The Waverley rules were designed to protect UK cultural heritage—are they having unintended consequences on the art market?

Just over a century ago, Gainsborough’s The Blue Boy (around 1770) was lost to the British public by a sale to an American collector. The nation mourned the loss, and there were no legal means to prevent it. By the 1950s, the “Waverley rules” had been developed to control the export of important cultural property deemed “national treasures” from the UK.

In essence, export licences for such national treasures are temporarily deferred to allow public and private entities providing sufficient public access to the object (referred to here as “qualifying entities”) to make an offer to buy the object and keep it in the country. However, in recent times more than half of those items deemed to be national treasures in any year do end up leaving the country. Are the Waverley rules working to protect British cultural heritage? Even if they are, do these export restrictions inhibit the UK art market?

Although public funding for institutions has diminished in recent years, innovative solutions to raising funds have been found; joint ventures between co-purchasing entities have been developed, and certain tax charges payable by sellers (when selling to an exporting buyer) can be used by British institutions as a credit against some of the costs of purchasing the national treasure.

There are difficulties with the Waverley rules, however. They relate to a general lack of understanding of the rules and uncertainty about their application. This gives rise to concerns for qualifying entities making offers to buy national treasures, but also for sellers agreeing to sell to overseas purchasers, exporting purchasers, art dealers and auction houses alike.

For cultural property of a certain age and value, the export license process is complex. An expert adviser reviews all export applications submitted to Arts Council England, referring any that satisfy one of the “Waverley criteria” to the Reviewing Committee on the Export of Works of Art and Objects of Cultural Significance. This committee, with expert assistance, then considers whether the object meets one or more of these criteria of historical, aesthetic and scholarly or research significance. If so, the item is deemed to be a national treasure, and the committee recommends to the secretary of state for digital, culture, media and sport (DCMS) a deferral of the export licence for a specified period (normally two to nine months) during which time expressions of interest to buy (at the “fair market price” recommended by the committee) can be made by qualifying entities. The exporter must then wait to see if qualifying offers to purchase are in fact made; it can choose to accept one or decide against export.

Setting a fair market price

The rules do not compel the export licence applicant to sell. However, absent agreement to sell to a qualifying entity making an appropriate offer, the export licence will be refused. If the exporter is inclined to accept an offer, the parties generally enter into the DCMS template Option Agreement, providing the putative purchaser the right to purchase for a fixed price within the deferral period (which can be extended). So, what issues arise in the application of the rules?

Consider first the issue of price. Any application must list the object’s attributed value. The committee may query that value (as happened with Joshua Reynolds’s Portrait of Mai—see below) and require an independent valuation to help set the fair market price. Anyone involved in valuation knows how contentious such issues are and how small the art world can be. The independent expert can be challenged but absent agreement the price is determined by a third person qua arbiter (as a judge). These expert reports are not made public, raising questions of accountability in the use of public funds and there is some concern about state interference in valuing privately owned objects.

The deferral period affords qualifying entities the time to raise the necessary purchase funds, and DCMS’s template Option Agreement provides some comfort that the owner will not sell to a third party in the interim. How much security does this agreement actually confer if the applicant-vendor simply sells in breach to some other qualifying entity? Can specific performance of the Option Agreement be obtained or are remedies confined to wasted costs with no other damages? If so, what purpose has the Option Agreement served?

With these national treasures, joint purchases are not infrequent: a notable example is the Portrait of Mai, jointly acquired by the National Portrait Gallery and the Getty Museum for £50m in 2023. These, too, are not without difficulty. Conflicts of interest may arise in relation to enforcement of the Option Agreement where funds are tight. Separately, agreement is necessary concerning insurable and non-insurable risks of damage in transit and in either location, and, with regular travel, the price is inflated by any number of other additional costs.

Referral is not always bad news

Aside from the limited success rate in retaining cultural property, are the Waverley rules damaging the UK’s art market? Many collectors outside the UK might well be concerned about the imposition of an export ban over a newly acquired work of art.

That said, the referral of a work to the committee is not always disadvantageous for its owner vendor. If deferral is recommended but no qualifying interest received, the owner then benefits from ownership of a newly declared national treasure (which it can export) and may quickly forget the considerable delay, costs and frustration caused by the deferral process.

The imposition of a price at which a qualifying entity must buy may have unintended price-dampening consequences for the art market. UK-based buyers aware of overseas collectors with deep pockets bidding against them in auction may be tempted to await the Waverley filter, potentially offering them a more advantageous opportunity to purchase. Overseas collectors might well argue that they will place the item on public display in Britain for the requisite period. They may also wish to return the item to its country of origin. Discussion over whether the Waverley rules should take such matters into account may prove profitable.

The Waverley rules have navigated complex issues and competing interests for many decades, but since their inception Britain has changed. Perhaps they should be reconsidered to best protect our cultural heritage in today’s world. We should aim to ensure effective and realistic opportunities for those most likely to advance the public interest to secure funds to do so, and seek to protect our position as a pre-eminent international art market.

• This article is by Sarah Barker, head of the international art law practice at Withers; and Angharad Start and Victor Steinmetz, barristers at 3 Verulam Buildings