is treated by litigators rather than negotiators.

As for owners who resist repatriation on scientific grounds, they must acknowledge that any strength of their position is dependent upon the value of the science delivered. For example, if the collection has been collected in a manner that makes reliance on the data unsafe, what is its scientific value? Sometimes it is argued that the value of a collection of human remains lies in its potential: The material will be available if and when the decision is made to undertake scientific testing, or if and when new technologies are invented that will permit different kinds of examination. This argument may have merit but is often the resort of institutions that have never actively planned such investigation, have no clearly articulated thesis that they wish to test, and have no peer-approved or community-endorsed strategy as to how it should be done.[41]

The difficulty faced by both the claimant and the owner is that there is no single, correct, answer. There is ‘right’ in the claims of both sides.

Each side can argue that its public interest should get precedence over the other – and where that is the approach taken, the status quo will be retained by the party that can prove legal ownership of the material (usually the institution) and the dispute will continue to burn like fire in a peat forest. In dealing with claims for repatriation, listening skills are more important than forensic skills; mutual respect and the adoption of creative strategies to achieve common goals, are more effective than either litigation or passive aggression.

Attitudes to repatriation within the museum sector

It is important to understand that the attitude of Australian museum professionals to repatriation is not necessarily the same as those of their European colleagues. From the perspective of a ‘source country’, many European institutions are reluctant to hand back human remains, either to the families, peoples or governments from which they were originally taken. It would seem that they consider human remains to be an important part of science and history collections and should be retained so that the museum has the capacity to undertake scientific examination and experiments.[42]

The Australian and New Zealand approach is in stark contrast. In our region, there is a widespread belief that the arguments in favour of maintaining collections of human remains are difficult to sustain.[43] Notwithstanding that the existence of the collections may permit an institution to scientifically examine the remains, in fact, very little such examination is done. Most of the remains sit undisturbed of their shelves for year after year and decade after decade.

There are good reasons for this:

• very few of the remains were more than 150 years old at time of collection[44];
• the means by which most of them were collected were scientifically biased and unreliable; and
• the ethical underpinnings of their collection is often incompatible with today’s ethical and social standards.

Consequently, over the past twenty years in Australia there has developed an institutional culture by which it is assumed that the return of human remains to their kin or skin group, or at least an appropriately affiliated cultural group, is to be preferred over holding them within the storerooms of the museums on the off-chance that they might later be useful.

It is significant that the Australian approach to repatriation of human remains and sacred objects is primarily governed by industry practice not Law: The State and Federal laws provide no explicit assistance to the museums which are custodians of human remains and which either wish to conduct scientific experimentation on them, or wish to return them to their original community.[45] Indeed, in many ways, legislation is a hurdle to both. As a consequence, while the codes of ethics and practice that have developed as to repatriation are consistent with Australia’s treaty obligations and local legislation, they have really developed independently of any legislative guidance.

The existing statutory framework

The statutory framework is one that will be familiar to many jurisdictions. The relevant statutes can be divided into various categories:

• those that control the protocols of handling of dead bodies[46] and
• those that prohibit or lay down protocols for transplantation of, or experimentation on, human tissue[47].

None of these contain exceptions that give museums any particular rights to conduct scientific testing on the human remains in their collections. Indeed, although they do not act to exclude museums from such activity, these general statutes act as inhibitors of any such scientific work in museums as they include onerous requirements of consent – from the deceased, the relatives of the deceased, the executor[48], the coroner (or various combinations of all of the foregoing); They are based on the assumption that the subject is either living or fairly recently deceased. They make no exceptions that might meet the needs of museums whose collections include human remains; they provide no exceptions to permit scientific experimentation or testing by museums; they provide no explicit right to maintain such collections and nor do they impose any duty of repatriation.[49]

The difficulty of complying with the statutory consent obligations means that little real research is carried out on these collections and is one of the practical underpinnings of the practice of repatriation. If scientific examination is not carried out on the remains, and is discouraged (if not prohibited) by statute, then the case for continued custodianship of the remains is greatly lessened. In short, even if the change of cultural and ethical values were not sufficient to stimulate repatriation, economics would.

Sectoral and professional codes of ethics

The museum sector has done much work establishing codes of practice in relation to the custody, treatment and repatriation of human remains held in their collections. The archaeologists have a Code of Ethics[50] as do the anthropologists[51]and there are several investigations and reports that give guidance in the area.[52]

The over-arching philosophy and approach is set out in Museums Australia’s 2005 document: ‘Continuing Cultures, Ongoing Responsibilities: Principles and Guidelines for Australian Museums working with Aboriginal and Torres Strait Islander Cultural Heritage[53]:

Although this code of conduct is not legally binding on museums, it sets out the basic approach of Australian museums:

• involvement of the relevant community;
• an obligation on museums to be pro-active and seek out rightful custodians and to ask them as to what should happen to the material;
• an emphasis on the sensitiveness that should characterise such discussions; and
• the prohibition of museums putting conditions on the return. (After all, it is the view of the rightful custodians that is paramount.)

This work by Museums Australia was an important initiative because it spelled out for the first time these basic principles by which the profession was expected to operate when faced with repatriation issues. As a result of this work, some repatriation questions were more likely to be answered according to consistent principle instead of moral positions adopted by individual decision-makers.[55]

Institutional policies

All institutions that hold human remains have individual policies, governed by statute and informed by sectoral codes of ethics that set down the protocols that govern the day-to-day activity of the staff. Some of these will be general institutional policies that affect all parts of the collection (such as policies relating to deaccessioning and disposal) while others will be more particular to the holding and treatment of sacred/sacred and private material and to the return or repatriation of cultural material.[56] Indeed, ‘Australian State and Territory Museums have been returning ancestral remains and sacred objects to Aboriginal and Torres Strait Islander people for over twenty-five years (although with varying degrees of willingness in the early years). Most repatriation exercises were responses to unsolicited requests from Indigenous groups. Repatriation events were few and far between and handled on a case-by-case basis. Since the late 1990s however, federal, state and territory Museums have had the opportunity to be more pro-active in repatriation exercises through the provision of extra state and federal funding programs.’[57]

These policies will differ from collection to collection as the historical reasons for acquiring the material, the circumstances in which it was collected, the reasons that it still holds such collections, will differ from institution to institution.

For example, as Dr Pickering observes:

... the National Museum of Australia holdings of human remains and sacred objects derive from many sources. Most of the remains are from the old ‘Australian Institute of Anatomy’ collections, transferred to the NMA in 1985 following the Institute’s closure. The Institute was established in the 1930s and made large collections of human and animal biological specimens, as well as an enviable collection of other cultural objects now held by the National Museum of Australia.

The Museum has also become the unofficial repository and repatriation service provider for some collections from overseas. For example, collections from Edinburgh University, the Royal College of Surgeons, Manchester and Horniman Museums in the UK, the Bishop Museum and Michigan University in the US, and from the Museum of Ethnography in Sweden. While all of these remains have been temporarily deposited with the Museum, the actual advocacy that resulted in the returns was primarily carried out by Indigenous representatives and/or Indigenous representative bodies. These include the Aboriginal and Torres Strait Islander Commission (ATSIC), Aboriginal and Torres Strait Islander Services (ATSIS), the Office of Indigenous Policy Coordination (OIPC), the Foundation for Aboriginal and Torres Strait Islander Research Action (FAIRA), and the Aboriginal Legal Rights Movement (ALRM).

The Museum’s holdings of secret/sacred objects similarly derive from the Institute of Anatomy ethnographic collections, collections that were held by the Federal Government pending the establishment of a National Museum, collections subsequently acquired by transfer or purchase, and by donations.’[58]

Government policy and support

Although the statutory basis for repatriation of human remains and sacred objects is, at best, sparse, it would not be correct to infer from that, that the government has not supported the process. The repatriation process could not have been as effective as it has, had governments of various political persuasion not provided the funding that underwrites the National Repatriation Program and the processes untaken by the owners and the claimants[59]: The Australian Government provides support through the International Repatriation Program, funding for Keeping Places under the Indigenous Heritage Program and, through the Cultural Ministers Council, the Return of Indigenous Cultural Property Program.

In brief, the Return of Indigenous Cultural Property Program (RICP) supports Australia's major government-funded museums to:

• identify the origins of all ancestral remains and secret sacred objects held by museums where possible;
• notify communities of ancestral remains and secret sacred objects held in museums;
• appropriately store ancestral remains and secret sacred objects if this is requested by communities; and
• arrange for repatriation where and when it is requested.

Through the program, the Australian Government, state and territory governments and the museums sector collaborate to resolve issues relating to Australian collections of ancestral remains and secret sacred objects. Crucially, it provides financial support to both the museum sector[60] and to Indigenous communities[61] to meet the costs associated with repatriation. Funds are provided to Indigenous communities through the museums. The RICP Program does not apply to private or university collections, or to holdings overseas. [62]

The RICP Program is overseen by a Management Committee of museum and Indigenous representatives from each state, the Northern Territory and Museums Australia.

The eight museums eligible to participate in the program are: Australian Museum; Museum and Art Gallery of the Northern Territory; Museum Victoria; National Museum of Australia; Queensland Museum; South Australian Museum; Tasmanian Museum and Art Gallery; Australian Museum. The Australian Capital Territory does not hold collections of Indigenous remains and secret sacred objects, so does not participate in the program. [63]

The RICP program is now the formal enunciation of repatriation policy in Australia. The principles that it articulates are the result of extensive discussion and negotiation between state and Commonwealth governments, the museum sector and Indigenous community representatives. The Principles are based on the Museums Australia’s Continuous Cultures, Ongoing Responsibilities but have expanded and elucidated those principles and, crucially, backed the program with financial resources.[64]

Click HERE to view the Return of Indigenous Cultural Property (RICP) Program National Principles.

The effect of the principles

Underlying the principles enunciated in Continuous Cultures, Ongoing Responsibilities and the Return of Indigenous Cultural Property Program is recognition of the moral, rather than the legal, authority of the Indigenous people or communities to which this material belonged and from which it was taken. Each stage of the repatriation process is based on consultation with, and empowerment of, the other side – an approach that is quite different from the traditional adversary legal approach.

Indeed, it is fundamental to the repatriation process that the repatriation event is not seen as a dispute (although of course disputes do arise), but rather as an opportunity to achieve ethical and useful community outcomes.

Accordingly there is no place in the process for litigators or even passive-aggressive museum officials. The practical tools of the repatriation process are respect, acknowledgement and negotiation.

The repatriation process

This is not the place for a full description of the issues underlying the repatriation of human remains and secret and sacred objects. There are some excellent descriptions of this subject matter and the issues that arise.[65]

Each individual repatriation process, shares a generic structure:

• investigation of the provenance of the remains;
• inquiry as to the most appropriate custodian;
• formal request for return and proof of a right of custodianship;
• engagement;
• decision;
• return or other management.

Investigation of the provenance of the remains

Where the material is held in overseas museums, identification and the establishment of provenance is usually achieved as a result of the efforts of the claimant groups. Examples of repatriation being pro-actively initiated by the foreign institution are rare.[66]

In contrast, where the material is held in an Australian museum, repatriation is most often commenced by proactive investigation by the holding organisation.

Inquiry as to the most appropriate custodian

It is important that the repatriating organisation undertakes a transparent and inclusive process to identify the appropriate custodians. At the National Museum of Australia, the repatriation process is usually proactive: The Repatriation Unit, having established the geographic or cultural provenance of the remains, does not take on itself decide who is the most likely appropriate custodian. Rather, it consults with:

• relevant government heritage authorities to assist in the identification of formally recognised representative organisations and/or individuals; and
• Indigenous representative bodies, established by legislation or government funding, that have a responsibility to represent custodians, traditional owners, and Native Title holders.

As Dr Pickering observes:

The identification of such individuals and groups based on cultural, anthropological, as well as legislative, criteria is their day-to-day business. Access to this information – achieved through their endorsement of a repatriation claimant, ... assists the Museum in fast tracking the repatriation process to the benefit of custodians. At the same time, such engagement provides some protection for Museums when they are required to describe whom they dealt with and the basis for their accepting that individual or group as being the appropriate custodians for repatriated items.’

A lawyer might note that the museum is undertaking valuable risk management in adopting such a consultative and seemingly passive role: Whereas it might have immediately made its own conclusions as to the appropriate persons or group, it chooses not to do so and instead, consults both with the government sector and the non-government Indigenous bodies. It is using a well-proven technique for conflict avoidance in such situations: Involve all of the bodies that have a bona fide interest in the transaction and whose adverse views might either derail the process or impugn the outcome.

Once a prospective custodian, custodial group, or representative body has been identified, it is advised in writing of the nature of the remains or objects available for return.

Formal request for return and proof of a right of custodianship

Each institution will have a formal procedure that the claimant must follow to make a claim.

This is a sensitive stage: sometimes the community may be embarrassed that it was not aware that remains and objects were being held. It may be reticent because it doesn’t know how to proceed. Accordingly, how this first contact is dealt with can affect the eventual success of the repatriation event: The Institution must acknowledge the right of the indigenous group to be consulted in respect of the material and must treat the claimant and their enquiries or demands with respect.

The communities cannot be treated as though they are middle-class, urban, Euro-educated. Communities need to confer amongst themselves to determine what to do. They often lack financial resources and this consultation process often requires considerable financial and logistical support to organise and implement these meetings and discussions. [67]

Many such groups do not have experience in such formal matters and will need assistance. The institution will need to help them understand what it needs to verify the claim and what it considers constitutes proof of custodial rights. For example, at the National Museum of Australia, the potential custodians will be given a document entitled ‘Advice to Applicants’ that details how to apply for the return of material. This asks prospective custodians for any information that assists in supporting their application for repatriation, including:

• the identities of the persons, groups, or community on whose behalf the application is made;
• the description of the specific remains/objects requested;
• letters of support for the application from local representatives organisations such as Land Councils, Native Title Representative Bodies, Legal Services, Government Indigenous or heritage bodies, or other community organisations;
• where an organisation is making the application, a statement of support from members of the relevant group.
• a statement that the applicants are entitled by the traditions and customs of their community to make application for the remains/objects.

Such requirements can be intimidating and complex and the officers of the institution will often need to assist the claimant with an application. The information sought from the applicant can appear daunting but it is not compulsory: At the National Museum of Australia, although such information is desirable, the decision as to custodianship is often made without such information, based on the museum’s own research as to provenance together with the information supplied by the government and Indigenous organisations.

Engagement

The institution engages with the applicants, describing the process and listening to the applicants’ case. The application is considered, the options discussed with the applicants, other groups consulted, and where relevant, any competing claims are considered.

When more than one group makes application for the return of the materials, the museum must try to determine which has the better claim. Although museums try to be impartial and would prefer the disputant factions to come to some agreement themselves, in most cases one group better satisfies the criteria of endorsed representation[68] and so the museum deals with that group. The museum must adopt a transparent process and this not only alleviates the suspicion and distrust that can accompany such negotiations, it also promotes reasonableness on the part of the claimants.

Decision as to the application

The museum then considers the information that it has gathered – that obtained through its own provenance investigations; that supplied by the representative organisations it has consulted; and that provided by the claimant community itself – and makes its decision as to custodianship.

There are two main possible outcomes:

• either, the institution responds positively and agrees to the return of materials - an explicit acknowledgement of the applicants’ right to be primary custodians for the purpose of repatriation; or
• where the group has failed to prove its rights to exclusive custodianship of the materials, the application for return of the materials will be refused.[69]

Return or other management

There are levels of physical return, ranging from the specific to the generic: ‘return to site’; ‘return to descendants’; ‘return to ‘country’’; ‘return to region’; ‘return to state’ and ‘return to Australia’.[70]

The legal formalities of return are few. With the exception of signing a receipt for remains, the return of remains and secret/sacred objects is unconditional.[71] Custodians may do with them as they see fit.

For the institution, the receipt is the legal proof that the benefits and burdens of ownership of the material have passed to the new owners,

For the new owners, legal and physical return will not be an end but a new beginning. With return (and gaining of legal title), comes responsibility and these pressures are keenly felt.

As Dr Pickering has observed:

Few communities have the financial or logistical resources to take possession of materials. The treatment of human remains may require ceremonies that require transport of participants and catering, burial that requires ceremonies, a grave site, excavation, grave marker, or the construction and maintenance of a suitably secure and culturally acceptable storage facility. Similarly, the receipt of sacred objects may require special transport protocols, ceremonies and specialised secure storage facilities. All of this costs money and many of the applicants have little enough of it.

On a number of occasions, people have expressed the concern that, if returned, sacred objects might be stolen or interfered with. Communities need secure storage facilities in which materials may be stored. Because of the secret nature of the materials stored the repositories must also be inconspicuous and of low profile. As well as initial set up costs, such facilities require long-term maintenance and management. This requires a long-term commitment of human and financial resources.[72]

For this reason, the museum is often asked to continue to store the material on behalf of the Indigenous community. Where this occurs, the presence of the materials in the museum is legitimate, as it has been endorsed by the Indigenous owners of the materials.

When one of the applicant groups is formally recognised as the moral and legal owners of the materials, one outcome is the hand-over of items. Another outcome is the request that the institution continues to hold the materials at the request of the community. Thus, a physical act of transport and handover may not occur and indeed, is not necessary as a measure of a successful repatriation exercise. What has happened is that both authority and ownership have been returned – the institution may continue to hold materials but this is under the clear recognition that the claimant community is the owner and manager of the material.[73]

What is success?

From a legal perspective, a successful repatriation event occurs when a cogent process has resulted in the formal, documented transfer of ownership and responsibility. However this approach is too limited.

The criteria for defining a successful repatriation event should not be restricted to the physical return of materials. Rather, the criteria for defining success should include the recognition that both authority and ownership has been returned to the community. This, as well as the development of closer relations between the repatriators and the custodians, may prove to be the most significant achievement of the repatriation process.[74]

[2] That is, claims made by representatives of previous owners against present owners, for the return of cultural material.

[3] For example, where Aboriginal human remains were removed from graves in breach of the British Anatomy Act (1832) but have gone through a series of hands, today it would be reasonable to state that institutions have legal title to them. See ‘A Scandalous Act: Regulating Anatomy in a British Settler Colony, Tasmania 1869’, Helen MacDonald, Social History of Medicine 2007 20; http://shm.oxfordjournals.org/cgi/content/abstract/20/1/39.

Another example is William Ramsay Smith, the infamous SA Coroner, who secretly dissected bodies and sent remains overseas without consent.

[4] In some cases, the material was collected legally but the circumstances of collection no longer comply with modern standards of ethics (if they ever did); in other cases the collection was traded with free and informed consent but in violation of traditional beliefs; in still other examples, individuals may have been coerced inappropriately or struck a deal with white people when they had no right to do so on behalf of the group. In some situations the perceived wrongdoer is the collector of the material; in the others, it is the person disposing of it.

[5] There is little doubt that the Indigenous people found offence, then as now, in the idea that the collection of ancestral remains was ever socially, morally or scientifically appropriate.

[6] For example, arguments about the ownership and return, or restitution, of stolen artworks.

[7] Doodeward v Spence (1908) CLR 406 at 412, per Griffith CJ. And see Bone v Clancy (1881) 2 LR (NSW) (L) 176; Williams v Williams (1882) 20 Ch D 659; R v Sharpe (1856-1857) Dears & Bell 160; 169 ER 959.

[8] See Professor Patrick O’Keefe, (1992) 2 International Journal of Cultural Property 393, noting the New Zealand case of the Maori tattooed head which was advertised for sale by London auctioneers. The President of the New Zealand Maori Land Council applied to the High Court of New Zealand and was granted letters of administration of the estate of the deceased.

[9] As to disputes between the spouse and the parents as to burial, see Jones v Dodd [1999] SASC 458; and dispute between the birth mother and the adoptive parent: In the Estate of Dayne Kristian Childs, Buchanan v Milton, 27 May 1999; (2000) 53 BMLR 176.

[10] See In the Matter of Warren Andrew Gray [2000] QSC 390; Wuridjal v the Northern Territory Coroner [2001] NTSC 99.

[11] See the excellent discussion of legal regulation of burial sites in ‘Resting in Peace? A Comparison of the Legal Control of Bodily Remains in Cemeteries and Aboriginal Burial Grounds in Australia’, Prue Vines, [1998] SydLRev 3; <http://www.austlii.org/au/journals/SydLRev/1998/3.html#6>

[12] Doodeward v Spence (1908) CLR 406 at 414, per Griffith CJ.

[13] R v Kelly [1998] 3 All ER 741. Note that this was a case involving theft (and thus the argument was whether the body parts were legally capable of being stolen; see too Dobson and another v North Tyneside Health Authority [1996] 4 All ER 474.

[14] A rule of thumb applied by many institutions – unwritten – is that it is acceptable to display remains when the originating country also displays those kinds of remains, that is, mummies.

[15] Or temporal distance between the living and the dead.

[16] Mungo Man was discovered at Lake Mungo, NSW, in 1974. The body, dated as being 40,000 years old, was sprinkled with red ochre, demonstrating sophisticated burial practice. Lady Mungo (Mungo I) is one of the earliest examples of a cremation. The bones were unconditionally returned to the Paakanji, the Mathi Mathi and the Ngiyampaa in 1992.

[17] Helena of Constantinople (246/50-330) was laid to rest in a large purple-hued, porphyry sarcophagus, decorated with reliefs. When the sarcophagus was moved from The Mausoleum of Santa Costanza, to the Vatican Museum, what was happening? Had the nature of the tomb and its contents changed aesthetically, culturally or spiritually? Had the essential character of the object been transformed into an object of art?

[18] But see Fn 17 for an example of transformation of character.

[19] Certainly, contemporary religious significance is a value. Churinga are still used and where not used any more are still recognised as powerful objects to be respected and kept secret. Even strongly Christian groups will observe the restricted nature of the objects. Also, levels of restriction originally applied are important – a chalice is typically sacred – unrestricted, while a churinga is secret-sacred.

[20] UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Material (1970).

[21] There are many international examples of such repatriations. Of course these do not relate to the PMCH Act but rather, other bilateral treaties or agreements between the countries involved. For example, the San Diego Museum of Art was required to return an 18th century painting to Mexico that had been stolen from a small church in San Juan Tepemazalco. The return was pursuant to the 1971 bilateral agreement between the USA and Mexico by which the USA is required to return any works from the colonial period found to have been illegally exported after 1971: The Art Newspaper, No. 155, February 2005, p. 15.

[22] See <http://www.environment.gov.au/about/publications/annual-report/07-08/pubs/vol2-movable-heritage.pdf>

[23] See Chapter 9.

[24] For example, the cases brought by the Iraqi government for the return of material looted from public collections since the invasion of that country in 2002.

[25] For example, the actions brought by individuals seeking the return of artworks and other assets unlawfully seized from them (or their family) by the Germans during World War II.

[26] Note that the burden of proof is on the plaintiff and the standard of proof is ‘on the balance of probabilities’.

[27] For example, as the owner who was deprived of his/her rights or as the heir of such owner.

[28] For example, proceedings may be barred because of the passage of time (so-called ‘laches’ or ‘limitation of actions’).

[29] Many of these cases are determined by rules relating to the acquisition of title by purchasers with or without notice. These are laws that vary from jurisdiction to jurisdiction. The old ‘nemo dat’ rule by which a party is unable to give better title than he or she enjoys, has been eroded to various extents in various jurisdictions. (It has nothing to do with ‘Finding Nemo’. That is a film about a fish.)

[30] No easy task given that the preponderance of authority is of the view that the executors and heirs have few rights over the body once it is buried.

[31] For example, the material may have been donated to the organisation and that donation may have been conditional upon certain prohibitions against deaccessioning or transfer or they may be subject to a trust. Further, for many European and British museums (where collection material is treated as an asset of the State) deaccessioning may be only possible if there is specific legislation to permit the deaccessioning and repatriation.

[32] See the following discussion of the Dja Dja Wurrung claim.

[33] Elizabeth Willis, ‘The law, history and politics - the case of Etched on Bark’, 2006 ARC Conference, ‘Risky Business: Managing Responsibilities & Solutions’, Hobart: <http://www.museumsaustralia.org.au/dbdoc/Conf%2006%20Willis%20Concurrent.pdf.>

[34] See Fn 33.

[35] Aboriginal And Torres Strait Islander Heritage Protection Amendment Act 1987, No. 39 of 1987, s.3:

3. Section 7 of the Principal Act is amended:

(a) by inserting in subsection (1) ‘,except Part IIA,’ after ‘This Act’; and

(b) by inserting after subsection (1) the following subsection:

(1A) Part IIA is not intended to exclude or limit the operation of:

(a any provision of the Archeological and Aboriginal Relics Preservation Act 1972 of Victoria in so far as it applies to or in relation to an entry made in a register, or a declaration made, under that Act before the commencement of the Aboriginal and Torres Strait Islander Heritage Protection Amendment Act 1987; or

(b) any other law of Victoria (other than a law for the preservation or protection of Aboriginal cultural property within the meaning of

Part IIA) except as referred to in paragraph (a); that is capable of

operating concurrently with that Part.’

[36] For full analysis of the case, see LV Prott, ‘The Dja Dja Wurrung Bark Etchings Case’, International Journal of Cultural Property (2006) Vol. 13 No.2 at pp 241-246, Cambridge University Press.

[37] See Fn 17.

[38] Aboriginal And Torres Strait Islander Heritage Protection Amendment Act 2006, No. 152 of 2006.

[39] See the new s.12 (3A) of the Aboriginal and Torres Strait Islander Heritage Protection Act. Note that s.12 of the Protection of Movable Cultural Heritage Act allows a person intending to import an Australian protected object for temporary purposes in circumstances where the person may wish subsequently to export the object to apply to the Minister for a certificate authorising the exportation of the object.

[40] Thanks to Dr Michael Pickering, Program Director: Aboriginal and Torres Strait Islander Program & Repatriation Program at the National Museum of Australia, for his insights into institutional process and attitude.

[41] It should also be remembered that the scientific examination and testing of human remains is, these days, subject to rigorous protocols imposed by legislation, professional organisations and funding bodies. It is not easy to obtain these approvals.

[42] For a lucid description of the differing attitudes to repatriation within the museum community see Prof. Michael F. Brown’s address to the 2008 conference proceedings, From Anatomic Collections To Objects Of Worship at the Museum Quai Branly, in a session entitled ‘Repatriating Human Remains: Why, For Whom, Under Which Conditions?’: http://www.quaibranly.fr/en/programmation/scientific-events/past-events/international-symposium-from-anatomic-collections-to-objects-of-worship/index.html.

[43] See Repatriation, Rhetoric, and Reality: The Repatriation of Australian Indigenous Human Remains and Sacred Objects, M. Pickering, Journal of the Australian Registrars Committee, June 2002: 15-19, 40-41.

[44] Using the time of collection rather than the age calculated from the current year is significant for as time rolls on, remains get older. In the UK some museums have placed a 100 year age limit on what remains they will consider returning – but the age is determined by the current year. Consequently, in the not too distant future no remains will be eligible for return and the status quo of 20 years ago will be re-established. The date of collection should be the trigger.

[45] Australia voted against the Declaration on the Rights of Indigenous Peoples adopted by the General Assembly on Thursday September 13 2007, by a majority of 144 states in favour, 4 votes against (Australia, Canada, New Zealand and the United States).

[46] See the various Coroners Acts in each State: NSW: Coroners Act 1980; QLD: Coroners Act 2003; ACT: Coroners Act 1956; Coroners (Consequential Provisions) Act 1997; SA: Coroners Act 2003; VIC: Coroners Act 1985; WA: Coroners Act 1996; NT: Coroners Act; TAS: Coroners Act 1995.

[47] Relevant legislation includes the following: ACT: Transplantation and Anatomy Act 1978; Crimes Act 1900; Guardianship and Management of Property Act 1991; Medical Treatment Act 1994; Powers of Attorney Act 1956; SA: Transplantation and Anatomy Act 1983; Consent to Medical Treatment and Palliative Care Act 1995; Criminal Law Consolidation Act 1935; Death Definition Act 1983; Family Relationships Act 1975; Guardianship and Administration Act 1993; Natural Death Act 1983; NSW: Human Tissue Act 1983; Human Tissue Regulation Act 2000; Anatomy Act 1977 ; QLD: Transplantation and Anatomy Act 1979, Criminal Code Act 1899; VIC: Human Tissue Act 1982; Human Tissue (Prescribed Institutions) Regulations 1997; WA: Anatomy Act 1930; Criminal Code Compilation Act 1913; Guardianship and Administration Act 1990; Human Tissue and Transplant Act 1982; TAS: Anatomy Act 1964; Criminal Code Act 1924; Guardianship and Administration Act 1995; Human Tissue Act 1985; NT: Criminal Code Act 1983; Human Tissue Transplant Act 1995; Natural Death Act 1988; Natural Death Regulations 1989.

[48] Either a legally appointed executor or a person or group determined by the court to be entitled by tradition or custom to manage the estate of the deceased (including remains).

[49] Note that these provisions are not particularly useful to determine whether a particular person or group has a right to make a claim for repatriation of the remains, rather they are focussed on who is capable of giving consents for particular activities to be carried out on or with the remains.

[50] Code of Ethics of the Australian Archaeological Association, Australian Archaeological Association, December 2004: <http://www.australianarchaeologicalassociation.com.au/codeofethics.php>.

[51] Code of Ethics of the Australian Anthropological Society (2003): <http://www.aas.asn.au/Miscdocs/AAS_Code_of_Ethics.pdf>.

[52] Continuous Cultures ongoing Responsibilities, Museums Australia, 2004; Guidelines for Ethical Research in Indigenous Studies, AIATSIS, 2004; National Statement on Ethical Conduct in Research Involving Humans, National Health and Medical Research Council, 2004; Report of the UK Working Group on Human Remains, UK Department of Culture Media and Sport, 2003.

[53] 2003.

[54] There is a similar provision in respect of sacred/secret objects.

[55] It was also important because it was the basis of the development of the hugely significant Return of Indigenous Cultural Property (RICP) Program. This is discussed below.

[56] For example, at the National Museum these issues are governed by (i) the Deaccessioning and Disposal policy, (ii) the ‘‘Aboriginal and Torres Strait Islander Human Remains Policy’, (iii) the ‘Policy on the Aboriginal and Torres Strait Islander secret/sacred and private material 1996’; and (iv) the Return of Cultural Objects Policy 1996. See: <http://www.nma.gov.au/libraries/attachments/corporate_documents/policies/atsi_human_remains_policy/files/9463/POL-C-011%20Aboriginal%20&%20Torres%20Strait%20Islander%20human%20remains-2.0%20(public).pdf>

[57] Despatches from the Front Line? Museum Experiences in Applied Repatriation, M. Pickering, an unpublished paper delivered at ‘The Meanings and values of Repatriation: a Multidisciplinary Conference’, 8-10 July 2005, ANU, Canberra

[58] See Fn 57. The National Museum of Australia makes both its Aboriginal and Torres Strait Islander Human Remains Policy and its Procedures for the Care and Management of Aboriginal and Torres Strait Islander Remains, publicly available from the museum’s website.

[59] On 4th July 2000, the Australian Prime Minister, John Howard and the English Prime Minister, Tony Blair publicly committed their governments and countries to increased effort to repatriate human remains. It was an important official step for both countries. The commitment was made at the highest level and was internationally noted.

[60] The Museum Support sub-program. The Museum Support sub-program funds are primarily for the preparation of collections and employment of specialist consultants.

[61] The Community Support sub-program. These funds are for community use only.

[62] See: M Truscott 2006, 'Repatriation of Indigenous cultural property', paper prepared for the 2006 Australian State of the Environment Committee, Department of the Environment and Heritage, Canberra, <http://www.environment.gov.au/soe/2006/publications/emerging/repatriation/index.html>

[63] See <http://www.arts.gov.au/indigenous/return>

[64] The RICP program is jointly funded by state and Commonwealth governments. In the 2007-08 Budget the Australian Government committed $4.716 million over four years as part of its contribution to continue the RICP Program.

[65] See: The Management of Restricted Aboriginal Objects by the National Museum of Australia, D Kaus, reCollections, 2008, vol. 3, no. 1.

[66] However the Government, through FAHCSIA, is taking a primary advocacy role and liaising between claimants and overseas holding institutions.

[67] The repatriation initiatives could not possibly be as successful as they are if the claimants were not able to access government funding to assist them in the processes described in this chapter.

[68] Endorsement by state territory or indigenous representative bodies.

[69] This is rare but when it does occur it is often because of an application by an alternative group of the same cultural affiliation but with a stronger claim and greater community support.

[70] And each one is a successful outcome: Define success: repatriation of Aboriginal and Torres Strait Islander Ancestral Remains and Sacred Objects’, M. Pickering, Museum National, February 2003.

[71] At least this is so when the material is being transferred by Australian institutions. It is not necessarily so when the repatriator is an overseas institution.

[72] For example, in 1992, the remains of Mungo 1 (Mungo Lady) were repatriated and are held in a locked vault in the Mungo National Park Exhibition Centre. Two locks protect it: one key is held by the Aboriginal custodians and the other by archaeologists.

[73] Pickering, at Fn 43.

[74] See Pickering, at Fn 43, at 13-14.

Most collecting institutions are involved in the touring of exhibitions: some merely as recipients; others, as organisers and promoters of the shows. The touring of an exhibition is a complex legal transaction as the monetary value of the subject matter is often high and the rights and responsibilities of the participants are as complex as they are weighty. All participants are undertaking considerable risk and the primary risk management tools are the formal written agreements between:

• the lender of the works and the organising institution;
• the organising institution and the touring venues; and
• the organising institution and the courier company.

17.1 Agreement between the lender of the works and the organising institution

This agreement contains many of the matters already dealt with in earlier chapters, relevant to the loan-in of exhibition material. That discussion will not be repeated here. The main additional factors relate to the fact that the loaned material will be part of an exhibition that will tour to venues other than that of the organising institution. Every time that material is moved, it faces an enhanced degree of danger. The touring loan agreement has to recognise those risks, make clear what degree of responsibility the borrower is undertaking to minimise those risks and set out a procedure that will be followed in the event that the loan material is endangered or damaged. In this way, the lender is fully informed and is assured that its property will be properly cared for. For its part, the lending institution knows the limits of its obligations, responsibility and legal liability.

The organising institution will make sure that the promises that it makes to its lenders will be mirrored in the agreements that it negotiated with the touring venues but, at the end of the day, it is the borrower – not the touring venue – that will be primarily liable to the owner of the loaned material. It can pass on the obligations but not the liability.

17.2 Agreement between the organising institution and the touring venues

The agreement between the exhibition organiser and the venues to which the exhibition will be travelling is both a primary tool for managing the risk inherent in the transaction and a document that facilitates the cultural purpose. The latter is important because, unless this is recognised, the agreement is seen as negative, formalistic and inhibiting. It shouldn’t be. Without it, neither party would be prudent to undertake the cultural purpose, such shows would be impracticable, and the public would be the loser.

All good touring exhibition agreements are essentially loan-out agreements with two distinguishing features: first, the loan is for a whole show, not merely individual items and second, at the end of the exhibition period at the venue, the show will move to another venue (or return to the exhibition organiser for dispersal).

What are the risks that arise as a consequence of the touring nature of the show? Essentially, they all come down to the fact that whenever an object is moved, it is at greater risk than when it is static. Accordingly, the primary issues that arise in touring agreements focus on:

• the obligations of the venue to minimise risk to the loaned material;
• the degree of liability that the venue has in the event of loss or damage to an exhibition material;
• definition of the exact moment that the venue assumes that risk; and
• definition of the exact moment when it is absolved of that risk.

Accordingly, the contract should clearly articulate the parties’ obligations of care; the procedures that must be complied with, the degree of care, the period of risk and what is to happen in the event that something goes wrong. So that responsibility for the condition of the material can be properly ascertained, it is a standard requirement that a condition report be undertaken every time that the loan leaves one venue and every time it arrives at another venue.

17.3 Checklist for loan-out for a touring of exhibition

Click HERE to view the checklist that Simpsons drafted for a public art gallery (hence its references to works rather than any other material). The principles are the same, irrespective of the material on loan, even if the detail differs. It is provided as an aide de memoire so that you can check that your loan agreement covers the important issues. As with all such checklists, it can never be exhaustive: You should build on this list and make it your own.

17.4 Agreements for loan-out and touring of exhibitions

(a) The NAME Contract

The Network of Australasian Museum Exhibitors (NAME) has drafted a model agreement for touring exhibitions.[2] Click HERE to view the N.A.M.E agreement.

(b) Questacon Travelling Exhibitions Agreement

Click HERE to view the agreement that is provided by the Commonwealth for loans of travelling exhibitions from the National Science and Technology Centre (NSTC). It is clearly very different in scope from those that would be used for the touring of art exhibitions.

(c) Regional galleries touring exhibition agreement

Museums & Galleries NSW has developed an agreement for the loan of art works for the purpose of organising art exhibitions that tour regional galleries. In this document the body of the agreement contains both administrative and legal content, and only the detailed description of the loaned material is contained in an annexure.

Because it relates to the loan-in of artistic works it contains clauses that relate to copyright and moral rights that may not be relevant to loans dealing with non-copyright material. Nevertheless, most of the agreement is also relevant to non-art loans.

As with all templates, it should be treated as the starting point; it should always be amended to suit the particular needs of each show. Click HERE to view the agreement.

[2] This contract may be downloaded from: http://discover.collectionsaustralia.net/name/.

16.1 Introduction

Before using this Chapter it would be wise to have already considered the issues set out in Chapter 15 and, in particular, to have given thought to the checklist for loan agreements. Checklists such as these are an invaluable risk-management tool when drafting agreements because they help you to ensure that the agreement contains everything you need. Given that we usually work from an earlier document (a precedent) it is an understandable temptation simply to review what is already there: it is much harder to recognise what should be there but is not. For this reason, the prudent drafter will always use a checklist of issues as an aid to memory. Checklists are invaluable drafting tools and you should personalise them so that they cover everything relevant to your needs.

16.2 Form of documentation

There are two basic styles of loan-in agreement: one can be described as ‘body heavy and annexure light’ and the other, ‘body light and annexure heavy’. There is no right or wrong approach; it is a matter of preferred style.

Annexure heavy

Some borrowers put as much of the detail as possible into the annexures. For example, the loan–in agreement for the National Museum has a first section that is little more than a cover sheet with a place to sign. All of the details are in the annexures:

• The unique details of the loan are set out in one annexure: Name of lender; description of objects being lent; purpose of the loan; value of the objects and so on. This allows all of the matters that will vary from loan to loan to be provided without the need to vary that part of the document that sets out the rights and obligations that govern the loan. Keeping the variables in a separate annexure facilitates the administration of the loan and makes it easier for the subsequent computerisation of the loan details, thus improving administration during the period of the loan.
• Descriptions of the substantial (and largely immoveable) legal rights and responsibilities are contained in another annexure. When the legal matters are set out in a form that appears ‘standard’ they can appear less overwhelming (and less negotiable) than when they are contained in the body of the agreement. Their legal effect is the same; it is a matter of psychology, style, and administrative convenience.

Annexure light

It is the experience of some borrowers that the use of annexures is daunting for lenders – particularly where the lender is not another institution. Where material is borrowed from members of the public, a bulky contract full of legalese creates an unnecessary psychological hurdle in the loan process. The simpler the form and the language, the easier it is for the lenders to understand the terms of the loan and the easier it is for them to agree to those terms.

16.3 Examples of loan-in agreements

Major institution: non-art museum

Click HERE to view the Loan Agreement/Incoming that Simpsons developed for a federal collecting organisation. Like those of most major institutions, it is of the ‘annexure heavy’ variety.

Major institution: art museum

Most loan-in agreements share common principles, irrespective of the subject matter of the loan. That said, art museums have some special needs.

Click HERE to view the National Gallery of Victoria’s Loan Agreement.

16.4 Commentary on the inward-loan agreements

The above agreements each have their strengths and weakness. They reflect the particular needs of each kind of organisation given the scale of exhibitions and the values of items being loaned. The following are some of the issues that deserve to be highlighted: not all necessarily should be included – but they should be considered.

The lender notifications

One common matter that would be a beneficial inclusion in most agreements is a clause that obliges the lender to advise the borrower if there is any change in address of the lender or change of ownership of the borrowed material. Many borrowers have faced difficulties when, at the end of the loan period, they discover that the material has been sold, the lender has died, gone bankrupt, gone into liquidation or simply moved. The borrower needs to know that the person giving it instructions has the authority to do so (and the basis of that authority) and needs to be assured it is returning the loan to the appropriate person, entity and place. It is exposing itself to a potential claim for negligence if it does not do so and including such notice requirements alleviates some of that risk. If the lender fails to provide such notice to the borrower in breach of its obligations under the agreement, it is more difficult for it to allege negligence on the part of the borrower.

Copyright

Where the loan is of material in which copyright subsists, most agreements should contain a provision that articulates the borrower’s rights to exercise any of the rights that are the exclusive property of the copyright owner. Can it be reproduced in the catalogue, on the web site, in advertising for the show, for teaching purposes, for archival purposes? If so, what are the limits of that permission? Too often, the copyright clauses in loan agreements are too bland and without sufficient detail to act as tools that facilitate or maximise the opportunities of the loan.

It is also important that some enquiry be made as to the basis upon which the lender has made the claim of ownership of copyright. All too often, the owner mistakenly assumes that it is the owner of copyright and grants the borrower rights that it does not have. When dealing with non-sophisticated lenders it is well worth including a question in the pre-loan negotiations along the following lines: ‘(i) Are you the owner of copyright in the work? If so, what is the basis of your ownership of copyright?’ This assists the borrower to ascertain the validity of the claim. If the answer to the second question is ‘Because it owns the work’, the borrower knows that it cannot rely on the claim of copyright and the permissions that flow from it.

Where the lender does claim to be the owner of copyright it is also worth including a simple clause that states: ‘If the Lender is not the owner of copyright in respect of any of the Works that are subject to this agreement, the Lender warrants that he/she has obtained all necessary permissions.’ This is simple risk management: sometimes, no matter how careful the borrower is and how honestly and fervently the lender believes in its ownership of copyright, the lender may be sued by a third party who believes that they are the real owner of the rights. The inclusion of a warranty such as this means that the borrower can then look to the lender for the costs and damages incurred as a result of its breach.

Period of the loan

Although most lenders and borrowers think that this is clear in all loan agreements, often it is not. Absolute clarity as to the commencement of the loan is essential because this is the moment that risk transfers to the borrower. All standard loan agreements should be reviewed to ensure that this apparently simple feature is clearly established.

More commonly, loan agreements do not sufficiently specify the end of the loan period. This is particularly important in situations in which the loaned material is not collected or is unable to be returned.

First, at the end of this period, the borrower’s legal duty of care owed to the lender should reduce to those of an involuntary bailee.

Second, it is the date of the end of the loan from which all notice periods will need to be calculated. For example, if the agreement contains a provision that allows the borrower to warehouse, sell or acquire the abandoned material, the borrower must be able to comply meticulously with its time-based obligations and be able to show exactly upon what dates it acquired which rights.

Return of the loan material

As is discussed in Chapter 15.7, many institutions are plagued with the problem of uncollected loans – material that can never become part of the collection but which the organisation is obliged to store, insure and administer. Given that all public institutions need to maximise the effectiveness of their limited resources, it is a waste.

It is essential that lenders include full and favourable clauses that articulate their rights over uncollected or undeliverable loan material. The National Museum example above is deficient in that it does not provide for a right to actually dispose of the material. It promises that the museum will warehouse the material and although the storage costs may at some time be recoverable from the owner, it is foreseeable that there will be a time when the storage charges far exceed the value of the material and until the owner is found, the museum has to keep paying the costs.

In the Regional Galleries agreement there is a provision to dispose of uncollected loans but, it is suggested, the time lines are too long. Having to hold the work for six months before putting it in a warehouse is an undue burden on the storage facilities of many regional galleries and having to pay for the warehousing of the work for two years before being able to dispose of it, is similarly too burdensome.

Also in the Regional Galleries example, the disposal power only applies to situations in which the lender is obliged to collect the work. It does not deal with the situation in which the borrower has agreed to return the work but is unable to do so because the lender has failed to advise it of a change of address, has gone into liquidation or done something else that causes to frustrate the borrower’s fulfilment of its obligations. As is discussed earlier, it is essential that careful consideration be given to this provision so that the borrower can rely on the contract’s mechanisms rather than the more arduous statutory ones.

Catastrophe

As hard as one might try to avoid them, accidents do happen. People are thoughtless or ignorant. The elements wreak their havoc. Whatever the reason, all borrowers are familiar with the dreaded situation in which loaned material suffers damage.

It is good practice to include a provision that provides an agreed mechanism that will be carried out in such situations. The Regional Galleries agreement includes a simple version of this in the body of the agreement, but where the procedure is more complex, it is best handled as a schedule to the agreement. The relevant clause in the National Museum example needs expansion. It neither gives guidance to staff in the event of disaster nor gives the lender assurance as to what procedures will snap into effect in such circumstances. If we think of the loan agreement as a risk management tool, it is clear that this provision could be made much more useful. It is also interesting to note that the same institution’s loan-out agreement contains a much more useful provision – a useful example of how so many institutions use more vanilla contracts when borrowing than when they lend their own material. In a commercial context this approach is understandable but in the case of collecting institutions, where lenders are borrowers and borrowers are lenders, it makes sense to have a uniform approach to such obligations so that the administrative procedures are uniform allowing the staff to be more certain of what is expected of them.

16.5 Loan-out of collection material

Introduction

The museum’s collection is its core business. Moreover, the items that make up the collection are often of considerable monetary, social, spiritual or intellectual importance. They are often unique and easily damaged or destroyed. Accordingly, when collection items are allowed out of a museum, it can only be in circumstances in which all aspects of the transaction are highly controlled. The loan-out agreement is the very heart of the risk management regime and every prudent owner will need to ensure that its asset is treated in a way that reflects its value and importance.

Outward loan agreements take into account the nature and particular characteristics of the material being loaned. The concerns of a loans officer in an art museum will have some resonances for the loans officer in a natural history museum: the generic issues will be consistent. However, the natural history loan agreement will have greater emphasis on quarantine obligations, the prohibition or regulation of destructive testing, the mechanisms required by CITES legislation and the risk management procedures required by the sometimes hazardous nature of the collection materials (or storage media such as ethanol). Each collection type imposes its own requirements on the loan-out agreement.[2]

The issues relevant to the loan-out agreement are no different from those discussed in relation to loan-in agreements: the positions are merely reversed. Each party will consider such issues from its own point of view. Yet the loan-out agreement seems to attract more time and care from collection managers and registrars than the loan-in documentation. Curious. So, if you are reading this chapter because you want to review your loan-out agreement, please take one step back and start by reading the early part of this chapter relating to Loans-in.

Loan-out agreement with commentary

Click HERE to view a loan-out agreement (with commentary) that Simpsons developed for a large, statutory, collecting institution.

[2] It may also allow the collection to gain an individual kind of benefit from the loan. For example, where a natural science museum lends a quantity of material to a researcher it may require that the researcher gives the museum a copy of the article and, further, that the researcher uses the museum’s numbering when referring to the museum’s objects. Similarly where the loan material is largely unidentified or classified, the museum may require that all data be made available to the museum. In this way the researcher benefits from having access to the public asset and the public interest is promoted by the enhancement of publicly available knowledge. (If the researcher is not prepared to agree to the release of information because of its potential for commercialisation, the museum should consider entering a commercialisation agreement in respect of the project.)

Introduction

It is not uncommon for collecting organisations to acquire new collection material from overseas. Sometimes the material donated by a person who is resident overseas. Most times, it is purchased. Either way, it is an import.

When collecting organisations export cultural material, unless it is a repatriation of non-Australian human remains, it is usually only a temporary export – one that is associated with a loan, whether of individual pieces or of an entire exhibition.[1]

Prior to the commencement of the Protection of Movable Cultural Heritage Act 1986 (PMCH Act) on 1 July 1987[2], Australia controlled the import and export of cultural material by regulations made under the Customs Act 1901. The only restrictions on import were on the import of cultural property from Papua New Guinea.[3] In such cases, importers were obliged to produce the written consent of the Trustees of the Papua New Guinea Public Museum and Art Gallery, to the export or removal of the goods from Papua New Guinea.[4] Restrictions on export were far more comprehensive,[5] but just as ineffective.

The system of export and import control by means of Customs Regulations proved to be profoundly inadequate.[6] Those empowered to enforce the Customs Regulations found it difficult to define the categories of prohibited exports and to identify objects that were subject to restrictions. There was no consultative machinery whereby officers could get speedy expert advice as to the nature or significance of objects being exported. Failure of the Regulations to provide for review or redress to persons refused an export permit, or for the retrieval of illicitly exported material, was an incentive for those with valuable material to use illegal means of export.[7]

Australia did not introduce a comprehensive legislative system of import and export control of heritage material until 1987.

The Legislation

Any effective system must include:

1. a procedure for the classification and assessment of cultural material;
2. a procedure for the granting or refusing of permits;
3. redress for persons affected by the refusal of permits or confiscation of innocently obtained cultural property; and
4. provision for recovery and return of illegally exported cultural material.

In 1986 Federal Parliament passed the Protection of Movable Cultural Heritage Act 1986, which came into force on 1 July 1987.[8] This gave effect to the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Material.

The main features of this legislation may be summarised as follows:

(a) Structure

National Cultural Heritage Control List

The Regulations[9] set out the National Cultural Heritage Control List (NCHL). The NCHL includes:

objects that are of importance to Australia … for ethnological, archaeological, historical, literary, artistic, scientific or technological reasons, being objects falling within one or more of the following categories:

(a) objects recovered from

(i) the soil or inland waters of Australia;

(ii) the coastal sea of Australia or the waters above the continental shelf of Australia; or

(iii) the seabed or subsoil beneath the sea or waters referred to in subparagraph (ii);

(b) objects relating to members of the Aboriginal race of Australia and descendants of the indigenous inhabitants of the Torres Strait Islands;

(c) objects of ethnographic art or ethnography;

(d) military objects;

(e) objects of decorative art;

(f) objects of fine art;

(g) objects of scientific or technological interest;

(h) books, records, documents or photographs, graphics, film or television material or sound recordings;

(i) any other prescribed categories.

Whilst earlier export controls focused on the protection of Aboriginal relics, the current legislation includes the significant, if more recent, effects of European colonisation, settlement and development. Thus, for example, early examples of farm and mining machinery may well be of significance to the heritage of a country whose economic development has been based on farming and mining, just as early film and sound recordings, books, paintings and craft objects have heightened significance to a country that has come to a quite recent appreciation of the social, aesthetic and economic impact of its arts industries.

The stated criteria for inclusion in the NCHL include factors such as age, rarity, quality, monetary value and extent of inclusion in public collections. The control list distinguishes between:

(1) Class A material, namely, those objects so rare and important as to be considered inalienable from Australia and which may not be exported;[10] and

(2) Class B material that, in certain circumstances, may (and perhaps usually will) be given an export permit.[11] Given the wide ambit of Class B material, such objects must meet additional criteria such as age, monetary value and significance to Australia.

Both in drawing up the NCHL and in exercising the discretion to grant export permits, the Minister is advised by a committee known as the National Cultural Heritage Committee, which receives advice from expert examiners. This group is made up of four museum representatives, an academic, a nominee of the Minister for Aboriginal Affairs, and four other persons ‘having experience relevant to the cultural heritage of Australia’.

Age thresholds

The Act recognises that the age of an object can affect its cultural significance. Just because something is old does not mean that it is significant,[12] and similarly, something quite new may have huge significance. A thirty-year threshold applies to Aboriginal and Torres Strait Islander (ATSI) heritage objects, non-indigenous fine or decorative art, applied science objects, objects of documentary heritage and objects of historical significance. A lower threshold of twenty years applies to Indigenous art objects. Archaeological objects must have been at least fifty years in the place from which they were removed.

There are no age thresholds for natural science objects, nor for numismatic and philatelic objects.

Monetary thresholds

One of the ways of judging an object’s significance is to look to its market value. If the system of export control did not take into account the monetary value of the objects described in such encyclopaedic terms, the system (and the public’s patience) would be overwhelmed. That said, market values are often uncertain and unstable. These thresholds require regular review to take into account the depreciation of money over time and the rise in the market for particular categories of cultural property.

Significance

One of the criteria required in six of the nine categories is ‘significance, to Australia’.

‘Significance to Australia’, for an object, means the object is of Australian origin, has substantial Australian content, or has been used in Australia, and:

(a) is associated with a person, activity, event, place or business enterprise, notable in history; or

(b) has received a national or international award or has a significant association with an international event; or

(c) represents significant technological or social progress for its time; or

(d) is an object of scientific or archaeological interest.’[13]

Australian protected object

If an object is of the nature described in the NCHL, and fulfils the necessary criteria, it is called an ‘Australian protected object’.

Australian Movable Cultural Heritage Prohibited Exports Register

In addition to the NCHL, reference should also be made to the Australian Movable Cultural Heritage Prohibited Exports Register. This includes objects that have been defined in the NCHL as Class A objects and those Class B objects for which export permits have been denied.

(b) Export Permits

Lawful export of an Australian protected object requires a permit.[14] This is a three-stage process. Each application for an export permit is reviewed by an Expert Examiner who:

(1) determines whether the material is an Australian protected object, and

(2) recommends whether an export permit should be granted. This recommendation is reviewed by the National Cultural Heritage Committee, which in turn makes a recommendation to the Minister. It is the Minister who makes the final decision.

SUMMARY OF RECENT PERMIT APPLICATIONS, PERMISSIONS AND REFUSALS[15]

The majority of applications for export permits fall within certain categories such as indigenous art, fossils, agricultural or other vehicles and military objects. By contrast, objects in the documentary, numismatic, archaeological and indigenous heritage categories have been the subject of few or no applications. Almost all of the applications in the fine art and decorative art categories have been made by auction houses and relate to indigenous art. Applications for objects of historical significance (a broad category that includes objects at least thirty years old that are not represented in at least two public collections) have almost exclusively concerned military and sports-related objects. Similarly, in applied science or technology, most applications relate to agricultural machinery and road or rail transport.[16]

(c) Unlawful Import

The unlawful import of cultural material that has been illegally exported from its country of origin attracts heavy penalties. Moreover, such objects are liable to be detained by Customs upon entry to the country or later seized by the Police. If it then proves that they have been illegally imported, they are liable to forfeiture. For this reason, it is essential that, when considering the purchase of cultural material that originates from a country that is a signatory to the Convention, the institution undertake a rigorous due diligence process. No Minister will be amused to receive a request from a foreign government for the return of its cultural property from an institution and the media scandal that would attend such a request will damage the institution’s delicate relationship with its donors and sponsors.

To commence the forfeiture process, the Australian Government must receive a formal request for the return of the object from the relevant foreign government.[17] The request for return must be from government to government. Private initiatives are not within the contemplation of the Act. It is this request that is the basis of the power to search for and seize the property, to lay charges, or forfeit the property.

Where the object is forfeited, ownership in the object vests in the Commonwealth of Australia and the costs incurred in transporting or disposing of the object are deemed to be a recoverable debt due to the government.

(d) Unlawful Export

Where a person illegally exports an Australian protected object, the object is forfeited. In contrast, when such illegal export is only attempted, or when a person imports cultural property that has been illegally exported from its country of origin, the object is only liable to forfeiture. In such cases, the onus is on the owner, or the person who had possession, custody or control of the object immediately before it was seized, to bring court action for the recovery of the object. If the person fails to do so, or fails in those recovery proceedings, the object will be forfeited.

Proceedings to recover illegally exported material must be commenced either by the owner or a person entitled to possession.[18] But where ownership is forfeited, title automatically vests in the government, thus giving it the necessary locus standi to demand return of its property.

Where an object is recovered, it will be disposed of in accordance with the directions of the Minister. This is a significant power, for the Minister may, for example, direct that a nominated institution hold the object or in the case of aboriginal relics, perhaps order that the objects be handed over to their traditional owners rather than persons with more recent claim to title.

(e) National Cultural Heritage Account

Any system of export control is an infringement upon the individual's normally accepted rights of property ownership. It is a system that is based on the principle that, in any balancing between the interests of the nation and those of the individual, the national interests must prevail. That is not to say that the individual must suffer harshly.

Most permanent exports of culturally significant material from Australia are for the purpose of resale i.e. financial profit. Thus the Act established the National Heritage Fund to facilitate the purchase and public display of objects prohibited from export. Notwithstanding this, both federal and state governments failed to provide any allocation to the Fund until 1999 when its name (and charter) was varied. Now known as the National Cultural Heritage Account, it receives an allocation of $500,000 from the federal government. Essentially, the fund is intended to help Australian cultural organisations acquire Australian protected objects, (as defined by the Act) that they could not otherwise afford, with the intention that they be preserved and made accessible to the public. Although the state governments have not contributed to the Account [19], they contribute to its overall purpose: So far, the majority of the acquisitions made by the Account have been completed in partnership with (and with financial contribution from) a state collecting institution.[20]

In allocating the money, priority is given to the following Australian protected objects:[21]

• Class A objects in Australia and overseas
• Class B objects that have been denied an export permit
• Class B objects that have been granted an export permit on condition that they be available at fair market value for purchase by an eligible cultural organisation
• Class B objects that are overseas.

The current review of the Act is considering whether or not donations to the Account should be made deductible. It is difficult to see what advantage this might bring given that a donor can already facilitate an acquisition by making a gift to the institution seeking to purchase the object and get his or her deduction through the Cultural Gifts Program or the Register of Cultural Organisations scheme[22].

Enforcement

Part V of the Act sets out the statutory enforcement provisions. If legislation is to be effective, it must be effectively enforced. If it is not, the legislation is at best, mere window-dressing and at worst, can actually interfere with the public benefit. Whether it is effective in this case is part of the Review being currently undertaken. There are some obvious issues:

The enforcement mechanisms under the PMCH Act are much more limited than those in Part 17 of the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act). The focus of the PMCH Act is on criminal offences (which must be proved beyond reasonable doubt, a high standard of proof, making the securing of convictions very difficult) and criminal enforcement mechanisms. The Review discussion paper actually compares the enforcement powers of the Act with that of the EPBC Act. For example, it points out that the EPBC Act:

• provides for certain provisions to be civil penalty provisions, which generally require a lower standard of proof, being proof on the balance of probabilities, and
• allows the Federal Court to order a person to pay the Commonwealth a pecuniary penalty on the application of the Minister in relation to a contravention of a civil penalty provision;
• provides for the Minister or another interested person to apply to the Federal Court for an injunction to restrain certain action, or require certain action to be taken, in relation to a contravention of the Act;
• allows the Federal Court to make a remediation order to repair or mitigate damage in certain circumstances;
• gives inspectors powers to act without search warrants in certain circumstances;
• provides for infringement notices as an alternative to prosecution in certain
  circumstances;
• allows enforceable undertakings to be given to the Minister in certain circumstances;
• gives the Minister information gathering powers in certain circumstances;
• allows the Minister to publicise contraventions.

There is little doubt that the Act will be amended and improved to make the choice of procedures and sanctions more flexible, as well as easier to enforce.

International ramifications of the legislation

The Act permitted Australia to accede to the 1970 UNESCO Convention. Only fifty-four countries have signed the Convention and most of these are countries that have suffered enormous loss of cultural material. This reflects upon the effectiveness of the Convention for its effectiveness is largely dependent on the reciprocity offered by its members. Of the signatories, only the United States of America and, to a lesser extent, Canada, have large collections of culturally significant material imported from other countries. Others, such as Britain, are notably absent. This is difficult to understand, for membership of the UNESCO Convention does not affect material that was obtained prior to accession. The treaty is not retrospective. It is not an undertaking to give back all fruits of wrongdoing; it is a promise to do the right thing in the future.

The relationship between Britain and Australia remains significant to the ex-colony not only because Britain retains important collections of Australian heritage material gathered in the nineteenth and early twentieth century, but also because London remains the most important international market place for such Australian material. It may be argued that London plays this dominant market role in the cultures of all ex-British colonies, and may explain why only seven other members of the British Commonwealth have bothered to become signatories to the Convention,[23] in spite of the fact that thirty two Commonwealth counties have legislation relating to the protection of cultural heritage.

[2] Although the PMCH Act was assented to on 13 May 1986, it didn't come into operation until proclaimed to commence on 1 July 1987 (see Commonwealth Gazette, 1987, No. S138).

[3] Customs (Prohibited Imports) Regulations, Third Schedule, Item 9A

[4] For Papua New Guinea legislation, refer to National Cultural Property (Preservation) Act, Ch. No. 156.

[5] Customs (Prohibited Exports) Regulations, Second schedule; item nos 113, 2, 5, 5A, 5B, 5c, 14; Twelfth Schedule item nos 1, 2, 3, 5, 6.

[6] For example, it did not prevent the export in 1981 of a rare Spitfire MK 8 MV 154, which was illegally taken out of the country as aluminium junk – just one of an estimated seventy vintage aircraft that have flown the jurisdiction.

[7] For US analogy see ‘Theoretical Thefts, Real Claims’, Art News, March 1983 pp.11–13.

[8] Its approach was not novel; it is similar in scheme to the Canadian Cultural Property Export and Import Act (R.S., 1985, c.C-51).

[9] Protection of Movable Cultural Heritage Regulations 1987.

[10] The objects currently included in Class A are: (i) Victoria Cross medals awarded to Australian service personnel, (ii) each piece of the suit of metal armour worn by Ned Kelly at the siege of Glenrowan, Victoria in 1880, and (iii) Aboriginal and Torres Strait Islander objects being sacred and ritual objects, bark and log coffins used as traditional burial objects, human remains, rock art, and dendroglyphs (carved trees).

[11] The objects currently included in Class B are: (i) certain objects of Aboriginal and Torres Strait Islander heritage, (ii) archeological objects, (iii) natural science objects, (iv) objects of applied science or technology, (v) objects of fine or decorative art, (vi) objects of documentary heritage, (vii) numismatic objects, (viii) philatelic objects, and (ix) objects of historical significance.

[12] This is a difficult concept for ageing lawyers to accept.

[13] Sub-regulation 2 (1) of the Protection of Movable Cultural Heritage Act Regulations 1987.

[14] The application form an Export Permit is found at: http://www.arts.gov.au/movable/exporting_cultural_heritage_objects. Note that at that site there are also details of the streamlined procedure for expert assessment of fossils and meteorites to determine which specimens require an export permit.

[15] Review of the Protection of Movable Cultural Heritage Act 1986 and Regulations, Discussion Paper, DEWHA, 2009, p. 9.

[16] Ibid.

[17] Section 41.

[18] See Attorney-General of New Zealand v Ortiz [1983] 2 WLR 809 at 817.

[19] The States and Territories have the ability to contribute under s.25A of the PMCH Act, but have not done so to date.

[20] For use that has been made of the Account see: http://www.arts.gov.au/movable/the_national_cultural_heritage_account/use_of_the_national_cultural_heritage_account).

[21] For further information see: http://www.arts.gov.au/movable/the_national_cultural_heritage_account.

[22] Although larger collecting institutions are likely to be on the Register of Cultural Organisations this is not necessarily the case for smaller, regional organisations. The Cultural Gifts Program does not cover gifts of money.

[23] Canada, Cyprus, India, Mauritius, Nigeria, Sri Lanka and Tanzania.

15.1 Introduction

One of the features of the modern collecting institutions is that they use a considerable amount of borrowed material in their exhibitions and even to augment collection displays. Exhibitions are no longer largely developed from the in-house collection. They involve more material sourced from public and other institutions. They are less static; they change more often and there are more of them. Similarly, displays of the institution’s own collection are sometimes augmented by loans: After all, few collections are so comprehensive that they would not benefit from the addition of some choice material held in other collections.

Accordingly, the loan-in agreement has become an essential part of exhibition development and implementation. In particular, given the complexity of managing loans, the loan agreement is the key risk management tool that drives all of the mechanisms associated with administration of the loan process.

All museums develop standard loan agreement forms. The two most common documents are (a) the loan-in agreement, whereby the museum borrow material from a third party for the purposes of exhibition, and (b) the loan-out agreement, whereby the museum lends an item from its collection so that another institution may exhibit it.

Many Australian institutions still use antiquated loan forms. Others rightly see the review of such documentation as a part of the core risk management strategy of the organisation.

Given the value of the subject matter of the agreement, it is essential that the contract be simple to understand and that it carefully and precisely articulate the parties’ intentions. It should play a positive role between the parties: It should act as an outward manifestation of trust and provide an effective and equitable machinery to prevent or resolve disputes.

Different museums have different needs. What works for a federal institution may not be appropriate for a small community museum. Nevertheless small institutions should carefully consider the models developed by the larger ones. This use of precedents should not be unquestioning: like so many other things, contracts do not necessarily get better with age. Thus, many cultural institutions in Australia, which have adopted old American models, do themselves little benefit.

This chapter provides model loan-in agreements, model loan-out agreements and a checklist of issues to discussed and determined when entering such agreements.

15.2 Documentation

An organisation that mounts an exhibition using third party material is likely to enter loan agreements with a range of owners – private owners, dealers, and other institutions. Inherent in this is a tension: ‘whose documents will we use?’

Whose document will we use?

There is a natural inclination of an owner to insist that the borrower use the owner’s documentation: The owner can be confident in its own documentation. The borrower, which has to administer all of the agreements, will prefer to use its own so that all the agreements are reasonably consistent. Many private owners who are lending a particularly valuable item may insist on using a contract drawn up by their own lawyers. These will usually be considerably more comprehensive and less free of wriggle room than the loan agreements between collegiate institutions. Sometimes it comes down to size and muscle: The bigger institution insists on having the right of way.

There is no right answer and no standard protocol. One answer is definitely wrong: During the course of research for this book it became apparent that some institutional owners and lenders had adopted the practice of signing two contracts – one from the lender and one from the borrower! A moment’s thought will show that this is the worst of all compromises. If there is any issue with the loan, there will be conflicting agreements with conflicting obligations, conflicting duties and conflicting procedures: In all, a fabulous result for the lawyers who get the subsequent brief but a terrible career-move for those who put their institution into such a position.

If the loan sought were agreeable to the lender in principle, the appropriate first step would be for the borrower to supply a copy of the intended documentation for the lender’s approval. The lender then reviews the draft and considers what, if any, changes it requires. At this stage, the lender, particularly when it is larger than the borrower, may decide that the borrower’s documentation is inadequate and rather than go to the trouble of extensive negotiation, might insist on the use of its own loan document.

Irrespective of the source of the loan documentation and notwithstanding that the practical detail of the contents will be the subject of considerable negotiation, each loan agreement will have similar general characteristics.

Clarity and simplicity

Ambiguity is an enemy of contract. One of the great (and underestimated) skills of good contract drafting is the ability to state the agreed terms in language that is unambiguous. Clear and simple English is essential – but simplicity is deceptive. It must not be attained at the cost of vagueness or uncertainty.

Nor is legalese your friend. It can be bad enough when used by experts but it is an ugly sight when non-lawyers try to articulate the terms of a contract in unfamiliar and non-expert legal language. Use simple, ordinary language avoiding words or phrases that might have another sense or meaning and check punctuation meticulously to ensure that it reflects the intended meaning.

15.3 Bailment: The basis of legal liability

Unless you understand the legal obligations inherent in taking possession of property owned by a third party, you can’t implement a serious risk management approach to loans. Collecting institutions take possession of third party material in many different circumstances and for many different reasons. The legal duties assumed by the borrower of an item for an exhibition is different from those owed to a collector who brings an item to a museum for identification, or to the commercial gallery that leaves a painting with a public gallery on approval. Each of these examples is a loan but each brings with it a different level of legal responsibility.

What is a loan?

Museum professionals are comfortable with the concept of “a loan” but when told that a loan is actually “a bailment” they develop a sense of unease.

Although we may think that we can get through life perfectly adequately without understanding the meaning of ‘bailment’, it is not by chance that bailment is one of the truly ancient areas of the Law. Given the importance of personal property in the fabric of human relationships, it is hardly surprising that, early humans developed rules that protected the rights of ownership when chattels were entrusted to the possession of third parties. This evolved from mere social expectations into a series of rules; it reflected a move from mere etiquette to a legal and enforceable relationship.

This move, from a system of indistinct and idiosyncratic social obligations to a system of enforceable rules, reflected the social and economic importance of chattels to humans. That importance, together with the development of increasingly sophisticated transport, communication and trading systems, required the development of a legal system that allowed personal property to be physically parted from its owner without threatening the owner’s rights. If it were true that ‘Possession is 99% of the Law’ it would be impossible to have a domestic or international trading system; we could not even leave our clothes at dry cleaners nor send our television out for repair. It would also be impossible for those seeking to mount an exhibition to borrow material from third parties. In short, bailment may not sound interesting but it is one of the essential oils that facilitate modern life. It is also the legal basis of all exhibition loans.

The term ‘bailment’ comes from the French, bailier, to deliver. The bailor is the party who owns the material and delivers it into the possession of the bailee. The bailee is the party that receives the material.

Types of bailment

There are many different types of bailment and each type carries its own rights and obligations. Generally, they fall into three groups: those bailments that are principally for the benefit of the bailor, those that are principally for the benefit of the bailee and those where the benefit is mutual. Where the bailment is principally for the benefit the bailor the courts generally impose a slightly lighter burden of care on the bailee. In such cases the courts will usually require that the breach of care by the bailee must have involved ‘gross negligence’ rather than ‘mere negligence’. In contrast, where the bailment largely benefits the bailee[1], the court imposes a reasonably high duty in the care upon the bailee.[2]

The law further makes distinctions between (i) bailment for reward, (ii) gratuitous bailment, and involuntary bailment.

These distinctions are important because collecting institutions take possession of third party material in many different circumstances and for many different reasons. The legal duties assumed by the borrower of a work for an exhibition would be different from those owed to a collector who brings an item to a museum for identification or the commercial gallery that leaves a painting with a gallery on approval.

Bailment for reward

A bailment for reward arises where goods are taken into custody in return for valuable and mutual consideration. The usual instance of this is where you hand over goods for service or repair.[3] The bailment is for the mutual benefit of the parties. Where the bailment is for reward, the bailee is under a duty to deal with the goods with the due care and diligence which a careful person would exercise over their own chattels in similar circumstances.[4] Of course this is the very duty of care that is so commonly reflected in loan-in agreements.

Gratuitous bailment

A gratuitous bailment is one where just one party benefits. Usually a gratuitous bailee has permission to possess goods without payment or consideration but must return them to the bailor on demand. The duty of care owed by a gratuitous bailee is of a lower standard than required of a bailee for reward.

If you lend a painting to your neighbour, that loan is almost certainly a gratuitous bailment. The neighbour’s duty of care is low and the loan can be recalled at any time. Similarly, a loan from one institution to another (without fee) is very likely a gratuitous bailment for the lending institution receives no payment or consideration for the loan. It is for this reason that institutions have loan agreements that stipulate a higher duty of care and include definite loan periods.

Involuntary bailment

This occurs where the goods are found[5] or left[6] without payment. This may occur where an object brought to a museum for identification is left uncollected. This bailment gives rise to the lowest standard of care of all. All the bailee must do is abstain from reckless or wilful damage[7] There is much case law discussing the limits and application of those terms but is clear from those cases that the courts take into account what is reasonable and proper in all the circumstances. As the NSW Law Reform Commission noted:

2.7 The scope of the duty of the involuntary bailee to abstain from wilfully damaging the goods varies widely according to the circumstances of the bailment. There is some authority for the proposition that there can be no legitimate complaint against a bailee who acts in a manner which is considered ‘reasonable and proper’ in all the circumstances,[8] including the destruction of the goods if they have become a nuisance. [9] Similarly, a bailee who acts with the object of either returning the goods or mitigating responsibility for them (whether by delivering them to the police or a bank, or by returning an unsolicited letter to the post office) incurs no liability to their owner.

2.8 However, the precise duties of an involuntary bailee, and the nature of the safeguards to be taken in disposing of the goods, remain ill-defined and unsatisfactory due to the wide variety of goods and circumstances in which the involuntary bailee can acquire possession.

2.9 Logically the whole concept of involuntary bailment is a contradiction in terms. The term “bailment” implies both possession of another person’s goods and agreement to or acceptance of such possession. Involuntary bailment does not require a voluntary election by the bailee to hold the goods. It has been argued[10] that without this voluntary element there may not be a true relationship of bailor and bailee.

2.10 These problems are of particular importance in the present inquiry for they form the only part of the common law relating to unclaimed goods not superseded by the Disposal of Uncollected Goods Act. Involuntary bailees are thus the only bailees left without an effective remedy.

The joy of contract

Whilst the complexities of bailment will bring a smile to the lips of many lawyers, the wise collection registrar will be one whose first question is not, ‘What are the rights and responsibilities of bailees and bailors?’ The much better question is, ‘What can I do so that I never have to think about the complexities of the law of bailment?’

The answer is remarkably simple. If the bailee and the bailor enter an agreement, the terms of that contract supersede the Common Law rules. Where the express terms of a contract impose a particular duty of care and level of responsibility, those are the obligations that prevail. However, if the contract is silent as to such matters, or is ambiguous, one must again revert to the complexities of the Common Law or statute.

The following chapter focuses on the contractual aspects of bailment contracts. Of course in collecting institutions we call them loan agreements.

15.4 Legal responsibility under the loan agreement

One of the most important functions of the loan agreement is to define the standard of care that the borrower must fulfil. This creates a basic and natural tussle in that the lender will wish to impose high levels of legal responsibility on the borrower and the borrower, restricted by the extent and conditions of its insurance cover, will want to limit that liability.

In art museums it is very common that the borrower promises the lender that it will take the same degree of care of the item as it give to items of a similar quality and nature in its own collection.[11]

This clause imposes liability on the Exhibitor (the borrower) for the security of the work at all time from the time that the work is on its premises and in its possession. It includes specific promises that the borrower will abide by the security, staffing, environmental, conservational and handling requirements spelled out in detail in the Exhibits to the agreement.[12]

Note that the lender’s liability does not extend to transport: It is not ‘nail to nail’ liability.[13] The standard set is the rather self-satisfied standard: ‘at a minimum as they care for and secure works of art of the same or similar nature of their own, or on loan from others’. Even institutions of the first rank have had embarrassing experiences in the care and security of their own collection material and it is reasonable for lenders to insist that this watering down of liability be removed from the agreement. After all, the fact that institution A is prepared to accept a certain level of care towards its own collection material should not give institution B any particular succour. In the event of damage, loss or theft of the loan material, the owner should not have the legal obligation:

• to prove the standard of care usually given by the borrower to similar material in its own collections; and
• to prove that the standard of care given to the lender’s material was below the borrower’s usual standards.

Both of these things are very arduous (and expensive) matters of proof and most lenders do not want to have to jump such legal hurdles before they can get to the real issues of liability. On the other hand, museums that include such phrases in their loan-in documentation are inadvertently exposing themselves to embarrassment and expense: In the event that a borrowed work is damaged or destroyed, unless the claim is settled to the satisfaction of the owner and its insurance company, any legal proceedings will result in an unfortunate public washing and airing of dirty linen as lawyers for the plaintiff obtain evidence of all the defendant’s embarrassing blemishes of collection management. In an age in which sponsorship and donations are so important to the balance sheet of collecting institutions, none can afford to be the subject of such adverse criticism.

As a final observation, none of the museums that promise to look after inward loans with the ‘same standard as of care given to similar material in its own collection’ apply this standard when lending works to others. It is perhaps understandable that owners insist on a high standard of care whilst borrowers wish to work to a (lower) more flexible standard, but borrowers might find that there is a lot less negotiation (and thus time, cost and delay) if their loan-in contracts reflected the same standards of care as their loan-out agreements.

15.5 Risk Management

The risks inherent in the loan relationship are many and varied: if there is a problem in handling a loan, the fallout may be legal; it may be financial; it may be political and it may damage the institution’s reputation. It will always be costly in administrative time and resources and is often fatal to the relationship of trust between the borrower and the lender.

The contract as risk management tool

The loan agreement is not just a legal document that evidences the loan: it is the document in which the collected wisdom and experience of the parties is brought together so that foreseeable problems can be averted. Of course there is always risk in the loan relationship and no contract can eliminate that reality but the loan agreement is a key risk management tool: it can play a positive role in the relationship between the parties, cementing trust, preventing misunderstanding and providing agreed procedures for the administration of the loan.

One of the most important functions of the loan agreement is to anticipate problems that could arise during the loan period and present a framework by which those difficulties can be settled. Thus, both the owner and the borrower use the loan agreement to:

• identify the risks that attend the loan;
• articulate how the loan will be administered;
• implement a mechanism that best avoids the most likely risks; and
• prescribe an agreed protocol in the event of calamity.

These risks affect borrower and the lender (although not always to the same degree). The advantage is in identifying the risks and, together, agreeing how those risks will be met.[14]

Private lenders versus institutional lenders

Private owners are more risk conscious and averse than those of earlier times. Perhaps it is because a private lender has fewer pieces of exhibition quality and thus has a greater personal financial and emotional investment in the loan, but they tend to examine the loan-in agreement very closely and often retain their lawyers to do so. They can be more assertive than institutional lenders and are increasingly prepared to seek recourse to the law.[15]

Increasingly, high-net-worth private owners are less flexible than institutional lenders when lending their very valuable material: institutions, because they are in the business of making and receiving loans, are very familiar with the processes and are aware that long term relationships are often the best guarantee of solving a loan problem: A little give and take sometimes eases both parties through the rough passages of the loan. For private lenders who are familiar with commercial transactions, it is understandable that the negotiation of a valuable loan requires a level of attention and risk management similar to that they apply to their other commercial affairs.

Restrictions accompanying the loan

Some loans have quite onerous accompanying conditions that are not directly related to the loan. For example, a private owner may agree to lend provided that access to the objects be restricted, that information provided to the public about the objects be limited, that photography be prohibited. These kinds of restrictions tend to be more commonplace with private lenders rather than institutional lenders.

Before accepting such co-lateral restrictions it is important that they be given very careful consideration. It is important that the borrower not by unduly restricted in its use of the material – not just for exhibition but also use in its associated functions such as its public programs and research activities. There is a natural balance in this regard: for example, where the loan is particularly valuable or fragile it may be entirely reasonable to restrict secondary activities and thus minimise the risks associated with such uses.

Conditions imposed by the lender may be impracticable or expensive to implement, supervise and enforce but if they are not enforced, the lender will be in breach of the loan agreement. When such a breach occurs, the worst consequence is not simply that the lender may demand its loan to be returned forthwith. Less obvious, but potentially more damaging, is that the insurance policy protecting the loan may be invalidated and that the trust relationship with the lender will be destroyed.

Value of the loan

Whenever material is lent for exhibition, it is subject to heightened risk of damage, theft or loss. The more valuable the item is, the greater the financial risk.

High value is something that institutions are familiar with. Indeed they are often complacent. Having a middle aged and unfit person in a uniform sitting on a chair supervising a couple of rooms of paintings, is not really providing security that befits the value of the works. The answer may be that the security is geared to the degree of risk rather than the market value of the material being guarded. Indeed it may be so: perhaps the greatest danger is not from the professional thief but rather the small boy with jam on his fingers. If this is the case, it may be that the institution makes the decision to leave theft risks predominantly to the care of electronic guardians and damage risks predominantly to human supervision.

Another strategy for managing the risk of damage, loss or theft to high value exhibition material is to use exhibition design to control the degree and nature of access that the public is likely to have to the item. It is often easier said than done. In museums where the visitors expect a high degree of interactivity with the exhibition material, establishing boundaries for those expectations is a challenge. For this reason, the exhibition designer is one of the key risk management tools by which some of the loan risks can be managed.

Clear document trails

Tracking and managing documentation is one of the primary roles of the loans registrar. Improved forms of communications, such as fax and email has certainly made this process faster. But they can be a double-edged sword. On the one hand, we can communicate with people more quickly, ideal during busy periods. However, the problem of establishing a clear document trail that shows ‘who’ made ‘what’ decision ‘when’ is more problematic, especially when using email. The issue of security and email – ensuring that sender/recipient are authentic – is one that we have not yet had to address, but it certainly looms. Overall, we have had to strike a balance between an outcome focussed approach and administrative perfection.[16]

This exemplifies the strain between torrential developments in communication technology and the demands of risk management. The establishment of clear document trails is fundamental to the establishment of safe loans procedures and, in this task, easier and faster communication technology does not, without modification of established administrative procedures, enhance safety and prudence of the process.

Multi-skilled teams

Few outsiders realise how many skills have to be integrated into the team that mounts an exhibition. Because it is so much a part of everyday life, it is almost taken for granted within exhibiting institutions – but it should not be. The team that delivers an exhibition is at the heart of the institution’s risk management strategy. Every skill added to the team brings with it a greater degree of safety for the loan item, its owner and its borrower. This is already recognised in many institutions:

As well as clarifying our agreement with the lender, we also altered the way we treat the loans internally. The exhibition designer now plays a more important role in our approval process for inward loans. Loan proposals for exhibition must be submitted to design staff, conservation, curatorial and registration, and finally approved by the Director of the museum.[17]

15.6 A checklist for loan agreements

Many issues arising in exhibition loan agreements are relevant to both the borrower and the lender. During the negotiation process, each party needs answers to the same basic questions:

Parties

Who is lending the object? This is not always as easy as it seems. The piece may be the property of another institution, an individual, a company, a family trust or a gallery or other agent that is acting on behalf of the owner. The borrower must assure itself that the entity offering the loan has the power to do so and has the power to sign the loan documentation.

Subject

What is the subject of the loan? The object should be fully described in the loan document. Careful registration procedures usually see to this.

Purpose

What is the purpose of the loan? The loan may be for a very limited purpose such as for research or display in a particular exhibition or is it simply a general loan. Is it to be static or will it be able to tour?

Period

How long will the borrower have control of the object? It is surprising how many large institutions neglect to include this question on their standard loan form. This simple piece of information is important to both parties.

So-called ‘permanent loans’ should usually be avoided. ‘By definition, a loan is a temporary arrangement of finite duration, subject to renewal.’[18] There is no such thing as a permanent loan; it is still subject to withdrawal at virtually any time, either by the original lender, or that person's heirs. Several collecting institutions have chosen not to collect material because they already have strong holdings in that area on permanent loan. However, perhaps years later, when the owners decide to take back their material the institution is left with an unfortunate gap that is often difficult and expensive to fill. Moreover, resources spent on such material are better spent on items owned by the borrower and not subject to reclamation.

For these reasons, most collecting institutions discourage long-term loans. Those that are accepted should always be subject to a loan agreement that stipulates that:

• the loan will be reviewed every three or so years[19]; and
• that it is the lender's responsibility to advise the borrower of any change of address or ownership;
• that the lender will give the borrower a reasonably long and specified period of notice before requiring return of the material;
• that the borrower can terminate the loan on a reasonably short and specified period of notice; and
• that if the material is not collected within a certain period after the expiration of that notice, the borrower may dispose of it as it sees fit and may apply the proceeds of that disposal (if any), as it sees fit.

Unless otherwise specified, most loan agreements should be very particular as to the owner’s right to withdraw from or terminate the loan. Where the item is lent for an exhibition the document must be very clear that the owner may not withdraw from the loan until the end of the exhibition period. The exception is a situation where the owner reasonably believes that the loan item is endangered in some way – whether as a result of treatment by the borrower, threat from war or terror, or other such reason.

Fees

Are any fees payable to the lender? Some museums charge a fee to loan their collection objects. This becomes almost in the nature of a rental fee.

In art museums there is a widespread custom that that living artists are paid a modest fee for the exhibition of their work. Although this fee is small, some museums refuse to pay it on the basis that by exhibiting the work they are already rewarding the artist. Others, who would see this as a somewhat paternalistic attitude, argue that they are unable to afford the additional cost. In any event, the rationale is budgetary. Accordingly, museum can take different views of this issue depending on the financing of the exhibition: When a show has corporate sponsors, it may be easier to include artist fees in the budget of the show.

Expenses

What are the expenses associated with the loan? What are they and who will pay them? These must be fully itemised. Nothing should be assumed.

Delivery

What are the collection or delivery arrangements? When? Where? How? Who pays?

Return

What are the arrangements for the return of the object? When? Where? How? Who pays?

Maintenance and conservation

It is clearly of concern to any owner that the subject of the loan will be treated with care. Are there any special requirements?

Although common in old-fashioned agreements, it is totally inadequate to promise a lender that the museum will ‘exercise the same care in respect of loans as it does in the safekeeping of comparable property of its own’.

Where conservation is an issue, these matters must be discussed at length (and then captured in the agreement). If the work is constructed of non-durable materials, or if change or decay is in any way the essence of the work, the museum should not be obliged (and perhaps not be permitted) to attempt to prevent any deterioration or make good any damage which is attributable to that characteristic.

Storage

How will the loan material be stored? Where? Are there any unusual features in the medium/materials that demand a particular method of storage?

Presentation

Is the object to be presented in a particular way? Is it framed or mounted? May Perspex be substituted for glass? Are there special requirements for installation?

Restoration

Does the object need restoration or conservation? If so may such work be carried out? If so, in what circumstances? By whom? Subject to what conditions?

Insurance

Will the museum insure the object for the period of the loan? What are the details of that cover? What is the insurance value of the object? Is it 'wall to wall' insurance or does it exclude transport? Does it cover loss, theft, damage and destruction? Are there any important exceptions of which the lender should be aware? Museums must remember that insurance policies are only contracts and, as such, are negotiable. The terms of the policy must be read with pedantic care before entering the agreement. Those that do not satisfy the museum's needs must be renegotiated.

Where the material is to be covered by government indemnity, care must be taken to ensure that the exact terms of the indemnity are understood by both parties.[20]

Copyright

Is the object subject to copyright? If it is, who is the copyright owner? This may be important if the museum intends reproducing the work, say, in an exhibition catalogue. Care must be taken with this information for many persons filling in the loan agreement will not have the faintest idea of the laws of copyright. Many will wrongly assume that as owners of the material they are automatically owners of the copyright in it. As is explained in a later chapter, this assumption is usually wrong. Relying on such erroneous assertions can cost the museum considerable amounts of inconvenience and money.

Merchandising

Some owners are prepared to permit the loan to be used for merchandising. Others will permit it provided that they share in the merchandising income and have some degree of control over the process. Still others will not permit merchandising under any circumstances. This is applicable irrespective of whether the object is in copyright or whether the lender is the copyright owner. These conditions are contractual not statutory. They have force because they are a contractual condition of the loan.

Attribution

Does the lender wish to be attributed or remain anonymous? If attribution is required, what wording is appropriate? Many collectors are most careful about being identified for security reasons.

Calamity

Important loans are often, indeed usually, accompanied by extensive schedules as to what should happen in the event of calamity. It is absolutely standard practice that loans over a certain value be accompanied by such requirements. When the loan suffers a calamity there needs to be a pre-agreed protocol so that each party knows exactly what is going to be done in such event. The lender has an obvious reason to insist that this is rigorously drafted because it is the lender’s property that is at risk. Similarly, the borrower must be absolutely sure that it can comply with such expectations and obligations before entering the loan agreement. Should a calamity occur, it is essential that the borrower know exactly what to do, what it is permitted to do and how and when it must communicate with the owner. Conversely, the owner should be completely secure in the belief that the borrower knows and understands its obligation both in the way that it will treat the damaged or endangered property and in the manner and standard of its communication with you.

15.7 The ‘scary cupboard’: the disposal of old and uncollected loans[21]

Introduction

Every collecting institution has what some registrars colourfully refer to as the ‘scary cupboard’. This is the notional place in which are kept expired or unlimited duration loans that have been left unclaimed by lenders who cannot be located by the museum.[22] It also may have material found in the collection for which no documentation exists and also material that has documentation but which is perhaps ambiguous or partly missing.[23]

Such items may have little continuing value to the collection but nevertheless incur storage and maintenance costs and staff time and material resources. They create a dilemma as whether conservation resources should be committed to material that is not the property of the museum. The use to which even the useful material can be put is limited as the institution’s right to exhibit, loan out, publish or otherwise use the material may be severely limited by its netherworld status.

In major institutions, to deal with the problem of the scary cupboard it is important to treat the process as a special project to which specific resources are allocated. Otherwise, there are always more pressing things demanding the attention of the registrar. The process is not rocket science but it requires care and time. First, you must undertake an inventory of the collection and reconcile the inventory with the available documentation. This will reveal inventory material for which the documentation is in some way inadequate. It will also reveal missing inventory material – items that cannot be found notwithstanding that there is documentation that establishes or suggests that the material should still be in the possession of the institution. Then the institution must undertake reasonable good faith enquiries to try and track down the owners.[24]

With each item, it is important that the institution makes a decision as to what it wants to achieve. Any negotiation as to the future of the item should always be strategically directed so that the registrar (or other person undertaking the negotiation) is sure as to the desired result.

If the owner can be found then negotiations will be undertaken to determine whether the material will be returned to the owner, whether another loan agreement will be entered, or whether loan will be transformed into an acquisition.

If the owner cannot be found then the institution must look to the legal mechanisms available to it, to achieve its desired end.

Irrespective of the type of bailment, a bailee has very limited rights to dispose of goods. As a general rule, disposal is one of the rights that accompany ownership. Unless there is a contract or statute that provides otherwise, the right of a borrower is limited to giving the item back to its legal owner.

There are generally four available mechanisms for dealing with uncollected loans:

• common law
• uncollected goods legislation
• specific institutional legislation
• contract

As we will see, the first of these is almost irrelevant to collecting institutions, the second is applicable to all Australian collections, the third is relevant to some of the statutory institutions (in particular the state and federal ones) and the fourth is relevant to all.

Common law

The limited common law rights of disposal were summarised by the NSW Law Reform Commission[25] as follows:

2.15 In some, very limited, circumstances a bailee may be relieved from liability for disposing of goods without authority. The principle of agency of necessity excuses the bailee from liability when there is an actual commercial necessity to dispose of the goods. Traditionally, the defence is confined to:

(a) those who accept bills of exchange to be honoured by the drawer, that is, the bailee who is entitled to be reimbursed by the person for whom the payment is made; and

(b) masters of ships in foreign ports, unable to obtain immediate instructions from the owners of the ship or cargo and in need of money for unforeseen expenses.[26]

The defence developed to cover carriers by land, but is still limited to cases of emergency or real business necessity,[27] is for example, where the goods are perishable and it is impracticable to obtain instructions from the owner.[28] The principle also applies where goods are deteriorating or otherwise losing value, but only if the loss is serious enough to constitute an emergency.

2.16 The courts have been reluctant to extend the classes of agents of necessity. This is well illustrated by the decision in Sachs v Miklos.[29] In that case gratuitous bailees sold Items of furniture that they had stored for three years after several attempts to reach the bailor by letter and telephone had failed. The Court of Kings Bench found the bailees guilty of conversion, and refused to accept that they had acted as agents of necessity, stating that the sale was made for the convenient running of their business (a boarding house), and not in response to any real emergency. In the course of his judgment Lord Goddard CJ said: ‘in peace-time such a course would probably have landed them in no real liability for if the market value of the furniture had been obtained and had remained constant they would have had an adequate sum to hand to the plaintiff’.[30]

2.17 It is not hard to see why the courts have been reluctant to widen the defence of agency of necessity. The defence developed as part of the specialised law of common carriers, to facilitate the smooth carriage or shipment of goods, and to deal with the unforeseen circumstances which can occur during the performance of such contracts. In cases there is rarely, if ever, any suggestion that the goods will remain uncollected by the owner. It is the intervention of factors beyond the control of the carrier and owner, such as delays, strikes and unforeseen expenses which gives rise to the agency. The concept is, therefore, of limited value when dealing with uncollected goods. By contrast, the possibility that the goods will never be claimed is the major concern of the bailee in possession of uncollected goods.

2. Abandonment

2.18 It is sometimes suggested that an involuntary bailee can argue that the bailor has abandoned all title and interest in the goods, thus permitting the bailee to dispose of the goods at will. While the common law recognises abandonment, the concept is of very limited application. In order to rely on it the bailee must prove that the true owner has intentionally abandoned the goods.[31] Mere accidental or negligent loss of goods does not amount to abandonment. The concept has very little application to the problem of uncollected goods, since in most cases it would be difficult or impossible to prove the requisite intent in the bailors at the time the goods left their possession. Uncollected goods are, by their very nature, merely uncollected; they are not abandoned as that term is legally defined.

So – generally, in collecting institutions, we can forget about the Common Law: True necessity is very rare[32] and strictly interpreted; and proving the requisite intention of abandonment is almost impossible[33]. Accordingly, we must focus on the legislation.

Statutory right to dispose

Disposal of uncollected goods legislation

All States and Territories confer a right to dispose of uncollected goods by statute. These are general legislative powers;[34] they can be used by shoe repairers and collecting institutions alike. They are only useful if the institution has ensured that its procedures comply with the conditions laid down in the statute. This is a matter of law – not commonsense. The detailed requirements differ from jurisdiction to jurisdiction; so, each collecting institution should ensure that its procedures are compliant.

In general, the various Acts provide two mechanisms:

(i) disposal by court order, where disposal can occur after the bailee obtains a court order permitting the action; and

(ii) disposal after notice, where the disposal can take place after notice has been given to the owner.

Disposal by court order

A bailee can apply to the Local Court for an order authorising the bailee to dispose of goods.[35] This application must be served on the bailor, the owner of the goods and on each person claiming to have an interest in the goods.[36] You do not have to give notice if you:

(a) are unaware of the fact that the person has or claims an interest in the goods; or

(b) cannot trace or communicate with the person.[37]

The court order will specify:[38]

(a) the goods to which it relates;

(b) the manner in which disposal of the goods is authorised;

(c) the date on or after which the goods may be disposed of under the order;

(d) the amount of the relevant charges due to the bailee in respect of the goods.

Once the order is obtained the bailee can sell the goods.

Disposal after notice to bailor

There is a mechanism that permits a bailee to dispose of uncollected goods after giving notice to the bailee. The rules (and the degree of difficulty) vary according to the value of the goods.

For example in NSW goods are divided into four categories: those up to $100 in value; those between $100 and $500 in value; and those between $500 and $5000; and those above $5000. The bailee’s obligations increase in proportion to the value of the material.

Goods of up to $100 in value[39]

A bailee may dispose of uncollected goods whose value is less than $100 if the bailor:

(a) has been given oral or written notice of the bailee's intention to dispose of the goods, and

(b) has been given at least 28 days, from the date when notice was given, within which to collect the goods.

Uncollected goods may be disposed of under this section in such manner as the bailee considers appropriate.

Goods of between $100 and $500 in value[40]

A bailee may dispose of uncollected goods whose value is less than $500 (but not less than $100), if the bailor, the owner of the goods and each person having or claiming an interest in the goods:

(a) have been given written notice of the bailee's intention to dispose of the goods, and

(b) have been given at least 3 months, from the date when notice was given, within which to collect the goods.

(c) Uncollected goods may not be disposed of under this section otherwise than by way of public auction or by private sale for a fair value.

Goods of between $500 and $5,000 in value [41]

A bailee may dispose of uncollected goods whose value is less than $5000 (but not less than $500), if the bailor, the owner of the goods and each person having or claiming an interest in the goods:

(a) have been given written notice of the bailee's intention to dispose of the goods; and

(b) have been given at least six months, from the date when notice was given, within which to collect the goods; and

(c) if a copy of the notice has, at least twenty-eight days before the goods are disposed of, been published in a daily newspaper circulating generally throughout New South Wales.

Uncollected goods may not be disposed of under this section otherwise than by way of public auction.

Notice obligations

The notice must comply with the requirements spelled out in the Act. For example:[42]

Notice under this Part must include:

(a) the bailee's name, and

(b) a description of the goods, and

(c) an address where the goods may be collected, and

(d) a statement of the relevant charges due to the bailee in respect of the goods, and

(e) a statement to the effect that, on or after a specified date, the goods will be disposed of unless they are first collected and the relevant charges are paid, and

(f) if applicable, a statement to the effect that the person will retain, out of the proceeds of sale of the goods, an amount not exceeding the relevant charges.

Service of the notice can be achieved either by personal service (where the person can be contacted) or by means of a letter addressed to the person and left at, or sent by post to, the person's last known address.[43]

The untraceable or unresponsive bailor

If you cannot trace or communicate with the bailor:

(i) provided that the goods are less than $5000 and you have made bona fide efforts to find and contact the person, you will be relieved of the need to give notice; but

(ii) if the goods are valued at over $5000, you must get a court order.[44]

Perishable goods

Sometimes nature intervenes and requires that rotting or infected material be destroyed or thrown out. The legislation reflects this reality:[45]

(1) Nothing in this Part prevents a bailee from disposing of perishable uncollected goods (that is, goods that have perished or are in imminent danger of perishing) if the bailor and the owner of the goods:

(a) have been given oral or written notice of the bailee's intention to dispose of the goods, and

(b) have been given a reasonable opportunity, having regard to the nature and condition of the goods, to collect the goods.

(2) Goods may be disposed of under this section in such manner as the bailee considers appropriate.

This leaves unanswered the most obvious question: What happens where we can’t find the owner or the owner is unresponsive?

Requirements after the disposal

The money received from the sale, less any authorised charges, gets paid to the bailor or, if the bailor is unidentifiable or not found, according to the legislation dealing with uncollected money.[46]

The record-keeping obligations are considerable but reasonable:[47]

(1) Within 7 days after disposing of goods in accordance with this Part, a bailee must prepare a record of the following particulars:

(a) a description of the goods disposed of,

(b) the date on which the goods were disposed of,

(c) the manner in which the goods were disposed of,

(d) in the case of goods that have been sold:

(i) the name and address of the person to whom they were sold, and

(ii) the amount of the proceeds of the sale, and

(iii) the amount retained by the bailee to cover the relevant charges due to the bailee in respect of the goods,

(e) in the case of goods sold by public auction – the name, and the address of the principal place of business, of the auctioneer by whom the goods were sold.

(2) A record prepared under this section must be kept by the bailee for at least 6 years from the date on which the goods were disposed of and must be made available by the bailee, on request, for inspection by the bailor or by any other person claiming an interest in the goods.

Statutory institutions

Collecting institutions that are established by statute should ensure that their founding statute permits them to dispose of this sort of material after certain precautions have been followed. Such individual provisions can give institutions powers of disposal that are better suited to collecting institutions rather than the provisions that are provided for general bailees.

There are many institutions that do not have their own statutory mechanism that provides for the disposal of uncollected goods. Most of them would be well advised to seek such a mechanism.

One institution that does enjoy its own statutory mechanism is the National Gallery. By way of example, s 11 of the National Gallery Act 1975, is set out below. As you will notice, its procedures are tailored to the needs of the institution while still respecting the rights of owners. The Gallery’s mechanism is far more appropriate, quicker and cheaper than the procedures provided under general legislation for disposal of uncollected goods. Further, having the mechanism in the statute means that it does not have to be spelled out in each loan agreement that it enters.

Click HERE to view a PDF of the following table.

NATIONAL GALLERY ACT 1975 – Section 11

Disposal of property left with Gallery

(1) Where:

(a) the Council wishes to apply this section to any property (including a work of art) that is not the property of the Gallery but has been submitted to the Gallery with a view to its acceptance by the Gallery or for any other purpose;

(b) the property has remained in the possession or custody of the Gallery for a period of not less than 1 year after its submission to the Gallery;

(c) in a case to which subsection (2) applies:

(i) the Council has complied with the requirements of that subsection; and

(ii) the period specified in the notice under that subsection or, if such notices were sent to more than 1 person, the period specified in the notice last sent, has expired; and

(d) the property is not the subject of a claim lodged with the Gallery by the person who submitted the property to the Gallery or by any other person who has an interest in the property;

this section applies in relation to that property.

(2) Where the Gallery has a record of the name and address of a person who has an interest in property referred to in paragraph (1)(a) or of the person who submitted that property to the Gallery, the Council shall send by pre-paid registered post to that person or to each of those persons, addressed to him or her at the relevant address, a notice informing him or her that, after the expiration of 3 months from the date of the notice, the Council intends, unless the person who submitted the property to the Gallery or any other person who has an interest in the property lodges with the Gallery a claim with respect to the property, to deal with the property under this section.

(3) The Council may, in respect of property in relation to which this section applies, cause a notice, in accordance with subsection (4), relating to the property to be published twice, with an interval of at least 7 days between the dates of the publications, in such daily newspapers as will ensure its publication in every State and internal Territory.

(4) A notice under subsection (3) shall sufficiently identify the property to which it relates and shall state that, at the expiration of 3 months from the date of publication of the notice, the Council intends to deal with the property under this section unless, before that time, the person who submitted the property to the Gallery or any other person who has an interest in the property has lodged with the Gallery a claim with respect to the property.

(5) Where:

(a) the period of 3 months specified in a notice under subsection (3) that has been published for the second time has expired; and

(b) the property to which the notice relates has not ceased to be property in relation to which this section applies;

the Council may:

(c) if the property is a work of art and the Council wishes to acquire it for the national collection – request the Minister to approve its acquisition for the national collection; or

(d) in any other case – request the Minister to approve its disposal in accordance with this section.

(6) Before approving of the acquisition of a work of art in accordance with a request under paragraph (5)(c), the Minister shall obtain a valuation of the work of art from an independent expert.

(7) Where a work of art the subject of a request under paragraph (5)(c) has not ceased to be property in relation to which this section applies, the Minister may, by notice published in the Gazette, approve the acquisition of the work of art for the national collection.

(8) Upon the publication in the Gazette of a notice under subsection (7), the work of art to which the notice applies is, by force of this subsection:

(a) vested in the Commonwealth; and

(b) freed and discharged from all interests, trusts, restrictions, obligations, contracts, licences and charges;

to the intent that the legal estate in the work of art and all rights and powers incident to that legal estate are vested in the Commonwealth.

(9) The Minister shall, on behalf of the Commonwealth, transfer to the Gallery for inclusion in the national collection a work of art referred to in subsection (8).

(10) Where property the subject of a request under paragraph (5)(d) has not ceased to be property in relation to which this section applies, the Minister may approve the disposal of the property and advise the Council accordingly.

(11) Where the Minister has advised the Council of his or her approval of the disposal of property and the property has not ceased to be property in relation to which this section applies, the Gallery may:

(a) cause the property to be sold by public auction; or

(b) if the Council determines that the property is valueless or that for some other reason it is not practicable to sell the property by public auction – cause the property to be disposed of otherwise than by sale or to be destroyed.

(12) For the purposes of a sale or other disposal of goods under subsection (11), the Gallery shall be deemed to be the absolute owner of the property.

(13) The interest of every person in a work of art to which a notice published under subsection (7) relates is, on the date of acquisition of that work of art, converted into a right to compensation against the Commonwealth.

(14) Parts VII and IX of the Lands Acquisition Act 1989 apply in relation to a right to compensation referred to in subsection (13) as if:

(a) that right were an entitlement to compensation under section 52 of that Act;

(b) a reference in those Parts to an interest in land were a reference to the legal estate in the work of art to which that right relates; and

(c) a reference in those Parts to the Minister were a reference to the Minister administering this Act.

(15) Where a person satisfies the Council that he or she had an interest in property immediately before the property was sold by virtue of subsection (11), the Gallery shall pay to the person such amount as it considers appropriate having regard to the interest that person had in the property but not exceeding the amount by which the amount of the proceeds of the sale exceeded the amount of any expenses incurred by the Gallery in connexion with the storage and sale of the property.

(16) No action, other than an action under the Lands Acquisition Act 1989 as applied by subsection (14), lies against any person by reason of any act or thing done in accordance with this section.

Contractual right to dispose

Institutional borrowers know what a problem uncollected loans can be. They also know that this problem commonly arises because lenders change their names, sell their interests, go out of existence, have a fire or change their addresses, during the loan period. Given the expense and inconvenience of the problem caused by such things it makes sense that the agreement, as a matter of course, should contain provisions that anticipate such foreseeable problems.

The failure to collect material at the end of the bailment period is a clearly foreseeable problem in many institutions. Because this is so, any bailee of third party property would be well advised to include a mechanism in its agreements to deal with uncollected property without having to comply with the vagaries of legislation.[48] In particular, the bailee should Include mechanisms that

• put an obligation on the lender keep in regular contact with the borrower;
• that require the lender to formally advise the borrower if certain events occur; and
• permit disposal after certain procedures have been fulfilled or attempted.

In such a situation, the museum acquires its disposal right by means of the contract. Its powers are limited to those granted in the document.[49]

However, where there is no contract, or the contract is silent on the issue of what happens to uncollected material at the end of the loan period, the borrower must look to legislative solutions.

Special legislation for collecting institutions?

There is no legislation in Australasia that provides a general mechanism by which all collecting institutions can deal with their scary cupboard. Perhaps this is because the large institutions generally have a mechanism in their individual statute – but this provides no succour to those museums that are not so endowed.

In the USA, the Registrars Committee of the Mid-Atlantic Association of Museums in 1995 decided that museums needed special legislation.[50]

The purpose of this draft legislation was to:

• Encourage both museums and their lenders to use due diligence in monitoring loans;
• Advocate fairly, responsibilities between lenders and borrowers; and
• Resolve expeditiously the issue of title of unclaimed loans left in the custody of museums.

It set out a number of obligations for both the lender and the borrower:

For new loans, the museum was obliged to make and retain written records of the loan including the lender information, a description of the property, the beginning and end date of the loan. It had to provide the lender with a signed receipt or loan agreement.

For old loans, the museum was obliged to update its records if the lender informed it of changes in contact information or ownership of the property and had to inform the lender whenever renewing or updating information about the loan.

As for the lender, it was obliged to notify the borrower of any change in address or of a change in ownership. Usefully, it stipulated that the successor of a lender is responsible for establishing ownership, thus relieving the museum of the burden of proof.

As for the mechanism that it provided for converting old loans, as would be expected, the museum was required to make a good faith search for, and attempt to contact, the lender. As in Australia, the mechanism provided for actual notice and deemed notice (by publication). It set out timelines and what the museum had to establish in order to acquire full ownership of the property.[51]

[2] The mere fact of possession does not automatically give rise to a bailment. Generally, a conscious and willing assumption of possession of the goods is required before bailment can exist: N E Palmer, Bailment (Law Book Co, 1979) at 1 and note 1 at 30.

[3] The consideration would be mutual where, say, one party gets paid for the service and the other gets the promise that the goods will be repaired.

[4] Coggs v Bernard (1703) 2 Ld Raym 909; 92 ER 107 per Holt CJ at 916; 111.

[5] Which may be relevant where material is acquired through field trips.

[6] For example, where an anonymous person leaves a valuable book outside the door of the library. Perhaps the most common example is where possession arises from ‘inertia selling’ – e.g. Readers Digest.

[7] N E Palmer, Bailment, (Law Book Co, 1979) at Note 1 at 383; see also Elvin & Powell Ltd v Plummer Roddis Ltd (1933) 50 TLR 158.

[8] Hiort v Bott (1874) LR 9 Ex 86 at 91, per Cleasby B.

[9] Winfield and Jolowicz, Torts (12th ed, Sweet & Maxwell, 1984) at 481.

[10] Note 1 at 379. The approach of the English courts at least has been to deny that the involuntary recipient of goods is a bailee; see Lethbridge v Phillips (1819) 2 Stark 478. Australian authority is limited in this area, but see Alice Erh-Soon Tay, ‘The Essence of a Bailment: Contract Agreement or Possession?’ (1966) 5 Sydney LR 239, especially 248–57.

[11] For example see clause 4, Exhibition Agreement, Museum of Fine Arts, Boston:

The Exhibitor will be responsible for the security of the Works at all time while on the Exhibitor’s premises, including during storage, unloading/loading, unpacking/repacking, installation/deinstallation and exhibition, and must take all appropriate and prudent measure to protect the Works and keep them secure while in their possession, at a minimum as they care for and secure works of art of the same or similar nature of their own, or on loan from others, including without limitation precautionary measures against risks of fire, theft, accidents, disasters, ultraviolet and visible light, incorrect relative humidity and temperature, environmental overcrowding in the galleries, and the dangers resulting there from. Specifically, the Exhibitor agrees to abide by the security, staffing and environmental conditions specified in Exhibit B or any special requirements for Works in the Exhibition that MFA may stipulate in writing in Exhibit C or at a later date. In addition, the Exhibitor agrees to comply with any special security, handling, care, or other requirements of Private Collector(s) which MFA will provide as soon as available. No off-site storage of any Work is allowed without advance written permission of MFA.

Several Australian art museums, such as the AGNSW, use similar clauses.

[12] Such administrative and technical matters are often best handled in schedules or annexures so that they do not make the body of the contract too impenetrable. The contract should make the principles of liability very clear: they will rarely change from borrower to borrower. The details, however, will often vary and this is best done in a Schedule so that the body of the contract does not get constantly amended.

[13] In this agreement the transport of the work is undertaken by the owner institution and therefore the lender’s liability only lasts from the time the work is delivered to the time the owner picks it up from the borrower’s premises.

[14] For example, see Chapter 15.7: The ‘scary cupboard’: the disposal of old and uncollected loans.

[15] ‘The Evolution of Loans Practice: Development of Procedures and Documentation at the Powerhouse’, Penny Huisman, Powerhouse Museum (Newsletter of the Australian Registrars Committee, June 2000, 4.)

[16] Ibid 4–5.

[17] Ibid 4.

[18] John E. Simmons, ‘Things Great and Small’, Collections Management Policies, p. 73, American Association of Museums.

[19] This forces both parties to regularly review the status of the loan and helps to maintain current details of owner and their address.

[20] Insurance is more fully discussed in Chapter 39: Insurance and indemnification.

[21] For discussion of the issues concerning the disposal of material that has been accessioned to the collection (i.e. material owned by the institution), see Chapter 9: Disposal.

[22] Ildiko DeAngelis, ‘Old Loans’, 2005.

[23] These may include gifts, purchases, loans, commissions, and exhibition props.

[24] These efforts must be documented, as it is the bailee who must be able to prove that the efforts made to find the owner were reasonable.

[25] Report 54: ‘Disposal of Uncollected Goods’, 1988, see full Report at <http://www.lawlink.nsw.gov.au/lrc.nsf/pages/R54TOC>.

[26] Hawtayne v Bourne (1841) 7 M & W 595, 600, 151 ER 905, 907; Bowstead on Agency (14th ed, Sweet & Maxwell, 1976) 63–4.

[27] Note 1 at 684, Sims & Co v Midland Railway [1913] 1 KB 103.

[28] Or in some similar category, such as livestock, which must be tended, fed and watered. See Sachs v Miklos [1948] 2 KB 23, per Lord Goddard, CJ at 35.

[29] [1948] 2 KB 23, followed in Munro v Willmott [1948] 2 AII ER 983; and see also Jebara v Ottoman [1927] 2 KB 254 at 270 per Scrutton LJ.

[30] Ibid 35.

[31] See Halsbury’s Laws of England (4th ed, Butterworths, 1973) Vol 2 at para 1510.

[32] Although there may be situations in which a loan item starts to decompose or leak and so becomes hazardous.

[33] Mere accidental or negligent behaviour is insufficient.

[34] See Uncollected Goods Act 1996 (ACT); Uncollected Goods Act 1996 (NSW); Uncollected Goods Act 2004 (NT); Disposal of Uncollected Goods Act 1967 (Qld); Disposal of Uncollected Goods Act 1966 (NSW); Disposal of Uncollected Goods Act 1970 (WA); Disposal of Uncollected Goods Act 1961 (Vic); Disposal of Uncollected Goods Act 1968 (Tas).

[35] Uncollected Goods Act 1996 (NSW), s 8.

[36] Ibid, s 8(1).

[37] Ibid, s 8(3).

[38] Ibid, s 9(3).

[39] Uncollected Goods Act 1996 (NSW), s 20.

[40] Ibid, s 21.

[41] Ibid, s 22.

[42] Ibid, s 26.

[43] Ibid, s 27.

[44] Ibid, s 25.

[45] Ibid, s 24.

[46] For example in NSW under the Unclaimed Money Act 1995 the money would be paid to the Chief Commissioner of State Revenue. Each jurisdiction has its own equivalent legislation.

[47] Ibid, s 30.

[48] Where there is an agreement, the terms of the contract take precedence over any legislation. For example, s 6(i) of the Uncollected Goods Act 1995 (NSW) states: ‘This Act is available for the disposal of uncollected goods where there is no agreement between the parties on the means of their disposal. If there is such an agreement, this Act applies to any aspect of the disposal of those goods that is not dealt with in the agreement.’ In such a situation, the museum acquires its disposal right by means of the contract. Its powers are limited to those granted in the document.

[49] For example where an art museum is hosting a competition such as the Archibald Prize, the contractual terms of entry should always give the institution the right to dispose of works that remain uncollected after a certain time has expired. For further, more commonplace commercial examples of this, consider the conditions on the back of laundry and dry cleaning tickets.

[50] Jeanne Benas and Jean Gilmore led the task force and Ildiko DeAngelis, then of the Smithsonian Institution General Counsel’s office, was consulting counsel.

[51] For further commentary on the RC-MAAM Model legislation 1995: Rebecca Buck, ‘Found in Collection’, 2005; Ildiko DeAngelis, ‘Old Loans’, 2005.

From time to time, all museums rely on buying-in skills or resources to mount exhibitions. Even large institutions with numerous professional staff, need to retain additional, outside expertise. Accordingly, there is an extensive range of independent museum professionals who provide their services on a project by project basis. The include: exhibition designers, catalogue designers, lighting designers, commissioned contributors to the catalogue, installers, security experts, conservators, photographers and curators.

Even where the museum has this expertise in-house, it may choose to hire a consultant to provide the service. It may do so because its employees are already fully committed with other projects, to promote a new voice or approach or for financial reasons.

All consultants must be properly contracted. The terms of the agreement must very clearly articulate the expectations of both parties. In particular the brief must be fulsome and unambiguous.

19.2 Model consultancy agreement

Museums are great users of consultants: they need to be because they have a continual need for diverse skills and no museum, however wonderfully resourced, has the internal intellectual richness to meet the entire range of demands upon it. The following is an agreement drafted for a major museum to use when retaining the services of consultants providing creative services such as the curator or designer of an exhibition or the author of a catalogue essay. The commentary provided, will assist to understand the significance of the clauses.

Model Consultancy Agreement with Commentary

Click here to view the Agreement (PDF).

Schedule

The model contract will then have a Schedule that sets out the nitty gritty that assists the administration and supervision of the contract. For example, the above contract may have a Schedule that looks like the following. Just make sure that all of the items set out in the Schedule are actually referred to in the principal agreement.

SCHEDULE

Item 1: CONTRACTOR DETAILS

Name: (referred to as ‘the Consultant’)

Address:

Telephone: Fax: Email:

Key person who is to deliver the Services:

Item 2: BRIEF:

Item 2.1: The Brief: [description of the project/activities for which the Contractor is contracted]

Item 3: PRICE AND DELIVERY

Item 6: APPROVED BUDGETED EXPENSES:

Item 7: TRAVEL EXPENSES:

Item 8: MATERIAL AND FACILITIES TO BE PROVIDED BY THE MUSEUM:

(eg: access to work facilities, conference rooms, meetings with staff)

Item 9: SPECIAL CONDITIONS:

Item 10: BANK ACCOUNT DETAILS

The Museum will make payment via electronic funds transfer into the following account:

Australian Business Number:

The Consultant’s ABN is ………………………………………………………..

Item 15: REQUIRED INSURANCES