The private collector, who remains anonymous, bought Australian artist Herbert Badham’s Snack Bar at a Deutscher and Hackett auction in Melbourne last year for A$465,000 (£265,000).
He had planned to take it to the UK to hang in his home but has been barred from exporting the work by a tribunal.
The court case centred on the “national significance” of the work. Although Badham’s importance to the Australian art market was questioned by experts during the tribunal, the work was deemed significant because of its depiction of different cultures and races mixing.
The 1944 Snack Bar by Badham shows US soldiers and Australian locals at a diner, thought to be Hasty Tasty in Sydney’s Kings Cross, the city’s first 24-hour snack bar.
"Interaction of different races"
Critically it depicts a black American GI with a female civilian.
In its judgement, the tribunal said: “The subject matter, which graphically records the interaction of different races, associating in congenial circumstances at a time of great danger for Australia, is deeply impressive.”
In conclusion, it stated: “By reason of its combined historic and artistic value, the painting Snack Bar is of such importance to Australia, that its loss would significantly diminish the cultural heritage of Australia.”
The work falls under the Protection of Movable Cultural Heritage Act 1986 and therefore needed an export permit to be taken out of the country.
The National Cultural Heritage Committee recommended that a permit should be refused last summer.
The owner appealed to the Administrative Appeals Tribunal and the case was heard last month.
Auctioneer Chris Deutscher told The Australian it is damaging to have limitations on trading and the decision to stop the work being exported shocked Australia’s art experts.
One Sydney based auctioneer described the decision as ridiculous. Paul Sumner, chief executive of Mossgreen, said: “It's a ridiculous decision in my view and as we don't have a national lottery system or a way of the vendor getting compensated. It's very anti fair trade.”