Update: Feb 2nd, 2016

A temporary agreement has been reached by the parties involved in a lawsuit over a Picasso bust estimated to be worth in excess of $100 million, reports the New York Times. The bust is currently on view in “Picasso Sculpture,” a retrospective of the artist’s three-dimensional output at the Museum of Modern Art, which is slated to close on February 7th. Under the terms of the new agreement, upon the show’s closure, the bust will go to the gallery of Larry Gagosian until the dispute between the dealer and a representative of the Qatari royal family is settled. Gagosian’s anonymous buyer was initially slated to take possession of the sculpture on February 7th, and the current suit’s defendant, Pelham Europe Ltd, had attempted to gain possession of it even before that date.

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Pablo Picasso’s Bust of a Woman (Marie-Thérèse) (1931), a work valued at over $100 million and currently on view at MoMA as part of a major survey of the artist’s sculpture, has found itself at the heart of a legal dispute between art market mega-dealer Larry Gagosian and a representative of Qatar’s royal family, Pelham Europe Ltd. (helmed by former Christie’s executive Guy Bennett).

Both parties claim that Picasso’s daughter, Maya Widmaier-Picasso, sold them the bust. And Gagosian filed an action for declaratory judgement in New York’s Southern District on Tuesday, asking the judge cement his claim and “quiet” any others. Here’s what’s behind the dispute and what it may mean for the art world going forward.

The Backstory

At issue is the validity of a November 2014 sale agreement between Maya Widmaier-Picasso and Connery, Pissarro, Seydoux (“CPS”). Now disbanded, CPS was acting as an intermediary for Pelham, who in turn was representing Sheik Jassim bin Abdulaziz al-Thani of the Qatari royal family. According to Gagosian’s complaint, the deal saw Widmaier-Picasso grant CPS a two-month period to sell the work, which the group then did to Pelham for €38 million (roughly $42 million). The sum is much lower than the nine-figure offers by interested buyers that Gagosian claims were proffered but never accepted when the piece was shown at the gallery in 2011 as part of “Picasso and Marie-Thérèse: L’Amour Fou.” Crucially, the deal between CPS and Pelham stipulated that title to Picasso’s work would only be transferred following full payment.

Gagosian’s complaint goes on to state that on April 10, 2015, after two of three installments (some $6 million) had been paid, Widmaier-Picasso canceled the agreement, acting on the advice of her daughter, noted art historian Diana Widmaier-Picasso, who is in the process of compiling a catalogue raisonne of the abstract artist’s sculpture. The elder Widmaier-Picasso allegedly returned what funds had been paid, all of which were accepted by CPS. In a letter dated May 11, 2015, the complaint states that group unilaterally cancelled the agreement, then passed the funds onto Pelham, who also accepted them.

Gagosian says he was unaware of the prior deal when, according to a May 12, 2015, invoice, he purchased the sculpture from Widmaier-Picasso for $106 million on behalf of an anonymous third party. The complaint goes on to say that title was assumed on October 2nd, after $79.7 million—75% of the work’s total $106 million dollar final price—was paid. Gagosian’s complaint argues he made the purchase in good faith. “We have the highest respect for Sheik al-Thani, a longtime friend of the Gallery, and regret that he has been unfairly drawn into this matter,” said Larry Gagosian in a statement provided to Artsy.

Parsing the Legalese

Gagosian’s lawsuit isn’t exactly peremptory, given that Pelham has previously launched court actions in Europe against Picasso’s daughter and in New York against the dealer. “These things can take years,” comments Leila Amineddoleh, a partner at Galluzzo & Amineddoleh LLP who deals in art and cultural heritage law. “However in his complaint, [Gagosian] asks the court to act with haste.” (On February 7th—the date when the MoMA exhibition ends—the work is supposed to join the collection of Gagosian’s unnamed buyer, who is reportedly based in New York.) According to the complaint, Pelham has threatened legal action to try to obtain the work even before then.

To support their claim, lawyers for Gagosian argue that the previous contract between Widmaier-Picasso and CPS was voided once the money that had been paid was returned and accepted. “That’s another subtlety the judge will look towards,” says Amineddoleh. “If you’re accepting the payment, you’re accepting the fact that the contract was rescinded.” Also at issue will be the letter sent by CPS voiding the contract. Additionally, the complaint states that title never passed because full payment was never made in accordance with the terms of the agreement.

In a statement provided to Artsy, a Gagosian Gallery representative writes: “We filed an action for declaratory judgment to quiet title because we bought and sold the sculpture in good faith without knowledge of the alleged claim. We are entirely confident that our purchase and sale are valid and that Pelham has no rights to the work.” (Pelham’s representatives in the New York matter, Patterson, Belknap, Webb & Tyler, did not respond to a request for comment by presstime.)

Not mentioned in Gagosian’s complaint but included in a November legal action by Pelham (which Gagosian lost, leading to an order to produce documents related to the sale and begin depositions by April) is the allegation that a lawyer for Widmaier-Picasso asked for the agreement to be invalidated on the grounds that her client “lacked the mental capacity” to enter into an agreement with CPS. Pelham was reportedly alleging that such a claim by the seller’s counsel was an example of the shifting, vague reasons provided for backing out of the contract.

Art Market Opacity 

“Saying that someone lacked mental capacity is a very strong claim to void a contract,” comments Amineddoleh. She notes, however, that in Gagosian’s current complaint “they focus on the other argument,” that because payment was never made in full by Pelham on behalf of the Qatari sheik and the return of the balance of funds was accepted, the initial contract was void.

The argument has the benefit of making the matter “a somewhat cut and dry contracts case,” says Amineddoleh. “The interesting aspect is that this being the art market, so many things aren’t publicly available.” Private sales such as those which were arranged between Widmaier-Picasso, Pelham, and the Qataris and between Widmaier-Picasso, Gagosian, and his anonymous buyer are among the most secretive of the already astoundingly opaque art market.

Such secrecy is generally to the benefit of those who wish to maintain a certain level of discretion when huge sums of money and prized artworks are changing hands. However, it can also impact those immediately involved in unforeseen ways. Potentially still behind closed doors could be details of the circa-$100 million offers Gagosian, in the initial filing, claims were made for the work in 2011, as well as evidence of due diligence measures that might serve as additional support to Gagosian’s claim that he was unaware of the previous purchase agreement. “In high-stakes cases,” such as this one, says Amineddoleh, one would expect contractual assurances “about having good title to a work and that there aren’t any clouds on the title.”

Whether such evidence will be uncovered through the course of the current court proceedings remains to be seen. (It may well be unnecessary, if the presiding judge sides with Gagosian’s lawyers that Pelham’s contract was indeed voided by CSP’s acceptance of Widmaier-Picasso’s returned funds.) However, the case “will give other people a reason to take pause when they’re entering into transactions,” says Amineddoleh.