Court of Appeal represents Phillips in dispute with Chinese collector over auction of Gerhard Richter’s fighter jet painting

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The long-running legal battle between auction house Phillips and Chinese collector Zhang Chang over Gerhard Richter’s 1963 painting of a fighter jet, jet fighter, may finally be over. In a March 3 decision, the Appellate Division of the New York State Supreme Court upheld that court’s July 2021 decision dismissing Zhang’s claims that Phillips violated the terms of his contract with the collector and engaged in unjust enrichment.

The appeals court’s dismissal seemingly marks the end of a twisted series of disputes and settlements — which includes Zhang, who effectively won the Richter painting at two different Phillips auctions — that began with the collector nearly seven years ago selling an outright other painting pre-purchased from another auction house. To understand how we got here, a summary of this epic art market litigation is in order.

In June 2015, Zhang bought Francis Bacon’s diptych painting Study for the Head by Isabel Rawsthorne and George Dyer (1967) at Christie’s in London for £12.1 million. To pay for it, he secured loans from another Chinese person, Lin San, but when Zhang was unable to repay the funds, Lin agreed to lend him more money on the condition that he (Lin) become the owner of the fat. The diptych was then given to Gagosian to cover the sum owed by Zhang Lin.

Separately, Zhang had also bought Richter’s jet fighter at an auction in November 2016 at Phillips in New York for $24 million ($25.5 including fees) under a guarantee agreement with the auction house. While Phillips paid the $24 million to Richter’s shipper (believed to be the heirs of the late Microsoft co-founder Paul Allen), Zhang did not pay that sum to the auction house, which was filing a lawsuit claiming the Bacon diptych would help to secure some of the funds Zhang owed him. To secure his claim to the bacon and prevent Phillips from taking possession of it, Lin filed his own lawsuit to confirm his possession of the diptych.

In January 2018, Zhang, Lin and Phillips reached an agreement. Lin renounced any claim to the bacon, and Phillips took possession of both it and the Judge painting. Under the terms of the settlement, Zhang was given until July 2018 to pay off Phillips’ $26 million outstanding debt to take ownership of Richter’s jet fighter.

But Zhang failed to pay the $26 million on time, and in March 2019 Phillips brought it jet fighter re-listed at his Spring Evening Contemporary Art sale in London, this time with a much lower estimate of £10-15 million (versus its 2016 estimate of US$25-35 million). After a bidding war it was sold to a telephone bidder for a hammer price of £13.5m (£15.5m including fees). The buyer, as later litigation revealed, was none other than Zhang.

The collector filed the lawsuit, the dismissal of which was just upheld in the Court of Appeal after paying Phillips his outstanding debt and taking possession of the Richter and Bacon paintings. Zhang alleged that Phillips violated the terms of their agreement and unjustly enriched himself by demanding that he pay the buyer’s premium of around $2.6 million, which he sought to recover through litigation. In its decision after a contentious virtual hearing on February 9thThe Appellate Division upheld the court’s July 2021 ruling, noting that Phillips “did no more than exercise his right under previous agreements” by reselling the judge.

Zhang and Phillips’ attorneys had not responded to requests for comment as of press time. A spokesman for the auction house said: “Phillips is pleased that the plaintiff’s claims have been found to be without merit and the court has ruled to dismiss them.”

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