MUSEUMS, RESTITUTION AND THE NEW CHARITIES ACT.
| Author | Herman, Alexander |
The recently passed Charities Act 2022 has the potential to introduce new possibilities for charity trustees in England and Wales (including museum trustees) to make disposals of charity property, which would have an impact on the restitution of cultural objects from museum collections. The power to make 'ex gratia payments' already exists in section 106 of the Charities Act 2011, but the new legislation would expand this in two important ways. The first is by allowing trustees of institutions otherwise prevented by statute from disposing of property (e.g. national museums) to seek authorisation for such disposals when these are motivated by a moral obligation, with the approval of the Charity Commission, Courts or Attorney General. This change specifically overrides the 2005 High Court decision in Attorney General v. Trustees of the British Museum. The second change will allow trustees to make ex gratia disposals of low-valued trust property without the requirement for approval, the value of which is to be measured along a sliding scale based on the gross income of the charity. Both these new powers will enable institutions in England and Wales to act much more confidently in pursuing the restitution of objects in their collections when there is a strong moral case for doing so. With important matters involving the Benin Bronzes already being considered by the Charity Commission, the recent legislative changes have the potential of making a significant impact on restitution cases to come. In October 2022, the Government stated that before these provisions could come into force it must first seek to fully understand their implications for national museums and other charities.
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Charity law in England and Wales is set to change and this could have a significant impact on museums dealing with restitution claims for cultural objects in their collections. The majority of museums in England and Wales are established as charities, either as charitable trusts or (as in the case of most national museums) as charities established by statute. Charity law affects the duties and powers of the trustees of such museums, establishing benchmarks for making decisions, which must generally further the charity's purpose and be made in the best interests of the charity. (1) There exist rare recourses by which trustees can seek external approval (such as from the Charity Commission) for actions that might not further the charitable purpose or the charity's interests. Trustees of museums always need to pay special attention to changes in charity law as these can have an impact on their broader duties and the recourses available to them.
The Charities Act 2022 was passed this year, on the same day as the Russian invasion of Ukraine (24 February 2022) and so its passage, perhaps forgivably, went largely unnoticed by the press. The entry into force of the legislation was also not immediate, but will instead be staggered over the course of 2022 and 2023 according to its commencement provision. (2) The legislation does not represent a complete overhaul of charity law in the way the Charities Act 2011 repealed and replaced its predecessor, the Charities Act 1993. Instead, the new Act will make targeted changes to the Charities Act 2011, which will remain the primary legislation in this area. Some of the new changes include giving charities additional powers and flexibility in amending their governing documents, in deciding how to procure goods and services, and in borrowing from their permanent endowments in specific circumstances. (3) But the most important change in the context of art and antiquities--that is, the change that could have a significant impact for years to come on the museum sector--will be the expanded situations in which charity trustees can make ex gratia applications of charity property.
BACKGROUND
The traditional rules around 'ex gratia payments' derive from the 1970 case of Re Snowden. (4) That case involved two separate matters: in one, charitable legatees sought the approval of the Attorney General for payment of sums from an estate that had a much higher value than had been contemplated by the testator; in the other, administrators sought similar approval from the court for payment out of an estate to charity. In neither case had the payment been allowed by the relevant charitable instrument. Considering the matters together, Cross J. approved the authorisations, despite the fact that such payments were not expressly permitted under the terms of the trusts. Authorisation could be given, according to Cross J., for payment "motivated simply and solely by the belief' held by the trustees or administrators that the charity is "under a moral obligation to make the payment". (5) Referring to such payments directly as "ex gratia payments", he further cautioned that:
It is however a power which is not to be exercised lightly or on slender grounds but only in cases where it can fairly be said that if the charity were an individual it would be morally wrong of him to refuse to make the payment. (6) The case gave rise to what can be called the 'Snowden principle', whereby the Attorney General (or court) could authorise charity trustees to make ex gratia transfers of charity property where the act is motivated by a moral obligation. Since that case, the power to make ex gratia payments has been authorised by the Attorney General and the court on numerous occasions. (7) It would however apply in relatively limited circumstances, at times when the trustees felt a moral compulsion that would not allow them, ethically, to act otherwise. And, despite the specific reference to use of the term 'payment' in Snowden, it has been understood that such a power exists in regard to disposals of any trust property according to moral obligations, not only to monetary payment. (8)
In the Charities Act 1993, the Snowden power was extended by statute so as to be exercisable by the Charity Commissioners as well as the Attorney General and court. This was provided at section 27:
(1).... The [Charity] Commissioners may by order exercise the same power as is exercisable by the Attorney-General to authorise the charity trustees of a charity--
(a) to make any application of property of the charity, or
(b) to waive to any extent, on behalf of the charity, its entitlement to receive any property
in a case where the charity trustees--
(i) (apart from this section) have no power to do so, but
(ii) in all the circumstances regard themselves as being under a moral obligation to do so.
After the repeal of the 1993 Act, a similar provision appeared in the subsequent charity legislation, the Charities Act 2011, at section 106. There were several differences, one of which was that the then recently-formed Charity Commission, established in 2006, was the relevant body now being referenced: (9)
106 Power to authorise ex gratia payments etc.
(1) Subject to subsection (5) [the possibility of the Commission referring the matter to the Attorney General where it considers this desirable], the Commission may by order exercise the same power as is exercisable by the Attorney General to authorise the charity trustees of a charity to take any action falling within subsection (2)(a) or (b) in a case where the charity trustees--
(a) (apart from this section) have no power to take the action, but
(b) in all the circumstances regard themselves as being under a moral obligation to take it.
(2) The actions are--
(a) making any application of property of the charity, or
(b) waiving to any extent, on behalf of the charity, its entitlement to receive any property.
Since the power applies in section 106 to 'any application of property', authorisation may in principle be sought by charity trustees who wish to dispose of an artwork belonging to the charity where the trustees feel morally obliged to return it to a past owner, even if this did not further the objects of the charity. Most museums in England and Wales are charities, thus making this an available recourse for trustees when contemplating the deaccessioning of works from their collections in response to a morally- compelling claim for restitution.
This would not, however, be the case for national institutions. Although national institutions (such as the British Museum, the National Gallery and Tate) are charities run by trustees, they are considered 'exempt charities' under the terms of the Charities Act 2011, (10) which means compliance with their legal duties is not generally overseen by the Charity Commission but by the 'principal regulator', which for these institutions is today the Department for Digital, Culture, Media and Sport (DCMS). (11) This would not in itself prevent such institutions from seeking Snowden-type relief from the court or Attorney General, nor indeed from making an application to the Charity Commission under the legislation. (12) What prevents this is the fact that nearly all national institutions in the UK are governed by statute, and these statutes set out clear restrictions on trustees' powers to dispose of collection objects, usually providing only very narrow exceptions to these restrictions. (13)
Three examples of such statutes are the British Museum Act 1963, the National Heritage Act 1983 and the Museums and Galleries Act 1992. The first of these, the British Museum Act 1963, governs the British Museum and the Natural History Museum, providing a general restriction on disposal at section 3(4) for the Trustees of the British Museum (the same restriction applies to the Trustees of the Natural History Museum as well) (14). Faced with this restriction, the Trustees may avail themselves of the exceptions only in the following circumstances:
* If the object is a duplicate; (15)
* If the object is printed matter originating from after 1850 of which a copy is already held; (16)
* If the object is considered by the Trustees to be unfit for retaining in the collection and...
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