February 8, 2017

Welcome to China Art Law, the first newsletter to focus on legal issues and the role of law in the art world in China. The goal of China Art Law is to answer some questions, raise some questions, and keep our readers up-to-date on developments in the law affecting art and the business of art in China.

We believe there is a large and varied audience interested in a discussion of how the law affects art and the art business in China. CAL will analyze issues and publish articles relevant to artists, gallery owners, private dealers, museums, private collectors, art consultants, auction houses, art fair organizers and probably anyone else who loves art and is interested in the development of the art business in China. In each edition we will aim to clarify legal matters for “beginners,” so to speak, as well as to address sophisticated legal issues affecting distinct segments of the art world, such as copyright and trademark, fine art insurance, the regulations applicable owning and operating an art gallery or business in China, import and export restrictions, and more.

This newsletter was created with the help of our close friends and partners at https://litsterfrost.com Litster Frost who have provided assistance with research, translation and proofreading of our articles.

We welcome comments and feedback, and especially hope to be able to make China Art Law a useful and relevant resource for all of our readers. We encourage you to contact us at Newsletter@ChinaArtLaw.com with your comments, requests and critiques!

Gallery Closure in Shanghai

In May 2010, OV Gallery in Shanghai was closed by the Shanghai authorities for 28 days.  The closure of OV Gallery raises several questions about the regulations governing various art industry activities, as well as questions about the procedures followed (or not) by the government authorities when interpreting and implementing such regulations.

It is generally assumed by the management of OV Gallery as well as most observers that the main, if not the only, reason for the closure was the exhibition, entitled “Re-Visioning History,” at the gallery.  Included in that exhibition were works by the well-established artist Zhang Dali.  Zhang’s artworks, part of his larger project “A Second History,” document alterations by the government of official photographs for (presumably) political purposes.  Prior to its inclusion in the Re-Visioning History show at OV, all or portions of the Second History project had been exhibited both within and outside of China, including solo shows at the  Walsh Gallery, Chicago (2006), the Kiang Gallery, Atlanta (2006), SZ Art Center, Beijing (2009-2010), and the Guangdong Museum of Art (2010).  Zhang’s Second History works were also included in a group show entitled “China’s Soul” at Galerie Magda Danysz in Paris (2010).

The opening of the exhibition at OV Gallery took place on Saturday, May 22.  On the following Monday, policemen from the Luwan District Police (which is under the jurisdiction of the Shanghai municipal police) came to the gallery and informed members of the gallery staff that the lease on the gallery’s premises had expired, and that, because the premises were owned by the Public Security Bureau, OV would have to vacate the space.  
The following day, on Tuesday, representatives from the Luwan District Police again came to the gallery, this time confiscating one copy of a catalogue from an exhibition entitled “Past/Forward” that had been held at OV Gallery in the spring of 2007, which exhibition had also been closed down by the authorities soon after it opened.  (In the case of Past/Forward, it is generally believed that the impetus for the closure was the inclusion of a painting by Sheng Qi, depicting an image of Tiananmen Square and a tank, rather than Zhang Dali’s work, which also was shown in that exhibition.)

Later on the same Tuesday, representatives from the Xuhui District Culture Market Comprehensive Law Enforcement Agency  (上海市徐汇区文化市场行政执法大队) (the “Enforcement Agency”), a division under the jurisdiction of the Shanghai Culture Market Comprehensive Law Enforcement Agency of the Shanghai Municipal Government, came to OV and confiscated copies of a catalogue from a show of Zhang Dali’s work that had been held at the Walsh Gallery in Chicago in 2006, along with five copies of the Past/Forward exhibition catalogue and one copy of a catalogue from an OV Gallery 2010 show entitled “Make-Over.”   At this time, OV was provided with a receipt for the confiscated books.  The Enforcement Agency representatives also photographed the catalogues in situ, presumably because the catalogues constituted a central element in the local authorities’ allegations against OV, as well as a basis for the actions taken.  In addition, the C Enforcement Agency representatives removed and took away one artwork, a single digital print from a video work by the American artist Ben Houge, who was also featured in the Re-Visioning History show.

OV Gallery, which is owned by a PRC citizen and the manager of which is European, rents its premises from a local Shanghai art gallery.  The Enforcement Agency informed an assistant at OV Gallery that the gallery would have to close and for the time being would not be permitted to re-open.  Subsequent communication from the government authorities concerning the closure and possible re-opening of OV was conducted through the Shanghai landlord.  As to what steps OV could or should take to expedite the re-opening of the gallery, the instructions conveyed from the Cultural Bureau through the landlord were that the gallery could re-open when “the situation was resolved.”  In practical terms, OV Gallery was unable to do more than wait to see what further instructions would  be issued by the Cultural Bureau, which OV personnel assumed would be orders specifying which works would have to be removed from exhibition.  Also presumably, such instructions would be given through the landlord.  

After having been closed for 28 days, OV Gallery was permitted to re-open on June 22.  The procedure resulting in the re-opening was entailed the landlord paying a visit to the Enforcement Agency and picking up the Houge artwork.  After the visit, the landlord informed the manager of OV Gallery that the gallery could re-open.  According to the landlord, the authorities had instructed her to “keep a better eye on” OV Gallery.  

OV Gallery has not, to date, received any formal (written, chopped) notification from the Luwan Police Department, the Shanghai Municipal Cultural Bureau or the Enforcement Agency of any violation by the Gallery of any specific law or regulation.  Other than the receipt issued by the Enforcement Agency for the catalogues, no formal papers were delivered to or served on OV, and, from OV’s point of view, no formal procedures were imposed or instigated.  In particular, the Gallery was not apprised of (a) the nature of the violation that resulted in the Gallery closure; (b) what steps or measures had to be taken to remedy the violation; or (c) any applicable time frames for remedy or end of any closure period.  

Under PRC law and regulations, it appears that there are three potential legal bases for the local government’s actions.  Whether the regulatory bases cited also provide a legal basis for the actual penalty or penalties (closure and confiscation of artworks and catalogues) imposed on OV Gallery is another question.

 •   Exhibiting artwork created by a foreign artist without approval to do so.  Article 9 of the 2004 Measures for Administration of Artwork Business (美术品经营管理办法) (the “2004 Measures”) forbids the commercial exhibition of artwork by non-PRC citizens without a prior, formal  approval from the relevant Cultural Bureau.  The penalty (set forth in Article 16) for non-compliance is “remedy of the situation” and a fine between RMB5,000 and RMB30,000.   

 •   Sales of books without a license (or without the requisite scope of business set forth in the business license of the gallery) to do so.  Under Articles 24 and 34 of the Provisions for the Administration of the Publications Market (出版物市场管理规定), the sale and import of overseas publications can only be conducted by entities which have been approved to import publications.  Violations are punishable by penalties including confiscation of the publications and a fine between RMB3,000 and RMB30,000.

 •   Exhibition of artwork which contains “illegal” content.  Article 12 of the 2004 Measures forbids this, in a list of 10 prohibited types of content, but notwithstanding the breadth and vagueness of the regulatory language, it is hard to see how Zhang Dali’s work would fall into any of the 10 categories, and the same holds true for the other artwork in the Re-Visioning History show.   Significantly, the local Shanghai authorities have made no gesture in the direction of alleging any violation of this highly sensitive Article 12 by OV Gallery or any artist, leading to the conclusion that no such violation formed the basis of the government’s actions against the gallery.

It should be noted that, under Article 20 of the 2004 Measures, the Cultural Bureau, Enforcement Agency or other local authority was required to issue a written order of penalty when it ordered OV Gallery not to re-open the gallery.  The authorities gave only a verbal order, and thus themselves were not in compliance with the requirements of the 2004 Measures.   


As mentioned above, OV Gallery re-opened on June 22, after having been closed for 28 days.  All of the original works in the show were on display, including the confiscated piece by Ben Houge.  OV Gallery threw a well-attended re-opening party, and subsequent attendance at the exhibition was good. Substantial media coverage of the closure (including an article in The Wall Street Journal and That’s Shanghai, as well as extensive blog discussion) may have enticed curious audiences to go to see a show containing "sensitive works," according to the show’s curator and OV Gallery’s owner.  The director of OV Gallery plans on building better relationships with the local Cultural Bureau to help smooth things over for upcoming shows.
As to the confiscated catalogues, the gallery’s lack of import licenses and sales permits, even for the catalogues printed in China, mean that it is unlikely they will ever be returned.  The local Cultural Bureau indicated that the confiscation of the catalogues was meant to be "taken as a lesson" by OV Gallery and to serve as a reminder to the gallery to follow proper procedures in the future.  

The 2009 US-China Memorandum of Understanding on Restrictions on the Import of Art and Archeological Materials into the United States

On January 14, 2009, China and the United States signed The Memorandum of Understanding Between the Government of the United States of America and the Government of the People’s Republic of China Concerning The Imposition of Import Restrictions on Categories of Archeological Materials From the Paleolithic Period Through the Tang Dynasty and Monumental Sculpture and Wall Art At Least 250 Years Old(the “MOU”).  In the main, the MOU calls for the US to restrict the entry into the US of objects designated as archeological material and produced in China prior to 907 AD (the last year of the Tang Dynasty) and monumental sculpture and wall art at least 250 years old.  

In order to implement the MOU, the US Customs and Border Protection agency (the “CBP”) adopted a rule amending CBP regulations to impose import restrictions on a wide variety of “archeological material” from China, as enumerated in the “Designated List of Archeological Material of China” set forth in 19 CFR 12.104g(a) (the “Designated List”).  The revised CBP regulation (the “Revised Customs Regulation”) sets forth the guidelines that must be followed in connection with the importation of any Chinese objects into the US that qualify as “archeological materials” under the definition in the Revised Customs Regulation itself and the Designated List.

The operative language of the Revised Customs Regulation makes importation of materials on the Designated Materials List subject to the restrictions the CBP Regulations. Those restrictions are as follows:

Requirement that lawful exportation be backed up by documentation: Section (a) states that “No designated archaeological or ethnological material that is exported ... from the State Party … may be imported into the United States unless the State Party issues a certification or other documentation which certifies that such exportation was not in violation of the laws of the State Party (italics added).”

Alternative documentation permitted.  Section (b) creates an alternative to having to provide documentation issued by the “State Party” (in this case, China) by allowing the importer/consignee to present to US Customs, in lieu of “State Party documentation”, other “satisfactory evidence” that the object in question was exported from the State Party either (i) not less than ten years before the date of importation, or (ii) on or before the date on which such material was designated under Section 2604.  For Chinese material, this date is January 16, 2009.

The next question, of course, is what, precisely, qualifies as “satisfactory evidence.”  The answer can be found in 19 USC 2606.  To support the assertion that the object was exported from China at least ten years prior to the date of importation in to the US (or on or before January 16, 2009), the importer must provide all of the following:

  1. one or more declarations under oath by the importer (or the person for whose account the material is imported), stating that, to the best of his knowledge the material was exported from the State Party (i) not less than ten years before the date of entry into the United States or (ii) on or before January 16, 2009 , and that neither such importer or person contracted for or acquired an interest in such material more than one year before the date of entry of the material; and
  2. a statement provided by the consignor, or person who sold the material to the importer, which states the date, or, if not known, his belief, that the material was exported from the State Party (i) not less than ten years before the date of entry into the United States (ii) on or before January 16, 200, and the reasons on which the statement is based.

Experienced importers of art and antiques into the US are likely to be familiar with these requirements, and with the form that such declarations and statements typically take.   US Customs officials have been accepting such statements, oaths and similar documentation for many years in connection with imports from countries other than China; the requirements in connection with Chinese objects are no different from those applicable to all goods that are subject to import restrictions under 19 USC 2606.

There is, however, an issue raised by the MOU and Revised Customs Regulation that is unique to China, which is the question of what constitutes “a certification or other documentation which certifies that such exportation was not in violation of the laws of China,” for this is what will be required for objects exported from China after January 16, 2009.

The answer to what constitutes “legal exportation” from China is obviously a question of PRC law, and is to be found in the relevant laws and regulations in China.

The PRC legal framework

At the top of the governmental and administrative hierarchy for art in China is the Ministry of Culture, which, like all ministries in China, is directly subordinate to the State Council.  The State Administration of Cultural Heritage (“SACH”), which is responsible for all cultural relics policy in China, is directly administered by the Ministry of Culture.  SACH, sometimes referred to as the Cultural Relics Bureau, has subordinate divisions at the provincial and certain municipal levels.  Although technically having a sub-ministerial ranking, SACH has unusually broad powers and an unusually high level of independence, which allow it to function virtually as a ministry itself, without much micromanagement by the Ministry of Culture.

Laws applicable to art and to objects that are designated “cultural relics” (文物) are passed at the level of the National People’s Congress (“NPC”), but are principally drafted and revised by the Ministry of Culture and, if the law is applicable to cultural relics, SACH.  Rules and regulations that are below the status of a “law” are ubiquitous in the PRC, and are where the nuts and bolts, as well as the teeth and claws, of the higher-level laws are to be found.  Rules and regulations can be promulgated at many levels, including at the State Council and Ministry level, provincial level, autonomous region, municipality level, and possibly below.  The relative legal effect of any two rules will depend upon which type of rule each is and the level at which it was passed.

The current law governing cultural relics in China is the PRC Cultural Relics Protection Law (中华人民共和国文物保护法), amended and passed in 2002 (the “Cultural Relics Law”).  The previous law was the 1982 Law on the Protection of Cultural Relics, which superseded the Interim Regulations on Cultural Relics Protection Management promulgated in 1961.  Prior to 1961, scattered rules and regulations were all that existed. 

Beginning with the passage of the Cultural Relics Law in 2002, China entered a lively period which saw the promulgation of a series of new laws and regulations on the protection of cultural relics, including the 2003 Cultural Relics Protection Regulations, the 2007 Administrative Measures for the Entry-Exit Examination and Verification of Cultural Relics(the “Measures”) and the 2007 Standards for the Entry-Exit Examination and Verification of Cultural Relics(the “Standards”).  The new regulations were specifically designed to further two increasingly important policy aims: (1) to broaden the definition of “cultural relic” through resetting the operative dates so as to include within that definition far more objects than previously (thereby entitling such objects to legal protection), and (2) to strengthen the government’s control over the export of objects designated as cultural relics through re-defining the role of the Examination Agencies.

PRC Export Procedures

Obtaining versus exporting.  Article 50 of the Cultural Relics Law permits an individual to obtain Chinese art through many channels, including inheritance, receipt as a gift, purchase from a cultural relics store or auction house, and mutual exchange or transfer of “cultural relics legitimately owned by individual citizens.”  However, the Cultural Relics Law imposes extensive restrictions on the export of Chinese art and enforces these restrictions through the export permit system.  Under this system, any object leaving China which is designated a “cultural relic” must be accompanied by an export permit (an “Export Permit”) issued by a cultural relics entry-exit examination and approval agency designated by SACH (an “Examination Agency”). 

At present, there are 14 Examination Agencies qualified to examine and approve the export of cultural relics from China.  They are located in Beijing, Shanghai, Tianjin, Guangdong, Jiangsu, Zhejiang, Fujian, Anhui, Shandong, Henan, Hubei, Shaanxi, Hebei and Yunnan.  Three other agencies also exist in Shanxi, Sichuan, and Liaoning, but they are not, as of the time of this writing, qualified as Examination Agencies.  While SACH is reluctant to discuss the non-qualification of these three agencies in detail, SACH implied in conversation that those three agencies lost their qualified status due to failure to live up to the new, heightened requirements for Examination Agencies under the current laws and regulations.  

Export Permits and the problem of the importer’s copy.  The document that must be obtained in order to legally export cultural relics from the PRC is an Export Permit (文物出境许可证),which is issued by one of the Examination Agencies.  An Export Permit is issued in triplicate.  One copy is retained by the issuing Examination Agency, and one copy must be provided to PRC Customs at the time of export by.  The third copy is retained by the party actually doing the exporting.   

The Export Permit scheme cannot be faulted for being irrationally byzantine, or out of line with international practice for export of goods.  In actual practice, however, when goods such as art objects are shipped out of China, it is impossible for a foreign purchaser to obtain one of the three copies of the Export Permit prior to the export of the objects in question.   As stated above, one of the three copies is retained by the person actually “taking” the item out of China.  In most cases, this will be a shipping company, as the actual exporter.  The shipping company will retain its copy of the Export Permit for exportation purposes.  Once the goods have been exported, the shipping company may make a copy and send either the original or the copy to the foreign purchaser or consignor, while retaining the other copy for the shipping company’s own records.   In the past, shipping companies did not usually send copies of the Export Permit to the consignors, primarily because buyers/consignors rarely asked for this document.  In the post-MOU era, it is now critical for foreign buyers to obtain their own copy of the Export Permit, so as to be able to import the object on the US Customs side.

Temporary importation.  A separate procedure permits objects to be temporarily imported into China, and requires the completion of a Temporary Import Form (临时进境文物登记表).  This procedure is typically used for the importation of an object into China for the purpose of appraisal, exhibition, sale at auction or sale through a licensed cultural relics store.  The Temporary Import Form will be exchanged for an Export Permit at the time the item is to be exported.   The Temporary Import Form is generally valid for six months. Objects which remain in the PRC for more than six months must be “re-exported” under normal Export Permit application procedures. 

For sheer ease of paperwork, many PRC auction houses and other parties (such as museums) recommend that potential overseas sellers or exhibitors simply carry the relevant objects into China, and handle the importation paperwork on the ground in Beijing or Shanghai, for example, once they have arrived.  This method has tax benefits, in that items hand-carried in are less likely to be assessed VAT or import duty, whereas goods shipped in, unless another tax exemption is available (e.g., antiques more than 100 years old are exempt from import duty) will be subject to those taxes.

Satisfaction of the MOU requirement for import into the US .  Assuming that the purchaser/importer does have a copy of the Export Permit in his or her possession to present to US Customs, the presentation of that Export Permit at the time of import into the US constitutes proof of legal export from China of the object – it constitutes the legally-required “satisfactory evidence.”  As no other documentation is required under PRC law for the legal export of an art object or object under the jurisdiction, so to speak, of the Ministry of Culture, no other document can be required by US Customs according to the terms of the MOU or the Customs Regulations.  

Different rules for contemporary art.  The previous happy conclusion notwithstanding, it is important to flag here that as of August 2009 a new set of regulations governing the import/export of contemporary art came into effect in China.   The Interim Provisions on the Management of the Import and Export of Fine Artestablishes a different set of requirements and procedures for the import and export of contemporary art: prior approval of the Ministry of Culture is now required for any import and export of all contemporary art work (including paintings, photographs, sculptures etc., but excluding art work mass-produced in amounts of 200 or more).  (See CAL Newsletter, November 2009)

While the MOU and subsequent restrictions have caused significant consternation amongst art professionals as well as lovers of Chinese art in general, much of that concern may be attributable to the unusual manner in which the entire process was managed from its inception roughly seven years ago until it was passed from the State Department to US Customs, which has given rise to dissatisfaction within the legal community that the legislative thresholds that should have been applied to China and the imposition of the embargo under the UNESCO treaty were sidestepped.

The Cultural Relics Law has increased the requisite number of “Responsible Examiners” in each Examination Agency.  The previous rules required only seven to twelve full-time employees in each Examination Agency, only two of whom were required to be qualified as “cultural relics responsible examiners” (“Responsible Examiners”).  For each to-be-exported work of art, only two Responsible Examiners were required to appraise and issue export permit together.  The Measures now require each Examination Agency to have at least seven full-time cultural relics appraisers, among whom, at least five shall be Responsible Examiners.  For each to-be-exported work of art, a minimum of three cultural relics appraisers must participate in the decision-making process, at least two of which appraisers must be Responsible Examiners.  An exit permit can be issued only upon the unanimous agreement of the Responsible Examiners.  A Responsible Examiner must have a bachelors degree or above, and an intermediate or higher level professional title in the field of cultural relics.  The Examiner must also pass the qualification exam given by SACH, in one of five fields covered by the exam: pottery, jade, bronze, paintings or miscellaneous items.  It is worth noting that from the commencement of the qualification exam system in 1991 until 2008, a total of 164 people had passed the exam.

Standards for Auction of Cultural Relics and Artworks

1  Scope

These standards define the basic principles for the auction of cultural relicsrelics and artworks and stipulate the principal procedures and basic requirements.


These standards apply to cultural relics auction activities conducted within the territory of the People’s Republic of China for profit-making purpose.


2  Terms and Definitions

The terms and definitions used herein shall apply to these standards.

2.1  Auction

The means of selling and buying by which specific articles or goods or property rights are transferred through public bidding to the bidder that offers the highest price.


2.2  Parties to Auction


The auctioneer, consignor, bidder, and buyer participating in an auction activity.


2.3  Auctioneer

An enterprise legal person that is established in accordance with the Auction Law and the Company Law of the People’s Republic of China and engaged in auction activities.


2.4  Consignor

A citizen, legal person or other organization that authorizes an auctioneer to auction his or its articles, goods or property rights.


2.5  Bidder

A citizen, legal person or other organization that participates in the bidding for auction objects.


2.6  Object of Auction

The objects or property rights that a consignor authorizes an auctioneer to auction.


2.7  Buyer

A bidder who purchases an auction object at the highest price offered by him.


2.8  Auction Catalogue

The pictures or written materials produced prior to the date of auction to introduce an auction object.


2.9  Auction Rules

The relevant rules that all the parties to auction shall observe.


2.10  Auction Contract

A contract entered into between an auctioneer and a consignor to establish the relationship of consignment for auction.


2.11  Preview

Public display activities, held by the auctioneer, of the auction objects in accordance with the laws.


2.12  Absentee Bid

The service provided by an auctioneer, at the request of a bidder, to transmit the bidding information at auction to the bidder.


2.13  Sales Confirmation

A written confirmation executed by the buyer and the auctioneer  to confirm the fact of conclusion of the transaction after it is concluded


3  Basic Principles

The parties in auction activities shall abide by the relevant laws and administrative rules and regulations and adhere to the principles of openness, fairness, justice and good faith, and conform to the principles in the interest of protection and inheritance of historical cultural heritage.


4  Collection of Auction Objects


4.1  Collection Methods

“Collection of auction objects” refers to the activities conducted by an auctioneer to search for and select auction objects. The collection methods include perennial collection and directional collection.


4.2  Collection Requirements

The collection of cultural relics auction objects shall abide by the state regulations of the scope of cultural relics auction objects, and conform to the auction enterprise’s qualifications regarding cultural relicss.
  The auctioneer may publicize the collection activities through appropriate media prior to the auction. The main details include the time of collection, place of collection, scope of collection, and contact information.
  When the auctioneer collects auction objects, relevant professionals shall be arranged to participate in the collection activities on the spot, with a copy of  the business license, affixed with the official seal, of the auctioneer or relevant certificates.
  Where an auctioneer collects auction objects outside the territory of the People’s Republic of China, the auctioneer shall abide by the relevant state entry/exit provisions for cultural relics administration.


5  Consignment for Auction


5.1  Contents of Auction Contract

Where an auctioneer accepts consignment, the auctioneer shall enter into an auction contract the consignor, which shall include the contents as follows:

-  name or title , nationality, certificate number, address, and contact information of both the consignor and the auctioneer.
  -  author/age, title, texture, form, size, quantity and  preservation status of  the auction objects;
  -  reserve price proposed by the consignor for the auction objects;
  -  time and place of auction, or other details in respect of the arrangement thereof;
  -  time and manner of delivery or handover of the auction objects;
  -  evaluation of the auction objects;
  -  commission and expenses, and manner of and time limit for payment thereof;
  -  manner of and time limit for payment for the purchase;
  -  relevant issues in case no transaction is concluded;
  -  agreement upon issues of confidentiality;
  -  liability for breach of the contract, including indemnity provisions for losses arising from the consignor’s suspension or termination of auction;
  -  other matters as agreed upon between both parties.


5.2  Execution of  Auction Contract

When the auctioneer and the consignor sign the contract for authorization of auction, the auctioneer shall require the consignor to provide consignor’s identity certificate:

  • where the consignor is a natural person, he shall provide his valid identity card or passport or other valid identity certificate admitted by the government of the People’s Republic of China;
  • where the consignor is a legal person or other organization, it shall provide its valid registration  document, identity certificate of legal representative, or legally effective documentary evidence of consignment;
  • where an agent is authorized to sell the auction objects, he shall provide the power of attorney, his and the consignor’s valid identity certificates. The power of attorney shall clearly state the name or title of the agent, the entrusted task(s), and the scope and duration of the power of agency.

When the auctioneer signs the auction contract with the consignor, the auctioneer shall have the right to require the consignor to provide the ownership certificate for the auction objects, or certificates and any other materials certifying that he has the legal right to dispose of the auction objects according to law, and to state clearly the defects of the auction objects.

The auctioneer and the consignor shall accurately, clearly, and completely fill out each of the items of the contract. A contract with an appendix shall  indicate the number of the master contract in the appendix.

The contract for authorization of auction shall be executed in at least three (3) counterparts, one (1) for each of the department of finance and department of operation of the auctioneer, and the consignor.

Where any amendment is required for the auction contract, such amendment may be directly made in the original contract, or a supplementary agreement may be executed. Where amendment is directly made in the original contract, the places of the amendment shall be signed by the parties for confirmation.

5.3  Administration of Auction Contract

The auctioneer shall establish an administration system for auction contracts to track the performance of the contracts, adopt necessary confidentiality measures, and properly retain the contracts.

6  Evaluation and Verification of Auction Objects


6.1  Procedure of Evaluation and Verification

The auctioneer shall preliminary have the collected auction objects evaluated, prior to the conclusion of the auction contract, and determine whether or not to accept the consignment based on the evaluation results.


Where the auctioneer deems it necessary to have the auction objects further evaluated after the conclusion of the contract for authorization of auction, the evaluation may be conducted according to law. In case of any discrepancy between the evaluation results of the auction object and the descriptions of the auction objects as specified in the contract for authorization of auction, the auctioneer shall have the right to demand modification or cancellation of the contract.


The auctioneer shall, according to law, report the auction objects which are planned for auction to the administration agency of cultural relics under the people’s government of the province, autonomous region, or municipality directly under the Central Government for verification, and determine whether or not to auction based on the verification opinions. If the auction objects fail to pass the verification, the auctioneer shall advise the consignor and cancel the contract for authorization of auction of the auction object.


6.2  Records of Verification

Where the auctioneer has the auction objects evaluated, records of verification shall be produced, which shall include the time and place of evaluation, evaluator or evaluation agencies, evaluation opinions and conclusions.


7  Maintenance of Auction Objects


7.1  Basic Warehouse Facilities

The warehouse for auction objects shall be equipped with applicable monitoring, alarm, and fire-extinguishing systems, to meet the basic storage requirements for different types of auction objects. For the auction objects with special requirements, corresponding facilities for waterproofing, dust-proofing, insect prevention, fire prevention, and security against theft may be installed as the case may be.


7.2  Storage of Auction Objects

Where an auction object is stored in a warehouse, an appropriate storage method shall be chosen according to material, packing shape, and quality and safety requirements, to keep the auction object from any damage.


7.3  Warehouse Safety Management

Smoking and lighting fires are strictly prohibited in the warehouse. The sign indicating “no smoking or open flame” shall be displayed in a prominent place. Fire-fighting equipment shall be inspected regularly, and be repaired or replaced immediately in case of any failure.


The warehouse management personnel shall be present when non-warehouse management personnel enter the warehouse;


All persons who enter the warehouse shall not carry any personal suitcases, handbags, overcoats, rain gears, and inflammables and explosives. In the warehouse, it is not advisable to use such stationery as pens or stamp-pads and ink, which can easily stain the auction objects.


The warehouse keeper must inspect all warehouse facilities before and after work shift, and fill out an inspection record.


7.4  Warehousing of Auction Objects

The auctioneer shall warehouse the collected auction objects in a timely manner. The warehouse keeper shall verify and check the warehousing auction objects based on the auction contract. If there is no discrepancy after the check, the warehouse keeper shall sign after receiving the auction objects, and establish a register account for the incoming auction objects that shall be stored at the appointed stock position. Objects stored temporally shall also be entered in the account.


Where the warehouse keeper finds that the title, specifications, quantity or packaging of the warehousing auction objects fails to conform to the descriptions in the auction contract, he shall immediately notify the department of operation.


7.5  Delivery of Auction Objects out of Storage


7.5.1  Temporary Delivery out of Storage

Where the auction objects are temporarily delivered out of storage for the purposes of evaluation, photographing, or itinerant exhibition, the person who handles them and the warehouse keeper shall properly conduct the handover formalities. At the time of return, the person who handles the auction objects shall hand over the objects in the warehouse keeper’s presence.


7.5.2 Buyer Taking Delivery

The auctioneer conducts the formalities of taking delivery for the buyer based on a receipt of delivery voucher. After the buyer takes delivery of the object(s), the auctioneer shall immediately draw back the receipt of delivery voucher on the spot.


If the buyer appoints another person to take delivery of the article(s), the agent appointed shall produce the power of attorney of the buyer and the receipt of delivery voucher for the object(s). The power of attorney shall clearly state the name or title of the agent, the type and number of his identity certificate, authorized task(s), and the scope and duration of the power of attorney. The auctioneer shall check and reproduce a copy of the agent’s valid identity certificate for its own record.


7.5.3  Return of Auction Objects

Where the auction objects are not auctioned or sold, the auctioneer shall promptly notify the consignor to process the return formalities based on a valid identity certificate and relevant vouchers, to receive the auction objects.


If the consignor appoints another person to deal with matters related to reception, the agent shall produce the power of attorney of the consignor, which shall clearly state the name or title of the agent, the type and number of his identity certificate, authorized items, and the scope and duration of the power of attorney. The auctioneer shall check and reproduce a copy of the agent’s valid identity certificate for its own record.


7.6  Warehouse Inventory Management

The auctioneer shall establish a regular inventory system to take a regular inventory of the stock auction objects. In case of any difference between the total in inventory and the total in account, the auctioneer shall promptly find out the cause in conjunction with relevant departments, and handle it in a timely manner.


Where the warehouse keeper changes his job post, he shall implement the handover of the auction objects in accordance with provisions.


7.7  Handling and Package

To secure the safe transportation of the auction objects, the auction objects when temporarily delivered out of storage, shall be packed properly according to the different materials of the objects to meet the requirements of short or long distance transport. The auctioneer may develop technical requirements of packing for short or long distance transport based on the real conditions and the characteristics of various types of auction objects.


8  Production of Auction Catalogue


8.1  Purpose

Prior to auction activities, the auctioneer shall produce an auction catalogue, so that the relevant parties can learn about the auction activities and the general information of the auction objects.


8.2  Contents of Catalogue

An auction catalogue usually includes the following: title of the auction, time and place of preview and auction, auction rules and other information each party to auction should be aware of, document for authorization of bidding, contact information of the auctioneer, general information and special instructions of the auction objects. The said general information includes title, author and his date of birth, age, form, texture, size, seal, preface and postscript, reference price and other information, of each auction object.


The contents of the auction catalogue shall be subject to the verification of the departments in charge of the administration of cultural relics under the people’s governments of provinces, autonomous regions, and municipalities directly under the Central Government,


The auctioneer shall give a special mark in the auction catalogue to an auction object  which is forbidden to leave the territory, and/or which has no reservation price.


As requested by a bidder, the auctioneer may provide a report on the conditions of the auction objects, as a supplement to the auction catalogue.


All the auction objects shall be set up and printed on the auction catalogue, and may be supplemented with pictures where necessary. The pictures shall show the real conditions and quality of an auction object as accurately as possible.


9  Implementation of Auction


9.1  Declaration and Registration

Prior to the auction, the auctioneer shall complete a declaration and registration of the auction with relevant administrative department in charge under the relevant laws and administration regulations.


9.2  Announcement of Auction

The auctioneer shall announce the opening of an auction at least seven days prior to the date of auction. The announcement of auction shall include the following: time and place of auction, auction objects or auction number, time and place of preview of the auction objects, formalities required to complete for participating in bidding, contact information of the auctioneer, and other matters that need to be announced.


9.3  Schedule and Setup of Job Posts

The schedule of auction customarily includes: dates and duration of each of the phases of press releases, announcement of auction, preview of auction objects, live auction, financial settlement, handover of auction objects, and other information.


Such main posts shall be set up as on-sight direction, reception, security, press, liaison and coordination, and logistics support.


9.4  Display of Auction Objects


9.4.1  Preview of Auction Objects

The auctioneer shall display the auction objects prior to the auction and provide relevant information and conditions for bidders to view the auction objects. The duration of display shall be no less than two days.


The place of preview shall conform to the relevant requirements of the state for locations for displaying cultural relics and artworks. The display panels, display stands, and lighting devices shall conform to the national standards of safety.


The auctioneer may hire a professional organization to be in charge of design of the display areas and the setup of the display site.


9.4.2  Setup of Display Site

The auctioneer may set up as required: the layout chart of exhibition location, computing, communication and camera systems, reception, bidding registration office, settlement office, media reception, absentee bid office, catalogue and file distribution office.


Under the relevant provisions of the state, safe evacuation plans shall be clearly displayed in a prominent place.


9.5  Registration of Bidder

To complete the registration formalities, if the bidder is a natural person, he shall provide his valid identity certificate; if the bidder is a legal person or other organization, it shall provide its valid registration document, identity certificate of legal representative, or legally effective documentary evidence of consignment. If a bidder authorizes another person to go through such formalities, the agent shall provide the power of attorney, and his and the bidder’s valid identity certificates.


The auctioneer and the bidder shall enter into a bidding agreement, which includes: general information of the auctioneer and the bidder, bidding number, the major rights and obligations of both parties during auction, and the auction rules acceptable to the bidder.


The auctioneer may collect from the bidder a bidding deposit of a certain amount, and provide a receipt for the bidding deposit to the bidder.


The bidding paddle provided by the auctioneer is the sole voucher of the bidder’s authority to participate in the bid on site.


9.6  Entrustment of Bid and Absentee Bid

A bidder may take part in bidding himself or authorize his agent to participate in it. The bidding results and the relevant legal liabilities shall be assumed by the bidder.


A bidder may make a written request for absentee bid to the auctioneer. If the auctioneer accepts the bidder’s request for absentee bid, he shall arrange a seat on site to provide the bidder with the service of transmission of bidding information.


9.7  Auction Sale


9.7.1  Meeting-place Setup Requirements

The auctioneer shall make reasonable arrangements for the meeting-place of the auction according to the conditions of the auction objects and the number of the bidding paddles issued.


The auctioneer may arrange a projector system and monitoring system, and set up seats for absentee bid as required.


The auctioneer shall put in place the fire control measures.


9.7.2 Chairing Auction

The auction master shall announce the auction rules and instructions before the auction sale takes place.


In principle the auctioneer shall conduct auction successively in accordance with the sequence number on the auction catalogue. In case of any adjustment, explanations shall be given before the auction sale takes place.


Where there is no reservation price for an auction object, the auctioneer shall make it clear before the auction sale.


9.7.3  Rules of Reservation Price

Where there is a reservation price for an auction object, the highest price offered by a bidder shall be non-binding if it fails to reach the reservation price, and the auctioneer shall suspend the auction sale of such object.


9.7.4  Conclusion of Auction Transaction

An auction transaction is concluded after the highest offer is confirmed by the auctioneer by knocking the hammer or through any other method of public confirmation.


After a transaction is concluded, the buyer and the auctioneer shall sign a written confirmation.


9.7.5  Auction Minutes

Minutes of auction shall be made while an auction sale is under way. Such minutes shall be signed by the auctioneer and the recorder, as well as the buyer where a transaction is concluded.


10  Auction Settlement


10.1   Settlement by Buyer

After the conclusion of an auction transaction, the buyer conducts the matters of settlement with the auctioneer based on the sales confirmation and the receipt of bid deposit.


If the buyer appoints another party to pay, the agent shall provide the power of attorney of the buyer. The auctioneer shall check and reproduce a copy of the agent’s valid identity certificate for its own record.


10.2   Settlement by Consignor


10.2.1  Settlement Procedures

When the auctioneer receives payment from the bidder, the auctioneer shall settle with the consignor as mutually agreed. If the consignor authorizes another person to handle the matters of settlement, the agent shall provide the power of attorney of the consignor. The auctioneer shall check and reproduce a copy of the agent’s valid identity certificate for its own record.


The auctioneer shall be obliged to withhold and collect taxes in accordance with the relevant national tax stipulations.


10.2.2  Relevant Expenses  Insurance Expenses

Where the consignor has transferred the auction objects to the auctioneer, if the consignor requires insurance of the auction objects, then the auctioneer shall insure the auction objects, at the expense of the consignor.


Where the consignor has transferred the auction objects to the auctioneer, if the auctioneer requires insurance of the auction objects, then the consignor can arrange insurance in his own discretion, or the auctioneer can arrange such insurance on behalf and at the expense of the consignor.  Storage Charge

Where the consignor has transferred the auction objects to the auctioneer, if both parties agree not to insure the auction objects or if the auction objects are not insurable, then the auctioneer may collect reasonable storage charges from the consignor.


Where a consignor fails to collect the auction objects, which are not auctioned or concluded with transaction within the prescribed period, or a buyer fails to collect the auction object within the prescribed period, the auctioneer shall have the right to demand storage charges incurred thereby.


11  Auction File Management


11.1  Terms of File Maintenance

The auctioneer shall properly maintain the files and relevant materials. The term for maintaining such files and materials shall be no less than five years, commencing from the date of termination of the auction contract.


11.2  Scope of Files and Materials

The files and materials include:
  -  the auction contract, certificates and any other materials provided by the consignor certifying that the consignor has the title or the right of disposal to the auction objects, copies of certificates and licenses, and the relevant materials in respect of storage, insurance, handover, and other information, of the auction objects.
  -  announcements of auction, including press clippings, video and audio recordings from broadcast, which carry the announcement of auction.
  -  materials of the auction objects, including auction catalogue, various pictures, text information, and evaluation records related to the auction objects, and approval documents of relevant departments.
  -  video and text information of the preview and auction sale.
  -  documents of bidding registration, including bidding agreements, copies of bidders’ identity  certificates, the power of attorney for absentee bid, and copies of agents’ identity certificates.
  -  auction rules, instructions, and important statements etc..
  -  conclusion confirmation and auction minutes.
  -  a complete set of account books and any other relevant materials relating to auction business operations.


11.3  Management of Files and Materials

The auctioneer may choose the methods of file management in its own discretion. The methods include: archiving  based on each auction or archiving with categories based on the materials contained.


The materials of auction shall be true, accurate, complete, and allow for easy reference. Each file of auction shall be created with a catalogue and serial number.