Art Law in Ukraine

The Ukrainian art market has been gradually developing over the past years; however, it is still positioned at the fringes of the global scene and is hardly comparable to global market players in terms of both market size and activity volume. This can be explained by numerous factors, ranging from the low awareness and art consumption culture among Ukrainians, to the absence of a clear legislative framework, consequently resulting in an unstable art market infrastructure in Ukraine.

Overall, over the past years Ukrainian artists struggled with the absence of financial backing and lack of awareness of their works both in Ukraine and in foreign countries. One of the reasons might be that a lot of professional artists still lack any form of promotional representation (marketing) for their creations, resulting in minimal profit from their own works.

There is also a suggestion that the majority of art sales agreements in Ukraine lack transparency as each piece from an artist carries an individual value. In the Ukrainian art market, mostly paintings and sculptures are being bought, and very few are interested in photography as an artform. Prices for paintings are often inflated by the buyers themselves, as no one wants to admit to buying cheaply, leading them to artificially raise the prices for a particular artist.

Given the peculiarities of the Ukrainian art market, selling a painting as an artist without appropriate connections will be challenging. A novice artist can take two paths: finding an art dealer or arranging an exhibition with a gallery. In Ukraine, the main players in the art market are indeed gallerists and art dealers.

However, in the context of the legislative framework, the past year in art law clearly showed the trend of Ukraine’s digitalisation and approximation with EU legislation. The new Law of Ukraine ‘On Copyright and Related Rights’ (Copyright Law), entered into force on 1 January 2023 and, inter alia, introduced new provisions on contractual regulation, elaborating on the ceasing of IP rights infringement on the internet, and extending the droit de suite regulations. Also, the regulation of digital content was significantly amended, including the provisions that introduce non-fungible token (NFT) objects.

During the past year, Ukrainian art and cultural heritage has been significantly impacted by the war. In January 2023, researchers from the Smithsonian Institution’s Cultural Heritage Monitoring Lab claimed to have already identified almost 1,600 cases of damage to heritage sites in Ukraine.2 As of 27 September 2023, UNESCO has verified damage to 291 sites since the start of the full-scale aggression against Ukraine on 24 February 2022: 122 religious sites, 27 museums, 109 buildings of historical or artistic interest or both, 19 monuments, 13 libraries and one archive.3 The New York Times’ interactive material ‘A Culture in the Cross Hairs’4 discovered how Russia’s invasion has systematically destroyed Ukrainian cultural sites. The investigation has identified 339 sites that sustained substantial damage during the past year and revealed some of the biggest cultural atrocities, such as destroyed museums and churches, the airstrike on Mariupol Drama Theatre with numerous adults and children sheltering inside, burned libraries with Ukrainian literature, looted art collections all over the occupied territories and annihilated monuments for Ukrainian national heroes.

There is, however, a strong intention of Ukrainians to restore what Russians have recklessly destroyed, just as a phoenix is reborn in the ashes. The de-occupied territories, the churches, libraries and other cultural sites are being gradually rebuilt, often with the support of foreign and Ukrainian sponsors.

One of the main organisations supporting art restoration and preservation is the Ukrainian Cultural Fund,5 which annually gives grants and scholarships for the development of Ukrainian art in various spheres. The Fund’s activities are financed by the state budget and by philanthropists from all over the world. From the beginning of the full-scale war, the Fund has conducted numerous art projects across Ukraine and in cooperation with international organisations aimed at popularising Ukrainian artists and supporting their activities.

As to the Ukrainian art market, in the context of the full-scale war, significant changes have occurred over the past year, altering the priorities and preferences of potential buyers. Simultaneously, Ukrainian products have gained recognition and are being readily purchased abroad.

Ukrainian contemporary artists frequently conduct different exhibitions abroad as a documentation in real time of the humanitarian disaster in Ukraine caused by the Russian attacks. The aim of such exhibitions is to present Ukrainian art, raise funds for humanitarian purposes and encourage the international audience into a dialogue about Europe as ‘our common home’. Vivid examples of such exhibitions are ‘The Captured House’ all over Europe in 2022, ‘Golden Scars’ in Berlin in 2023 and ‘Fragmented Evidence’ in New York in 2023. Ukrainian cultural authorities often support such events as those are the unique way of communicating Ukrainian realities in other countries through the universal language of art.

Ukrainian artists also actively participated in the NFT wave in recent years, and after the beginning of the full-scale war, numerous young artists started creating their own NFT collections and independently offering them for sale to aid Ukraine.

Notwithstanding modern art selling platforms, such as PinchukArtCenter and Abramovych.Art, Ukrainian artists now actively use social networks such as X, Facebook and Instagram to popularise their art. There, artists have the opportunity to independently share their art, including links to marketplaces, seek collectors, offer their artwork, and also participate in curated spaces for the sale and purchase of contemporary visual art without intermediaries.

As to the disputes in art over the past year, the most vivid ones were related to war art (i.e., works created as a celebration of Ukrainian successes on the battlefield or in the media sphere). Such works are becoming immediately very popular on the internet and numerous users copy them without the creators’ consent. The majority of authors do not mind usage of their works for upholding the moral spirits of Ukrainians on social media; however, the users are explicitly asked to indicate the name of the author while reposting the work to their pages.

Things get more resonant when these works are being used for commercial purposes by producing various souvenirs and items with the unauthorised use of the art objects. However, no major litigations were spotted as pre-dispute settlement is actively used in Ukraine for such matters.

In Ukraine, the process of obtaining title to artwork generally involves a transfer of ownership through a sale, whether through auction or private sale. The specific steps and requirements may vary depending on the circumstances.

Whether acquiring art through auction or private sale, a sale agreement is typically executed between the buyer and the seller. This agreement outlines the terms and conditions of the sale, including the description of the artwork, the purchase price and any warranties or representations made by the seller.

It is most advisible to conduct such an agreement in writing, which will help the parties avoid misunderstandings in the future. It is also necessary to take an individual approach to the development of the provisions of a separate agreement, which will allow for taking into account the wishes and capabilities of each party in a certain format of cooperation. The agreement may refer to the cooperation of the parties on the provisions either on sales of the artist’s work or on the creation of an art object by order (Article 1112 of the Civil Code of Ukraine). Also, according to Article 6 of the Civil Code of Ukraine, the parties have the right to enter into an agreement not provided for by acts of civil legislation, which corresponds to the general principles of civil legislation. That is, cooperation between an artist and a buyer, dealer or auction can be formalised in the form of a dealer agreement for the sale of works of art or consignment (such as in the United States or Canada).

Upon the execution of the sale agreement and the payment of the purchase price, ownership of the artwork is transferred from the seller to the buyer. This transfer of ownership should be properly documented, and it is advisable to register the transfer, as this opportunity is provided by the copyright legislation, though not obligatory.

The process of title transfer is generally similar whether acquiring art through auction or private sale. Both scenarios involve the execution of a sale agreement and the transfer of ownership upon payment. However, in an auction, the auction house may act as an intermediary, and the terms of sale may be subject to the auction house’s terms and conditions.

Good faith is not specifically addressed as a presumption or requirement for title transfer in Ukrainian art acquisition. However, acting in good faith is generally advisable to protect the interests of both parties involved.

While there is no strict legal duty of inquiry into title, it is considered prudent for buyers to conduct due diligence regarding the artwork’s provenance and ownership history. This helps ensure that the buyer is acquiring the artwork from a legitimate source and reduces the risk of purchasing stolen or disputed artwork.

Ukraine, like many other countries, has been concerned with the restitution of art and cultural property that was looted or misappropriated during the Nazi era. The framework for addressing this issue includes international agreements, such as the Washington Principles on Nazi-Confiscated Art, to which Ukraine is a signatory. These principles encourage governments and institutions to identify and facilitate the restitution of art that was unlawfully taken during the Nazi era.

One of the rare examples of returning Nazi-looted art was the restitution of Mykhailo Panin’s painting Secret Departure of Ivan the Terrible before Oprichnina in 2019. The painting was looted from the Ukrainian Dnipro Art Museum during the Second World War and was found in a US private collection. It was proclaimed to be the first effective case of cooperation at the official state level between Ukraine and the United States in the return of cultural heritage monuments illegally exported abroad.

Ukraine has legal provisions in place to protect its cultural heritage, including laws related to the export and protection of cultural property. The Law of Ukraine ‘On Protection of Cultural Heritage’ outlines measures for safeguarding cultural property within the country

Cultural property protection in Ukraine covers a wide range of items, including art, artifacts, historical sites and more. There are regulations and procedures for the export and import of cultural property to prevent illegal trafficking and ensure that significant cultural items remain within the country’s borders.

In Ukraine, limitation periods determine the time within which a legal action must be initiated before it becomes time-barred. While there might not be specific limitation periods solely focused on art claims, general principles of civil law would apply. The general limitation period under the Civil Code of Ukraine is three years.

Regarding art claims such as those related to recovery of stolen or misappropriated art, the general limitation period would also apply. However, it is important to note that art claims can be complex and could involve considerations of international law, treaties and other relevant legal instruments.

There are no specific special limitation periods in Ukrainian law that address art claims related to the Nazi era. However, Ukraine is a signatory to international agreements and principles related to the restitution of art misappropriated during that period. These agreements, such as the Washington Principles, emphasise the importance of just and fair solutions for addressing looted art.

Alternative dispute resolution (ADR) mechanisms, including arbitration and mediation, are available in Ukraine for art disputes. ADR can provide parties with more flexible and private processes compared to traditional litigation; however, there are no specific ADR organisations for art disputes in Ukraine.

The following several key procedural considerations apply for ADR in Ukraine:

• Agreement to ADR: both parties must agree to engage in arbitration or mediation. This agreement can be established through contractual clauses or agreements reached after a dispute arises.

• Choice of ADR method: parties can choose between arbitration and mediation based on their preferences and the nature of the dispute.

• Arbitration rules: if parties opt for arbitration, they must agree on the rules that will govern the arbitration process. Commonly used rules include those from international arbitration institutions like the Court of Arbitration for Art (CAfA), International Chamber of Commerce (ICC) or the United Nations Commission on International Trade Law (UNCITRAL).

• Mediation process: mediation is a facilitated negotiation process. A neutral mediator assists the parties in reaching a mutually acceptable solution. The mediator does not make binding decisions but helps guide the discussions.

• Enforcement of ADR decisions: arbitration awards are generally enforceable under the New York Convention, to which Ukraine is a party. Mediation outcomes may be enforceable if parties enter into a settlement agreement and follow the applicable legal procedures.

Parties can choose internationally recognised institutions or local ADR centres in Ukraine to administer their disputes.

In Ukraine, both civil and criminal liability may be imposed for the production, sale or both of fakes, forgeries and inauthentic art. In the case of forgery, the author may seek protection for their intellectual property rights under the Civil Code of Ukraine and the Law of Ukraine on Copyright and Related Rights. Specifically, the copyright owner may ask the court with various claims not prohibited by law, including:

• restoration of the status quo that existed before the violation;

• termination, prohibition or both of actions that infringe upon copyright or create a threat to its infringement;

• collection of remuneration provided by copyright legislation;

• compensation for moral damages;

• compensation for losses incurred because of copyright infringement, including lost profits or the income obtained by the infringer as a result of copyright or related rights infringement, or the recovery of compensation (one-time monetary payment);

• termination of preparatory actions for copyright infringement, including through the suspension of customs procedures if there are grounds to believe that counterfeits may be imported into or exported from the customs territory of Ukraine;

• publication, at the infringer’s expense, of information about copyright violations and court decisions regarding these violations; and

• confiscation or seizure of all counterfeits for which it has been established that they were manufactured or distributed in violation of copyright or related rights.

For the production, sale or both of fakes, forgeries and inauthentic art, criminal liability may arise under the Criminal Code of Ukraine, including:

• violation of copyright and related rights, specifically the unauthorised reproduction, use and distribution of works of art, as well as financing such actions, if it causes significant material damage (Article 176 of the Criminal Code of Ukraine); and

• fraud, namely the misappropriation of someone else’s property or the acquisition of property rights through deception or abuse of trust (Article 190 of the Criminal Code of Ukraine).

If a work of art is found to be fake or a forgery, it can serve as grounds to breach a contract related to that artwork. This typically occurs in situations where someone has purchased or entered into an agreement to buy, sell or display a work of art under the assumption that it is genuine and valuable. When it is discovered that the artwork is not authentic, it can be considered a breach of contract because the fundamental representation and value of the item were misrepresented. In such cases, the party who believed they were getting a genuine work of art may have legal grounds to terminate the contract or seek compensation for the misrepresentation and any resulting damages. The specifics of the situation and the terms of the contract will determine the legal consequences and potential remedies available.

In general, the legally guaranteed remedies do not differ in the case when the artwork is sold by a dealer. However, dealers may play an important role in the process of identifying fake art, and they often provide various warranties and commitments in contracts related to art transactions.

Experienced art dealers possess a deep understanding of art history, styles, techniques and artists. They use their expertise to assess the authenticity of artworks. Dealers can often spot inconsistencies or anomalies that may indicate a forgery. Dealers may also employ technical experts or collaborate with art conservators to conduct scientific analysis of artworks. This can include pigment analysis, radiography and other techniques to examine materials and techniques used in the artwork’s creation. Another important role of a dealer is to maintain records and documentation related to the artworks they handle. These records can include certificates of authenticity, exhibition histories and any available information about the artwork’s history.

Dealers often provide a range of warranties in art contracts, among the most common are the following:

• warranty that the artwork is authentic, meaning it is an original work by the claimed artist; this warranty assures the buyer that they are acquiring a genuine artwork;

• warranty that the dealer has clear and legal title to the artwork, allowing them to sell it; this warranty ensures that the buyer won’t encounter legal disputes over ownership;

• dealers may warrant that the artwork’s description, including details about the artist, provenance and condition, is accurate; if any information provided is found to be false or misleading, it could be a breach of this warranty;

• warranty that the artwork is free from any liens, encumbrances or claims by third parties; this assures the buyer that there are no outstanding legal issues related to the artwork;

• some dealers offer a return policy, allowing buyers a specified period to return the artwork if they are not satisfied with its authenticity or condition; the terms of the return policy are typically outlined in the contract; and

• dealers may provide a certificate of authenticity signed by themselves or, in some cases, by recognised experts or authorities in the field. This certificate serves as evidence of the artwork’s authenticity.

The presence and extent of dealer’s warranties can significantly impact the buyer’s legal rights in case authenticity issues arise. If a dealer breaches any of the warranties, the buyer may have legal grounds to seek remedies, including a refund or compensation for damages.

As for experts, artist foundations and catalogues raisonnés, these play crucial roles in the process of identifying fake art. They provide valuable resources and expertise to help establish the authenticity of artworks and protect the integrity of the art market.

Art objects can indeed be examined in both public and private institutions. In Ukraine these examinations serve to verify the authenticity, provenance and condition of artworks. Here is a breakdown of the roles of both types of institutions:

Public institutions, such as state research institutes of forensic expertise, often have the authority and mandate to conduct official art examinations and provide expert opinions. They are typically government-funded and staffed by trained experts in various fields, including art history, materials analysis and conservation. Examinations conducted by public institutions are often highly regarded for their credibility and impartiality. Their findings can carry significant weight in legal matters and the art market.

Private institutions, including private individuals, auction houses and independent expert institutions, offer art examination services that are often more accessible to the public and art market participants. Private experts and institutions may specialise in specific areas of art expertise, such as a particular artist or art movement, which can be valuable when examining specialised artworks. Private institutions may offer quicker turnaround times for examinations compared to public institutions, which can be advantageous in fast-paced art transactions.

Ultimately, the choice between public and private institutions for art examination depends on various factors, including the specific needs of the art owner or buyer, the nature of the artwork, and the legal and market context. Both public and private institutions can play important roles in verifying the authenticity and condition of art objects, contributing to the overall integrity of the art market.

Art foundations are well represented in Ukraine and are working to preserve art and prevent the spread of fakes. Among numerous active Ukrainian foundation there are Stedley Art Foundation, Grynyov Art Collection, Voloshyn Gallery, Abramovych.Art, Goldens, Dymchuk Gallery, Ukrainian Emergency Art Fund, Bereznitsky Art Foundation, etc. Ukrainian art foundations can possess extensive documentation, including photographs, letters and exhibition records, that can aid in the authentication process. They can verify whether an artwork aligns with the artist’s known body of work.

For example, for all artworks acquired through the Goldens auction house (Kiev, Ukraine), whether through auction or private sale, a certificate of the auction house is issued. This certificate confirms the originality and authenticity of the item, serving as confirmation of its provenance from the Goldens auction house. The auction house’s certificate features a three-tier security system, internal numbering and cataloguing. The auction house also offers professional art appraisal services.

A certificate of authenticity is another instrument used to confirm the authenticity of art. Such a certificate can be obtained directly from the artist, gallery or auction house where the work was purchased, from museums and galleries that offer services to determine the authenticity of the work, as well as from individual art historians who are reputable in the Ukrainian or international art market. In some cases, the authenticity of a work of art can be established by conducting an official art historical examination. However, it is worth noting that there is no legislative obligation to issue this document when granting rights to dispose of an art object (such as selling, gifting, consigning to an auction, etc.) Furthermore, there is no universally standardised legal definition of a certificate of authenticity. Therefore, from a legal standpoint, a specific document may not be legally binding and may not create legal consequences for both the entity issuing it and the recipient.

The conduct of private sales and auctions of art is regulated by the Civil Code of Ukraine. According to Article 656 of the Civil Code of Ukraine, in the case of purchase and sale agreements concluded at auctions (public sales), the general provisions regarding purchase and sale apply unless otherwise provided by the law governing these types of purchase and sale agreements or arising from their nature.

An important aspect of art transactions and auctions, in particular, is compliance with the Law of Ukraine ‘On Protection of Consumer Rights’. Pursuant to Article 15 of this Law, a consumer has the right to receive necessary, accessible, reliable and timely information about products, which enables them to make a conscious and competent choice. A seller (contractor) selling products must indicate the price of each unit of such products or one category of products and the price of one standard unit of such products. At an auction, consumers must be informed of the starting price of the relevant product.

By the Order of the Ministry of Economy and European Integration of Ukraine and the Ministry of Culture and Arts of Ukraine No. 322/795 dated 29 December 2001, ‘On Approving the Basic Requirements for the Organisation of Trade in Antiques in Retail Trade and at Auctions’, regulations were established to ensure the proper level of trade services and the preservation of cultural heritage during the trade of antique items in the retail market and at auctions.

The regulatory framework for electronic auctions is provided in the Resolution of the Cabinet of Ministers of Ukraine dated 6 June 2007, No. 803, ‘On Approving the Procedure for Alienation of State Property’. This regulation pertains to the disposal of state property, which may include art objects.

The general regulatory framework for loans and credits is provided for in the Civil Code of Ukraine

Art loans are not popular or widely utilised in Ukraine. However, while art loans may not be as common in Ukraine, the availability and interest in such financial instruments could change over time as the art market evolves and financial institutions adapt to new opportunities. As the art market gains traction and matures in Ukraine, it is possible that art loans may become more widely utilised by collectors and investors seeking to unlock the value of their art assets while maintaining ownership.

Immunity from seizure for artworks is generally not provided by Ukrainian legislation. The conditions for the storage and the subsequent fate of art objects are determined on a case-by-case basis. In recent cases, Ukrainian law enforcement authorities seized 316 art objects from the residence of a Ukrainian politician accused of state treason in 2022.7 All these art objects were sent for examination to the Kiev Scientific Research Institute of Forensic Expertise, where they are currently stored for further valuation.

According to the Law of Ukraine ‘On the Export, Import, and Return of Cultural Values’, cultural values seized by customs authorities or law enforcement agencies, as well as those confiscated by court order, are transferred free of charge to the central executive authority responsible for implementing the state policy in the field of export, import and return of cultural valuables, as well as to the central executive authority responsible for implementing the state policy in the field of archival affairs and record-keeping, which ensures the storage, expertise and information about them for the purpose of clarifying ownership rights.

Cross-border transactions in art law present a complex and multifaceted landscape that encompasses legal, cultural, financial and ethical considerations. The Ukrainian jurisdiction contains specific features concerning cross-border transactions involving cultural values subject to further import or export under contractual terms. In this context, it is essential to consider the requirements of the Ukrainian Law ‘On the Export, Import, and Return of Cultural Values.

Certain cultural values in Ukraine are restricted from being exported, such as those listed in the State Register of National Cultural Heritage, the National Archive Fund and the Museum Fund of Ukraine. The Ministry of Culture and Information Policy of Ukraine oversees the control of exports, imports and returns of cultural values.

Cultural values intended for export or temporary export, as well as those returned after temporary export, undergo mandatory state examinations. The specific procedures and fees for these examinations are determined by the Cabinet of Ministers of Ukraine.

Following the state examination, cultural values intended for export may be included in the State Register of National Cultural Heritage, regardless of the exporter’s consent.

The central executive body responsible for cultural value policies can issue certificates for the export or temporary export of cultural values based on the state examination results. These certificates are essential for taking cultural values beyond Ukraine’s customs territory. Exporting cultural values without this certificate is prohibited.

From practical experience, the process of obtaining a certificate for the export of cultural values is relatively straightforward and formal but of paramount importance for monitoring the export of cultural assets.

This information is also submitted electronically to the Unified State Information Web Portal ‘Single Window for International Trade.

Cultural values imported into Ukraine must be registered following the procedures established by the Ministry of Culture and Information Policy of Ukraine. The Ministry of Justice of Ukraine, in conjunction with the Ministry of Culture and Information Policy of Ukraine overseeing state financial policies, is responsible for this registration.

Importing cultural values that are subject to search and seizure is prohibited. Such cultural values are subject to confiscation by customs authorities for subsequent return to their rightful owner through established procedures.

Cultural values temporarily taken out of Ukraine and not returned within the agreed-upon time frame are considered unlawfully exported.

In the context of tax considerations, general tax rates are applied under the Tax Code of Ukraine:

• personal income tax: 18 per cent – incomes from the sale of art objects (such as paintings, sculptures, etc.) and antiques by individuals, including through auctions, are included in the individual taxpayer’s overall monthly (annual) taxable income;

• corporate income tax for legal entities: 18 per cent (the base rate); and

• value added tax (VAT): 20 per cent.

When entering into agreements with non-residents, it is mandatory to consider bilateral agreements between countries on the avoidance of double taxation.

One of the practical peculiarities in the field of finance and art is the taxation of income for an individual who is registered as an individual entrepreneur and sells their own paintings as an independent artist. Registration as an individual entrepreneur entails a simplified tax system. Taxes are a single tax at a fixed rate of 2 per cent of the person’s income. An individual entrepreneur can be a taxpayer under the second of the unified tax, provided they meet the requirements specified in Paragraph 291.4 of the Tax Code of Ukraine and engage in activities not subject to restrictions on applying the simplified tax system. Such activities include individual artistic activities as an independent artist.

Therefore, the income received by an individual from the sale of paintings, including works of art, is included in their total monthly (annual) taxable income as other income and is subject to taxation at a rate of 18 per cent as personal income tax.

This situation creates challenges for freelance artists who create art as a means of livelihood. They are required to pay regular income tax, and this situation is considered by the public and the professional community to be unfair, as they are excluded from the simplified tax system.

Ukraine has undertaken a series of obligations to combat organised crime and money laundering. According to Article 20 of the Agreement between Ukraine, on one side, and the European Union, the European Atomic Energy Community and their Member States on the other side, dated 27 June 2014 (ratified with Law No. 1678-VII on 16 September 2014), the parties cooperate to prevent and combat money laundering and the financing of terrorism. To achieve this goal, the parties enhance bilateral and international cooperation in this field, including operational cooperation. The parties ensure the implementation of relevant international standards, including the standards of the Financial Action Task Force on Money Laundering and Terrorist Financing (FATF) and standards equivalent to those adopted by the Union.

In the course of European integration, Ukraine aims to align itself with European standards in the field of anti-money laundering, particularly the provisions of Directive (EU) 2018/843 of 30 May 2018, amending Directive (EU) 2015/849 on the prevention of the use of the financial system for money laundering or terrorist financing and amending Directives 2009/138/EC and 2013/36/EU. This directive extends, among other things, to:

• persons trading in works of art or acting as intermediaries in such transactions, including cases where this activity is carried out by art galleries and auction houses, when the transaction value or series of linked transactions amounts to €10,000 or more; and

• persons providing services for the safekeeping of works of art, trading in works of art, or acting as intermediaries in such transactions when this activity is carried out in free ports, where the transaction value or series of linked transactions amounts to €10,000 or more.

According to Ukrainian legislation, moral rights of artists are protected indefinitely, belong only to the author of the work (including in cases of creating a work as part of employment or on commission), cannot be transferred to the third persons, and do not pass to heirs.

Pursuant to Articles 423 and 438 of the Civil Code of Ukraine, as well as Article 11 of the Copyright Law, the moral rights consist of:

• the right to be recognised as the creator: this right allows demanding recognition of authorship by properly indicating the author’s name in the original and copies of the work and in any use of the work, whenever practically possible;

• the right to remain anonymous;

• the right to use a pseudonym (including the right to demand the use of a pseudonym instead of the real name);

• the right to demand the preservation of the integrity of the work, to oppose any distortion, alteration or modification of the work, including the addition of illustrations, prefaces, postfaces, comments, etc., without the author’s consent;

• the right to provide a title to the work or leave it untitled; and

• the right to dedicate the work to a person (persons), an event or a date.

In this context, the new Copyright Law for the first time classified the right to provide a title to a work, leave a work untitled, and dedicate a work to a person (persons), an event or a date as moral rights of the author.

One of the other novelties of the Copyright Law is the establishment of a sui generis right for non-original objects generated by computer programs. The law specifies that in the case of creating such non-original objects, moral rights do not arise. This is because the new Law explicitly establishes ‘originality’ as one of the mandatory attributes characterising a work as the result of an author’s intellectual creative activity. The legislation of Ukraine defines an author as a natural person. Therefore, in the case of generating a certain object through a computer program without the direct involvement of a natural person, the criterion of originality is absent.

The resale right (or droit de suite) is directly enshrined in Ukrainian legislation. With the adoption of the new Copyright Law recently, a new system for regulating the resale right’s royalty has been introduced.

Previously, an author had the right to receive a monetary amount equal to 5 per cent of the sale price of each original artwork or original manuscript of a literary work, subsequent to the alienation of the original, made by the author.

Currently, in terms of regulating the droit de suite, the Civil Code of Ukraine and the Copyright Law indicate that the author has an inalienable right to receive a fair remuneration as a fraction of the proceeds from each sale of the original artwork, original manuscript of a literary or musical work, subsequent to the sale of the original made by the author. Moreover, under this provision, reproductions created in a limited number by the author or under their guidance, which are numbered, signed by the author, or bear other indications certifying their authorship, are also considered originals. The term ‘artistic works’ in this context encompasses graphic or plastic arts (drawings, collages, paintings, sketches, engravings, prints, lithographs, sculptures, tapestries, ceramic and glass works, photographic works, etc.).

The resale right is inalienable. However, the Copyright Law specifies that after the author’s death, the right of resale royalty is transferred to heirs (including direct descendants of the author’s descendants). The term of the resale right in this case is the same as the term of the author’s property rights, namely 70 years, commencing from 1 January of the year following the author’s year of death.

As for the amount of remuneration that arises upon the exercise of the resale right by an author, the Copyright Law establishes the criterion of ‘fairness’. However, in accordance with the Law, the remuneration’s amount is determined as a certain fixed percentage of a specific price range of the sale.

Thus, remuneration is considered fair when it constitutes:

• 6 per cent for a sale price equivalent ranging from €50 to 3,000 inclusive;

• 5 per cent for a sale price equivalent ranging from €3,000.01 to 50,000 inclusive;

• 3 per cent for a sale price equivalent ranging from €50,000.01 to 200,000;

• 1 per cent for a sale price equivalent ranging from €200,000.01 to 350,000;

• 0.5 per cent for a sale price equivalent ranging from €350,000.01 to 500,000;

• and f 0.25 per cent for a sale price exceeding the equivalent of €500,000.

Additionally, the total amount of fair remuneration for each subsequent sale of an original work shall not exceed the equivalent amount of €12,500 (based on the official exchange rate of the National Bank of Ukraine on the day of art sale).

Furthermore, there are two exceptions where the payment of fair remuneration is not applicable. Specifically, these instances are:

1. Subsequent sales of the original work and its acquisition are carried out by individuals without the involvement of trading parties, except when their alienation (subsequent sale) is conducted through a public offer for resale via the internet (including social networks, online forums, groups, online advertisement platforms, trading venues, marketplaces, auctions, tenders, etc.); and

2. The resale price of the original work does not exceed the equivalent of €50,000

As a general rule, the obligation to pay the author fair remuneration lies with the seller. In the case of original work sales through auctions, galleries, showrooms, shops, etc., the responsibility to pay the resale royalty to the author (or the author’s heirs) is placed upon the individuals engaged in the trade of art pieces. However, in the event of original work sales via the internet (including social networks, online forums, groups, online advertisement platforms, online auctions, marketplaces, auctions, tenders, etc.), the payment of the resale royalty is directly handled by the individuals offering the original works for public sale.

According to the Civil Code of Ukraine and the Copyright Law, economic rights may be transferred either fully (covering all methods of use of the work worldwide) or partially (covering all or specific methods of use of the work within all or certain countries).

As per the Copyright Law, economic rights of intellectual property comprise the right to use the work in any manner and the exclusive right to authorise or prohibit the use of the work by others. The term ‘use of the work’ under the Copyright Law includes:

• reproduction;

• inclusion in a composite work;

• inclusion in another work, other than a composite work;

• distribution of copies of the work;

• importation of copies of the work;

• leasing or lending of copies of the work;

• public performance, public display, public demonstration, public transmission, interactive public access and other means of bringing to the public’s attention;

• translation;

• transformation, adaptation, arrangement and other similar alterations of the work;

• and other rights (this list is not exhaustive).

As from 1 January 2023, the new Copyright Law introduces several changes regarding economic rights, including the following.

Establishment of the author’s right to a fair remuneration

Authors have been granted the right to a fair remuneration for the use of their works, which is preserved independently of the transfer of economic intellectual property rights. The right to a fair remuneration may also be inherited by the author’s heirs and cannot be alienated to other parties.

Regulation of the transfer of economic rights for ‘work for hire

Intellectual property rights to works created on order (contractual nature) and official works (employment nature) are now transferred to the employer or client from the moment of creation of the work in its entirety, unless otherwise stipulated in the commission agreement, employment contract, contract or other agreements. The law clarifies that intellectual property rights to commissioned works of visual arts (excluding works specifically created as components of computer programs) belong to the author unless specified otherwise by contract or law.

Regulation of the ownership of economic rights to non-original objects generated by computer programs

As mentioned earlier, such objects fall under the scope of sui generis rights. In the case of these objects, economic rights belong to individuals who have the right to use the computer program (including through licensing), namely the authors of such computer programs, their heirs, individuals to whom authors or their heirs have transferred (alienated) economic to the computer program, as well as legitimate users of the computer program. The term of validity of sui generis rights for non-original objects generated by computer programmes expires after 25 years, calculated from 1 January of the year following the year in which the non-original object was generated.

There are various organisations in Ukraine that maintain and manage collections of artworks. They can operate as creative unions, national-cultural societies, centres, funds, associations, cultural institutions, private collections, auctions or other legal entities of private, state or communal ownership. According to the Law of Ukraine ‘On Culture’, bodies of state authority and local self-government support the activities of non-profit cultural institutions, including by creating a favourable taxation regime.

Auction houses and art foundations often organise themselves as limited liability companies. Their activities are governed by the Law of Ukraine ‘On Limited and Additional Liability Companies’. This structured approach ensures transparent and well-regulated operations in the art world, instilling confidence among collectors, buyers and sellers.

Charitable organisations hold a prominent place in Ukraine’s art landscape. These legal entities are defined by their constituent documents, which articulate their charitable activities in one or more areas specified by law. Their primary purpose is to support various charitable causes, including the preservation and promotion of art and culture.

Art trust funds, as a form of art asset management, are less common in Ukraine. While these trusts play a pivotal role in other jurisdictions, they are still emerging in the Ukrainian art scene.

The Ukrainian art market has shown gradual development in recent years, yet it remains on the periphery of the global art scene because of factors such as low art awareness among the local population and an unstable market infrastructure. Ukrainian artists have faced challenges related to financial support and limited awareness of their work, highlighting the need for better promotional representation.

The art market in Ukraine has also grappled with issues of transparency in sales agreements and price inflation. Notably, the market is primarily focused on paintings and sculptures, with photography receiving less attention as an art form.

However, there are positive trends on the horizon. Recent developments in Ukrainian art law have demonstrated a shift towards digitalisation and alignment with EU legislation. The introduction of the new Copyright Law in 2023, with provisions addressing contractual regulation and digital content, reflects the evolving landscape of art transactions.

The past year has brought to light the resilience of Ukrainian art and culture in the face of the ongoing war. Despite the targeted attacks on cultural heritage sites,8 Ukrainians have shown a strong determination to rebuild and restore, with support from both local and international sources.

In the art market, the priorities and preferences of buyers have shifted, and Ukrainian contemporary artists have gained recognition globally, with exhibitions serving as a platform to document the humanitarian crisis caused by conflict and raise funds for humanitarian purposes.

In summary, the Ukrainian art market is undergoing transformation, with legal developments and a resilient artistic community contributing to its evolution. As Ukraine continues to navigate challenges, its art and culture remain a source of strength and international dialogue.

LEXOLOGY