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The 1892 Gustave Caillebotte painting Iris bleus, jardin du Petit Gennevilliers.

Heffel Fine Art Auction House

Foreign art can be nationally important to Canada, the Federal Court of Appeal has ruled.

In a controversial case in which an auction house protested rules that blocked it from exporting a French painting, the court decided it was reasonable for experts to stop the work leaving Canada. Tuesday’s decision in Heffel Gallery Ltd. v. Attorney-General of Canada seems to re-establish a system used to evaluate art for both export permits and tax credits for donations, which had been overthrown by the Federal Court in a June, 2018, ruling.

The case turns around Iris Bleus, Jardin du Petit Gennevilliers, an 1892 painting by the French artist Gustave Caillebotte that Heffel sold at auction to a British art dealer in 2016. Experts retained by the Canadian Cultural Property Export Review Board (CCPERB) decided that the painting – a strong example of an increasingly appreciated artist who is unrepresented in Canadian collections – should not leave the country. CCPERB used the criteria provided by the law covering such exports, which allows the board to delay the departure of art considered of “outstanding significance and national importance,” but does not define what national importance means.

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This system gives Canadian museums both time and grant money to buy the art; if no public institution wants it, the board may eventually issue an export permit. It is also the same system used to judge whether art that is being donated to museums is important enough to qualify for special tax credits, a link that had made the case particularly thorny.

Heffel took the export delay to court and in his 2018 ruling, Judge Michael Mason agreed that the law wasn’t reasonable: How could a French painting with no special link to Canada be considered an important piece of Canadian cultural heritage?

The court of appeal has disagreed, saying CCPERB had correctly interpreted the export law. “The Federal Court thus erred in concluding that the Board’s interpretation was unreasonable on the basis that it was too broad,” Justice Richard Boivin wrote in his decision.

“We are disappointed by the decision and the lack of clarity it gives for how works are professionally assessed under the Cultural Property Export and Import Act,” Heffel Fine Art Auction House said in a statement on Tuesday. “In particular, the Board could continue to interpret the ‘national importance’ criterion very broadly such that almost any work can be considered to be of national importance.”

Meanwhile, Moira McCaffrey, executive director of the Canadian Art Museum Directors Organization, said she was pleased with the decision but still reading it. The case had disrupted the museum community because the same criteria of outstanding significance and national importance are used by CCPERB to assess whether donors get special tax credits for major gifts of art. A group of museums including the Montreal Museum of Fine Arts, the Art Gallery of Ontario, the Royal Ontario Museum, the Winnipeg Art Gallery and the Vancouver Art Gallery had joined the suit as intervenors, arguing that the Federal Court decision was hampering their ability to attract gifts.

Most of these institutions have little money to spend directly on acquisitions and rely mainly on donations, for which – if deemed of outstanding significance and national importance – donors are given a special tax credit. While some art works also come to the institutions through export blocks, the direct donations are far more significant in number.

In the February budget, the government moved to fix the museums’ problem simply by removing the words “national importance” from the law that covers donations. That fix would no longer seem to be necessary, but a spokesman for the Ministry of Canadian Heritage said the government is now reviewing the decision. “We welcome the Federal Court of Appeal’s decision," Simon Ross said. “It supports the interpretation advocated for by Canadian museums.”

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Critics on both sides of the issue have suggested that the export and donation systems might need to be separated.

“We are encouraged that the government has recently responded in the 2019 budget by separating donations from export, with regards to the national importance criteria, and is showing its willingness to improve and enhance legislation,” Heffel also said in its statement.

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