Most people are familiar with the general concept of an agent. Buying or selling a house, for instance, will usually involve dealing with an estate agent. However, one would not normally expect an estate agent to buy the house themselves and then sell it to you at a profit, while at the same time taking a commission for finding the house for you. Yet this summarises the position in which the Russian billionaire Dmitry Rybolovlev found himself in relation to the person he thought was his art agent, Yves Bouvier, as the case of Accent Delight International Ltd v Sotheby’s, which went to trial in New York in January 2024, has shown in some detail. Moreover, this is not the only case in the art world (or elsewhere) which highlights the importance of knowing what exactly intermediaries are being engaged to do and are being paid for, and what their duties are from a legal perspective.

Accent Delight International Ltd v Sotheby’s

In the case of Mr Rybolovlev, he had engaged Mr Bouvier (through his companies) to source paintings of significance for him to buy and was willing to pay Mr Bouvier a 2% commission on the purchase price of such paintings. Mr Bouvier did indeed secure the sought-after paintings worth hundreds of millions of pounds, some through Sotheby’s, and Mr Rybolovlev assumed that Mr Bouvier was doing so as his agent. However, Mr Bouvier saw himself as a dealer and therefore sought to buy the paintings on his own account and then sell them on to Mr Rybolovlev, often at an eye-watering profit. This came to light at a lunch party in 2014 in which Mr Rybolovlev happened to sit next to the art consultant for the seller of a painting by Modigiliani, which Mr Rybolovlev had bought through Mr Bouvier. The art consultant confirmed that the seller had sold it (to Mr Bouvier) for $93.5 million. Mr Rybolovlev, through Mr Bouvier, had paid $118 million for the painting, not realising that he had in fact bought it from the person he considered to be his agent on the deal. As well as his 2% commission, Mr Bouvier had, unbeknownst to Mr Rybolovlev, made an additional profit of $24.5 million. Needless to say, worldwide litigation ensued, the latest being Mr Rybolovlev’s claim that Sotheby’s colluded with Mr Bouvier. Sotheby’s has consistently maintained it did not know about Mr Bouvier’s conduct in relation to Mr Rybolovlev and on 30 January 2024 the jury in New York found in Sotheby’s favour.

What constitutes an agent?

Is there a difference, then, between an agent and a dealer? An agent is someone who acts on behalf of another person (the principal) who may not wish to be widely known, for instance, as the buyer or seller of an artwork, as was the case with Mr Rybolovlev (though anti money-laundering obligations applicable to the art market in the UK do require some transparency). Depending on the scope of the mandate given to an agent by their principal or client, an agent may be empowered to do certain things such as engage and negotiate with third parties and enter into agreements for purchase or sale on the principal’s behalf. In return, the agent will be remunerated for their services, usually in the form of an agreed commission.

Under English law, agents are deemed to owe fiduciary duties, intended to ensure that they only act for the benefit of their principal. Therefore, an agent should act in good faith and in the interests of their principal at all times, avoiding potential or actual conflicts of interests, disclosing matters relevant to their principal’s interests, and accounting to them in respect of any financial gains – an agent cannot make a “secret profit”.

Of course, as indicated above, an agent is not exclusive to the art world. Another sphere in which agents play a significant role is football. Indeed, the essence of agents’ fiduciary duties was summed up most succinctly in Imageview Management Ltd v Jack, a case involving a football agent who made a “secret profit” in a side deal when negotiating terms with a football club, and was required to pay it back to his goalkeeper client, as well all commission which had been paid to the agent.

Agents would do well to consider the words of Lord Justice Jacob who emphasised in the Court of Appeal decision:

An agent’s own personal interests come entirely second to the interest of his client.   If you undertake to act for a man you must act 100%, body and soul, for him.  You must act as if you were him.  You must not allow your own interest to get in the way without telling him.”

The role of an art dealer

An art dealer can be an agent. If a client entrusts (consigns) a work of art to a dealer for sale, in the hope that the dealer will be able to sell it for them at a desirable price, then the dealer will be acting as agent for the seller. A dealer might also be asked to find a particular work or negotiate its purchase for a particular client, in which case they will be agent for the buyer. In that case, the ultimate client or principal will pay for the work, although the funds might go through the dealer. This is the role Mr Rybolovlev thought Mr Bouvier was playing.

However, a dealer can also be a principal in that they will buy art works with their own funds to sell on, usually at a mark-up. Dealers will therefore often be on the look-out for “sleepers” at auction (under-attributed and therefore under-valued works) or works which the dealer considers they could add value to, for instance through additional research or cleaning. Mr Bouvier considered himself to be acting in this “principal” role, although he was not a dealer by occupation.

Unfortunately, the distinctions can sometimes become blurred. For those who instruct an agent, these cases show that as a principal it is wise, if not imperative, to mutually agree and define as clearly as possible the agent’s role, namely what exactly they are authorised to do, and their remuneration structure, and to document this in a written agreement, to avoid all possible ambiguities which could lead to disputes.

If you are an agent or have questions about dealing with an agent, please contact Lisette Aguilar.

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This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.