Bills Digest no. 69 2012–13

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WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Moira Coombs
Law and Bills Digest Section
6 February 2013

Contents
Purpose of the Bill
Background
Committee consideration
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions
Concluding comments

 

Date introduced: 28 November 2012
House: House of Representatives
Portfolio: Regional Australia, Local Government, Arts and Sport
Commencement: Sections 1 and 2 commence on Royal Assent. Sections 3–21 commence on the earlier of a day to be fixed by Proclamation or six months after Royal Assent.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill's home page, or through http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation. When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/.

Purpose of the Bill

The purpose of the Protection of Cultural Objects on Loan Bill 2012 (the Bill) is to establish an immunity from seizure scheme for cultural material on loan to Australia from foreign cultural institutions. The scheme protects cultural objects on loan from legal proceedings while the object is on temporary exhibition in Australia. It also provides for borrowing institutions to be approved by the Minister according to certain criteria.

Background

International lending of artworks

International loans of artworks (whether between museums or between countries) are a critical element of cultural exchange. But each time an artwork leaves the borders of the nation where it is currently held, there is some degree of uncertainty about whether it will return. In an effort to provide a level of confidence to institutions in lending countries, many nations have passed various form of anti-seizure legislation, each one trying to balance a moral and legal imperative (the return of stolen property) with a cultural and societal privilege (the exchange of timeless treasures).[1]

In practice, there are three situations in which someone may wish to seize a cultural object that is temporarily on loan. Firstly, if there is an ownership dispute over a cultural object on loan – that is where the object has allegedly been stolen or wrongfully appropriated. A claimant may attempt to file a claim for injunctive relief in the borrowing state and to try to seize the object if he or she believes that his or her chances in the country where the cultural object is temporarily on loan are better, from a legal perspective, than in the country where the object is normally located.[2]

Secondly, if an individual or company is of the opinion that the owner of the cultural object on loan owes a debt (not necessarily related to the object) to the claimant, and this claimant has concerns regarding the enforcement of a judgment or arbitration award in the state of residence of the owner.[3]

Finally, in the context of a criminal investigation, law enforcement officers may wish to seize certain cultural objects in order to preserve evidence.[4]

Australia’s current framework

‘At the end of the 1960s and in the beginning of the 1970s, thefts were increasing both in museums and at archaeological sites... Private collectors and, sometimes, official institutions, were offered objects that had been fraudulently imported or were of unidentified origin’.[5] It is in this context, and to address such situations, that the Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property (the Convention) was created in 1970.[6]

The Convention requires States Parties to take action in the following areas:

• preventive measures such as inventories, export certificates, monitoring trade, imposition of penal or administrative sanctions, educational campaigns
• restitution under Article 7(b)(ii) of the Convention—to take appropriate steps to recover and return any cultural property that has been imported provided that the requesting State pays just compensation to an innocent purchaser or to a person who has valid title to that property and
• international co-operation—the idea of strengthening cooperation among and between States Parties is present throughout the Convention.

In Australia, the Protection of Movable Cultural Heritage Act 1986 (Protection of Movable Cultural Heritage Act)[7] regulates the export from Australia of cultural heritage objects, and also provides for the forfeiture of protected objects of cultural heritage illegally exported from other countries and subsequently imported into Australia. It implements Australia’s obligations under the Convention to which Australia acceded on 30 January 1990. However, it does not provide protection against claims for cultural objects which are on loan to Australia.

There is an additional international convention—UNIDROIT Convention on Stolen or Illegally Exported Cultural Objects.[8] However, Australia is not, at the time of writing this Bills Digest, a party to it.

Immunity from Seizure Discussion Paper

In 2011, the Australian Government published a discussion paper entitled Immunity from Seizure for Cultural Objects on Loan. The paper defines ’immunity from seizure’ in the following terms:

Immunity from seizure for cultural objects on loan broadly means providing protection against potential claims on cultural heritage objects lent by an international or domestic collection to cultural agencies, including, but not limited to, museums, galleries, libraries and archives, for the duration of the loan. It is essentially a guarantee that objects on temporary loan from another country will be protected against seizure, and, in some cases, suit (defined as any legal proceedings brought to a court of law), during the period of the loan.[9]

A number of other countries have legislation in place to protect objects on loan for temporary exhibition. The United States (US), for example has had immunity from seizure legislation since 1965.[10] The statute covers objects of cultural significance borrowed from outside the US that are either privately or publicly owned.

Not all examples of such legislation are the same. France’s immunity from seizure law is more restrictive.[11] It protects objects that are publicly owned by a foreign public or government institution.[12] There are a number of other countries with immunity from seizure legislation including Belgium, Austria, Switzerland and Germany.

An immunity from seizure scheme came into being in the United Kingdom (UK) in 2007. The relevant legislation[13] provides for the protection of objects on loan for the purpose of public exhibition to pre-approved institutions and certain conditions apply to approval.[14] The proposed scheme in the Bill is based on the UK model and was strongly endorsed by the Western Australian Museum.[15] The UK legislation sets out five conditions that must be met in order for an artwork to be protected, that is:

• the object must usually be kept outside the UK
• the object must not be owned by a person resident in the UK
• the import of the object must comply with the law on the import of goods
• the object must be brought to the UK to be displayed to the public in a temporary exhibition at a museum or gallery and
• the museum must have complied with regulations requiring publication of information about the object.

In that case protection is granted for 12 months beginning on the day the object enters the UK if the object is in the UK for one of the purposes defined in the UK legislation.[16]

The discussion paper sets out a number of benefits experienced by foreign countries from having such legislation in place. These include:

• reducing the risk involved in cross-border loans for collecting institutions
• providing surety for the lender and allowing mobility of collections between collecting institutions for the publicly beneficial exhibition of significant objects
• allowing lending procedures to become streamlined and more transparent and
• improving the due diligence of borrowing institutions which are required to meet particular standards in order to gain access to immunity provisions.[17]

Australia in the Asian Century

‘It has long been accepted that art loans are a cardinal form of modern cultural exchange.’[18] It is in this context that the Bill is currently part of a number of other Government initiatives such as the Government’s White Paper Australia in the Asian Century.[19] It is intended to strengthen the growing ties between Australia and Asia. The other initiative is the development of the National Cultural Policy to set out ‘a strategic framework of support for individuals, organisations and communities … involved in cultural expression’.[20]

The Minister noted in his speech to the current Bill:

This Bill will further develop our cultural wealth by encouraging loans of significant cultural objects from overseas for temporary public exhibition in Australia.

He further noted:

The ability to borrow these objects enriches the cultural experience for Australian audiences, draws visitors from far and wide, and delivers significant economic benefits.[21]

Committee consideration

Senate Selection of Bills Committee

At its meeting on 28 November 2012 the Senate Selection of Bills Committee resolved to recommend that the Bill not be referred to a Committee for inquiry and report.[22]

Senate Standing Committee for the Scrutiny of Bills

At the time of writing this Bills Digest, the Committee had not dealt with the Bill.

Joint Parliamentary Committee on Human Rights

At the time of writing this Bills Digest, the Committee had not dealt with the Bill.

Position of major interest groups

In the submissions that formed the consultation on the Immunity from Seizure discussion paper, stakeholders welcomed the Bill because it provides protection and certainty for objects on loan from foreign countries to various institutions in Australia for public exhibitions.

The British Museum noted that the model set out in the discussion paper is broadly similar to the model introduced into the UK in 2007 which, in the British Museum’s experience, has generally worked well.[23] As already stated, the Western Australian Museum also recommended the adoption of the UK model in Australia.[24]

The National Gallery of Australia (NGA) was very supportive of legislation being developed in this area and noted in its submission:

Currently Australia is behind in being able to offer its major cultural institutions the opportunity to apply for this type of cover. The NGA has not to date, received any outright refusals from lenders and this may be because of its particular federal status and association with the Commonwealth Government and the old Art Indemnity scheme, unlike the State Galleries.[25]

The NGA considered also that there should be a return guarantee for any object that would be covered by legislation.[26] The NGA also preferred the model of institutional accreditation.[27]

The Australian Museum noted in its submission that in its experience ‘the absence of such legislation has meant foreign cultural institutions are increasingly reluctant to lend objects to Australian museums and galleries. Increasingly, this is having a significant impact on the quality and range of cultural experiences that can be enjoyed by the Australian community’.[28]

The New South Wales (NSW) Government submission stated that ‘national immunity legislation is urgently needed by NSW major cultural institutions for cultural objects on loan for temporary exhibition’.[29] The NSW Government further noted:

If recent trends continue, and immunity legislation becomes a prerequisite or best practice for foreign lending, and Australia does not adequately respond, NSW cultural institutions will find it increasingly difficult to secure loans, even from institutions with which they have longstanding friendships. If this occurs, it could adversely impact on the international blockbusters in Australian museums and galleries—potentially affecting the educational opportunities, the revenue base of these institutions, as well as cultural tourism.[30]

Financial implications

The Explanatory Memorandum states that the ‘Bill is not expected to have an impact on Commonwealth expenditure’.[31] However it should be noted that provision is made under clause 20 of the Bill for the Commonwealth to pay compensation on just terms if there is an acquisition of property.

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act.[32] The Government considers that the Bill is compatible.

Key issues and provisions

Approval of Institutions

Consistent with the UK legislation, this Bill provides for the approval of a borrowing institution, rather than a requirement that each relevant exhibition is to be approved in order for immunity from seizure to attach.

Subclause 15(1) of the Bill provides that a borrowing institution may apply to the Minister for approval for a specified period of not more than 60 months. Clause 5 of the Bill defines a borrowing institution as an organisation that:

• collects and publicly exhibits in Australia objects that are of interest for archaeological, artistic, ethnological, historical, literary, scientific or technological reasons and
• is established by a law of the Commonwealth, a state or a territory or is prescribed by regulation as a borrowing institution.

Notice of approval is given to the institution and published on the Department’s website. The Minister must consider, as a minimum, all of the matters under subclause 15(2) of the Bill when considering approval of an institution, that is:

• the curatorial expertise of the institution and its expertise in the management of collections
• the procedures used by the institution to identify the provenance of objects collected or exhibited by the institution
• the procedures used to identify objects in a foreign country for possible temporary loan arrangements
• the procedures used by the institution (or its parent[33]) in negotiating temporary loan arrangements
• whether the institution often publicly exhibits objects from foreign countries in Australia and
• any other matters prescribed by regulation.

Subclause 16(1) provides that the Minister may impose, vary and revoke the conditions relating to the approval of a borrowing institution by notice given to the institution and published on the Department’s website.

In addition, subclause 17(1) provides that the Minister may revoke an approval of a borrowing institution by notice given to the institution and published on the Department’s website in circumstances where the Minister is satisfied that a regulation involving the institution, or conditions of approval, have been contravened. The Minister may also revoke an approval because of any of the matters listed in subclause 15(2) which are set out above.

Clause 18 provides that applications may be made to the Administrative Appeals Tribunal in relation to a decision of the Minister to refuse to approve a borrowing institution under clause 15, to impose or vary a condition under clause 16, and to revoke an approval under clause 17.

Objects that are protected

The protections in clauses 9–13 of the Bill apply to an object in the circumstances set out in subclause 8(1) of the Bill, that is, if:

• the object is imported under a temporary arrangement between a lender[34] of the object and either, or both, an exhibiting institution[35]or an exhibition facilitator[36] who in turn has an arrangement with an exhibiting institution for the object
• the object is imported for the purpose of a temporary public exhibition in Australia
• the institution is an approved institution (under clause 15) and

one or more of the following circumstances exist:

• the loan is made in the course of trade or commerce between Australia and another country
• the lender is a foreign corporation within the corporations power of the Constitution[37]
• the approved institution (or its parent), or the exhibition facilitator, is a corporation under the Constitution or a law of the Commonwealth or a territory
• the parent institution or exhibition facilitator is the Commonwealth or a territory
• the public exhibition will occur, or has occurred, in a territory
• the public exhibition will occur in a place acquired by the Commonwealth for public purposes under the Constitution[38]
• the protections in Part 2 are appropriate and adapted for Australia to give effect to its obligations under an agreement with foreign countries or international organisations and that is relevant to the loan
• the importation of an object does not contravene a law of the Commonwealth prescribed by regulation[39]
• the object is not a Class A object as defined in the Protection of Movable Cultural Heritage Act[40] or
• the object is not specified in a written notice that was given to the Minister before a prescribed time and before the object is imported. A written notice to the Minister in the approved form which has not been withdrawn has the effect that the Part 2 protection provisions would not apply.

Issue—indigenous cultural objects

As already stated, the Protection of Movable Cultural Heritage Act regulates the export from Australia of cultural heritage objects, and also provides for the forfeiture of protected objects of cultural heritage that are illegally exported from other countries and subsequently imported into Australia.

This Bill specifically excludes Class A objects from its operations. This means that, should a Class A object be imported into Australia for a temporary public exhibition, it will not be subject to the immunity from seizure provisions of the Bill.

Class A objects are not affected by the operation of this Bill as the material is particularly culturally sensitive. According to the Explanatory Memorandum:

The inclusion of other Aboriginal and Torres Strait Islander objects [that is, those that are not Class A objects] in this Bill has been made to encourage foreign lenders who hold such objects in their collections to consider lending those objects to Australian institutions for temporary public exhibition. This will increase awareness of those objects in foreign collections and provide an opportunity for members of Aboriginal and Torres Strait Islander communities to see and connect with objects from their cultural heritage that may not otherwise be loaned to Australian institutions. If Aboriginal and Torres Strait Islander objects were excluded from the Bill, lenders may not consent to loan those objects to Australian institutions and their presence in foreign collections may remain unknown.[41]

When the protection ends

Paragraph 8(2)(a) provides that the protections in Part 2 of the Bill do not apply to the object if either of the following events has occurred:

• the end of a 24 month period from the day the object was imported: subparagraph 8(2)(a)(i) or
• the object is exported from Australia: subparagraph 8(2)(a)(ii).

The rationale for this time limit is that ‘the purpose of the scheme is to protect objects on loan for temporary public exhibition and most of those arrangements are for periods of less than 24 months’.[42]

Paragraph 8(2)(b) of the Bill allows ‘the possibility of an extension to the period of protection in exceptional circumstances’.[43] Subclause 8(3) provides that the Minister may make a declaration for the purposes of paragraph 8(2)(b) only if the exhibiting institution makes an application and only if the Minister is satisfied that exceptional circumstances exist to justify the making of a declaration.

In that case paragraph 8(2)(b) authorises the Minister to declare by notice published on the Department’s website—before either of the events in paragraph 8(2)(a) have occurred—that the protections in Part 2 cease to apply to the object at a time stated in the declaration. That time will be at least 24 months after the day the object was imported.

Nature of the protection

Protection from suit

Clause 9 deals with protection from suit. It deals with actions in personam[44] and actions in rem.[45] Subclause 9(1) provides that proceedings for an action in personam cannot be commenced against a protected person in relation to the object. Clause 5 of the Bill defines a protected person for an object as:

(a)    a lender of the object or

(b)   an officer, employee or agent of a lender of the object who accompanies the object for some or all of the time it is on loan or

(c)    an exhibition facilitator for the object, an exhibiting institution for the object or the parent of such an institution or

(d)   a person who is an officer, employee, agent or delegate of an exhibition facilitator for the object or an officer, employee, agent or delegate of an exhibiting institution for the object or the parent of such an institution or

(e)   a person engaged by a lender of the object, an exhibition facilitator for the object or an institution or parent described in paragraph (c) to do any of the following: transport the object from one place in Australia to another or between Australia and a foreign country; carry out conservation work on the object in Australia; store the object in Australia; provide security for the object while it is being transported between Australia and a foreign country or while it is in Australia; provide a service that relates to the object and is prescribed by regulation or

(f)     an officer, employee, agent or delegate of a person described in paragraph (e).

Subclause 9(2) provides that proceedings for an action in rem in relation to the object cannot be commenced. Notes to subclauses 9(1) and (2) state that a judgment or order made in relation to the object as a consequence of proceedings commenced before Part 2 applies, cannot be enforced while Part 2 applies to the object.

The list of persons who are a protected person in the definition is hierarchical. According to the Explanatory Memorandum ‘this recognises the fact that some protected persons have a high claim than others to start proceedings and has been included to protect the lender’.[46]

Subclause 9(3) of the Bill provides an exception to the general rule so that a protected person in relation to the object is not prevented from commencing proceedings against another protected person in relation to the object. The words of the subclause state that a protected person may commence proceedings against a protected person who occurs in the same paragraph or a later paragraph of the definition. However, a protected person lower in the hierarchy cannot commence proceedings against a protected person higher in the hierarchy of the definition. For example, the lender of the object (paragraph (a) of the definition) could bring proceedings against a person who is an officer, employee, agent or delegate of an exhibition facilitator for the object (paragraph (d) of the definition) but the reverse could not occur.

Subclause 9(4) provides that subclauses 9(1) and (2) do not apply to proceedings under the Proceeds of Crime Act 2002 (Proceeds of Crime Act)[47] or proceedings prescribed by regulation for the purposes of this subclause. Subclause 9(5) provides that the protection in clause 9 applies to commencing proceedings in a federal, state or territory court by claim, cross-claim or otherwise. The Explanatory Memorandum states that this ‘enables the object to be protected from point to point, including across jurisdictional boundaries following importation into Australia’.[48]

Protection from Enforcement of Judgments

Clause 10 deals with enforcement of judgments and orders by courts concerning the objects while they are in Australia. Subclause 10(1) protects the object against the enforcement of a judgment or order in personam or in rem of a federal, state or territory court or foreign court that relates to the object.

Subclause 10(2) provides exceptions to some foreign judgments and awards. Subclause 10(1) does not protect against an act done: under Part 2 of the Foreign Judgments Act 1991[49], enforcing a judgment or order of a superior or inferior court to which Part 2 applies; Part 7 of the Trans-Tasman Proceedings Act 2010[50], or Part II of the International Arbitration Act 1974.[51]

Consistent with subclause 9(3) and the hierarchical list of protected persons, subclause 10(3) of the Bill provides an exception so that a judgment or order can be enforced in favour of a protected person for the object unless the judgment or order is against a protected person who is referred to in an earlier paragraph of the definition of protected person. For example, an officer, employee, agent or delegate of an exhibition facilitator for the object (paragraph (d) of the definition) could not enforce a judgment or order against the lender of the object (paragraph (a) of the definition).

Subclause 10(4) of the Bill provides that subclause 10(1) does not apply to an order made under the Proceeds of Crime Act or a judgment or order made in proceedings prescribed in the regulations.

Protection from Seizure

Subclause 11(1) of the Bill provides that a relevant object cannot be seized under a law of the Commonwealth, a state or a territory. However there are exceptions, which allow seizure under:

• Part 1AA of the Crimes Act 1914 (Crimes Act)[52]
• Part 3-5 of the Proceeds of Crime Act[53]
• a law of the Commonwealth, a state or a territory giving only a police officer a power of seizure or
• a law of the Commonwealth, a state or territory prescribed by regulations for the purposes of this subclause.

Protection from forfeiture

Subclause 12(1) provides that the object cannot be forfeited under a law of the Commonwealth, a state or a territory. However subclause 12(1) does not prevent forfeiture under:

• Part 1AA of the Crimes Act
• Part 2-2 or 2-3 of the Proceeds of Crime Act[54] or
• a law of the Commonwealth, a state or a territory prescribed by regulation for the purposes of this subclause: subclause 12(2).

Protection from Heritage Laws

Subclause 13(1) provides that nothing in, or done under, a heritage law[55] can affect a protected person for the object from giving effect to a temporary loan arrangement or meeting obligations to another protected person who is a party to a temporary loan arrangement. Subclause 13(2) provides that nothing in, or done under, a heritage law affects the ownership of the object; the physical possession, custody or control by the protected person; or the right of the protected person to the custody of the object. A heritage law prescribed by regulation is an exception, however, to the general operation of clause 13: subclause 13(3).

Concluding comments

This Bill brings Australia into line with many countries which have immunity from seizure legislation in relation to the loan of objects to cultural institutions for temporary exhibition. As the Minister notes:

The introduction of this legislation will align Australia with an emerging international standard of providing protection for cultural objects on loan from overseas. It will reassure foreign lenders that Australia is a secure destination for loans and enable our great cultural institutions to successfully compete for world class exhibitions.[56]

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.

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