When you purchase fine art in Canada, you must apply for an export permit before you will be permitted to export the artwork. It is possible that the Government of Canada will not grant the export permit if the artwork is the work is on the Canadian Cultural Property Export Control List (the "Cultural Proeprt Export Control List") and if the work is of "outstanding significance" or the work is of such a degree of "national importance" that its export would significantly diminish the national heritage. It is important to know Canada's rules before you acquire Canadian fine art and cultural proeprty for export.
The complexities of exporting Canadian fine art was highlighted in a recent Federal Court of Appeal judicial review decision. On April 16, 2019, the Federal Court of Appeal issued its decision in Attorney General of Canada v. Heffel Gallery Limited, 2019 FCA 82, and held that the Canadian Cultural Property Review Board (the "Board") made a reasonable decision when they would not issue an export permit to export a specific painting. The Federal Court of Appeal reversed a decision of the Federal Court of Canada and reinstated the decision of the Board.
The case focused on the sale of Gustave Caillebotte's Iris bleus, jardin du Petit Gennevilliers painting ("the Painting"). The Painting was listed on the Cultural Property Export Control List. On November 23, 2016, Heffel Fine Auction House ("Heffel") agreed to sell the Painting to a London commercial gallery. On the following day, Heffel applied for a permit from the Department of Canadian Heritage. On December 29, 2016, a permit officer provided the Heffel with a written Notice of Refusal for the requested permit. On January 13, 2017, the Heffel requested a review of the Notice of Refusal from the Board. On July 13, 2017, the Board announced that it had decided to reject the export permit application. Heffel filed a judicial review with the Federal Court of Canada. On June 12, 2018 in file T-1235-17 (2018 FC 605), the Federal Court of Canada found that the decision of the Board was unreasonable and sent the matter back for reconsideration. On behalf of the Board, the Attorney General filed an appeal with the Federal Court of Appeal. The Federal Court of Appeal allowed the appeal and reinstated the decision of the Board.
Do I need to apply for an export permit to export Canadian art?
In accordance with the Cultural Property Export and Import Act, an export permit is required to export cultural property from Canada if the property is more than 50 years old, or the creator is no longer living. "Objects of Fine Arts" are one group that is expressly controlled under the Act.
The CBSA explains the importance of the Cultural Property and Import Act in D- Memorandum D19-4-1, as follows, "[t]he Cultural Property Export and Import Act and its regulations enable Canada to meet its obligations under the 1970 UNESCO Convention on the "Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property" to recover and return illegally imported cultural property".
The Canadian Cultural Property Export Control List defines cultural property subject to export control and an export permit is automatically necessary for all cultural property listed on the Cultural Property Export Control List. Therefore, it is necessary to check the Cultural Property Export Control List prior to attempting the export of any fine art from Canada.
The Cultural Property Export Control List is established by the Governor in Council and the purpose is to establish which objects are deemed necessary to control for exporting to preserve Canadian national heritage. The mandatory requirements to be listed are (1) that the cultural property must be at least 50 years old, and (2) the creator must no longer be living. If any cultural property that is subject to an export permit is on the Cultural Property Export Control List, the application for exporting must be referred to an expert examiner. The expert examiner will then provide a recommendation to the Minister concerning whether the work can be exported.
What could cause my application to be rejected?
In this case, the Canadian Cultural Property Export Review Board provided three reasons for rejecting the Heffel's application. First, the Board explained that the Painting was listed on the Canadian Cultural Property Export Control List (see above).
Next, in accordance with the Cultural Property Export and Import Act, the Board explained that the Painting was of "outstanding significance" and had a high degree of "national importance", such that its export would "significantly diminish the national heritage" pursuant to the Act. The law states that if the subject cultural property meets only one of the conditions, then the permit must be granted. The property must have both outstanding significance and national importance for the permit to be rejected. If both conditions are met, the applicant will receive a Notice of Refusal which will include written reasons for refusal.
According to the Act, an expert examiner must be referred to for objects listed on the Cultural Property Export Control List. The expert examiner must then determine if the cultural property has "outstanding significance" and "national importance". These requirements are colloquially referred to as the OS/NI framework.
How do I know if an item has outstanding significance or national importance?
This is a subjective test. In this case, the Board determined that the Painting had outstanding significance due to its aesthetic qualities. Another key factor was the rarity of the artist's work. The Board explained that there is only one other known work of art by Gustave Caillebotte in a Canadian collection. Therefore, the opportunity to view and study Caillebotte's work would become limited for Canadians if the Painting was exported from the country.
Furthermore, in relation to establishing if the Painting had "outstanding significance" the Board stated in its decision as follows (Board's Decision at para. 33):
"... Given the stature of the artist as one of the leading artists of French Impressionism, the importance of French Impressionism to understanding the history of art and to art practice today (including in Canada), and the fact that the Object is representative of works from late in the artist's career, the Review Board determines that the Object meets the criteria of outstanding significance for its value in the study of the arts."
Therefore, the requirement of "outstanding significance" effectively measures the artistic and scientific value of the cultural property.
The Board will also analyse whether the cultural property is of such a degree of "national importance", meaning that its loss would significantly diminish the national heritage of Canada. It is important to realize that an object can meet the required degree of "national importance" even if the object, or its creator, have no direct connection with Canada or the country's history. The Federal Court of Appeals affirmed the Board's reasoning that "national heritage" can be significantly diminished if "the loss of the property would deny a segment of the population exposure to or study of their cultural traditions of the cultural traditions of other Canadians" (Board's decision at para. 40). Thus, the requirement of "national importance" effectively measures the extent of the effect of the removal of the object from Canada.
The terms of "national importance" and "national heritage" are not clearly defined within the Act, so the law allows the Board to use their expertise to define these terms from a broad range of options (see Schmidt v. Canada (Attorney General), Page: 14 2018 FCA 55,  F.C.J. No. 315 (QL)). Overall, the Federal Court of Appeals affirms that the expertise of the Board and expert examiners will be relied upon to define these requirements.
Finally, what can I do if my application for an export permit is rejected?
If an application for an export permit is rejected, the permit officer will provide reasons with the Notice of Refusal. After receiving the Notice of Refusal, the applicant may request that the Board review the application. The Board will consider whether the object is included on the Cultural Property Export Control List, and the Board will also determine whether the object meets the conditions required by the OS/NI framework.
The Board is required to grant the export permit if it is determined that these requirements are not fulfilled. In the alternative, the Board may establish a delay period if the Board determines that the cultural property is included on the Cultural Property Export Control List and meets the OS/NI framework conditions. This delay period lasts between two to six months, during which an export permit will not be granted. The delay period is only able to be granted if the Board is of the opinion that there may be a fair offer to purchase the property by a Canadian institution or public authority within the six months.
If the Board refuses to grant an export permit, that decision may be judicially reviewed by the Federal Court of Canada. An application for judicial review must be field within 30 days of the Board's decision to refuse an export permit.
If the export permit is not granted and the delay period is established, the Board will notify the Minister of Canadian Heritage and Multiculturalism. The Minister then advises institutions and public authorities within Canada of the cultural property, and that a fair offer can be made to purchase the property. Either the applicant for the permit, or the institution/public authority that is making an offer, can request the Board to determine the cash value of a fair offer. If the applicant decides to reject all offers by institutions/public authorities, then no export permit may be granted for two years starting from the date when the Notice of Refusal was sent.
Overall, it is important to be careful when buying fine art for export. The first step would be to determine if the fine art or cultural property that is being sold is listed on the Cultural Property Export Control List. If the property is listed on the Cultural Property Export Control List then a permit must be obtained. It is also important to determine the age of the property to determine if it more than 50 years old. The next step would be to determine who the creator was, to establish if they are still living. After determining whether or not these conditions are met, an application for export permit will be submitted to the Canadian Cultural Property Export Review Board. Once an application for export permit is submitted, it is important to understand that the Board has the discretion to determine if the property has outstanding significance and national importance. The rarity of the work and artistic value will impact the Board's decision. The courts will rely on the expertise of the Board and any expert examiner to determine whether or not the application for export will be granted.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.