The art scene in Singapore reacted with a combination of shock, disbelief and I-told-you-so’s when the organisers of Art Stage Singapore cancelled the exhibition just nine days before it was set to happen. Although people have come together quickly to limit the damage, given the amount of time and money that was invested by the would-be participants in Art Stage, it is likely that the legal issues will take longer to resolve.
In a civil action, the law requires the guilty party to compensate the party who has suffered a loss, in this case the participants. The participants of Art Stage entered into an agreement with the organisers to participate, display, and sell their works at an exhibition in Singapore. It was reported that Singapore-based gallery Visionairs had spent six-figure sums creating and shipping artwork from various parts of the world in anticipation of the exhibition. Now that the organisers have cancelled the event at the last minute, a natural reaction might be to start wondering how much compensation should be demanded.
Whether the organisers should pay
Before the Court decides how much compensation to award, it first decides whether or not any compensation should even be paid. For example, the agreement between the organiser and participant might say that the event has to be held by “January 2020”, which is sometimes the case when an organiser wishes to gauge interest before committing to a certain event date.
The organiser could then say to the participants that the event has merely been postponed, not cancelled. In such a situation it is not certain whether the participants would definitely be entitled to compensation. Alternatively, there might have been a cancellation policy that says the organiser does not have to pay for everything.
Amount the defendant has to pay
If, after considering the nature of the agreement between parties and the facts of the matter, the Court decides that the participant is entitled to compensation from the organiser, the Court then directs its mind towards the question of the quantum of compensation to be awarded.
As mentioned above, the law operates to compensate an aggrieved party, or to restore them to the position where they would have been had the guilty party performed its side of the bargain.
Generally, compensation is given for losses that are direct, foreseeable, and reasonable.
For example, if a participant had paid for the rental of the exhibition space in advance, and the space is not made available to the participant, this is a loss that is likely to be compensated by the defendant. However, if the participant says that they “could have” sold millions of dollars of art and therefore have lost thousands of dollars in profits, such claims are generally unlikely to be successful.
A paper judgement?
Even after a plaintiff obtains judgement against a defendant, that does not necessarily mean that it will get its money back. In the event where the defendant is bankrupt, missing, or otherwise unable to make payment of the judgement sum, it may be difficult for the successful plaintiff to recover the money it has lost.
Very often, participants assume that the persons running the company have the same liability as the company. The person running the company may be very wealthy, but if the contracts are between the participant and the company, there is no liability on the part of the person running the company (unless some form of personal guarantee is provided by the person).
Practically, it makes good business sense to verify and be aware of the credibility of the organiser (usually a company) before committing hundreds and thousands of dollars to third parties on the basis of the organiser’s promises. In addition, there may be other commercial arrangements such as “back to back” payment mechanisms, or even insurance to protect a business from such situations.
If you find yourself in a situation where you might have obtained judgement against an empty or shell company that has wealthy directors, speak to a lawyer who will be advise you on your options, such as taking out an application for the examination of judgement debtor, which may be useful in putting pressure on the directors of a company. Alternatively, winding up proceedings can also be an effective tool.
Disclaimer: Neither Asian Art Platform, or IRB Law LLP are connected to or affiliated to Art Stage. This article is provided for information purposes only, and should not be used in lieu of independent legal advice.