Hyperallergic has the story.
Sergio Muñoz Sarmiento says: "If this was in a New York court, and under the current Second Circuit ruling of Cariou v. Prince, we highly doubt that Tuymans’ appropriation would constitute fair use."
I would rephrase that slightly as: "If this was in a New York court, and under the current Second Circuit ruling of Cariou v. Prince, we would have no idea whatsoever whether Tuymans’ appropriation would constitute fair use."
UPDATE: Adrian Searle makes the case for Tuymans.
UPDATE 2: More reactions trickling in. LA Times art critic Christopher Knight says: "Is making a painting of someone else's photograph plagiarism? Uh, no." Richard Prince (yes, that Richard Prince) says instead of claiming "parody," "Tuymans just should of said, 'it's what I wanted to do.'" And Lewis Bush at Hyperallergic: "Luc Tuymans Case Illustrates the Failure of Europe’s Copyright Laws."