On June 30, 2023, a bill to enact the Art Promotion Act (the "Bill") was passed by the plenary session of the National Assembly. The Ministry of Culture, Sports and Tourism (MCST) announced that the key objective of the Bill is to provide a separate legislation dedicated to supporting the fine arts ecosystem. Notably, among other things, the Bill introduces the Artist's Resale Right, the details of which are as follows.

1. Key details of the Artist's Resale Right

It is currently the case that after an artist sells an artwork, they have no legal entitlement to share in an increase in the artwork's economic value on resale, regardless of how famous the artist has become since the original sale. Only the owners of the artwork and their agents profit. The Artist's Resale Right introduced by the Bill gives artists the right to a part of the resale price whenever their artwork is resold by or to an art market professional.

More specifically, the artist will be entitled to a portion of the profits made by the seller when a person who is engaged in a "gallery business, artwork auction business, artwork consulting business or artwork rental/sales business" is involved in the resale of the artwork as a seller, purchaser, or agent (Article 24 of the Bill). This Article specifically relates to "artwork", and the Bill defines it as a "tangible/intangible creation produced by an artist through their artistic activities. The rate of compensation will be set by Presidential Decree after collecting opinions from the industry, including artists.

The Artist's Resale Right will not apply if (i) the resale price of the artwork is less than KRW 5 million; (ii) the artwork being resold was a "work made for hire" under Article 9 of the Copyright Act; or (iii) the resale price of the artwork is less than KRW 20 million and the seller resells the artwork within three years of acquiring the artwork directly from the artist.

The Artist's Resale Right will be recognized for 30 years following the artist's death. Further, the collection and distribution of the resale profits will be made through institutions dedicated to the promotion of the arts as designated by the Minister of the MCST, or non-profit organizations comprised of individuals entitled to the Artist's Resale Right. Such institutions or organizations will have the right to engage in judicial or extrajudicial acts concerning the Artist's Resale Right (Article 25 of the Bill).

2. Next steps for the Bill

As the Bill was recently approved by the plenary session of the National Assembly, it will be transferred to the Ministry of Government Legislation for promulgation. The Bill will become effective following a grace period set by the Addenda to the Bill. According to the current Bill, the provisions relating to the Artist's Resale Right will be implemented four years after the promulgation.

Because the Bill's broad definition of "artwork" may encompass digital forms of art as well as the traditional, it will be important to monitor its ultimate scope. Also, in light of the fact that the art promotion institutions designated by the Minister of the MCST or the non-profit organizations will be in charge of the collection and distribution of resale profits, it is expected that an industry-wide discussion will be held with respect to the Bill so we will continue to closely monitor the related discussions and keep you apprised. It would be advisable to conduct a thorough legal review of the issues when drafting/reviewing a contract involving artwork in order to prepare for and prevent any claims or disputes that could arise.