Can Larry Gagosian’s declaratory action over the ownership of a $100 million Picasso sculpture change the art trade forever?
Larry Gagosian is one of the most powerful gallery owners in the world. His annual turnover for 2015 alone was estimated at 652 million US dollars. What he is prepared to do about it could only have been speculated about so far. But these speculations have not really harmed him so far. This could change soon. Because now a procedure is pending, which has it in itself the machinations of this global Powerplayers of the art trade to disclose. Since December last year, a lawsuit has been pending at the US District Court in New York in which the company Gagosian Gallery Inc. is the plaintiff. It is apparently about the ownership of a sculpture by Pablo Picasso from 1931 (Buste de femme (Marie Thérèse) and it is about a lot of money. To be more precise, 105.8 million US dollars. But this procedure will probably not only clarify the ownership of a sculpture. Rather, it is to be expected that the legal dispute will shed light on the opaque and mostly secret circumstances and agreements of such private mega-sales in the art trade and that the nebulous agreements of the private art trade could be disclosed at least in this case.
Owners of the sculpture
Both Gagosian and Guy Bennett (formerly Christie’s Man for Modern Art and Impressionism, now responsible for the collection of the royal family of Qatar) claim that they are the owners of the sculpture. Gagosian argues that he bought the work on behalf of a New York collector who wants to remain anonymous, while Pelham probably worked for Sheik Jassim bin Abdulaziz al-Thani from Qatar.
The following facts can be inferred
Maya Widmaier-Picasso, daughter of Marie-Thérèse Walter and Pablo Picasso, initially sold the sculpture in November 2014 through an intermediary, the Connery Pissaro Seydoux Group (CPS), to Pelham Europe Ltd. The parties, together with Maya’s son, Olivier Widmaier-Picasso, negotiated a purchase price of 38 million euros (approximately 42 million USD) to be paid in 3 installments to Maya. Only after payment of the third instalment would ownership pass to the buyer. Pelham was not to receive any rights to the sculpture beforehand.
The payment plan was set out in the agreement as follows
01 December 2014 : 1.900.000 Euro
15 January 2015: 4,100,000 euros
20.April 2015: 32.000.000 Euro
However, before the third instalment could be paid, Maya terminated the contract with Pelham on 10 April 2015 on the advice of her daughter Diana Widmaier-Picasso and promptly repaid the first two instalments to CPS, who in turn passed the money on to Pelham. So far the process seems undisputed.
But Gagosian now claims that he is the rightful owner because Maya sold him the sculpture free of encumbrances in May 2015. By the way, he had already resold the sculpture to the already mentioned anonymous New York collector. The property was transferred to him on 2 October 2015 with payment of a third instalment (75% of the purchase price of USD 105.8 million). As proof of this, Gagosian has so far only submitted an invoice, but not the actual purchase contract. A purchase price of 100 million US dollars had been appropriate, as several offers of 100 million dollars had already been received on the occasion of an exhibition in Gagosian’s gallery in Chelsea in 2011. In his statement of claim, Gagosian also suggests that the purchase price from the Pelham contract, which is far below this margin, is contrary to good morals and that the contract could therefore already be null and void.
However, the gallery owner bases his argument primarily on the fact that in the contract between Maya and Pelham (represented by CPS) it was agreed that ownership would only pass to the buyer upon full payment of the purchase price and that this had never happened. Pelham had also accepted repayment of the first two instalments. From this, Gagosian concludes that Pelham never acquired ownership under the contract. In addition, the gallery owner had been in “good faith” at the time of his acquisition of ownership of the rights to the sculpture, as it was only when Pelham wrote to him in late October 2015 that Gagosian learned of possible privileges of Pelham Ltd. in the sculpture. Meanwhile, Pelham is suing three courts (Switzerland, France, and New York) for the release of the sculpture, Maya’s acceptance of the purchase price, and disclosure of the facts of the agreement between Gagosian and Maya.
Buste de femme (Marie Thérèse), 1931, is currently in the Museum of Modern Art in New York and is shown in the exhibition “Picasso Sculpture”, which runs until 7 February. What happens to her afterwards is still completely open. As already mentioned, Gagosian claims above all that he had acquired the property of Maya Widmaier-Picasso. Since the property had not yet been transferred to Pelham, Maya was also able to provide him with property. But what about the claim that Pelham had obtained from the earlier contract with Maya? Was the Pelham contract unilaterally terminable by Maya? Was the contract perhaps even null and void from the beginning due to immorality? This would possibly be the case if there was a noticeable disproportion between performance and consideration and Pelham had taken advantage of the lack of judgement of the 80-year-old Maya. But how is the market value of such a sculpture determined at all and were the ominous bidders from 2011 actually there? If, however, the contract was valid and all the above questions were rejected, can the acceptance of repayment of the purchase price to Pelham be interpreted as an amicable reversal?
Little is known about the agreement between Gagosian and Maya: What exactly was agreed between the two? Did the gallery owner perhaps already know that there were privileges when the contract was concluded? He claims: No. But what care did Gagosian take regarding his good faith and was this sufficient? Would he perhaps have had to do his own research to ensure that the sculpture was free of third party rights? Were there any assurances from the seller (Maya) regarding the ownership of the sculpture? This is also common with contracts of this size. The question also arises as to how the purchase price of USD 105.8 million was determined? Should Maya already be accused of a lack of judgement at the time of the Pelham contract, will it perhaps also be possible to affirm this with regard to the Gagosian contract, so that this contract was also flawed? Surely also possible claims for damages of the parties will have to be discussed in this case.
The present lawsuit raises some questions, which are essential to shape the art market. The contracts in question will probably be disclosed and agreements made public. It has long been known that the art market is about imense values. The present procedure could, however, give us a small insight into possible manipulations and strategies of the market, which had previously been kept secret. Gagosian has worked closely with Maya’s daughter, art historian Diana Widmaier-Picasso, for many years. The exhibition “Picasso and Marie Thérèse” in 2011 was also created in close collaboration. Both have a great interest in making an example of the prize on the basis of the sculpture at the centre of this legal dispute. So far, the sculptures have been rather undervalued compared to Picasso’s paintings. Should Gagosian win the litigation, this would change abruptly and its annual turnover could continue to rise. Diana, who is currently working on a catalogue raisonné about Picasso’s sculptures, would also benefit significantly.
Addendum: On February 1st the parties reached a temporary agreement: Picasso’s Buste de femme (Marie Thérèse), 1931, will be temporarily taken to Larry Gagosian’s gallery next Sunday after the end of the exhibition at the MOMA and kept there until the decision on the lawsuit.