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ASK THE ART LAWYER. Cuba, Its Art, Its Acquisition by Americans and Its Legal Logistics. PART ONE
By Octavio Robles, AIA, Esq.
I had the pleasure of traveling recently to Cuba for the 12th Havana Biennial that inaugurated in that city on May 22. The Biennial event was spectacular, with many excellent venues scattered throughout the city. By far the most significant and stunning venue was the exhibition “Zona Franca,” held at the great fortress of La Cabaña. The fortress was converted to an art center in which each chamber was made into a gallery. La Cabaña was also a notorious and infamous prison at one time, and being there added another dimension of consciousness. I had the opportunity to meet many of Cuba’s great artists and a few curators and dealers. When they found out that I was an art lawyer, questions almost always came up. I, in turn, had many questions to ask them regarding their status as artists, curators and dealers in Cuba. I also had the opportunity to meet with a former attorney general of the republic who is presently in private practice, and he had many informative points to share. This is part one of a two-part series regarding the legal ramifications and logistics of traveling to Cuba by Americans for the purpose of conducting art transactions in that country with artists, curators, dealers and the government, as well as taking the art out of the country. Part one looks at how an American can legally visit Cuba for the purpose of buying Cuban art and importing it back to the United States.
On Dec. 17, 2014, President Barack Obama announced proposed economic and diplomatic changes to U.S. relations with Cuba. That announcement led to a revision of the Cuban Assets Control Regulations (CACR) and the Export Administration Regulations (EAR) by both the U.S. Departments of the Treasury and Commerce. These revisions institutionalize the changes announced by the President. The revisions amend the sanctions enforced by both the Office of Foreign Assets Control (OFAC) at the Treasury and the Bureau of Industry and Security (BIS) at the Commerce Department. These changes took effect on Jan. 16.
View of the main entrance of “Zona Franca.” San Carlos de la Cabaña Fortress, 12th Havana Biennial, May 2015. Photo: Milagros Bello, PhD.
The changes will have a profound impact on the ability of Americans to conduct business transactions involving the purchase of art in and outside of Cuba. The effects of the changes will facilitate travel to Cuba by Americans for authorized purposes, will simplify the tasks of service providers like travel agents and transportation companies and entities that forward remittances or otherwise provide business services to Americans visiting Cuba, will raise the limits on those remittances and permit U.S. banking institutions to transact business on the island through correspondent Cuban banks. The changes will also allow U.S. banks to transfer funds to Cuban nationals outside the island. Perhaps the most significant change in the regulations is the liberalization of travel licenses. There are 12 categories of travel licenses to Cuba. Previously, those licenses required the issuance of specific licenses. Under the new regulations, those 12 categories are permitted under general licenses, subject to certain conditions. The net effect of this liberalization means that those who meet one or more of the conditions will not be required to formally apply for a physical license for travel to Cuba. The individual will simply verbally claim the license based on the permitted category and the U.S. government will presume that the claim is valid. For purposes of transacting art-related business leading to the purchase and importation of art, the applicable license refers to “the exportation, importation or transmission of information or information materials.” Under the new regulations and pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), official tourist travel to Cuba and travel-related transactions for purposes other than the 12 categories is still prohibited.
The definition provided under the regulations for “Information and informational materials” clearly includes “artwork,” naming different types of media, including films, posters and CDs. The CACR regulations impose strict limits on how much Americans can spend while in Cuba and how much they may import back into the U.S. for personal use, however, §515.206(a) of the (CACR) regulations explicitly exempts various transactions from the ban, including, “information and informational materials.” Such material cannot be purchased from the Cuban Government and is specifically intended to be for purchases made from Cuban entrepreneurs or in the case of art, from independent artists, collectors, dealers and curators. This applies to such Cuban entrepreneurs or independent artists, collectors, dealers or curators who are living outside Cuba and not subject to U.S. jurisdiction. It is also important to note that the importation of “information and informational materials” via a commercial vessel or carrier as cargo is also exempt from the prohibitions set forth in the CACR. This means that an American traveling to Cuba may use a commercial carrier to send the art to the U.S. when that American is not traveling aboard that specific carrier.
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Because Cuba will no longer be listed as a “state sponsor of terrorism” in the State Department list, it is expected that U.S. banking institutions will soon start implementing the use of U.S.-based credit and debit cards in Cuba. When this occurs, it will enable art purchasers to use their cards in Cuba and not be subject to the risk of carrying the cash limit of $10,000 to which travelers are presently limited. In the meantime, Americans may opt to carry a Canadian or other third country credit or debit card in order to avoid the risk of carrying cash. Traveler checks are not common in Cuba. A safe way to pay for art is to use an escrow agent or attorney to receive and hold the funds in his trust account in the U.S., as well as to receive the art. Upon inspection and authorization of the release of the funds, the attorney will transfer the funds to an entity or trust account designated for the seller in the U.S. or a third country. This has the added benefit of shifting the burden of all the paperwork required by Cuba to be completed by the seller/artist before the funds are paid.
Another significant restriction that is still in effect has to do with the nature of the art being purchased. Namely, that which is purchased in Cuba has to be an “as is” work, which means that although Americans may theoretically buy completed artwork for any amount, they may not commission a Cuban artist to either create a new piece or modify an existing work of art. Additionally, the work of art (paintings, drawings, watercolors, etc.) must be executed entirely by hand; hand-painted or decorated manufactured articles do not qualify. As for prints, the regulations specifies that “original engravings, prints and lithographs means impressions produced directly, in black and white or in color, of one of several plates wholly executed by hand by the artist, irrespective of the process and materials employed by the artist but can not include any mechanical or photomechanical process.” Mass-produced reproductions or commercial works do not apply, even if they were created by the artist.
In the case of sculptures, the original and first 12 castings, replicas or reproductions made by the artist from his original work or model or made by another authorized artist either working under the supervision of the original artist or authorized to do so if the original artist is dead, are permitted to be imported. In the case of original engravings, prints and lithographs, regardless of whether they are framed or not, they would be permitted. The issue is assessing whether or not the work is considered an original. Signed and numbered prints are not considered originals even if the artist’s signature is an original. What is important to understand is that there is a gray area in what is considered an original with regard to the regulations.
In part two of this article, I will cover the issues of transacting the acquisition of art in Cuba for purposes of exporting it out of the island and the Cuban government’s corresponding regulations. The pitfalls of purchasing art of deceased artists, the problems associated with their forgeries, the patrimony restrictions and the serious risks associated with the purchase of art work confiscated by the Cuban government after the revolution.
Address your questions to Octavio@TheArtLawyer.net.
Octavio Robles, AIA, Esq. is legal contributor to ARTDISTRICTS and a member of the Florida and Federal Bars (Southern District of Florida). He is a Florida Supreme Court Certified Mediator and Approved Arbitrator; a member of the Construction Committee of the Real Property, Probate and Trust Law Section, the Art and Entertainment, and the Alternative Dispute Resolution Law sections of the Florida Bar; and a member of the American Institute of Architects, Art Deco Society of Miami and Copyright Society of the USA. He holds licenses as a registered architect, state-certified general contractor and real-estate broker in Florida and is a LEED-accredited professional. He received his Juris Doctor degree from the University of Miami School of Law in 1990. He holds master’s degrees in architecture and construction management and a bachelor’s degree in design, all from the University of Florida. His practice is limited to art, design, architecture, construction and real-estate law.
