Watteau’s Le Rêve de L'artiste: the binding offer mechanism

The RCEWA was established in 1952 in accordance with the recommendations of the Waverley Committee, and assesses artworks presented to it against the three "Waverley Criteria": 1. Is it closely connected with our history and national life? 2. Is it of outstanding aesthetic importance? 3. Is it of outstanding significance for the study of some particular branch of art, learning or history?  The RCEWA applies a temporary export bar if it considers that the departure of an artwork from the UK would be a misfortune on one or more of the above three grounds. 

The painting by Watteau is valued at over £6 million and was once owned by Britain’s first prime minister, Sir Robert Walpole. It hung in his wife’s dressing room in 10 Downing Street during Walpole’s administration. The RCEWA Committee found that the painting met the first and third Waverley criteria for its outstanding significance to the study of the collections in which it was included as well as the early and highly unusual depiction of dream imagery.

When the RCEWA decides to defer granting an export licence, a period of several months is given to allow a UK-based party to offer to buy the artwork at the recommended price with a view to keeping it in the UK.  If a potential buyer expresses an interest, the decision to grant an export licence is deferred for a second period of months to allow the buyer to raise the funds to acquire the artwork.

If a buyer comes forward during the first deferral period, the new ‘binding offer mechanism’ kicks in. This mechanism, introduced in January 2021, is a legally binding option agreement designed to prevent owners looking to export art from the UK from reneging on their commitment to sell at the recommended price once an offer is made and accepted in principle. Prior to the introduction of this mechanism, if a potential buyer expressed an interest, and the RECWA deferred granting the export licence for a second period to allow the buyer to raise funds to pay the recommended price, the owner could simply wait and hope that the potential buyer would fail to raise sufficient funds.  If so, the export licence would be granted.  If the potential buyer succeeded in raising the funds, the owner remained free to reject the offer until the last moment and decide to keep the artwork in the UK.  This resulted in difficult situations for British institutions who scrambled to raise funds to buy an artwork, only to be told at the eleventh hour that the owner would not sell, thereby wasting the institution’s time and resources and its funders’ goodwill. For example, in 2017, the National Gallery, despite raising funds to meet the recommended price of £30 million, could not proceed with the purchase of the 16^th century painting by Jacopo Pontormo, Portrait of a Young Man in a Red Cap, as the seller ultimately withdrew his export application, ending the prospect of a sale and keeping the work in the UK. Another example is the Portrait of Mai by Joshua Reynolds, one of Britain’s most iconic paintings. After being hit with a temporary export bar in 2003, Tate matched the offer of £12.5 million to keep it in the UK but the seller withdrew the offer, and Tate could not proceed with the acquisition. 

Today, once the owner signs the non-negotiable ‘Option Agreement’, they are legally bound to follow through with the transaction. The ‘Option Agreement’ is a contract between the owner and a UK buyer serious about purchasing the artwork. The agreement provides the buyer the legal option to acquire the artwork. Once the agreement is signed, a second deferral period of up to six months commences, allowing the buyer to raise the necessary funds. This creates a sense of security for UK institutions by giving them confidence that their fundraising efforts will not go to waste.

What’s next for Watteau’s Le Rêve de L'Artiste?

For now, the fate of Watteau’s masterpiece remains in the balance. The government’s temporary export bar has bought time for UK buyers to come forward, but the window for action is limited as the first deferral period ends on 29 November 2024. If a British institution or private buyer makes an offer (and that offer is accepted), the binding offer mechanism will ensure that the buyer can raise funds in the knowledge that the owner cannot withdraw. On the other hand, if no UK buyer steps up, Le Rêve de L'Artiste may depart British shores.

Whether it be Le Rêve de L'Artiste or other significant works, the new system provides a fairer, more transparent process for keeping important art in the country, while maintaining the owner’s right not to sell (until the option agreement is signed), with the caveat that if an offer is made and the owner rejects it, the export licence will be denied.

Pierre Valentin