The essence of the claim against Bouvier appears to be that Bouvier had ‘fiduciary duties’ to Rybolovlev in acquiring paintings for him, but that he allegedly breached these duties by pocketing millions of dollars by, apparently unknown to Rybolovlev, buying at one price and then selling to Rybolovlev for another, higher price.
Bouvier denies that he was Rybolovlev’s agent.
Although this latest claim in a long-running legal dispute is brought in the US, the position of an agent is very similar under English law.
This problem is fundamental to the art world, insofar as the role of the intermediary is often ill-defined, if indeed it is defined at all.
For whom exactly is the intermediary acting? Here, Bouvier is effectively saying he was acting for himself, to which the response may well be – well, he would say that wouldn’t he?
The position is well-illustrated by a case which went all the way to trial a decade ago, in the English courts.
A football world parallel
The case concerned a footballer’s agent who negotiated a two-year contract for his client with a football club. The agent’s remuneration was to be 10% of the footballer’s monthly salary which, as we all know, these days may amount to a great deal of money.
The contract, to which the judge referred, provided that the agent was to “use his reasonable endeavours to promote the player and act in his best interests”.
At the same time as negotiating for the player to play for the club, the agent agreed that the club would pay the agent a fee of £3000 for getting a work permit for the player.
The agent did not tell the player about this work permit contract. When asked about it a year after the event, the agent told the player: “It was none of your business.”
When the player found out about the work permit contract with the club, he stopped paying the 10% due under the agency contract. The agent sued for the unpaid fees.
Full disclosure
The judge in this case said that if the footballer’s agent had been open and had told his client, the footballer, that he was also going to make a deal with the club for himself in connection with getting the player’s work permit, then, if the player had had no objection, there would have been no problem: “All [an agent] has to do to avoid being in breach of duty is to make full disclosure. Any agent who is doubtful about his position would do well to do just that.”
The footballer’s agent had to pay back all of the 10% fees he had received, and, in addition, pay all the £3000 secret profit he had made from the club to the player.
Back to Rybolovlev’s complaint against Bouvier. If the court decides that Bouvier was indeed an agent, he too may be at risk of forfeiting all the profit he has made.
An express agreement clearly defining the role of the parties, avoiding any implication of ‘agency’, and structured along the lines of a joint venture, would be one way of dealing with these difficulties.
Milton Silverman is senior commercial dispute resolution partner at Streathers Solicitors LLP, London.
