Appeals court sides with Phillips in dispute with Chinese collector over Gerhard Richter fighter jet paint auction
The long-running legal row between Phillips auction house and Chinese collector Zhang Chang over Gerhard Richter’s 1963 fighter plane painting, Dusenjager, maybe finally finished. In a March 3 ruling, the New York State Supreme Court’s Appellate Division upheld that court’s July 2021 ruling, in which it dismissed Zhang’s claims that Phillips had violated the terms of his contract with the collector and had been unjustly enriched.
The appeals court’s rejection apparently marks the end of a torturous series of disputes and settlements — which includes Zhang actually winning the Richter painting at two different Phillips auctions — that began with the purchase by the collector of an entirely different painting from another auction house almost seven years ago. To understand how we got there, a reminder of this contentious epic of the art market is necessary.
In June 2015, Zhang bought Francis Bacon’s diptych painting Study for the head of Isabel Rawsthorne and George Dyer (1967) at a Christie’s sale in London for £12.1 million. In order to help him pay, he obtained loans from another Chinese, Lin San, but when Zhang failed to repay the funds, Lin agreed to lend him even more money, on the condition that ‘he (Lin) becomes the owner of the bacon. The diptych was later given to Gagosian to cover the sum Zhang owed Lin.
Moreover, Zhang had also purchased Richter’s Dusenjager in a November 2016 sale at Phillips in New York for $24 million ($25.5 with fees) through a collateral agreement with the auction house. While Phillips paid the $24 million owed to the shipper of the Richter (believed to be the heirs of late Microsoft co-founder Paul Allen), Zhang did not pay that sum at the house of auction, which sued for title to the Bacon diptych to help secure some of the funds owed to it by Zhang. Seeking to secure his claim to the Bacon and prevent Phillips from taking possession of it, Lin filed his own lawsuit in an effort to assert his ownership of the diptych.
In January 2018, Zhang, Lin, and Phillips reached an agreement. Lin relinquished all claim to the Bacon, and Phillips took possession of both it and Richter’s painting. Under the terms of the settlement, Zhang was given until July 2018 to pay Phillips his $26 million outstanding debt in order to take possession of Richter’s. Dusenjager.
But Zhang did not pay the $26 million on time, and in March 2019 Phillips brought Dusenjager back on the market at its Spring Evening Sale of Contemporary Art in London, this time with a much lower estimate of £10-15m (as opposed to 2016’s estimate of $25-35m ). After a bidding war, it was sold to a telephone bidder for a hammer price of £13.5 million (£15.5 million with costs). The buyer, later litigation revealed, was none other than Zhang.
The collector filed a lawsuit that was just upheld in an appeals court after paying Phillips his outstanding debts and taking possession of Richter and Bacon’s paintings. Zhang alleged that Phillips violated the terms of their agreement and unfairly enriched himself by demanding that he pay the buyer’s premium, approximately $2.6 million, which he was seeking to recover through litigation. In his decision following a controversial virtual hearing on February 9the Appeals Division upheld the court’s July 2021 ruling, finding that Phillips was “doing no more than exercise its right under prior agreements” by reselling the Richter.
Lawyers for Zhang and Phillips had not responded to requests for comment at press time. A spokesperson for the auction house said: ‘Phillips is pleased that the claims of the plaintiff have been found to be without merit and firmly dismissed by the court.