The law, which was passed in the 15th century, has been condemned as a 'thieves' charter' because it allows criminals to sell or 'fence' stolen antiques and art. Up to 20 markets, known as 'market overt' (open market) are affected by the legal loophole.
People who buy goods from a market overt between dawn and dusk acquire ownership or 'good title' to the items, even if they are stolen. The law has also been used by traders to avoid prosecution for handling stolen goods. The international trade in stolen art is one of the fastest growing crimes, worth billions of pounds a year.
Bermondsey antique and silver market, on Tower Bridge Road, South-east London, is the best- known market overt. The entire City of London area, which includes parts of Petticoat Lane market, is also protected. There are also at least three large antique open markets in the Midlands, one in East Anglia, one in the North East and one in the South East. The law does not cover Scotland or Wales.
A trader at Bermondsey said: 'Crooks know which stalls to go to if they want to get rid of stuff. Everyone knows about the overt system, but I don't think many punters have any idea.'
Another man, who has an antique stall, said: 'You would have to be a bloody idiot to sell stolen goods here, but there are some idiots about.'
The law is understood to have been introduced during the reign of Richard III and was designed to give protection to both the victims of theft as well as traders and buyers at certain legally constituted markets.
The victims are allowed to retrieve their goods by going to the market before dawn and searching through the stalls.
The law also safeguards the traders. Providing the trader bought the items in good faith, has a permanent stall, and sells other similar pieces of art or craft, they can claim market overt defence.
In addition if they are accused of selling stolen goods they can claim the items were bought from another dealer at the market and they are thus covered by the overt system.
Innocent buyers are protected from losing money by unknowingly purchasing stolen goods. Normally a buyer would have to return any stolen property to the original owner.
A spokesman for the New Scotland Yard Arts and Antiques Squad confirmed that criminals use market overts to sell stolen goods and that it can cause difficulty in obtaining prosecutions. He said: 'The law needs to be changed. It's impossible to keep track of how much stolen property goes through the markets.'
He added that one advantage of the system was that the police knew where to look for stolen goods. However, he said, only a small proportion of the stolen art trade went through the markets. Most of it was sold in the open market by dealers and in auctions.
The Council for the Prevention of Art Theft, an organisation set up earlier this year and including representatives of the art world, the police, insurance companies and the legal profession, has called for changes in the law. They are compiling a document, outlining changes needed, which they intend to send to the Home Office at the end of the year.
Dr Steven Parissien , the council's secretary, said: 'It's a ludicrous legal anomaly that has no part in modern day trading. It allows thieves to get away with fencing stolen goods - it's not a charming medieval law, it's a licence to handle stolen art.'
Philip Saunders, the council's co-chairman and managing director of Trace magazine, which specialises in writing about stolen art, said he knew people who had gone to the markets and had retrieved stolen jewellery, paintings and furniture, but that normally the only practical way of getting the goods back was to buy them.
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