Editor's Note:Ryan is Assistant Professor at Thompson Rivers University, he defended his PhD at Erasmus University Rotterdam in December 2015. His dissertation examined human rights violations caused by international sporting events, and how international sporting organisations may be held accountable for these violations. 

“Serious sport…is war minus the shooting.”– George Orwell

In May 2016, the Union of European Football Associations (UEFA) admitted the Football Federation of Kosovo (Kosovo) as a member. The voting was close, with 28 member federations in favour, 24 opposed, and 2 whose votes were declared invalid. The practical outcome of this decision is that Kosovo would be able participate in the UEFA Euro championship, and that Kosovo teams could qualify for the UEFA Champions’ League or Europa League.

A few days later, Kosovo, along with Gibraltar, were admitted into the Fédération Internationale de Football (FIFA) as members. This marked the increasing recognition of Kosovo as an independent entity for sporting purposes, with Kosovo’s National Olympic Committee receiving recognition from the International Olympic Committee (IOC) in December 2014.

The admission of Kosovo as an independent competitor in the sporting world has touched off controversy, particularly in Serbia. Kosovo has attempted to assert its independence from Serbia for more than two decades, with a formal declaration of independence in 2008 – a declaration that was referred to the International Court of Justice who found that the declaration was not a violation of international law (I.C.J. Reports 2010, p. 403). The Football Federation of Serbia (Serbia) sought review of UEFA’s decision, and took its case to the Court of Arbitration for Sport (CAS). CAS upheld UEFA’s decision in January 2017 (CAS 2016/A/4602).

The CAS Decision

Serbia’s argument to the CAS was that UEFA violated its own regulations by admitting Kosovo as a member. Other grounds, namely procedural grounds, and an alleged violation of Serbia’s freedom of association rights, were raised. However, the CAS denied Serbia relief on those grounds, and I’ll leave a discussion of those aside in order to get to the decision on the substance of UEFA’s regulations.

The main point of contention in the complaint was the interpretation of the UEFA Statutes Art. 5(1), which deals with the admission of new members:

Membership of UEFA is open to national football associations situated in the continent of Europe, based in a country which is recognised by the United Nations as an independent state, and which are responsible for the organisation and implementation of football-related matters in the territory of their country.

The CAS panel found this provision to be ambiguous based on the reality that the United Nations does not recognise states. Instead, an entity must be a state to become a member of the United Nations (UN Charter, Art. 4(1)). Since the part of the provision at issue, whether or not Kosovo could be admitted since it was not “recognised by the United Nations as an independent state”, was void, how was the provision to be interpreted?

The CAS turned to four principles of statutory interpretation, based on the Swiss Civil Code: the genesis of the law, a systematic interpretation, common practice and understanding, and the ratio (purpose) of the provision. The CAS found the first three principles to be unhelpful, as these principles ultimately uncovered elements that only led to the ambiguity in the first place.

The CAS finally turned to the ratio of the provision. It found that the purpose of the provision was to have one football federation per country, and to limit secessions of football federations only to instances where the secession was supported in a broader political sense. The CAS stated that: “the attempt to mirror the solutions and realities of the political map onto the sporting world makes a lot of sense” (para. 123). The panel also noted that the Olympic Charter and FIFA Statutes defined a “country” as “an independent state recognised by the international community”, and pointed out that Kosovo’s sports bodies had been recognised by the IOC and other international sporting federations under this definition. As a result, the CAS found that the definition of “country” had a common understanding in the sporting community, and it was one that did not require UN membership.

The Gibraltar Decision

Both UEFA’s decision, and the CAS case, have their roots in the late 1990s, but in regards to a territory on the other side of Europe – Gibraltar. Gibraltar is not an independent state, but is a territory of the United Kingdom. It is also a source of diplomatic conflict between the United Kingdom, and Gibraltar’s neighbour – Spain. Gibraltar applied for UEFA membership in 1997. Having had its own football association since 1895, and with the UEFA requirements then only requiring that a UEFA member have its own football association that oversees football in the territory, Gibraltar’s application looked to be a lock. Indeed, the application was initially positively received by UEFA, and looked to be a done deal by the year 2000.

However, UEFA repeatedly delayed making a final determination, in part because of Spanish opposition to Gibraltar’s membership (the English Football Association, for its part, was supportive of Gibraltar). After more than two years, UEFA still had not made a determination on Gibraltar’s membership. Yet, they had received, processed, and approved an application by Kazakhstan to join UEFA after it had left the Asian Football Confederation in 2001. UEFA remained pretty busy during this time, as they changed their rules regarding the admission of new members to UEFA. The new change was the language that was at issue in the Kosovo case – that a new member be recognised as an independent state by the United Nations.

The case was brought before the CAS (2002/O/410), where Gibraltar sought a declaration that its application be considered under the pre-2001 rules that it had initially applied under, and that its application be accepted by UEFA. The CAS agreed with Gibraltar that UEFA could not change its rules mid-stream, finding that upholding such a change would violate a presumption against retrospectivity in regards to substantive laws, and principles of good faith. The CAS ordered UEFA to decide on Gibraltar’s membership based on the pre-2001 rules. After two more arbitrations heard by the CAS in 2006 and 2013, Gibraltar was admitted as a UEFA member in 2013. Gibraltar’s status as a FIFA member was similarly accomplished through CAS decisions.

Sport as a Playground for International Law

With all apologies to this blog’s Editor-in-Chief Antoine Duval, sport is not just a playground for transnational law, but also for international law. Scholars of international relations and international law are frequently surprised with the complexity and the depth of sports’ legal system. But perhaps more surprising is the consistent surprise that sports is more than simply “low politics”, and something that can be safely ignored in light of other areas such as military force, international trade, and the like.

I suggest that a case such as Kosovo’s quest for recognition by sporting bodies does matter for international law and international relations more generally. On the merits, these cases are administrative law exercises, whereby the CAS is merely ensuring that UEFA has complied with its own procedures, and the Kosovo case is a statutory interpretation exercise. However, I think that these cases – particularly the Kosovo case, should help shape our understanding of establishing a state.

There is a debate in international law over when a political entity becomes a “state” – with the attendant rights and obligations. The “constitutive” theory argues that an entity can only become a state when other states recognize it. The “declaratory” theory argues that so long as certain “facts on the ground” are established (usually the Montevideo Convention requirements of territory, population, government, and the capacity to enter into foreign relations), recognition is merely a declaration of what is already the case.

Kosovo is in the midst of attempting to establish its statehood. Currently, 110 UN member states recognise Kosovo. However, Serbia, Russia, and China, amongst others, do not. In establishing its statehood, Kosovo is unlikely to obtain UN membership anytime soon, with two of the permanent members of the Security Council likely to veto any attempt by Kosovo to join.

However, Kosovo appears to be taking a page from the playbook of states that went through de-colonization – not only obtain a seat at the UN, but obtain recognition from the IOC (and other sporting bodies). Next to having a seat at the UN, participation in the Olympic Games is one of the most visible signifiers of statehood. What could a more powerful signal of independence than having one’s athletes march in the opening ceremonies of an Olympic Games, waving the state’s flag, and having its anthem play upon winning a gold medal in front of thousands of people live and billions of people watching from home?

Source: http://www.nbcolympics.com/news/judo-day-2-preview-majlinda-kelmendi-eyes-olympic-history.

If you are skeptical that states care about who participates in international sporting events, Taiwan remains a prime example. Taiwan does not compete as “Taiwan”, or as the “Republic of China” along with its national flag – but instead its athletes compete under “Chinese Taipei”, using a different flag with the Olympic Rings on it. This was as a result of a deal brokered by the IOC and the People’s Republic of China in 1979 to get the People’s Republic of China to participate in the Olympic Games – a deal eventually accepted by Taiwan in 1981.

What cases like Chinese Taipei and Kosovo suggest is that although recognition is important in establishing statehood, it may not be limited to state recognition. While states may be the only organisations that have international legal personality, there are cracks forming in that monolithic conceptualization of international law. It is clear that sporting organizations such as the IOC, FIFA, and UEFA do not have international legal personality. However, they act as global administrative bodies, responsible for the organization of much of global sport. As such, these bodies have the reach and arguably, influence of the UN bodies – creatures of states that have international legal personality.

A real concern over constructing statehood through, inter alia sporting competition is that it may create a “slippery slope”. After all, if Gibraltar – certainly not a state – and Kosovo – questionably a state – can join UEFA, FIFA, or have a National Olympic Committee recognized, what is to stop other entities from doing the same? “Alternative” competitions involving entities that are not recognized as states, such Northern Cyprus, or ethnic groups such as the Sami of Scandinavia or the Romani of Europe, have taken place. Could one of these entities apply to join the international sporting community? The line-drawing by international sporting organisations has thus far proven to be problematic. However, this is a question perhaps best left for future research.

So, in the end, does the UEFA admission and CAS decision make Kosovo a state? Legally-speaking, probably not. Becoming a state entails not only rights at international law, but also obligations. It seems perhaps a stretch to say that a decision by a private arbitral body that oversees a specialized area would be determinative of a highly-contentious issue. However, one step below that is the political question of whether recognition by these sporting bodies helps Kosovo’s claims to statehood. I think the answer is as follows: If you ask the “man on the street” whether Kosovo was a state as Majlinda Kelmendi (the flag-bearer in the photo above) stood on the podium after winning a gold medal in judo at the 2016 Summer Games, or while that man watches the Kosovo team participate in the UEFA Euro and FIFA World Cups – that answer is more and more likely to be “yes”.

In a recent judgment, the Brussels Court of First Instance confirmed the legality of a so-called surety undertaking, i.e. an agreement in which the parents of a minor playing football guarantee that their child will sign a professional contract with a football club as soon as the child reaches the legal age of majority.

This long-awaited ruling was hailed, on the one hand, by clubs as a much needed and eagerly anticipated confirmation of a long-standing practice in Belgian football[1] and, on the other hand, criticised by FIFPro, the international player’s trade union, in a scathing press release.

Background

Jason Eyenga-Lokilo (“Jason Lokilo”), born on 17 September 1998, joined the youth academy at Belgian top club, RSC Anderlecht (“Anderlecht”), in the spring of 2007. Anderlecht had set up a specific youth academy a couple of months earlier, which combined school education and football training for young football players.

As Jason Lokilo was one of the youth academy’s more promising prospects, Anderlecht and Lokilo’s parents entered into an agreement in which the parents, in exchange for a payment of 75,000 EUR (paid in instalments), guaranteed Anderlecht that their son was going to sign his first professional contract with the club upon turning 16, i.e. the minimum age in Belgium for signing a player contract. This same agreement stipulated that the parents were liable to pay Anderlecht a lump sum of 450,000 EUR in damages, if their son did not sign such a player contract.

When, in 2013, Aston Villa made a request to Anderlecht to give Jason Lokilo a trial when he was 15 years of age, Anderlecht refused, citing the player’s training obligations and the existing surety undertaking. Jason Lokilo’s father, a football agent, then told Anderlecht that he wanted to revise the terms of the surety undertaking, given the fact that a number of European football ‘powerhouses’ wanted to sign his son. Anderlecht refused his demand.

In June 2014, Jason Lokilo and his parents sent a letter to Anderlecht arguing that the surety undertaking was unlawful and hence null and void. Jason Lokilo alleged that unacceptable coercion had been put on him to sign his first contract with Anderlecht, which the player and his advisers considered was contrary to public policy. Anderlecht replied that it considered the surety undertaking to be perfectly valid since the surety did not prevent the player from signing his first professional contract with another club.

By the end of July of 2014, the gridlock between both parties ended with Jason Lokilo leaving Anderlecht and the latter club starting court proceedings against Jason Lokilo’s parents for a damages claim of 450,000 EUR.

Jason Lokilo eventually signed a contract with Crystal Palace in the summer of 2015.[2]

The Brussels Court of First Instance ruling

In its 22 November 2016 judgment, the Brussels Court of First Instance (“CFI”) confirmed the principle of this surety undertaking in the context of professional football.

The CFI referred to Article 1120 of the Belgian Civil Code that expressly allows the principle of a surety undertaking. A surety undertaking under Belgian civil law can be defined as an agreement in which one party promises another party regarding what a third party (who is either absent or legally not competent) will do, give or refrain from doing. The third party retains the freedom not to commit himself, since he, as a third party, is not bound by the agreement. However, the contracting party that made the promise will in that case be liable to pay the contractually foreseen damages if this third party eventually does not commit himself.

The main question the court had to decide was to determine whether the surety undertaking had a valid object and cause.

Jason Lokilo’s parents first argued that the contract was contrary to public policy legislation, considering the contract violated the freedom of association principle enshrined in the Convention on the Rights of the Child (“UNCRC”), the European Convention on Human Rights (“ECHR”) and the European Social Charter (“ESC”). The CFI did not follow this reasoning, simply stating that the surety undertaking did not bind Jason Lokilo and did not prevent him from signing a contract with another club.[3]

Lokilo’s parents also invoked an alleged violation of Belgian federal legislation, which prohibits player contracts below the minimum age requirement. This argument was cast aside by the court since at no point in time was a player contract signed below the legal minimum age of 16.

Furthermore, Lokilo’s parents argued that the contract breached a (regional) decree guaranteeing an amateur sportsperson the right to leave their club free-of-charge at the end of each sporting season. The CFI repeated that Lokilo was not bound by the surety undertaking and could still freely leave Anderlecht, stating that this outcome was, moreover, exactly what Lokilo did in 2014. An aggravating circumstance for the CFI was the fact that Lokilo’s father had indicated to Anderlecht that Aston Villa in 2013 was willing to cover the 450,000 EUR in damages, as a result of which the CFI considered these damages were ‘clearly not an obstacle for Jason Lokilo to leave Anderlecht’.

The argument invoked by Lokilo’s parents under EU law (free movement) was also dismissed by the CFI ‘for lack of a cross-border EU element’[4].

In the end, the CFI granted damages to Anderlecht but limited the amount payable by the parents, on the one hand, based on the grounds that Jason Lokilo’s mother was not an agent (and hence not professionally active in football) and, on the other hand, because 450,000 clearly exceeded the actual damages suffered by Anderlecht. The CFI set the damages ex aequo et bono at 140,000 EUR instead.

Some considerations

The Lokilo case echoes the Spanish Baena case,[5] although the latter concerned a slightly different situation and had a clearly different outcome.

Where the Spanish Supreme Court in its 5 February 2013 ruling considered a pre-contractual agreement concluded on behalf of a minor football player at odds with the minor’s best interests and therefore contrary to public policy, the CFI adopted a rather strict ‘pacta sunt servanda’ approach.

The CFI considered that the surety undertaking did not prevent Lokilo from signing a contract with a club other than Anderlecht. This finding may be correct from a strictly legal perspective, but ignores the reality that a child may not want to pursue his or her career at another club if he realises that, by doing so, his or her parents will be liable to pay damages. Moreover, under Belgian law, while a minor is indeed of legal age to sign his or her first professional contract when turning 16, the minor in principle still needs parental authorisation to do so until reaching 18 years of age. Parents might of course not be very inclined to agree to their child signing his or her first professional contract elsewhere, and therefore not provide the necessary parental authorisation, if doing so triggers important financial liabilities for them…

The surety undertaking seems also incompatible with regional decrees guaranteeing amateur sportsmen the right to leave their club free-of-charge at the end of each sporting season. These decrees are considered to have a public policy character by the case law, and disallow any hindrance, financial or otherwise, when moving to another sports club.[6] The fact that the surety undertaking related to a switch from an amateur to a professional contract,[7] did not alter the fact that the player was not free to leave for another amateur club when turning 16 either, since he was forced to sign a professional contract with Anderlecht when turning 16 or see his parents face the prospect of paying hefty compensation.

Arguments regarding the fundamental rights of the minor were either not invoked or not upheld by the CFI. The CFI stated that the matter concerned a contract between the parents and the club and not between the player and the club, as a result of which the minor’s fundamental rights were not jeopardised.

This argument is frankly unconvincing.

It should be noted that the UNCRC[8] recognises the right of a child to freedom of association[9] and the right to participate freely in cultural life.[10] The UNCRC furthermore protects children from economic exploitation.[11] The UNCRC provides also that “in all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration.”

The UNCRC is often labeled as ‘soft’ law,[12] with Belgian case law even considering most of its provisions lacking a self-sufficient or self-executing character;[13] yet, the UNCRC remains a treaty with clear moral authority. Moreover, a number of its provisions do have direct effect, especially when read in combination with other international legal sources, such as the ECHR and the EU Charter of Fundamental Rights. The obligation to consider the best interests of the child is expressly incorporated in the EU Charter of Fundamental Rights.[14] Even though the obligation to observe the child’s best interests is not expressly laid down under the ECHR, the ECtHR incorporates this obligation also in its case law.[15] One could further argue that the surety undertaking disproportionally affects the career development and perspectives of a player who is a minor, and so violates that player’s proprietary rights[16] and the right to family life that both the player and the player’s family enjoy.[17]

In addition, both the Belgian Constitution[18] and the Belgian Economic Code[19] protect the freedom for each individual to freely choose his or her occupation. This freedom can only be curtailed through or by law.[20] An agreement jeopardising one’s freedom to freely choose one’s occupation, has an unlawful causa and is null and void.[21]

The statement made by the CFI that the EU internal market law does not apply due to a lack of cross-border effect is at odds with the fact that Lokilo clearly intended to join a club outside Belgium, within the EEA (as shown by Aston Villa’s interest and his eventual signing with Crystal Palace), a fact that was not contested by Anderlecht. As Anderlecht is a Belgian football ‘powerhouse’, and clearly one of the top clubs in Belgium (if not the top club), a player aiming higher than Anderlecht would necessarily have to look at opportunities abroad.

If EU law is deemed to apply, then the guiding principles of the Bernard case must be observed. The CJEU, in its Bernard ruling,[22] recalled that an obstacle to the freedom of movement of workers can be accepted only if it pursues a legitimate aim and is justified by overriding reasons in the public interest. The CJEU clearly accepted recruitment and training of players as a legitimate aim. Even where that is so, that measure’s application still must be such as to ensure the objective’s achievement and not go beyond what is necessary for that purpose. In considering whether a system restricts the freedom of movement, the specific characteristics of sport, and of football in particular, their social and educational function, should be taken into account. One may even take into account the costs of training other players that do not succeed at establishing a professional career (the player factor).[23]

This being said, the surety undertaking mechanism in this case seems overly restrictive for the player. Although, again, a surety undertaking binds the parents and not the player, and damages can only be claimed from the parents, the surety undertaking obviously ultimately serves to discourage a player from exercising his or her right of free movement. Moreover, the player already suffers a restriction upon his or her free movement, following the training compensation mechanism in place under FIFA regulations, which is criticisable in its own right.[24] The surety undertaking constitutes an additional burden on the player’s free movement. In Bernard, although the CJEU seemed to accept the principle of training compensation, the CJEU dismissed the French arrangements governing young players (‘joueurs espoirs’) since they did not involve compensation for real training costs incurred, but rather were damages for breach of contractual obligations calculated with reference to the total loss suffered by the club. And taking into account the actual loss suffered by Anderlecht is exactly what the CFI has done. To the extent a surety undertaking goes beyond what is necessary to encourage the recruitment and training of minors (and funds those activities), a violation of the EU internal market law seems given.

Conclusion

In conclusion, based on the considerations set out above, it can certainly not be excluded that the ruling will be overturned on appeal. Such an appeal, which would bring the case before the Brussels Court of Appeal, is being considered by the player’s parents, but has not yet been lodged.

Apart from the doubt around their enforceability, it should be noted that payments under surety undertakings may in addition give rise to (social) tax issues, if they are not structured correctly.[25][26]

The problem with the surety undertaking in the Lokilo case predominantly lies with the surety undertaking’s disproportionate character in the specific case at hand. Less restrictive solutions could, in the author’s view, be envisaged, although exploring such alternatives would exceed the scope of this article.

[1] Surety undertakings, together with money lending contracts (loan to parents pledging that their child will sign first professional contract, non-reimbursable if child effectively signs contract), are common practice with Belgian top level teams.

[2] Jason Lokilo is still a member of the Crystal Palace Academy. Crystal Palace offered Anderlecht compensation for an approximate amount of 45,000 EUR, which Anderlecht refused.

[3]“(…), la convention de porte-fort litigieuse n’engageait que les parents de Jason vis-à-vis du club et ne créait aucune obligation pour lui”

[4]“Or, contrairement à l’arrêt Bernard qu’ils invoquent (arrêt du 16 mars 2010 – pièce 3 de leur dossier), M. et Mme Lokilo ne démontrent pas, dans le cas present, l’existence d’un élément d’extranéité.”

[5] Sentencia de 5 de febrero de 2013. STS 229/2013. Tribunal Supremo. Sala de lo Civil. http://www.iurismuga.org/es/bases-de-datos/jurisprudencia/144-jurisprudencia-derecho-espanol/8153-sts-n-de-resolucion-26-2013-de-05-02-2013-sentencia-baena. The case was invoked by the parents before the CFI but considered irrelevant because, according to the CFI, the contract between Baena and Barcelona was entered into by (on behalf of) the minor player.

[6] Vred. Ghent 16 September 2013, role n° 130318.

[7] The relevant decrees apply to amateur sports, not professional sports.

[8] http://www.ohchr.org/EN/ProfessionalInterest/Pages/CRC.aspx

[9] Article 15 UNCRC

[10] Article 31 UNCRC

[11] Article 32 and 36 UNCRC. One may argue that, in the end, a child is used to generate money through (later) transfers and sponsorship deals.

[12] H. Stalford, Children and the European Union: Rights, Welfare and Accountability, Hart Publishing, [2012], 34.

[13] Belgian case law has been reluctant to grant direct effect to the UNCRC: cf. Cass. 11 June 2010, obs. S. Van Drooghenbroeck,Le droit international et européen des droits de l’homme devant le juge national, Larcier, [2014], 196 and following.

[14] Article 24 (2) of the EU Charter of Fundamental Rights

[15]Handbook on European law relating to the rights of the child, European Union Agency for Fundamental Rights, 75.

[16] Article 1 of ECHR First Protocol: “Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. (…)”.

[17] Article 8 ECHR

[18] Article 23 Constitution

[19] Article II.9 of the Economic Code. This is one of the oldest Belgian public policy principles, previously laid down in the famous Decree D'Allarde of 2 - 17 March 1791

[20] C.E. 12 July 1993, JLMB [1993], 1442, note J.F. NEURAY

[21] Cass. 29 September 2008, C.06.443.F, JTT [2008] 464.

[22] CJEU 16 March 2010, Olympique Lyonnais v Olivier Bernard and Newcastle United.

[23] i.e. the ratio of players who need to be trained to produce one professional player.

[24] S. Weatherill, European Sports Law, T.M.C. Asser Press [2014], 485 and following.

[25] The tax and social security authorities may e.g. argue that these payments relate to the (future) employment contract of the player.

[26] The surety undertaking’s ‘nephew’, the money lending contracts, in addition pose problems under Belgian finance law since clubs as a rule do not possess the necessary licences or authorisations.

 Editor's note: This report compiles all relevant news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. You are invited to complete this survey via the comments section below, feel free to add links to important cases, documents and articles we might have overlooked.

The Headlines

The CAS award in Joseph S. Blatter v. FIFA

In the first half of March, the CAS published its long-awaited award in the arbitration procedure between FIFA’s former President Mr Joseph S. Blatter and FIFA itself. The Panel dismissed the appeal filed by Mr Blatter against the decision rendered by the FIFA Appeal Committee on 16 February 2016. As a result, Mr Blatter remains banned from taking part in any football-related activity at national and international level for six years as of 8 October 2015.

The dispute in question concerned (i) a payment of CHF 2,000,000 made by FIFA to Mr Michel Platini in early 2011 allegedly remunerating work performed by Mr Platini for FIFA between January 1999 and June 2002; and (ii) Mr Blatter’s alleged authorization which entitled Mr Platini to receive credit towards his FIFA ExCo pension fund for his service to FIFA from 1998 to 2002. With regard to the former, the Panel held that assuming there actually had been an oral agreement between Mr Blatter and Mr Platini dating back to 1998, such an agreement would nevertheless have been superseded by the written employment contract signed in August 1999 (according to that contract, Mr Platini were to be remunerated ‘only’ CHF 300,000 a year). Consequently, the Panel concluded that there was no contractual basis for the payment of CHF 2,000,000 in favour of Mr Platini. In respect of the second point of contention, namely the contribution towards Mr Platini’s FIFA ExCo pension fund, the Panel held that Mr Platini was simply not entitled to receive such a contribution for his service to FIFA from 1998 to 2002, as he became a member of the FIFA Executive Committee only in 2002.

The CAS award in Seraing FC v. FIFA 

The dispute between the Belgian football club Seraing FC and FIFA has its roots in the decision rendered by the FIFA Disciplinary Committee in September 2015. In this decision, the FIFA Disciplinary Committee imposed a transfer ban (four consecutive registration periods) and a fine of CHF 150,000 on Seraing FC for violating Articles 18bis and 18ter of the Regulations on the Status and Transfer of Players which prohibit the third-party influence on clubs and the third-party ownership of players’ economic rights (TPO) respectively. The Belgian club challenged the said decision (as confirmed by the FIFA Appeal Committee) before the CAS.

In its press release dated 10 March 2017, FIFA expressed its content with the award delivered by the CAS. According to FIFA, ‘the CAS has recognized and confirmed the validity of FIFA’s ban on TPO, which was adopted in order to preserve the independence of clubs and players in matters of recruitment and transfer, and to ensure the integrity of matches and competitions’. The CAS has not yet published the award, nor has it issued any statement in this regard.

WADA calls upon athletes and other persons to ‘Speak Up!’ 

On 9 March 2017, WADA launched a new digital platform called ‘Speak Up!’, which seeks to encourage athletes and others to come forward and report (i) alleged Anti-Doping Rule Violations under the World Anti-Doping Code (Code); (ii) non-compliance violations under the Code; or (iii) any act or omission that could undermine the fight against doping in sport. On this occasion, WADA’s Director General, Mr Olivier Niggli, stated that ‘WADA’s independent Pound and McLaren Investigations, which were both triggered by whistleblowers, highlighted the importance of these individuals to the Agency and to clean sport on the whole’. The platform is accessible via a secure app for iPhone and Android phones.

Sports Law Related Decisions

• CAS – Award delivered in the arbitration between Mr Alex Schwazer and IAAF
• CAS –Award delivered in the arbitration between Mr Arijan Ademi and UEFA
• CAS – Award delivered in the arbitration between Mr Joseph S. Blatter and FIFA
• Sport Resolutions (UK) –Award delivered in the arbitration between Aljaž Bedene, The Lawn Tennis Association Limited (applicants) and ITF (respondent)

Official Documents and Press Releases

• CAS – CAS registers two appeals filed by the Bolivia Football Federation
• CAS –Dr Sergei Portugalov sanctioned with lifetime ban
• CAS –FIS refers the case of Therese Johaug to the CAS
• CAS –Harold Mayne-Nicholls files an appeal at the CAS
• CAS –Settlement agreement in the case of FK Partizan v. UEFA
• FIFA –Circular on ‘Limited minor exception’
• FIFA –FIFA completes internal investigation, shares findings with authorities
• FIFA – FIFA rejects appeal of Sevilla FC against sanctions under third-party influence rules
• FIFA –FIFA suspends Malian Footbal Association
• FIFA –FIFA welcomes CAS award recognising compatibility of TPO ban with EU law
• FIFA –Human Rights Advisory Board meet in Zurich
• FIFA –Informative note on the eligibility checks
• FIFA –Match official banned for life due to match manipulation
• FIFPro –Football player sanctions: Legal opinion
• IOC – Declaration of the IOC Executive Board
• IOC –IOC launches bold initiative on gender equality
• UEFA –Zero tolerance for match-fixing
• WADA – The athlete voice, compliance and whistleblowing take centre stage at WADA Annual Symposium
• WADA –WADA encouraged by signs of progress within Russia after President Vladimir Putin urges country to heed demands of McLaren Investigation
• WADA –WADA launches ‘Speak Up!’ – A secure digital platform to report doping violations
• WADA –WADA removes Spain from the list of Signatories deemed non-compliant with the World Anti-Doping Code

In the news

Doping 

• Anti-Doping Database FIS wants reasonably extended ban for Norwegian cross-country skier
• Nick Butler Anti-doping claimed to cost sport $ 300 million each year
• Nick Butler Isinbayeva reappointed head of Russian Anti-Doping Agency in face of WADA opposition
• Nick Butler USOC propose exclusion of Olympic officials from WADA governance
• Daniel Etchells iNADO publishes list of measures aimed at reforming WADA’s governing structures
• Global News World Anti-Doping Agency headquarters staying in Montreal until at least 2021
• Le Monde L’Agence mondial antidopage exige un système transparent
• Sputnik International Putin denies state-sponsored doping in Russia, vows to boost anti-doping efforts
• Sputnik International WADA needs Russian Anti-Doping Agency back in fold to secure funding

Football

• BBC Franz Beckenbauer questioned by prosecutors in 2006 World Cup fraud inquiry
• Andy Brown FA publishes written reasons for Manchester City ‘whereabouts’ fine
• Daily Sabah CAS rejects Trabzonspor’s appeal against UEFA’s match-fixing decision
• David Davutovic Exciting Australian prospect Seb Pasquali still waiting for FIFA clearance to join Ajax youth team
• Graham Dunbar FIFA to review pay, pension deals for Council members
• Rob Harris Russia World Cup head Vitaly Mutko barred from FIFA Council
• Elias Meseret Hayatou’s reign ends as African soccer head and FIFA VP
• ReutersArgentine FA faces possible FIFA ban
• ReutersFIFA looks to ease the fixture burden on players
• TASS Russian football player Eremenko to challenge UEFA’s decision with CAS
• The Guardian – Premier League launches major fightback against illegal streaming
• The Guardian – UEFA President hints at luxury tax and transfer changes to rein in rich clubs
• Max Winters – Equatorial Guinea launch CAS appeal against international football tournaments ban
• Yahoo! Sports FIFA ban Nigeria’s Adamu for two years

Other

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Editor’s Note: Saverio Spera is an Italian lawyer and LL.M. graduate in International Business Law at King’s College London. He is currently an intern at the ASSER International Sports Law Centre.

In the football world the use of unilateral extension options (hereafter UEOs) in favour of the clubs is common practice. Clubs in Europe and, especially, South America make extensive use of this type of contractual clauses, since it gives them the exclusive possibility to prolong the employment relationship with players whose contracts are about to come to an end. This option gives to a club the right to extend the duration of a player’s contract for a certain agreed period after its initial expiry, provided that some previously negotiated conditions are met. In particular, these clauses allow clubs to sign young promising players for short-term contracts, in order to ascertain their potential, and then extend the length of their contracts.^[1] Here lies the great value of UEOs for clubs: they can let the player go if he is not performing as expected, or unilaterally retain him if he is deemed valuable. Although an indisputably beneficial contractual tool for any football club, these clauses are especially useful to clubs specialized in the development of young players.^[2] After the Bosman case, clubs have increasingly used these clauses in order to prevent players from leaving their clubs for free at the end of their contracts.^[3] The FIFA Regulations do not contain any provisions regulating this practice, consequently the duty of clarifying the scope and validity of the options lied with the national courts, the FIFA Dispute Resolution Chamber (DRC) and the CAS. This two-part blog will attempt to provide the first general overview on the issue.^[4] My first blog will be dedicated to the validity of UEOs clauses in light of national laws and of the jurisprudence of numerous European jurisdictions. In a second blog, I will review the jurisprudence of the DRC and the CAS on this matter.

Even though the DRC’s and the CAS’s view on UEOs matter most prominently in daily practice, it is impossible to entirely ignore the positioning of national laws and EU law vis-à-vis the legality of UEOs. In fact, as we will see later, arguments derived from national law also play a fundamental role in the assessment of the UEOs by the CAS. A comparative analysis of the UEOs validity under national laws is extremely difficult to conduct, as these clauses are relatively rare outside of football and the few rulings of lower level national courts are difficult to access. In an ordinary employment contract, deprived of the specificities of the sporting context, it is hard to fathom the utility for the employer to have the power to extend the contract unilaterally at his or her will. Due to the operation of the transfer market, football players are in a peculiar employment condition, hardly comparable to that of any other employee. The investments clubs make on training footballers and their transfer value contribute to this unique employment relationship to the extent that footballers are considered intangible assets for the clubs.^[5] Given the difficulty of comparing hardly comparable situations, the only way to proceed to a comparative overview is to attempt to produce comparative snapshots, which, due to the limited amount of space, are necessarily incomplete.

In Switzerland: It’s unenforceable

It is ironical that in a liberal country like Switzerland, where contractual freedom is interpreted widely, the validity of UEOs under national law is doubtful. Although there are no provisions concerning UEOs in Swiss labour law, we can conclude that under Swiss law these clauses are most likely unenforceable.^[6] In Switzerland such an option would be deemed to infringe employment law and thus considered invalid when incorporated in employment contracts. According to Art. 335a para. 1 of the Swiss code of Obligations^[7] there must be formal parity between employer and employee concerning terminations of contracts. UEOs clauses would circumvent this provision by creating disparity between the parties, as they confer to one party the unilateral possibility to prolong the contract. The Swiss Civil Court, although in disputes arising outside the realm of football, has in the past denounced the circumvention of the provisions. It imposed the equality of treatment between employer and employee concerning the conditions of termination of an employment contract. In one case regarding a two year contract for services abroad, which included the possibility of tacit renewal and the right for the company to recall the employee in Switzerland, the Court stated that the right to recall the employee granted unilaterally to the employer gave him a more favourable position than the employee with regard to the termination of the fixed-term contract. This situation, stressed the Court, is contrary to the purpose of then Art. 336 para. 2 CO, which aims to grant equivalent protection to the parties.^[8] A next case involved a trilateral service contract between an employee, an employer (Meco Mechanical Corporation) and a beneficiary (the government of the then United Arab Republic, a short-lived political union between Egypt and Syria). The contract included a right to early termination granted to the beneficiary. The Court, nonetheless, stated that this right is contrary to “Article 347 (3) of the Swiss Code of Obligations, which prohibits the agreement between different periods of notice for the employer and the service provider. This prohibition cannot be circumvented by making the right of termination or the automatic termination of the employment relationship conditional upon a condition which is unilaterally dependent on the will of the employer. Such a condition would allow the employer to terminate the contract at a point in time at which the service provider could not.”^[9]

It should be noted that the principle of parity between the parties is not considered part of the Swiss ordre public. Consequently, if a case has to be decided on Swiss territory according to a foreign law that allows for the use of unilateral extension options, Swiss law cannot prevent the application of such clauses. However, if the clause leads to over extensive commitment on the side of the employee, it might be considered an infringement of the ordre public and, thus, be deemed null and void. 

In Germany: It’s complicated

According to a first ruling of the Labour Court of Ulm, some UEOs are considered null and void. It concerned a one-year agreement (valid from 1 January 2007 to the end of season 2007/2008) between the club and the player, which contained an UEO giving the club the right to extend the contract for one more year.^[10] The Court held the option invalid. More precisely, the Court considered the unilateral option ineffective. Based on Art. 307 para. 1 BGB, provisions in general terms and conditions should be considered invalid if they unduly penalize the contractual partner and are not accompanied with appropriate compensatory measures. In the present case, the Court found that the unilateral option clause served only the purpose of providing the employer with an additional income in the form of a transfer indemnity. In these conditions, the UEO amounts to a disproportionate restriction of the freedom to work enshrined in Art. 12 of the Grundgesetz (German constitution).^[11]

Nonetheless, a few years after the decision of the Labour Court of Ulm, the German Federal Labour Court held (implicitly) another UEO clause for valid.^[12] The Court dealt with the option only incidentally, as the case mainly revolved around the validity of the resolution agreement signed by the parties. The player, 15 years old at the time, and the club had originally concluded a contract for a period of four years (from 1 July 2006 to 30 June 2010) with the option granted to the club to unilaterally extend the relationship for another year (until 30 June 2011). Sometime after having joined the club, the player started suffering psychological pressure due to a series of personal circumstances and expressed the desire to terminate the contract prior to its natural expiry. The parties then signed a resolution agreement, pursuant to which the club agreed to a resolution in return of a payment of € 40,000. The decision was focused on the validity of that agreement, it only briefly scrutinised the extension option and considered it compatible with the framework of § 15 Abs. 4 TzBfG (or of § 624 BGB for free employment), due to the fact that the length of the contract respected the maximum binding time of five years.^[13] The Court emphasised, in fact, that this is the threshold a fixed-term employment contract has to observe in order to avoid curtailing excessively the employee’s personal freedom and added that the standard is consistent with the principle of freedom of work and of choice of work enshrined in Art. 12(1) of the Basic Law.^[14]

In the Netherlands: It’s probably ok

It takes a bit of legal extrapolation to conclude that any jurisdiction plainly authorizes UEOs, given that none of those examined for the purpose of this blog has a labour legislation in place which expressly supports the validity of UEOs. However, in the Netherlands, where the national labour legislation does not contain any provisions on UEOs, the only known (private) decision to date recognized the validity of such clauses under Dutch law. In the dispute between the Tunisian football player Hatem Trabelsi and his club Ajax Amsterdam the unilateral option included in the contract was deemed to be valid and binding.^[15] The ruling found the option compatible with the dismissal system provided by labour law in combination with contract law.^[16]

In Belgium, Spain, Austria and Italy: It depends on the collective bargaining agreement

A very common framework among jurisdictions seems to reflect the specificity of sport in that it makes footballers’ employment contracts sort of double-layered agreements regulated by employment legislation on the one side and by Collective Bargaining Agreements (CBAs) on the other. In this context, the various legislations delegate to CBAs the duty to outline the details of footballers’ employment conditions, among which one often finds the requirements for UEOs to be validly included therein.

In Belgium, player contracts are mainly regulated by provisions of employment law, in particular by the Act of 3 July 1978 on employment contracts (the Employment Contracts Act).^[17] Yet, with regard to option clauses, the Football Collective Agreement of 15 February 2016 states that, although in general these options are not valid, they are not considered to be unilateral under certain conditions. According to Art. 15 of said agreement, if the clause (i) is agreed upon in writing at the outset, (ii) provides a total duration, extension included, of the relationship of maximum 5 years, and 3 years for under 18 players and (iii) provides for a certain increase in salary (at least 15% of the fixed remuneration and 5% of the match- or selection premium, or 20% of the fixed remuneration, whereby the increase does not need to exceed the amount of 20.000 Euro), it might be considered valid and binding as not unilateral.

In Italy, the employment aspects of sports are regulated by the Law 91/1981. This special legislation, according to which some of the dispositions applicable to subordinate employment do not apply in the sporting context,^[18] was enacted to reflect the peculiarities of the employment relationship in sport.^[19] This legislation does not include any express provision covering UEOs, but – while generally stating at art. 5 that the duration of the fixed-term contract cannot exceed five years - it relies on the CBA for specific contractual requirements. Art. 2 para. 2 of the CBA states that “option agreements are permitted both in favour of the Club and the Player, on the dual condition that a specific consideration is provided in favour of the party who grants the option and that the limit of the overall duration of the Contract, such overall duration consisting of the sum of the duration provided plus any extension represented by the option […], does not exceed the maximum duration provided by law”. The “specific consideration” of the English version is translated from “corrispettivo specifico” which means that, aside from the five-year ceiling, the condition for the UEO to be valid is an increase in the salary of the player.

In Austria these clauses are not invalid as such, but they have to meet the requirements laid down in Section 6(4) of the Collective Agreement for football players of the Austrian Football League (KV-ӦFB), as amended on 1 July 2014. It reads as follows: “The granting of an option to be exercised by a unilateral declaration is only permissible if each party of the contract is granted equal rights and the exercise of the option is linked to equivalent conditions for both parties […]. The date of conclusion of the contract shall be decisive for the assessment of equivalence”.^[20] The Austrian Supreme Court recently upheld the decision of the lower courts in a dispute regarding the validity of an extension option contained in a football player’s contract.^[21] The one-year agreement, valid from 1 July 2014 to 30 June 2015, contained an option that granted the club the possibility to extend the contractual relationship for two more years, until June 2017, as long as the club exercised it by 31 May 2015.  On October 2015 the player remitted his salary payments to the club and referred the case to the Tribunal to question the validity of the option. Both the Court of first instance and the Court of Appeals considered the agreement ineffective as the clause did not meet the requirements of Section 6 (4) KV-ӦFB. The ground on which the two courts reached this conclusion was the lack of equivalency of rights under the agreement, as (i) the increase in salary (of 15%) was not proportionate to the length of the extension; (ii) at the time of signing the contract, the contractual conditions for an extension were not defined.[22] The Supreme Court held that the assessment of the lower courts could not be disputed and reiterated that Section 6 (4) KV-ӦFB is unequivocally clear in requiring the granting of equivalent rights to both parties of the contract for an UEO to be acceptable. Equivalence, the Court continued, that has to be assessed at the date of conclusion of the contract.

In Spain the main source of law regarding the employment relationships of professional athletes is the Royal Decree 1006/1985. Regarding the duration of the contract, art. 6 of RD 1006/85 provides that (i) sportsmen contracts are always fixed-term contracts, (ii) the extensions of these contracts, which shall always be definite as well, can be achieved through subsequent agreements between the parties when the contract is about to expire. Paragraph 3 of this provision admits different possibilities of extension in so far as the Collective Bargaining Agreement provides so.^[23]  On the matter, the current Collective Bargaining Agreement defer in turn to the RD 1006/85, as Art. 14 provides that “by mutual agreement between the Club and the Footballer, the contract may be extended, in the terms established in the second paragraph of article 6 of Royal Decree 1006/1985, of June 26”. At the moment, therefore, it seems that extension options in Spain need to be agreed with the player.

In the UK: Likely not

Sometimes circumstances other than the CBA can play a role. The United Kingdom and the Premier League, for instance, represent a unicuum in the panorama of the jurisdictions under scrutiny in the sense that, although here – as in other countries – the employment relationship is governed by national law, collective agreements and the rules of the Football Association (FA),^[24] two specificities place this system in a peculiar position. First of all, in the United Kingdom collective agreements are not legally enforceable. It is true that the terms of a collective agreement may be binding and enforceable between the parties of an employment relationship if these have been incorporated into the individual contract.^[25] However, a court may nonetheless conclude that the term is not enforceable. Secondly, no single overarching collective agreement encompasses the employment relationship between clubs and players in the Premier League. There are, instead, a series of collectively negotiated agreements, such as the Standard Players’ Contract.^[26] In an early decision that challenged the English ‘Retain and Transfer System’ as an unlawful restraint of trade, the High Court placed emphasis on the inequality of bargaining power in a professional football player’s relationship with a club, stating that “in the football industry players commonly enter into their first contract either while they are under 21 or shortly afterwards, and that wherever they may subsequently go, within the Football League, there is only one form of contract they can sign. The Court must be careful to see that contracts made in these circumstances are justifiable in the interests of both parties”.^[27]

That said, although there is no CBA in place that can enlighten us about the validity of UEOs, a satisfying answer could nonetheless be found in the Courts’ rulings concerning contracts in the (to some extent) comparable context of the music industry. The profession of the musician resembles in various aspects that of the football player. As for footballers, musicians’ contracts are linked to their performance, in terms of copies of albums sold, concert tickets sold, royalties from the ads etc. The more a musician is perceived to be promising, the more lucrative the contract he can get from the record company will be. Just as sports professionals, musicians often begin their career in their prime age. In order to get a foot in their respective highly rewarding industries, sportsmen and musicians might agree to contractual clauses without fully understanding the consequences or, more likely, even if they do fully understand the implications of such contracts they may feel they have no option but to sign them if they want their career to start or progress.^[28] This similarity allows us to draw some useful comparisons from the case law of UK courts regarding musicians.

For instance the House of Lords declared void an agreement between a young and unknown musician by the name of Tony Macaulay and the publishing company Schroeder Music Publishing Co Ltd, which contained a clause extending to 10 years the original five-year undertaking of the company.^[29] When he signed the contract, the musician was aged 21. The agreement provided that the duration of five years would have been extended to 10 in case the royalties for the first five years exceeded £ 5,000. In the words of Lord Reid “if the respondent’s work became well known and popular he would be tied by the agreement for ten years”.^[30] In consideration of the duration of the contract and the fact that the payment received by the author was minimal unless his work was released, which was not an obligation for Schroeder Music according to the contract, Lord Reid was of the opinion that the publishers’ appeal had to be dismissed. His reasoning was grounded on the consideration that “if contractual relations appear to be unnecessary or to be reasonably capable of enforcement in an oppressive manner, then they must be justified before they can be enforced”.^[31] Lord Diplock deemed the contract unenforceable due to its substantial unfairness and emphasised the need to accord protection to “those whose bargaining power is weak against being forced by those whose bargaining power is stronger to enter into bargains that are unconscionable”.^[32] For the same reason, the English Court of Appeal struck down as void a publishing agreement between the already established band Fleetwood Mac and the publisher which tied the band to the company for a five year period plus the possibility to extend the relationship for another five years.^[33] The court held that the publishing agreement gave the company “a stranglehold over each of the composers”^[34] and found the contract fundamentally unfair to the group.

These two decisions give us an insight on how under English law, where – it is important to bear in mind – as a general rule the letter of the contract prevails, clauses of these kind tying professional musicians have been considered null and void because of the disproportionate contractual power between the parties. A conclusion that was confirmed even when the band concerned was not unknown. It is easy to see how such reasoning could be applied to UEOs in professional football.

Under EU law: It should be fine

The last unknown is the position of EU law with regard to UEOs. In many ways, UEOs are contractual mechanisms used to attenuate the consequences of the Bosmanruling.  Indeed, they give the club the opportunity to prolong an employment contract without the consent of a player, and therefore to obtain compensation in case the player wishes to move to another club. However, the striking difference with a Bosman situation is that this contractual set-up is not mandated by the private regulations of the football federations or leagues. Instead, it is negotiated ab initio between the contractual parties, and hardly ever imposed by a collective agreement. Thus, as long as the original free will of the player is not constrained by private rules, which in fact might be the case in a closed labour market where the clubs can act as an oligopoly and (implicitly) coordinate their behaviour, one could argue that the free movement of a player is restricted only by his or her own free will.  In its more recent Bernard ruling, the CJEU came close to dealing with an UEO, but here again the forced prolongation of the contract was imposed by the French collective bargaining agreement in force at the time of the dispute and not negotiated on an individual basis between the parties. Therefore, it is relatively unlikely that EU law could be successfully invoked to challenge the validity of UEOs, unless those are at least identified as a collective practice or informal rule applied by clubs against the will of players.

Conclusion: A European legal mess

Notwithstanding the hardly avoidable incompleteness of the above comparative sketch, a short conclusion on the validity of UEOs in light of national and European law is in order. First of all, it is clear that no single answer prevails Europe-wide. The brief analysis carried out shows that each of the jurisdictions scrutinised approaches the topic differently. The only uniformly shared regulatory trait is that national legislators have not regulated the matter. Instead, we had to look for potential answers in the jurisprudence of local courts, more often than not extrapolating from cases outside of the realm of football. Furthermore, legislators commonly delegate to CBAs the duty to define the employment conditions of professional football players. In short, the legality of UEOs is usually dependent on the interpretations of local courts or the decisions of local social partners. However, where UEOs are deemed valid, it is always under stringent conditions such as a strict limit to the overall duration of the extended contract and the provision of a substantial increase in salary. Hence, the validity of UEOs hinges on the rather subjective evaluation of the overall fairness of a specific UEO in the context of a specific contract. Whether this is also true of the jurisprudence of the DRC and the CAS when confronted to UEOs will be the subject of our next blog.

[1] The reference is obviously to young players older than 18, as in respect of contracts of minors art. 18 FIFA RSTP is crystal clear in prohibiting the signing of contracts longer than three years.

[2] D. F.R. Comparie, G. Planás R.A. and S-E. Wildermann, Contractual Stability in Professional Football: Recommendations for Clubs in a Context of International Mobility, 2009, p.27. The authors point out that, although transfer fees constitute an important part of every clubs’ financial income, some clubs, particularly those with smaller broadcasting revenues, rely on them to a great extent. Usually, clubs which cover their costs mainly through transfer fees tend to build a good youth development, because being able to sell the players when they are valued the most is financially crucial for them.

[3] F. de Weger,The Jurisprudence of the FIFA Dispute Resolution Chamber, Asser Press, 2016, p. 164.

[4] The few existing contributions on this question are F. De Weger, The Jurisprudence of the FIFA Dispute Resolution Chamber, Asser Press, 2016, pp 163- 191 and W. Portmann, Unilateral option clauses in footballers’ contracts of employment: an assessment from the perspective of international sports arbitration,Sweet Maxwell Int Sports Law Rev, 2007,  7(1):6-16.

[5] See UEFA Club Licensing and Financial Fair Play Regulations (2015 Edition), which, at ANNEX VI (B)(ix), includes players as intangible assets among the assets that need to be disclosed for balance sheet requirements and, at ANNEX VII (C)(1), sets out the minimum accounting requirement “for player registrations carried out as intangible fixed assets as set out in Articles 47, 48 and 52”.

[6] For a similar view, see Jan Kleiner, Der Spielervertrag im Berufsfussball, Schulthess, 2013, at pp. 891-900.

[7] Art. 335a para 1 Swiss Code of Obligations reads as follows: “Notice periods must be the same for both parties; where an agreement provides for different notice periods, the longer period is applicable to both parties”.

[8]BGE 108 II 115.

[9]BGE 96 II 52. The original German version reads as follows: “Eine solche Schranke bildet insbesondere Art. 347 Abs. 3 OR, der die Vereinbarung verschiedener Kündigungsfristen für den Dienstherrn und den Dienstpflichtigen verbietet. Dieses Verbot kann nicht dadurch umgangen werden, dass das Kündigungsrecht oder die automatische Beendigung des Dienstverhältnisses von einer Bedingung abhängig gemacht wird, deren Eintritt einseitig vom Willen des Dienstherrn abhinge. Eine solche Bedingung würde es dem Dienstherrn erlauben, den Vertrag schon auf einen Zeitpunkt zu beenden, auf den der Dienstpflichtige das nicht tun könnte. Ein bedingtes Kündigungsrecht und eine bedingte automatische Beendigung des Dienstverhältnisses dürfen nur vereinbart werden, wenn und soweit der Eintritt der Bedingung vom Willen der Parteien nicht abhängt oder beide Parteien ihn in gleicher Weise herbeiführen können“.

[10]ArbG Ulm, judgment of 14 November 2008 – 3 Ca 244/08.

[11] Ibid., para. 37. The original German version reads as follows: “Nach § 307 Abs. 1 Satz 1 BGB ist eine formularmäßige Vertragsbestimmung unangemessen, wenn der Verwender durch einseitige Vertragsgestaltung missbräuchlich eigene Interessen auf Kosten seines Vertragspartners durchzusetzen versucht, ohne von vornherein auch dessen Belange hinreichend zu berücksichtigen und ihm einen angemessenen Ausgleich zu gewähren. Die Feststellung einer unangemessenen Benachteiligung setzt eine wechselseitige Berücksichtigung und Bewertung rechtlich anzuerkennender Interessen der Vertragspartner voraus. Bei diesem Vorgang sind auch grundrechtlich gestützte Rechtspositionen zu beachten. Zur Beurteilung der Unangemessenheit ist ein genereller, typisierender, vom Einzelfall losgelöster Maßstab anzulegen. Im Rahmen der Inhaltskontrolle sind dabei Art und Gegenstand, Zweck und besondere Eigenarten des jeweiligen Geschäfts zu berücksichtigen. Zu prüfen ist, ob der Klauselinhalt bei den typischen Interessen der beteiligten Verkehrskreise eine unangemessene Benachteiligung des Vertragspartners ergibt (vgl. BAG Urteil vom 18.03.2008 9 AZR 186/07 Rn. 19, NZA 2008, 1004 ff.). § 6 a Spielervertrag gibt nur dem Arbeitgeber das Recht, den Vertrag um ein Jahr zu verlängern. Will der Spieler den Arbeitgeber nach Ablauf der Laufzeit des Vertrages wechseln und übt der Arbeitgeber sein einseitiges Optionsrecht für die Vertragsverlängerung rechtzeitig aus, führt das dazu, dass ein aufnahmebereiter Arbeitgeber eine Freigabe des Spielers durch den bisherigen Arbeitgeber nur gegen Zahlung einer Transferentschädigung erhalten wird. Durch die Transferentschädigung reduziert sich die Aufnahmebereitschaft von neuen Arbeitgebern und die Verdienstmöglichkeit des Arbeitnehmers bei neuen Arbeitgebern. Der Kläger verursacht dem neuen Arbeitgeber bei einem ablösefreien Wechsel weniger Kosten. Der budgetierte neue Arbeitgeber kann dem Kläger in diesem Fall eine höhere Vergütung zahlen. Die einseitige Optionsklausel dient nur dazu, dem abgebenden Arbeitgeber eine zusätzliche Einnahme in Form einer Transferentschädigung zu verschaffen. Sie behindert damit erkennbar die Berufsfreiheit des Arbeitnehmers nach Artikel 12 Abs. 1 Satz 1 Grundgesetz, wonach alle Deutschen u. a. das Recht haben, die Arbeitsstätte frei zu wählen. Das Interesse des Beklagten an einer Einnahmequelle aus einem Spielertransfer hat hinter dem grundgesetzlich geschützten Interesse des Klägers an der Berufsfreiheit zurückzutreten”.

[12]BAG, judgment of 25 April 2013, 8 AZR 453/12.

[13] Ibid., para 32.

[14] Ibid.

[15] Dutch KNVB Arbitration Tribunal, 4 June 2004 n. 1022.

[16] M. Colucci and F. Hendricks, Regulating Employment Relationships in Professional Football. A Comparative Analysis, European Sports Law and Policy Bulletin 1/2014, p. 254.

[17] Ibid., 39.

[18] To sports contracts do not apply Art. 4, 5, 13, 18, 33, 34 L. 300/1970, regulating, among others, medical assessments and dismissals and Art. 1, 2, 3, 5, 6, 7, 8 L. 604/1966. To fixed term contracts, the provisions of L. 230/1962 do not apply.

[19] Colucci, Hendricks, Regulating Employment Relationships in Professional Football. A Comparative Analysis, European Sports Law and Policy Bulletin 1/2014, 201 – 202.

[20] The original German version reads as follows: “Die Einräumung von durch einseitige Erklärung auszuübenden Gestaltungsrechten (Optionsrechten) ist nur zulässig, wenn sie jedem Vertragsteil gleichwertige Ansprüche einräumt und auch die Art der Ausübung des Optionsrechtes für beide Teile an gleichwertige Bedingungen geknüpft ist (z.B. einseitige Vertragsverlängerungsmöglichkeit durch den Klub bei bereits vorab festgesetzter Gehaltserhöhung für den Spieler oder sonstiger gleichwertiger Verbesserungen für den Spieler, wobei stets die besonderen Umstände des Einzelfalles [Alter des Spielers, Dauer der Vertragsverlängerung] zu berücksichtigen sind). Für die Bewertung der Gleichwertigkeit ist der Zeitpunkt des Vertragsabschlusses maßgeblich”.

[21]OGH 28.10.2016, 9 ObA 88/16f

[22] Ibid., The original German reads as follows: “Das Erstgericht gab dem Klagebegehren statt. Es kam zu dem Ergebnis, dass die Optionsvereinbarung unwirksam sei, weil sie nicht den Voraussetzungen des § 6 KV-ÖFB entspreche. Den Vertragsteilen würden durch diese Vereinbarung keine gleichwertigen Ansprüche eingeräumt. Der „Sideletter“ zum Spielervertrag, der ein höheres Gehalt für die Verlängerungszeit regelte, sei nicht statutengemäß unterfertigt worden und daher nicht wirksam geworden; darüber hinaus sei diese Gehaltserhöhung im Verhältnis zur Dauer der Verlängerung auch nicht angemessen. Das Berufungsgericht gab der Berufung des Beklagten dagegen keine Folge. Auf die Frage des rechtswirksamen Zustandekommens der im „Sideletter“ vorgesehenen Vereinbarung komme es hier nicht an, weil § 6 Abs 4 des KV-ÖFB die Gleichwertigkeit der Ansprüche beider Vertragsteile bereits zum Zeitpunkt des Vertragsabschlusses fordere und die dem Beklagten im Spielervertrag eingeräumte Option daher dem Kollektivvertrag widerspreche. Bei Abschluss des Vertrags sei nicht festgesetzt worden, mit welchen Verbesserungen der Kläger im Fall der Verlängerung rechnen könne; eine Lösungsbefugnis des Klägers sei auch nicht vorgesehen. Außerdem sei die Option wegen ihrer Dauer (Verlängerung doppelt so lang wie das befristete, eigentliche Vertragsverhältnis) nicht als gleichwertig anzusehen. Wenngleich das Interesse eines Fußballvereins an einer einseitigen Verlängerungsmöglichkeit insbesondere im Nachwuchsbereich plausibel sei, dürfe sich der Verein nicht vom Risiko der sportlichen Entwicklung des Spielers zu dessen Lasten (weitgehend) befreien. Hier sei die Option wegen der doppelten Länge der ursprünglichen Vertragsdauer schließlich auch im Fall einer Erhöhung des Entgelts um nur 15 % (wie im „Sideletter“ vorgesehen) nicht als ausreichend gleichwertig anzusehen“.

[23] Art. 6 RD 1006/1985 reads as follows: “La relación laboral especial de los deportistas profesionales será siempre de duración determinada, […].Podrán producirse prórrogas del contrato, igualmente para una duración determinada, mediante sucesivos acuerdos al vencimiento del término originalmente pactado. Solamente si un convenio colectivo así lo estableciere podrá acordarse en los contratos individuales un sistema de prórrogas diferente del anterior, que en todo caso se ajustará a las condiciones establecidas en el convenio”.

[24] L. O’Leary, Employment and Labour Relations Law in the Premier League, NBA and International Rugby Union, T.MC. Asser Press, 2017, p.204.

[25] Ibid., p.99.

[26] ibid., p.208.

[27] Eastham v Newcastle United Football Club [1964] Ch 413, p. 428, cited in in Leanne O’Leary, Employment and Labour Relations Law in the Premier League, NBA and International Rugby Union (2017), 5.

[28] S Gardiner, M James, J O’Leary and R Welch with I Blackshaw, S Boyes and A Caiger, Sports Law – Third Edition (2006), 494.

[29] [1974] 3 All ER 616

[30] Ibid.

[31] Ibid.

[32] Ibid.

[33] [1975] 1 All ER 237.

[34] Ibid., 238.

Doyen (aka Doyen Sports Investment Limited) is nothing short of heroic in its fight against FIFA’s TPO ban. It has (sometimes indirectly through RFC Seraing) attacked the ban in front of the French courts, the Belgium courts, the European Commission and the Court of Arbitration for Sport. This costly, and until now fruitless, legal battle has been chronicled in numerous of our blogs (here and here). It is coordinated by Jean-Louis Dupont, a lawyer who is, to say the least, not afraid of fighting the windmills of sport’s private regulators. Yet, this time around he might have hit the limits of his stubbornness and legal ‘maestria’. As illustrated by the most recent decision of the saga, rendered in March by the Court of Arbitration for Sport (CAS) in a case opposing the Belgium club RFC Seraing (or Seraing) to FIFA. The arguments in favour of the ban might override those against it. At least this is the view espoused by the CAS, and until tested in front of another court (preferably the CJEU) it will remain an influential one. The French text of the CAS award has just been published and I will take the opportunity of having for once an award in my native language to offer a first assessment of the CAS’s reasoning in the case, especially with regard to its application of EU law.

I.              The facts and procedure of the case

To cut a relatively long story short, RFC Seraing [the variation of the name of the club remains a disturbing mystery in the various proceedings in Belgium and at FIFA] entered a TPO agreement with Doyen on 30 January 2015, stipulating that the club transfers the economic rights of three players to Doyen against a sum of €300.000. At that time the transitory phase of FIFA’s TPO ban enshrined in art. 18ter RSTP was already in force and the FIFA TMS, tasked with monitoring the enforcement of the RSTP, quickly jumped on the matter. The issue was referred to FIFA’s Disciplinary Committee, which opened on 2 July 2015 proceedings against RFC Seraing for breaching arts. 18bis and 18ter RSTP. Additionally, on 7 July 2015, Seraing introduced in the TMS a request to recruit a Portuguese player, to which it attached an ERPA (on Doyen’s ERPAs see our blog here) attributing 25% of the economic rights attached to the player to Doyen against a payment of €50 000. A few days after, the FIFA TMS started another investigation into the transfer and on 21 July 2015 the FIFA Disciplinary Committee extended the existing proceedings to also cover this matter.

On 4 September 2015, the Disciplinary Committee rendered its (unpublished) decision finding that ‘FC Seraing’ breached arts. 18bis and 18ter RSTP. Consequently, it banned the club from recruiting players (at national and international level) for the next four transfer windows and handed out a fine of CHF 150.000. Seraing challenged the decision with FIFA’s Appeal Committee, which decided on 7 January 2016 to reject the appeal and confirmed the original decision. Eventually, Seraing appealed this decision to the CAS, leading to the latest award. As a side note, it feels like the disputes involving RFC Seraing (or FC Seraing or Seraing United) are a set-up prompted by Doyen to be able to challenge the validity of art. 18ter RSTP in various jurisdictions. If it were true it should not affect the question of the legality of the ban, but it is probably not of great support to the credibility of some arguments raised by Doyen, or its alter ego Seraing, in these proceedings.

II.            The CAS’ assessment of the compatibility of FIFA’s TPO ban under EU law

As the competence of CAS in this matter was not contested, the key question was against which law(s) should the compatibility of FIFA’s TPO ban be assessed. Due to the history of RFC Seraing’s key lawyer, it is no surprise that much of the award is spent assessing the EU law compatibility of the ban. In the past, as I have argued elsewhere (my CAS and EU law article is accessible for free here, download it now!), the CAS has been rather reluctant to apply EU law rigorously. This case is therefore a great opportunity to assess whether it has raised its standards in this regard.

a.   The applicability of EU law

First, is EU law applicable to the case? The CAS has rarely applied EU law (the exception confirming the rule being the rather old CAS 98/200case, which was later challenged in front of the EU Commission leading to the ENIC decision), an absurdity in light of the Bosman (and prior Walrave) case law of the CJEU, which made clear that EU law is applicable to the regulations of Sports Governing Bodies (SGBs), even when seated outside of the EU. Additionally, in light of the centrality of the free movement rights in EU integration, it is to be expected that like the EU competition rules they be considered part and parcel of a European public policy with which arbitral awards must comply to be recognized and enforced by national courts in the EU.

Thus, the less spectacular, but probably more important, aspect of the award is the clear affirmation that EU law is applicable because it constitutes a “mandatory provision of foreign law” in the sense of art. 19 of the Swiss Federal Act on Private International Law (PILA).[1] Mandatory provisions of foreign law must be taken into account when three cumulative conditions prevail:

1. Such rules belong to a special category of norms which need to be applied irrspective of the law applicable to the merits of the case;
2. there is a close connection between the subject matter of the dispute and teh territory where the mandatory rules are in force;
3. in view of Swiss legal theory and practice, the mandatory rules must aim to protect legitimate interest and crucial values and their application must lead to a decision which is appropriate.[2]

In this case, the Panel considers that the three cumulative conditions are fulfilled because:

1. EU competition law and EU provisions on fundamental freedoms are largely regarded as pertaining to the category of mandatory rules by courts and scholars within the EU;
2. the close connections between (a) the territory on which EU competition law  and EU provisions on fundamental freedoms are in force and (b) the subject matter of the dispute results from the fact that the challenge against the legality of the RSTP has an obvious impact on the EU territory. Indeed, the RSTP aims to regulate the activity of football clubs, many of which are European. Furthermore, the particular decision affects the participation of RFC Seraing to competitions taking place on the European soil.
3. Finally, the Swiss legal system shares the interests and values protected by EU law, specifically by the EU competition rules and EU fundamental freedoms.[3]

This is a strong confirmation that EU law (mainly EU free movement rights and EU competition law), which applies almost naturally to decisions and regulations of the SGBs[4], will always be deemed applicable if invoked in front of the CAS to challenge their legality. This, as Seraing has learned in the present instance, does not mean that the SGBs rules will be automatically found incompatible with EU law. Instead, it merely subjects them to a duty of justification and proportionality, which will be assessed on a case-by-case basis.[5] The message for sports lawyers appearing in front of the CAS is then: Work hard on your EU law! But don’t get your hopes up too high… 

b.   The compatibility of FIFA’s TPO ban with EU law

The rest of the CAS award is mainly dedicated to assessing the compatibility of the TPO ban with EU law.[6] In doing so, the CAS, rightly in my view, considered that the conditions regarding the compatibility, or not, of a private regulation of an SGB with the EU free movement rights and competition rules overlap with regard to the key question: the proportionality of the rule.

The legitimacy of the objectives of the TPO ban

The Panel’s assessment focuses firstly, and therefore mainly, on a possible disproportionate restriction of the free movement of capital guaranteed under art. 63 TFEU. The Panel decides to assume, without addressing it, that article 63 applies horizontally. This is still a widely uncharted territory and the CJEU has yet to take a clear stand on it. However, the CAS decided to be better safe than sorry and, thus, followed a maximalist interpretation of the scope of application of the article by applying it horizontally to the rules of FIFA. From the outset, it is uncontested that articles 18bis and 18ter RSTP constitute a restriction to the free movement of capital in the EU.[7] Yet, as emphasized by the Panel, a restriction does not entail an automatic incompatibility with EU law. Instead, the restrictive effect might be justified by a legitimate objective and compatible with EU law if the rule or measure is a proportionate mean to attain that objective. In the present case, FIFA invoked a number of potential legitimate objectives underlying the TPO ban:

• The preservation of the contractual stability;
• The preservation of the independence and autonomy of clubs in the management of their recruitment policy;
• The securing of the integrity of football and preservation of the loyalty and equity of competitions;
• The prevention of conflicts of interests and the securing of transparency in the transfer market.[8]

Those objectives remained uncontested by Seraing and the Panel concluded that they could be deemed legitimate in the sense of the CJEU’s jurisprudence.[9] Instead, Seraing tried to argue that the ‘real’ objective of FIFA in adopting the TPO ban was to ensure that the clubs monopolize the financial streams generated by the transfers of players.[10] Yet, it failed to provide the necessary evidence to convince the Panel, which insisted that “TPO has triggered amongst many commentators and inside the various instances and organisations of football intense worries to which the objectives invoked by FIFA are a response”[11]. Additionally, the Panel considers “that this practice gives way to numerous risks, in particular: risks linked to the opacity of investors escaping the control of football organizations and who are able to freely sell-on their investment; risks of a restriction of the economic freedom and rights of players, through the influencing with a speculative interest of their transfer; risks of conflicts of interests, or even of rigging or manipulation of games, contrary to the integrity of competitions, as the same investor can have TPO deals and multiples clubs involved in the same competition; risks linked to the ethics of sport because the objective pursued by investors is purely a financial and speculative one, to the detriment of sportive and moral considerations”.[12] Hence, the arbitrators buoyed the legitimacy of FIFA’s objectives in adopting the TPO ban.

The proportionality of the ban

The key question is then whether the FIFA ban can be deemed a proportionate means to attain its legitimate objectives. It is at this most crucial stage of the evaluation of the compatibility with EU law that a number of academic commentators have denied the ban’s proportionality.[13] It is the most important part of the award, which will be most likely scrutinized and attacked in follow-up cases in front of national or European courts. It is important to note that SGB regulations have never failed in front of the CJEU because they were lacking a legitimate objective, but rather because they were not considered adequate or necessary to attain their objectives. This stage of the analysis entails political considerations and a comparative analysis of the policy alternatives (and their feasibility) available to tackle a specific problem. In other words, it is not sufficient to claim that you can think in the abstract of a less restrictive alternative, you need to factually demonstrate that this less restrictive alternative is a credible candidate to attain the objective. This is obviously a difficult task for a lawyer. Furthermore, procedural considerations connected to the rulemaking process will come into play. If a sporting rule has been devised via an inclusive legislative procedure and finds broad support amongst the affected actors, then it will in turn be more likely to be deemed proportionate. Instead, if a rule is the result of a secretive, exclusive and authoritarian procedure, then it will be easier to challenge its proportionality. Thus, both substantial (effects-based) and procedural (legitimacy-based) considerations are key to evaluate the proportionality of the TPO ban.

The Panel insists first that the TPO ban has limited effects on the freedom to invest in football. Indeed, it finds that investors are not barred from investing in clubs or to finance specific operations (such as transfers), the ban is devised only to exclude certain types or modalities of investing.[14] On the procedural/legislative side, the Panel notes that the ban has been introduced after a broad consultation and on the basis of numerous, though unpublished, expert reports.[15] This positive assessment of the adoption process could be contested, especially because FIFA did not release the expert reports to the public, which were therefore not subjected to the critical scrutiny of their peers.  Moreover, the Panel takes due note of the relatively long experimentation of a lighter measure (article 18bis RSTP), which has proven inefficient to control the widespread recourse to TPO.[16] The question was then whether Seraing would be able to come up with a credible less restrictive alternative to rein the anarchic use of TPO in football. The Belgian club claimed that FIFA’s legitimate objectives could have been attained through regulation and measures improving transparency (very similar to La Liga’s argument here).[17] Nonetheless, the arbitrators noted that Seraing failed to specify the alternative measures it envisaged.[18] Instead, the Panel sided with FIFA in finding that it lacks the capacity and legal competence to properly police investors which are not subjected contractually to its disciplinary power.[19] In such a context, the Panel finds that the risks of conflicts of interests stemming from TPO contracts cannot be properly controlled by FIFA and the national federations, and the alternative measures proposed by Seraing are bound to fail.[20] Finally, the Panel also referred to the previously existing bans in France, England and Poland, insisting that FIFA was also aiming at harmonizing the rules applicable to the transfer market in Europe to alleviate any potential discrimination.[21] Hence, the arbitrators conclude that the ban is a proportionate restriction to art. 63 TFEU and compatible with EU law. While the Panel doubts that the TPO ban has substantial restrictive effects on the free movement of players and on the freedom to provide services of agents,[22] in any case it refers to its findings under art. 63 TFEU to conclude that it must be held proportionate.[23]

Regarding the compatibility of the ban with EU competition law, Seraing argued that it constitutes an unlawful restriction to free competition under article 101 TFEU and an abuse of a dominant position under article 102 TFEU. The CAS deemed (uncontroversially) FIFA an association of undertaking for the purpose of article 101 TFEU and recognized that the TPO ban affects trade between the Member States.[24] However, the arbitrators emphasized that Seraing bears the burden of proving that the ban constitutes a restriction by object or effect of free competition in the internal market.[25] In that regard, the CAS referred to the CJEU’s analytical framework developed in its Wouters case.[26] It concluded, referring to its previous holdings, that the ban had legitimate objectives and was necessary to attain them, and therefore did not constitute a restriction in the sense of article 101 (1) TFEU. As far as the abuse of a dominant position is concerned, after criticizing the lack of serious economic analysis by the appellant,[27] the Panel simply reiterated its previous findings regarding the legitimate objectives and proportionality of the ban.[28] 

The CAS swiftly rejected all the other arguments raised by Seraing on the basis of the EU’s Fundamental Rights Charter,[29] the European Convention of Human Rights,[30] and Swiss law.[31] Nonetheless, it did held that the sanction imposed on Seraing by the FIFA Disciplinary Committee was too stringent in light of the proportionality principle and reduced Seraing’s transfer ban to three windows and a fine of CHF 150.000.[32]

III.          Conclusion

Doyen lost a new battle and, while the war is still raging on, the controversial company is slowly starting to run out of legal ammunitions to challenge FIFA’s TPO ban. I have explained elsewhere why I believe the ban to be compatible with EU law and many of the arguments of the CAS in this award resonate with my own views.  Yet, though I think banning TPO is a step in the right direction to a healthier transfer market, I also believe that FIFA is artificially sustaining a transfer market that leads to the shadowy financiarization of football brutally exposed in the recent football leaks. In other words, the fact that a challenge against articles 18bis or 18ter fails does not mean that the whole RSTP is compatible with EU law, and for various reasons I believe that the current article 17RSTP is likely to fall foul of the EU internal market rules.[33]

The broader lesson of this TPO saga is that EU law is (at last) becoming a potent tool to challenge SGBs and their rules at the CAS. However, EU law is not blind to the necessary regulatory function they exercised vis-à-vis transnational sporting activities. What EU law targets is the SGBs’ illegitimate, disproportionate, and abusive regulatory behaviour to the detriment of the affected actors. When invoking EU law, sports lawyers must be aware of the need to show concretely the disproportionate nature of the rule or decision challenged. This is a heavy evidentiary burden. In other words, one cannot be satisfied with simply pointing out a restrictive effect, instead an interdisciplinary engagement with the economic and social effects of a regulation as well as with its legislative process is in order.

On a final note, I am truly pleased to see that the CAS is finally taking EU law a bit more seriously. This is a giant step forward, which will protect its awards from challenges in front of national courts, foster its reputation in Europe’s legal communities, and empower it as a counter-power inside the system of the lex sportiva. I urge the CAS to fully embrace this change and to continue to thoroughly assess the EU law compatibility of the sporting rules challenged in front of it. In this regard, it should keep in mind that the more these rules are the result of a deliberative and inclusive (in a way democratic) transnational legislative process, the more they can be deemed legitimate in the eyes of EU law…and vice versa.

[1] TAS 2016/A/4490 RFC Seraing c. FIFA, 9 mars 2017, para. 73 : « La Formation arbitrale considère que le droit de l’Union Européenne (« droit de l’UE »), dont notamment les dispositions des traités en matière de liberté de circulation et de droit de la concurrence, doivent être prises en compte par la Formation arbitrale, dans la mesure où elles constituent des dispositions impératives du droit étranger au sens de l’article 19 de la Loi fédérale sur le droit international privé du 18 Décembre 1987 (« LDIP »).

[2] This English translation is taken from CAS 2016/A/4492 Galatasaray v. UEFA, 23 juin 2016, para. 43.

[3] TAS 2016/A/4490 RFC Seraing c. FIFA, para. 76. The French version reads as follows :

i.       Les dispositions de droit européen, concernant notamment le droit de la concurrence et les libertés de circulation, sont communément considérées comme des règles impératives par les juridictions de l’Union et la doctrine ;

ii.     Les relations étroites entre (a) le territoire sur lequel le droit européen est en vigueur et (b) l’objet du litige, tiennent au fait que la mise en cause de la légalité du RSTJ a un impact évident sur le territoire européen. En effet, le RSTJ vise à réguler l’activité des clubs de football, dont de nombreux clubs européens. De plus, la Décision attaquée affecte notamment la participation du RFC Seraing à des compétitions se déroulant sur le sol européen.

iii.    Enfin, l’ordre juridique suisse partage les intérêts et valeurs protégées par le droit européen et notamment les dispositions de droit européen en matière de droit de la concurrence et de libertés de circulation.

[4] See B. van Rompuy, The role of EU Competition Law in Tackling Abuse of Regulatory Power by Sports Associations. In general, see S. Weatherill, European Sports Law, Asser Press, 2014. For my take on the centrality of EU law to exercise a ‘counter-democratic’ check on the lex sportiva, see my PhD thesis (in French) available here.

[5] See crucially CJEU, Meca Medina, 18 July 2006, ECLI:EU:C:2006:492, para.42.

[6] See TAS 2016/A/4490 RFC Seraing c. FIFA, paras 90-144

[7] Ibid., para.97.

[8] Ibid., para 101. En l'espèce la FIFA invoque plusieurs objectifs poursuivis par les mesures en cause, et qu’il convient de reprendre : la préservation de la stabilité des contrats de joueurs , la garantie de l'indépendance et l'autonomie des clubs et des joueurs en matière de recrutement et de transferts, la sauvegarde de l'intégrité dans le football et du caractère loyal et équitable des compétitions, la prévention de conflits d'intérêts et le maintien de la transparence dans les transactions liées aux transferts de joueurs.

[9] Ibid., paras 102-104.

[10] Ibid., paras 105-106.

[11] Ibid. para. 107.

[12] Ibid., para.108.

[13] See J. Lindholm, Can I please have a slice of Ronaldo? The legality of FIFA’s ban on third-party ownership under European union law and S. Egger, Third-party Ownership of Players’ Economic Rights und Kartellrecht, in K. Vieweg, Inspirationen des Sportrechts, Duncker & Humblot, Berlin, 2016, pp.307-331.  

[14] TAS 2016/A/4490 RFC Seraing c. FIFA, paras 109-112

[15] It refers to “une phase significative d’étude, de consultation, de travaux et discussions à laquelle ont participle de nombreux interlocuteurs”, at Ibid., para.113.

[16] Ibid., para.114.

[17] Ibid., para. 116.

[18] Ibid.

[19]“La FIFA ne peut pas contrôler les intérêts de personnes qui ne lui sont pas affiliées, ni les contrats qui sont conclus à l'occasion ou à la suite de transferts par d'autres personnes que les clubs, joueurs et agents et dont la déclaration est obligatoire via le TMS.” Ibid., para.117.

[20] Ibid., para.118.

[21] Ibid., para. 120.

[22] Ibid., paras 125-127.

[23] Ibid., para. 128.

[24] Ibid., para. 135.

[25] Ibid., para. 137.

[26] Ibid., para. 138.

[27] Ibid., para. 142.

[28] Ibid., para. 143.

[29] Ibid., paras 145-148.

[30] Ibid., paras 149-151.

[31] Ibid., paras 152-161.

[32] Ibid., paras 167-179.

[33] On this see R. Parrish, Article 17 of the Fifa Regulations on the Status and Transfer of Players : Compatibility with EU Law and G. Pearson, Sporting Justifications under EU Free Movement and Competition Law: The Case of the Football ‘Transfer System’.

Since yesterday FIFA is back in turmoil (see here and here) after the FIFA Council decided to dismiss the heads of the investigatory (Cornel Borbély) and adjudicatory (Hans-Joachim Eckert) chambers of the Independent Ethics Committee, as well as the Head (Miguel Maduro) of the Governance and Review Committee. It is a disturbing twist to a long reform process (on the early years see our blogs here and here) that was only starting to produce some tangible results.

This journey to a new FIFA started in 2015 after the events that eventually pushed Sepp Blatter and Michel Platini out, and Gianni Infantino in. As noted by the FIFA Reform Committee in its final report, it became clear FIFA needed to undertake “significant modification to its institutional structure and operational processes […] to prevent corruption, fraud, self-dealing and to make the organisation more transparent and accountable”.[1] The Reform Committee put forward a series of recommendations, which later culminated in a set of reforms approved during the Extraordinary FIFA Congress held in Zurich the 26 February 2016. Greater transparency and accountability were the leading mantras of the reform, which – broadly speaking – hinged on (i) generating a cultural change at FIFA, (ii) fostering greater participation of member associations and stakeholders in FIFA and, most importantly, (iii) reforming the principles of governance at FIFA. The essence of the reform process was about changing the governance structures and ethos at FIFA. This was to be done mainly by:

• Separating the political and management functions
• Financial Transparency and Transparency of Compensation
• Term Limits and Eligibility Checks
• Promotion of the role of women in football

And, to be fair to FIFA, on paper at least, things changed quite dramatically over last year, here is how.

1.     The new FIFA Council                                                                          

First, the reform changed the political and administrative structure of FIFA. The Executive Committee being replaced by theCouncil, a new body with a different composition and set of competences. The Council’s larger size is aimed at ensuring broader participation and representativeness. While the Executive Committee comprised 24 members plus the FIFA President, the Council is composed of 36 members plus the FIFA President. The Congress elects the President, whereas the other members of the Council represent the confederations. Each Confederation president is ex officio a vice-president of the Council. UEFA has three vice-presidents at the Council and the other Confederations one each, for a total of eight vice-presidents. The rest of the members are divided as follows: four from CONMEBOL and CONCACAF, six from AFC, UEFA and CAF, and two from OFC. 

One of the main objectives of the governance reform was to reduce the possibility of conflicts of interests. To this end, a firm separation between political decision-making and management was considered crucial. Even though the Council’s role is supposed to be confined within the boundaries of supervising FIFA’s administration and defining strategic directions, it retains strong steering powers through its competence, enshrined in Article 34 FIFA Statutes, to nominate and dismiss the members of FIFA’s Committees as well as FIFA’s Secretary General. Nevertheless, the executive functions are delegated to the Secretary General, who has the duty to carry out the day-to-day business and implement the strategies outlined by the Council. While, the Chief Compliance Officer, oversees this activity and reports to the independent Audit and Compliance Committee.

2.     The introduction of eligibility checks

The FIFA reform committee recognized that a trustworthy governance of FIFA requires that the executives be, as much as possible, free of conflicts of interest. Hence, all the members of the Council are now subject to eligibility checks carried out by the Review Committee, a special commission within the newly created Governance Committee, formed by its chairperson, its deputy chairperson and one independent member. The members of the Governance Committee are in turn subject to eligibility checks carried out by the investigative chamber of the Ethics Committee. According to Art. 27(8) FIFA Statutes: “candidates for the positions of chairperson, deputy chairperson and members of each of the Audit and Compliance Committee and the judicial bodies must pass an eligibility check carried out by the Review Committee”.[2] The Secretary General is required to fulfil an eligibility check as well[3] and so do the candidates for standing committees.[4] This new check is the cornerstone of FIFA’s governance reform. In the absence of truly open and fair democratic elections to determine who exercises power inside FIFA, the eligibility checks are a fundamental brake to control the pool of potential executives and ensure a modicum of ethical virtue amongst them.

3.     The strive for financial transparency

The FIFA Reform Committee Report proposed to make public the compensation packages of FIFA’s executives. Thus, the new Art. 51(10) FIFA Statues imposes a duty to disclose the individual compensation of the FIFA President, the members of the Council and the Secretary General. The compensation of the said members and the Compensation Rules are determined by the Compensation Sub-Committee within the Audit and Compliance Committee.[5] Indeed, in its 2016 Governance Report, published in April 2017, FIFA disclosed the compensation packages of its executives. This was a much-needed development in light of the way Blatter, Platini and co were playing with FIFA’s finances, sometimes/often to their own benefits.

4.     The limited role of the FIFA President

The reformed Statutes reduced the role and discretionary power of the FIFA President, who is now depositary of a more ambassadorial than executive role. Pursuant to Art. 35 FIFA Statutes, the President has no right to vote at the Congress and has one ordinary vote in the Council. The new provision repealed the possibility for the President to have a casting vote whenever votes are split equally inside the FIFA Council.[6] And yet, due to his capacity to set the agenda of the FIFA Council and to steer the Council’s appraisal of the Secretary General, his influence inside the constitutional structure of FIFA should not be underestimated.

5.     The introduction of term limits

The need to answer to transparency and accountability demands also resulted in the provision of term ceilings for the most prominent figures within the Organisation. The President, the members of the Council and the members of the independent committees can serve their office for no more than three terms, whether consecutive or not, of 4 years each.[7]

6.     The representation of women

FIFA recognised that “football governance at all levels needs to include more women in order to create a more diverse decision-making environment and culture”.[8] It has aimed to achieve this goal in two ways. First, FIFA adopted gender equality as an explicit statutory objective.[9] Second, and more visibly, each Confederation has to reserve for women at least one seat at the FIFA Council.[10]

7.     The reform of the standing committees

In order to improve efficiency the number of standing committees was reduced from 26 to 9. The current standing committees, which “advise and assist the Council in their respective fields of function”[11] are: the Governance Committee, the Finance Committee, the Development Committee, the Organising Committee for FIFA Competitions, the Member Associations Committee, the Player’s Status Committee, the Referees Committee, the Medical Committee and the Football Stakeholder Committee. The latter was freshly created to foster greater engagement with the football stakeholders.

Some specific requirements to be fulfilled by the members of the committees are laid out in Art. 39 FIFA Statutes. Paragraph 3 of that provision states that, while the general rule is that members of the committees can be at the same time members of the Council, the members of the Governance Committee, the independent members of the Finance Committee and the independent members of the Development Committee cannot simultaneously belong to the Council.[12]

Furthermore, at least 50% of the members of the Governance Committee, Development Committee and Finance Committee need to fulfil the independence criteria as defined in the FIFA Regulations.[13] These independence criteria need to be fulfilled also by the chairpersons, deputy chairpersons and members of the FIFA judicial bodies, i.e. the Disciplinary Committee, the Ethics Committee (both its investigatory and the adjudicatory chambers) and the Appeal Committee.[14] Furthermore, the members of the Audit and Compliance Committee must not belong to any other FIFA body.[15] The same applies to all the members of the FIFA judicial bodies.[16]

Conclusion: Plus ça change, moins ça change?

To sum up, on paper FIFA did change. It is undeniably a bit more transparent (but we are still waiting for the publication of the Garcia Report or of the decisions of the Ethics Committee) and its executives are a bit more likely to face independent counter-powers (e.g. Ethics Committee or the Governance Committee). FIFA’s reforms rely on a double strategy:

·       independent ex ante control on who is to exercise power inside the organization and;

·       independent ex post review of how this power is exercised.

And yet, with Blatter becoming a phantom of an almost forgotten past, the urge to reform is quickly receding. In fact, reform at FIFA is a bit like the ebb and flow. Its urgency, rises with the tide of public outrage at corruption scandals, and diminishes with public indifference in the face of a new business as usual.

Yesterday, 9 May 2017, we ebbed anew. It seems that the FIFA Council has decided that the time for reforms has past. New sponsors are lining up for the next world cups, the old guard is gone and the time seems ripe to turn the page. However, the institutional changes introduce over the last year made sense only if they are being monitored by strong independent institutions (the Ethics Committee and the Governance Committee), whose members do not feel that they are at the mercy of the power of the FIFA Council. Their role is to be disagreeable and to act as counter-powers, if they are dismissed at will when they do their job then the whole house of cards of FIFA reforms falls apart and we are back to square one. The dismissal and departure of independent and highly qualified academics like Miguel Maduro (with whom I  had the pleasure to work with at the European University Institute during my PhD) and Joseph Weiler are a sign that the Governance Committee and its capacity to control access to FIFA’s most powerful positions is being curtailed. Maybe it’s due, as some seem to think, to the Committee’s decision to bar access to the FIFA Council to Russia’s infamous former sports minister Mutko. In any event, it’s seems that FIFA’s strong (mostly) men are unimpressed by the benefits of “good governance”.

The tide will certainly turn again. Scandals will arise and force through new changes. Nonetheless, one is left to wonder whether the Swiss State and/or the European Union should not forcefully intervene to impose once and for all certain basic “constitutional” requirements  (e.g. independence, transparency, separation of powers) to a global body that exercises a strange form of public-private authority.

[1] 2016 FIFA Reform Committee Report, 2 December 2015, p. 1.

[2] Art. 27(8) FIFA Statutes.

[3] Art. 37 (3) FIFA Statutes.

[4] Art. 39(5) FIFA Statutes.

[5] Art. 51 FIFA Statutes.

[6] Art. 35 FIFA Statutes.

[7] Art. 33 FIFA Statutes.

[8] 2016 FIFA Reform Committee Report, 2 December 2015, p. 9.

[9] Art. 2 f) FIFA Statutes includes “the full participation of women at all levels of football governance” among the objectives of FIFA. The heading of Art. 4 FIFA Statues was amended to explicitly include ‘gender equality’.

[10] Art. 33(5) FIFA Statutes.

[11] Art. 39(2) FIFA Statutes.

[12] Art. 39(3) FIFA Statutes.

[13] Art. 40(1), Art. 41(2) and Art. 42 (1) FIFA Statutes.

[14] Art. 52(4) FIFA Statutes.

[15] Art. 51(1) FIFA Statutes.

[16] Art. 52(5) FIFA Statutes.

 Editor's note: This report compiles all relevant news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. You are invited to complete this survey via the comments section below, feel free to add links to important cases, documents and articles we might have overlooked.

The Headlines 

The CAS award in RFC Seraing v. FIFA

On 10 March 2017, FIFA published a short press release which praised the long-awaited award delivered by the CAS in the appeal of the Belgian football club RFC Seraing against FIFA’s decision. The French version of the award is now available on the CAS’s website.

The dispute in question emerged from agreements concluded between RFC Seraing and Doyen Sports Investments Limited, a private investment company known for its engagement in the acquisition of professional football players’ economic rights (Doyen). These agreements allowed Doyen to (i) influence the independence and the policy of the Belgian club; and (ii) receive an indemnity payable in connection with the future transfer of certain players. In September 2015, the FIFA Disciplinary Committee held that by entering into these agreements, RFC Seraing violated Articles 18bis and 18ter of the Regulations on the Status and Transfer of Players (RSTP) prohibiting the third-party influence on clubs and the third-party ownership of players’ economic rights. As a result, the Belgian club was banned from registering players on a national and international level for four consecutive registration periods and obliged to pay a fine of CHF 150,000.

On appeal, the CAS Panel has confirmed that Articles 18bis and 18ter RSTP are valid under European law and Swiss law. Having considered the sanction imposed by the FIFA Disciplinary Committee on RFC Seraing disproportionate, the CAS Panel reduced the transfer ban from four to three consecutive registration periods. For an in-depth analysis of the award, we invite you to read the recent blog written by our senior researcher Mr Antoine Duval.

The CAS award in Olga Abramova v. International Biathlon Union

On 1 January 2016, WADA prohibited the use of meldonium for the first time. A few days later, Ms Olga Abramova, a Russian-born Ukrainian biathlete, underwent an in-competition doping control which revealed the presence of meldonium in her body. An independent investigation was conducted by the Anti-Doping Hearing Panel (ADHP) of the International Biathlon Union. On 14 November 2016, the ADHP rendered a decision in which (i) Ms Abramova was found to have committed an anti-doping rule violation (meldonium); and (ii) a one-year period of ineligibility was imposed on her. Eventually, Ms Abramova appealed the said decision before the CAS.

In its press release dated 19 April 2017, the CAS announced that the appeal filed by Ms Abramova had been partially upheld. The CAS Panel has found to its comfortable satisfaction that Ms Abramova fulfilled her obligation to ensure that meldonium did not enter her body after 1 January 2016 (i.e. the date when meldonium was added to the list of prohibited substances). In other words, Ms Abramova ‘could not reasonably have known or suspected even with the exercise of utmost caution that meldonium could still be detected in her blood after 1 January 2016’. Accordingly, the CAS Panel has cancelled the one-year period of ineligibility imposed on Ms Abramova. It should be noted, however, that, in accordance with WADA Guidelines, the CAS Panel has confirmed the disqualification of any results achieved by Ms Abramova between 10 January 2016 and 3 February 2016.

France investigates potential corruption linked to the selection procedure for the 2018 and 2022 FIFA World Cup

Following the United States and Switzerland, France has recently become the third country to open a criminal investigation into potential corruption relating to the selection procedure for the 2018 and 2022 FIFA World Cup finals which are scheduled to take place in Russia and Qatar respectively. The Parquet National Financier, a French authority responsible for law enforcement against serious financial crime, has reportedly interviewed the former FIFA President Mr Joseph Blatter. The former UEFA President Mr Michel Platini, who admitted in the past that he had eventually decided to cast his vote for Qatar following a lunch with the former French President Mr Nicolas Sarkozy and senior Qatari officials, has not been interrogated by French authorities yet.

Sports Law Related Decisions

• CAS – Award delivered in the arbitration between RFC Seraing and FIFA
• Comisión Nacional de los Mercados y la Competencia (Spanish competition authority) – Decision on Liga Endesa and its anticompetitive behaviour
• European Commission – Decision on support from central government of the Czech Republic to non-profit sport facilities

Official Documents and Press Releases

• CAS – CAS cancels the one-year period of ineligibility imposed on Olga Abramova
• CAS – CAS issues decisions in the cases of Stanislav Emelyanov, Ekaterina Poistogova, Vladimir Kazarin and Alexey Melnikov
• FIFA –Activity report 2016
• FIFA –Agenda of the 67^th FIFA Congress
• FIFA –FIFA publishes new annual reports and confirms target result of USD 100 million for cycle
• FIFA –Financial report 2016
• FIFA –Football official Richard K. Lai banned by independent Ethics Committee for 90 days from all football activities
• FIFA –Governance report 2016
• IAAF –Independent Athletics Integrity Unit is operational
• IOC –IOC sanctions three athletes for failing anti-doping test at Beijing 2008 and London 2012
• IOC –IOC sanctions two athletes for failing anti-doping test at Beijing 2008 and London 2012
• Paralympic Movement –CAS decision on Russian Paralympic Committee confirmed by the Swiss Federal Tribunal
• UEFA – Three clubs exit settlement agreement with CFCB
• UEFA –UEFA Congress approves good governance reforms
• WADA –2015 Anti-doping rule violations report
• WADA –Statement regarding Italian Tribunal decision on Michele Ferrari and entourage
• WADA – Statement on ARD documentary
• WADA –WADA reinstates the Madrid Laboratory
• WADA –WADA removes Brazil from the World Anti-Doping Code non-compliant list
• WADA –Yemen ratifies UNECO Anti-Doping Convention

In the news

Doping

• AFP News UK chief calls for more money in fight against doping
• The Associated Press 5 Russians banned for doping at Olympics
• The Associated Press IAAF clears 2 Russian world champions, 5 others to compete
• The Associated Press Lawmaker in Russia fights Olympic doping case at CAS
• Andy Brown Meldonium 2.0? Jamaican case highlights need for clenbuterol thresholds
• Hajo Seppelt and Thilo Neumann IOC sweeps test results under the carpet
• Sky Sports UEFA unhappy with WADA over Mamadou Sakho’s ban
• Joscha Weber Doping pressure mounts on IOC at German parliament

Football 

• Andy Brown CONMEBOL publishes details of suspicious bank transfers totalling USD 129 million
• CIES Football Observatory The Champions League among the most unbalanced competitions
• David Conn France investigates votes for 2018 and 2022 World Cups and questions Blatter
• David Conn Newcastle United and West Ham raided in HMRC tax fraud investigation
• Rob Harris Anglo-French soccer fraud probe sees raids on teems, arrests
• Liam Morgan Sheikh Ahmad resigns from all footballing roles following alleged corruption link
• MSN Qatar football official wins FIFA ban appeal
•  ReutersFIFA compliance official pleads guilty in U.S. bribery case
• ReutersGenoa defender Armando Izzo banned for 18 months over match-fixing claims
• Charles Sale FIFA legal bills for investigation into corruption in football hit £80 million mark
• Stephan Uersfeld DFB backs Bild over claims of Russian censorship for Confederations Cu

Other

• Nick Butler IOC ban 2024 candidate cities from Pan-American Sports Organisation General Assembly
• Bryan Armen Graham eSports to be a medal event at 2022 Asian Games
• Craig Lord Governance review lawyers tell FINA that Ethics Panel must have stand-alone powers
• ReutersCAS upholds Mexican player’s appeal against match-fixing ban

Academic Materials

 International Sports Law Journal, April 2017, Volume 16, Issue 3

• Johan Lindholm Editorial to the International Sports Law Journal, Volume 16, Issue 3-4
• Mordehai Mironi The Promise of Mediation in Sports-related Disputes
• Oskar van Maren How to Bail Out Your Local Club: The Application of the State Aid Rules to Professional Football Clubs in Financial Difficulty
• Antoine Duval The Russian Doping Scandal at the Court of Arbitration for Sport: Lessons for the World Anti-Doping System
• Paolo Garraffa Michael Jordan’s Who? The Trade Mark Litigation between Michael Jordan and ‘Qiaodan’ Sports
• Terence D. Brennan Over Compensation: The Battle for Training Compensation and Solidarity in United States Soccer
• Salomeja Zaksaite and Karolis Radoševičius Manipulation of Competitions in Formula 1: Where Policy Ends and Cheating Begins
• Jonathan G. Merritt ‘Don’t Look a Gift Horse in the Mouth: Regulating for Integrity, What Equestrianism Can Learn from Thoroughbred Racing’
• Claire Sumner The Spirit of Sport: The Case for Criminalisation of Doping in the UK

Others

• Borja García A New Horizon in European Sports Law: The Application of the EU State Aid Rules Meets the Specific Nature of Sport
• John Grady Analysing Rule 40’s Restrictions on Using Athletes in Olympic Sponsorship at Rio 2016
• Maureen Weston The Regulation of Doping in U.S. and International Sports
• Salomeja Zaksaite and Karolis Radoševičius Manipulation of Competitions in Formula 1: Where Policy Ends and Cheating Begins

Blog

Asser International Sports Law Blog

• Antoine Duval RFC Seraing at the Court of Arbitration for Sport: How FIFA’s TPO Ban Survived (Again) EU Law Scrutiny
• Saverio Spera The Validity of Unilateral Extension Options in Football – Part 1: A European Legal Mess
• Adriaan Wijckmans The Legality of Surety Undertakings in Relation to Minor Football Players: The Lokilo Case

Law in Sport

• Thomas Barnard Six key points for footballers to consider when signing their first professional contract
• Lydia Banerjee How a change in approach could help tackle racism in football – The Jonjo Shelvey case
• Manali Kulkarni Child welfare in sport – How different countries approach mitigating the risks relating to contact sports for children
• Despina Mavromati The application of Swiss law in doping cases before the CAS and the Swiss Federal Tribunal
• Zane Shibab, James Thorndyke and Thomas Gibby How to recover prize money from doping athletes: Lessons for event organisers from the Shobukhova case
• Jamie Singer and Leon Farr Changing nationality in sport: Where should we draw the line? A review of the Aljaz Bedene case

Others

• Aage Radmann Another book about football hooliganism – is that really necessary?
• Andreas Selliaas How far should governments go controlling the governance of international sports federations?
• Ross Tucker On the Jamaican clenbuterol positives: A procedural failure and credibility black hole
• Mike Woitalla How FIFA rules hurt immigrant children in the USA

Upcoming Events 

• 7-9 June – International Conference on Doping and Public Health, Thon Hotel Ullevaal Stadion, Oslo, Norway
• 29-30 June – Sport & EU 12^th Annual Conference, Molde University College, Molde, Norway
• 26-27 October – ISLJ Annual Conference on International Sports Law, T.M.C. Asser Institute, The Hague, the Netherlands. Save the date!

Editor’s note: Serhat Yilmaz (@serhat_yilmaz) is a lecturer in sports law in Loughborough University. His research focuses on the regulatory framework applicable to intermediaries. Antoine Duval (@Ant1Duval) is the head of the Asser International Sports Law Centre.

Last week, while FIFA was firing the heads of its Ethics and Governance committees, the press was overwhelmed with ‘breaking news’ on the most expensive transfer in history, the come back of Paul Pogba from Juventus F.C. to Manchester United. Indeed, Politiken (a Danish newspaper) and Mediapart (a French website specialized in investigative journalism) had jointly discovered in the seemingly endless footballleaks files that Pogba’s agent, Mino Raiola, was involved (and financially interested) with all three sides (Juventus, Manchester United and Pogba) of the transfer. In fine, Raiola earned a grand total of € 49,000,000 out of the deal, a shocking headline number almost as high as Pogba’s total salary at Manchester, without ever putting a foot on a pitch. This raised eyebrows, especially that an on-going investigation by FIFA into the transfer was mentioned, but in the media the sketching of the legal situation was very often extremely confusing and weak. Is this type of three-way representation legal under current rules? Could Mino Raiola, Manchester United, Juventus or Paul Pogba face any sanctions because of it? What does this say about the effectiveness of FIFA’s Regulations on Working with Intermediaries? All these questions deserve thorough answers in light of the publicity of this case, which we ambition to provide in this blog.

Paul Pogba: From Manchester to Juventus…and back 

On 3 August 2012, 19 years old Paul Pogba moved from Manchester United to Juventus on a free transfer. Four years later, his comeback to Manchester United was the most expensive transaction that the history of football ever recorded. Interestingly (and controversially), the latter transfer involved only one agent, Carmine “Mino” Raiola, acting on behalf of the three parties involved in the transaction. Indeed, on 20 July 2016, Raiola signed an agreement with Juventus stipulating that one of his companies, Topscore Sports Ltd, was contracted to find a suitable acquirer for the player before 31 August 2016 in return of a hefty commission payable by Juventus if Pogba was transferred for a minimum fee of €90,000,000 below which the club was not prepared to sell the player and the company was not entitled to any remuneration. A year before, one of Raiola’s many companies, Topscore Sports Ltd, had already been appointed by Juventus as of 1 March 2015 to facilitate the transfer of Pogba. The 2016 contract acknowledged that Topscore Sports Ltd succeeded in “creating hype around the future transfer” and triggered “a bidding war” to recruit the player. Hence, pursuant to the 2016 agreement, if Topscore managed to secure a transfer above the minimum fee, Juventus would pay to Raiola’s company €18,000,000. Furthermore, Raiola would earn €3,000,000 more for each €5,000,000 increase above the minimum fee of the final amount.

Simultaneously, on 27 July 2016, Mino Raiola signed a representation contract with the player through the Monaco based company Uuniqq Srl. The contract provided for a commission “amounting to 5% of the Player’s Basic Gross Income as result of any employment contract negotiated or renegotiated by the Intermediary”. While, on 8 August 2016, Raiola concluded, again through Uuniqq Srl, an agreement with Manchester United. On 9 August 2016, Juventus and Manchester United agreed to the transfer of Pogba for a compensation of €105,000,000. Pogba obtained a salary of €10,200,000 in 2016/2017, reaching €13,800,000 in 2017/2018. On top of that, he also secured a €2,200,000 bonus every time Manchester United qualifies for the Champions League and a €1,160,000 one in case he wins the ballon d’or. According to the agreement with Manchester United, the agent would be paid for his intermediary services five installments of €3,883,658 each, payable every 30 September from 2017 to 2020. In addition to that, Manchester United was undertaking the duty to pay the player’s fee to the agent. Consequently, Uuniqq Srl was also due to receive five installments of €516,342 each, payable on the same dates.

To sum up, as a consequence of Pogba’s transfer from Juventus to Manchester United, Topscore Sports Ltd collected a total commission of €27,000,000 from Juventus, consisting of the agreed minimum of €18,000,000 plus an additional €9,000,000 for overshooting his targeted transfer fee. Uuniqq Srl got a total commission of €22,000,000, resulting from the €19,420,000 (5 instalments of €3,883,658 each) paid by Manchester United as “club services” and €2,580,000 (5 instalments of €516,342 each) paid by the club as “player’s services” on behalf of Pogba. This is the contractual set-up leading to the headline number of € 49,000,000, but is it actually legal?  

Three key questions on the legality of Mino Raiola’s role in Pogba’s transfer

There is a tremendous amount of confusion in the press regarding the legality of the above-explained contractual arrangements. For example, FIFA might be investigating the transfer, but in practice it is not in a position of enforcing any direct sanctions, besides a fine for any misleading declarations of Manchester United or Juventus to the FIFA TMS, against the clubs, the player or the intermediary. Indeed, since the entry into force of the new FIFA Regulations on Working with Intermediaries (RWI) in 2015, the responsibility to police intermediaries has been delegated to national federations, in the present case the English FA and the Italian FIGC. It means in practice that the key question is whether Raiola, the clubs or the player complied with the obligations enshrined in the federations’ regulations. The Italian FIGC has not fulfilled its basic transparency obligations under the new FIFA rules, and should be sanctioned by FIFA for not doing so, thus it is impossible to assess whether Raiola and Juventus have complied with the FIGC’s rules. However, the FA has done his regulatory homework well and we believe that the case will raise numerous questions with regard to the compatibility of the behaviour of the parties with the FA’s Regulations on Working with Intermediaries (FA RWI).

• Is Mino Raiola's total fee/commission in breach of the FA RWI?

The fees payable to Mino Raiola by all parties involved in the transfer (Manchester United as “the registering club”, Juventus as “the former club” and Pogba as “the player”) seems to be the most controversial, and peculiar, aspect of the transfer. Mino Raiola is to receive almost 38% of the total value of Pogba’s contract from Manchester United and only 5% from Pogba directly. Despite the fact that the amount of these fees seems excessive in comparison to market standards under which the level of intermediary commission varies between 5% to 10% and in some of the most extreme cases 20% (see here and here), they do not as such breach the FA RWI. The English FA regulates remuneration payable to intermediaries under section C of its regulations and the indicative level of commission is at 3% (regulation C11). However, this is only a “recommendation” and is aimed at providing guidance to the market and not at constituting an absolute requirement. The non-binding nature of this restriction on the level of commission means that the parties to the transfer are free to negotiate a higher level of commission and this seems to be the case for the representation contracts between Manchester United, Pogba, and Mino Raiola. Additionally, the level of commission, if payable by the player, is to be calculated in accordance with the player’s gross annual income for the entire duration of the relevant employment contract (Article C11.a) whereas the Club’s fee is either based on the player’s gross annual income for the entire duration of the relevant employment contract (Article C11.b) or on the transfer compensation (transfer fee) paid in connection with the transfer (Article C11.c). Both the club and the player are entitled to make the payments to the intermediary in a lump sum or periodic instalments (Article C3 and C7). The club can also make the payments to the intermediary on behalf of the player, if a written request made by the player to do so, and periodic deductions from player’s salary can be made by the club to sanction those payments (Article C2.b). In the light of these provisions of the FA RWI,  the representation contracts published by the Danish news outlet, Politiken (see here) clearly prescribe the remunerations and payment schedules to Mino Raiola by both Manchester United and Pogba  and these contractual arrangements seem to be in compliance with the regulations.

• Can Mino Raiola represent all parties to the transfer?

The other controversial aspect of the transfer is the representation arrangements by Mino Raiola in respect of Manchester United, Pogba and Juventus. According to the documents published by Politiken and Mediapart, Mino Raiola represented both Manchester United and Pogba under the same transaction. At this point, distinction needs to be made between the dual representation (the intermediary represents the player and either the registering or the former club) and the multiple representation (the intermediary representing the player, the registering club and the former club) as the FA RWI uses both terminologies interchangeably. However, the distinction between the dual and the multiple representation becomes clear under the Intermediary Declaration Form IM1 (see here), the document that must be completed by all parties to the transfer and lodged with the English FA. The document clearly outlines declaration requirements in respect of representation of the player, the registering club and the former club. The representation arrangements between Manchester United, Pogba and Mino Raiola is a dual representation, which is clearly acknowledged by the English FA in its annual disclosure of individual transactions registered, where Mino Raiola and his company, Uuniqq Srl, are listed as the representative of both the Club and the Player (see here). Additionally, as mentioned above, Mino Raiola had also a representation contract with Juventus for the sale of the player. Under the circumstances, it seems the representation contract with Juventus adds another layer to the representation arrangements and constitutes the element of multiple representation with regards to the FA RWI. These arrangements clearly raise the possibility of a conflict of interest, therefore, the English FA allow dual/multiple representation only if the intermediary and the other relevant parties to the transfer strictly comply with the consent requirements of its regulations (Article E1). Otherwise the intermediary may only act for one party to the transfer (Article E1) and cannot receive any remuneration from other parties (Article E3).

Firstly, if the intermediary has a pre-existing representation contract with one party (“the first party”) to the transfer, then that contract should be lodged with the English FA (Article E2.a). In this case, the extracts of representation contract refer to “the player representation contract” between Pogba and Mino Raiola which seems to indicate the existence of a representation contract prior to the multiple representation arrangements. Therefore, it is safe to assume that Pogba could be “the first party” to the transaction and the existing representation contract can constitute a pre-existing representation contract under the FA RWI which should have been lodged with the English FA prior to the other representation arrangements. Secondly, the intermediary should obtain all parties’ (emphasis added) prior written consent to provide services to any other party to the transaction (“the other party(ies)”) (Article E2.b) meaning that Mino Raiola should have obtained the consent of Manchester United, Pogba and Juventus to enter into the multiple representation arrangements. Then, once the intermediary and the other party(ies) agree on the terms of representation, prior to entering into actual representation contracts, the intermediary must inform all parties of the full details regarding the proposed fee to be paid by all parties to the intermediary (Article E2.c). Mino Raiola, should not only have sought the consent of all parties to the multiple representation but also disclosed them the level of fees payable to him by each party. Finally, all parties to the transfer should be given opportunity to seek independent legal advice on the proposed arrangements and provide their written consent for the intermediary to enter into dual/ multiple representation arrangements with other parties (Article E2.d, E2.e).

 As a result, the key focus of the investigation initiated by FIFA but which will inevitably move to the English FA seems to be whether Mino Raiola complied with the regulatory requirements imposing written consent prior to entering into the multiple representation arrangements. Due to the involvement of different companies located in multiple jurisdictions, it is particularly important that the representation contract with Juventus was disclosed to other parties of the transfer, i.e., Manchester United and Pogba and included under the IM1 form. A potential non-compliance with these requirements would constitute a regulatory breach. The omission of information under the relevant paperwork by the parties might be considered as the concealment or misrepresentation of reality and/or substance of any matters in relation to the transaction which is also regulatory breach (Article A3). Any regulatory breach shall be misconduct and sanctioned accordingly (Article F1). All parties involved have potentially, if a multiple representation agreement was not disclosed to the FA, breached the FA rules. However, only Juventus and Raiola knew with certainty about this multiple heads. It is doubtful that the FA could sanction Juventus, which is out of its jurisdictional reach (one could potentially envisage a transfer ban to the FA). Yet, Raiola’s multiple companies must be registered with the FA to conclude transfers with Premier League clubs, thus if he fails to demonstrate that he obtained prior written consent from all the parties to the multiple representation, one could envisage that the FA would suspend their registrations.

• Who has authority to investigate and sanction Mino Raiola for regulatory breaches (if there is any)?

The final central question is: which governing body, in this case either the English FA, the Italian FIGC or FIFA, has the authority to investigate and sanction potential regulatory breaches in the transfer? The jurisdictional nexus derives from the international dimension of a transfer involving two different associations, (English FA and Italian FIGC) and the application of FIFA Regulations on Status and Transfer of Players (FIFA RSTP). It gets even more complicated if Raiola’s original intermediary registration with the Dutch FA is taken into consideration. Against this background, the FIFA Regulations on Working with Intermediaries (FIFA RWI)’s fundamental aim was to bring some transparency in an opaque market and Article 9.1 FIFA RWI authorises associations to hand out sanctions on any party under their jurisdiction that commits regulatory breach of FIFA regulations as well as their statutes or regulations. The article implies therefore that either the English FA or the Italian FIGC (or the Dutch KNVB) may have the authority to sanction Raiola if he falls under their jurisdiction. In the case of intermediaries, the jurisdiction is generally inferred by the registration and the English FA obliges any applicants to submit to its jurisdiction through the declaration under its intermediary registration process. A close scrutiny of the English FA’s intermediary disclosures reveals Mino Raiola’s intermediary registration as natural person (see here). He has also registered his five companies as legal persons including Uuniqq Srl (see here) which is the one used for the transfer of Pogba with the English FA. These registrations could provide the English FA with jurisdiction over Mino Raiola to investigate the transaction and, if any regulatory breach is proven, to impose any sanctions. The investigative power of the English FA over Minor Raiola also derives directly from his registration under which he consented to communicate to the English FA , for the purposes of investigation, all contracts, agreements and records in connection with his activities as an intermediary. Moreover, if for any reason Mino Raiola gets eventually sanctioned by the English FA, FIFA would have the authority to extend the sanction worldwide (Article 9.2 of FIFA RWI). 

Conclusion: Regulating intermediaries without FIFA 

What are the broader lessons we can learn from this case?

• First, the transfer market remains, despite the recent TPO ban and FIFA RWI, an opaque market on which conflicts of interest are routine. In this regard, FIFA’s decision to retreat from any direct involvement in the regulation of intermediaries, despite the obvious shortcomings of the old licensing system, has proven to be a relatively poor and to some extent incoherent choice. The legitimate objectives invoked to ban TPO are in turn betrayed by the decision to let go of any supervision of intermediaries. In general, the cognitive dissonance of FIFA vis-à-vis the transfer system is striking, it attacks on the one hand (rightly in the view of one of us) the financiarization of football through TPO, but supports it on the other by maintaining in place a system that transforms players into speculative assets.

• Second, the scope of regulation of intermediaries is now exclusively dependent on the decisions of national federations. If the English FA decides to crack down on conflicts of interest in the transfer market, it will have a tremendous impact on the way intermediaries operate. The English market represents a huge share of the whole transfer market and is hardly avoidable for major intermediaries. Further, if the federations of the so-called big five (England, France, Italy, Germany, Spain) leagues would accept to coordinate their intermediaries’ regulations, they would have such a dominant market position that in practice they would very much define how the transfer market operates. In this regard, the Pogba case will be decisive (and symbolic) to determine whether the English FA is ready to lead the way down a stricter regulatory road.

• Third, fans (and their clubs) are the ultimate losers of this state of play, they should rebel! The intermediaries’ fees are a consequence of the structural lack of competition and transparency in the transfer market. In the end, those who are going to the stadium every week or have an expensive subscription to watch the Premier League are paying the intermediaries. We the consumers of football are the ones on the losing end of this masquerade of a market. If clubs are unwilling to assert their contractual rights against ruthless intermediaries, it is unlikely for example that Manchester United will ask compensation from Mino Raiola if he omitted to inform them of the obvious conflicts of interest in the Pogba transfer, their supporters (and shareholders) should try to force them to do so.

Editor's note: Branislav Hock (@bran_hock)  is PhD Researcher at the Tilburg Law and Economics Center at Tilburg University. His areas of interests are transnational regulation of corruption, public procurement, extraterritoriality, compliance, law and economics, and private ordering. Author can be contacted via email: b.hock@uvt.nl.

This blog post is based on a paper co-authored with Suren Gomtsian, Annemarie Balvert, and Oguz Kirman.

Game-changers that lead to financial success, political revolutions, or innovation, do not come “out of the blue”; they come from a logical sequence of events supported by well-functioning institutions. Many of these game changers originate from transnational private actors—such as business and sport associations—that produce positive spillover effects on the economy. In a recent paper forthcoming in the Yale Journal of International Law, using the example of FIFA, football’s world-governing body, with co-authors Suren Gomtsian, Annemarie Balvert, and Oguz Kirman, we show that the success of private associations in creating and maintaining private legal order depends on the ability to offer better institutions than their public alternatives do. While financial scandals and other global problems that relate to the functioning of these private member associations may call for public interventions, such interventions, in most cases, should aim to improve private orders rather than replace them.

FIFA example – from gentlemen’s agreements to a rich global regulator

FIFA is the governing body for football (or soccer, as it is known in some countries). Founded in 1904 under Swiss law by seven football associations, just 40 years ago, FIFA was a small gentlemen's club with a staff of 11, far from politics, which produced little cash. Since then, it has evolved into a powerful organization generating billions of dollars in annual revenues through sales of media and marketing rights; now it employs hundreds. The rise of FIFA has been a continuous process that was made possible by the reluctance of states and supra-national organizations such as the European Union (EU) to intervene in the governance of sport, particularly football. Hence, supported by and benefitting from the special treatment of sports, FIFA filled the regulatory gap and strengthened its status as a private regulator.

Besides the rules of the game, FIFA’s legal order includes privately-designed rules of cooperation and a complex organizational structure that spans every involved party including players, clubs, coaches, managers, club investors, officials, sponsors, and spectators. The centerpiece of the relations regulated by the rules of FIFA are employment-related questions. Most importantly, FIFA’s Transfer Regulations create strong tensions between FIFA’s regulatory autonomy and public orders such as the sovereign jurisdictions of FIFA’s member associations and supra-national organizations. Tensions between different levels of employment rules are especially visible in matters related to equality and/or non-discrimination of workers, the treatment and qualification of minors, the freedom to choose employment, and the freedom of movement. For example, the inability of players to terminate their contracts without cause, before expiry and without paying compensation, is in stark contrast with traditional employment laws, according to which employees are free to end employment without cause by prior notice. Figure below illustrates the relationships between the different levels of “football ordering” and public ordering when it comes to labor rules.

The Relationship of Labor Rules in Football

Furthermore, FIFA has also private dispute resolution venues and sophisticated system of sanctions and incentives promoting compliance with the decisions of the private order’s dispute resolution bodies. Possible sanctions vary but they are leveraged by the monopoly power of FIFA. Consider the right of FIFA to suspend a member association for a specific period or expel it fully from FIFA for failure to comply with its obligations, including an obligation to comply with FIFA or CAS decisions. Given FIFA's monopoly, this, in fact, means that national teams and licensed clubs from the suspended or expelled country cannot participate in any organized game. As a consequence, FIFA has been able to maintain cooperation among all involved actors, yet, along with the increasing commercial dimension, the incentives of states and other public orders, particularly the EU, to intervene have grown.

Integrity vs. legal order

The fact that FIFA is undermined by corruption is nothing surprising. Prof. Alina Mungiu-Pippidi shows that the average public integrity in more than 200 countries whose soccer associations are the FIFA constituents “is just 5, on a scale where New Zealand has ten and Somalia 1” […] “Were FIFA a country, it would clearly not be in the upper half, but somewhere near Brazil, whose officials seem to have been waist deep in its corruption, and which ranks around 121, with a 4.2”. FIFA’s administrative structure, certainly, needs reforms that will improve its financial stability and decrease corruption risks within the organization. These reforms, indeed, may require “public nudge” by the enforcement of extraterritorial “anti-mafia” statutes such as the US Racketeer Influenced and Corrupt Organization Act (RICO) that played the central role in the so-called FIFAGate. Moreover, in the light of “the second FIFAGate”—six months after the original scandal, a number of FIFA officials that replaced the old leadership were charged with a 92-count indictment—and after the recent neutralization of its internal corruption investigations (see here), more radical “public nudge” may be desirable. Indeed, these developments, as was discussed in this blog some time ago, may call for a more powerful intervention by, for example, the EU, to impose ‘certain basic “constitutional” requirements’ to FIFA.

Nevertheless, while FIFA may need “public help” to clean its house and improve some areas of its legal order, no public order is a better alternative. Common rules spanning across borders, predictable contractual relations, and incentives to invest in training young players are only some advantages made possible by FIFA’s tailored rules of behavior. These advantages would be lost if public interventions would crash the FIFA order and replace it by a patchwork of national laws, unstable contractual relations, more costly dispute resolution and enforcement mechanisms, and limited ability to encourage talent development. Therefore, while FIFA as an administrative organization may generally be considered as more corrupt than an average government, it has been able to offer harmonized institutions that in many cases are better accustomed to the needs of the involved parties than their state-made alternatives, which often are based on one-size-fits-all approach and lack certainty of application.

Public orders as the reversed civil society

It does not mean that public orders such as the EU and nation states should do nothing. Private entities often need a “public nudge” not only to prevent excesses, but also to maintain incentives to produce rules that reflect new economic and social developments. In numerous writings (for an overview see Katz), law-and economics scholars indicate that while in principle private orders should be best left alone, states should limit the potential of powerful interest groups to undermine the roots of private orders such as FIFA. Who, how, and when should determine the benchmark of what is excessive is difficult, and law-and economics has declined to offer a general theory of the role of public orders in nudging private orders to limit interest groups’ power. Nevertheless, determining the role of public orders is no more difficult than the question what civil society should do when it comes to the performance of nation states.

In the context of nation states, the key role in limiting the power of elites belongs to the civil society. In case of monopolistic orders such as FIFA’s, however, there is often no direct representation of various actors inside such orders. Shouldn’t, then, states and the EU assume the role of a reversed civil society when interacting with large and successful private orders? In practice, particularly the EU is more and more involved in an informal co-determination of football-related regulation (for similar argument see here). For example, the recent social dialogue in European football, brokered by the EU Commission, is an example how public orders can fulfill their role as reversed civil society. The EU Commission, instead of intervening directly and regulating sports, encouraged, and should do so much more, various stakeholder groups, such as the European Club Association and FIFPro, to engage in a dialogue with the purpose of improving the practices of player protection (however, it is true that the EU Commission had a way deeper impact through EU competition law, see Duval). For the private order itself participation in this dialogue and active encouragement of the enforcement of its results is the best way to guarantee its role as a supplier of rules (see generally Colucci & Geeraert). In contrary, refusal to accommodate certain mechanisms, and mainly these that effectively limit FIFA’s executives’ power (e.g. Ethics Committee), may lead to a forceful, but legitimate, public intervention with possibly tragic consequences for the world of football.

Conclusion: Taking over fallen FIFA

What is so fascinating about FIFA is that it exemplifies how a very small number of enthusiastic people could set a mechanism that is ultimately able to create institutions that aim to regulate behavior of involved actors globally as well as to keep them away from regular courts. FIFA is an example of an order that has created huge economic and social value by being able to overcome many hurdles that prevented countless other member associations from creating their own orders (think of lawyers or investment bankers, for example). The fact that such order locks-in all involved football actors, despite some, such as small teams, benefiting significantly less by their participation than others, suggests that there is a value, despite FIFA’s monopoly power, that alternatives cannot offer. Some of them, such as increased certainty, are in the interests of all involved actors, whereas others, such as commitment to enforce contractual practices or training compensation awards, are more preferred by sophisticated actors (i.e. clubs and prominent footballers) and small clubs, respectively. This, though not allowing to state plainly that the private order is maximizing the welfare of all involved actors, also does not justify arguments for abandoning the current system in favor of state laws. In contrary, failure to accommodate mechanisms that limit the power of inside interest groups might undermine the order by giving incentives to interest groups to advocate public orders’ involvement, thereby putting an end to the monopoly of FIFA’s order, and possibly its destruction.

Editor’s Note: Saverio Spera is an Italian lawyer and LL.M. graduate in International Business Law at King’s College London. He is currently an intern at the ASSER International Sports Law Centre. 

This blog is a follow up to my previous contribution on the validity of Unilateral Extension Options (hereafter UEOs) under national and European law. It focuses on the different approaches taken to UEOs by the FIFA Dispute Resolution Chamber (DRC) and the Court of arbitration for sport (CAS). While in general the DRC has adopted a strict approach towards their validity, the CAS has followed a more liberal trend. Nonetheless, the two judicial bodies share a common conclusion: UEOs are not necessarily invalid. In this second blog I will provide an overview of the similarities and differences of the two judicial bodies in tackling UEOs.

The emergence and function of the Portmann criteria

Since their first appearance in a case widely known as the South American Bosman for the impact it had on the whole system of contracts established by the Uruguayan Football Association, the so-called ‘Portmann’ criteria are often referred to in decisions on the validity of UEOs.^[1] In short, these criteria provide that:

1. the potential maximum duration of the employment relationship must not be excessive;
2. the option has to be exercised within an acceptable deadline before the expiry of the current contract;
3. the original contract has to define the salary raise triggered by the extension;
4. the content of the contract must not result in putting one party at the mercy of the other, and;
5. the option has to be clearly emphasized in the original contract so that the player can have full consciousness of it at the moment of signing.^[2]

These five requirements, proposed by Prof Wolfgang Portmann, were meant to represent the standard UEOs had to meet in order to be considered valid and biding upon the players. More precisely, in order not to constitute an excessive self-commitment that would result in a violation of Swiss ordre public.^[3] They emerged in the course of the South American Bosman as Prof. Portmann’s report was presented by Atlético Peñarol in the (unsuccessful) attempt to uphold the validity of the unilateral option the club had used in its employment contracts. From that moment on, the Portmann criteria became a recurrent theme in decisions by the DRC and the CAS. However, these criteria have been used over the years in a rather incoherent fashion and their importance in the assessment of UEOs is not unequivocal.

Thereafter, in its first decision, the DRC used the criteria to assess the validity of an UEO.^[4] But then it drastically drifted away from them. Actually, in the ensuing decisions the DRC did not refer to the five conditions at all. In some instances it limited itself to recall its established jurisprudence finding the validity of UEOs disputable since they give the stronger party in the employment relationship the power to unilaterally extend or terminate the contract.^[5] In another occasion, the DRC expressly dismissed the binding effect of the Portmann report, underlining that it only constitutes a non-binding recommendation.^[6]

Furthermore, interestingly, in the appeal proceedings of the Atlético Peñarol case the CAS did not mention the Portmann report in its evaluation of the UEO. The Panel only referred to it in the part of the award that assessed the question of the applicable law and noted that Prof Portmann’s starting point was radically different from that of the Panel, as he deemed Uruguayan law applicable to the dispute, while the Panel applied Swiss law/the RSTP.^[7] Having said that, the CAS also seems to have departed from its initial approach, but in a rather different way than the DRC. In an early award of 2007, the CAS refused to give too much weight to the Portmann report and focused its reasoning on other circumstances.^[8] Yet, the ensuing awards did not follow suit on this approach. In its more recent awards, the CAS held that the criteria constitute soft guidelines and often de facto relied on them to reach its conclusion on the validity of an option.^[9] In one occasion, the CAS even added to the list of requirements two criteria, “emanating from recent developments in the FIFA DRC and CAS jurisprudence”, namely (i) the proportionality between the extension and the main contract and (ii) the desirable limitation of the number of extensions to one.^[10]

Regarding the relevance of the Portmann criteria, it seems that the only shared trait between the DRC and the CAS is that both have drifted away from their approach. Though, in quite opposite ways. 

Increase in salary as a sine qua non condition for the validity of UEOs

The question of the increase of the player’s salary is considered central, by both the DRC and the CAS, in deciding the validity of UEOs.

In fact, an improvement of the player’s salary is considered by the DRC as a possible ‘validating’ circumstance since the first published decision on the issue.^[11] The FIFA Chamber placed particular emphasis on the necessity to offset the unequal bargaining power that UEOs give to football clubs. To do that, a significant economic gain for the player must be envisaged in the contract as a result of the extension. In the view of the DRC, this is a necessary but sometimes not sufficient condition for the validity of a UEO, since the specification of the financial terms of the renewal in advance “necessarily cannot take into account, neither by the player nor the club, the possible enhancement of the player’s value, and hence earning power, over a two year period”.^[12]

In its awards on the matter, the CAS contends that the player must derive a clear economic advantage from the exercise of the option.^[13] Thus, the increase in salary is the only requirement that is fully embraced by both the DRC and the CAS. It is interesting to note, however, that in only one occasion did the CAS explicitly mentioned that “[e]ven if the financial terms had to be specified in advance, they necessarily take no account of the possible enhancement of a players value – and hence earning power – over a five year period e.g.: if he becomes an international player during that time”.^[14] It is also worth noting that, at least in one award, the CAS concluded that an increase in salary has to be evaluated only in relation to the previous economic conditions of the player’s contract and not in relation to the salary he could earn somewhere else.^[15]

In light of the above, it is safe to conclude that an UEO coming with a substantial increase in salary for the player has good chances to be deemed valid by the DRC and the CAS. To this end, a few additional observations are relevant. Firstly, how much is enough? Unfortunately, no clear guidelines can be derived from the case law. Secondly, it is practically impossible to predict the increase in value of a football player over a long-term period. Consequently, what can be considered a reasonable increase in salary at the signing of the contract might be deemed insufficient a few years later. Lastly, and probably most importantly, this approach might overlook the fact that an increase in salary is not always the only element a footballer takes into account in his career, as sometimes more personal considerations might push a player to move to a different club in another country. For instance family reasons might play a significant role in such a decision. Furthermore, football players might often consider more convenient for the development of their careers to give up on an increase in salary in order to have the chance to move to a club with more playing opportunities. An increase in salary, even substantial, should not be the altar on which a footballer’s fundamental freedom of movement and, ultimately, of choice is sacrificed.

The player’s behaviour

The player’s stance has often been evaluated by the DRC in particular as a concurrent element in determining the validity of an UEO. The main argument is that a certain behaviour of the player, such as keeping training and playing official matches with the club, implies a tacit acceptance of the extension. Once again, the DRC and the CAS are not entirely on the same line. The DRC jurisprudence gives more weight to this aspect, while the CAS has mentioned that particular attention has to be paid to “the player’s conduct during the period leading to the negotiation of the alleged extension clause” only in one single case.^[16]

With regards to the circumstance that the player has played in official matches as a consequence of the extension, the DRC showed a swinging trend. In one instance, it deemed it not relevant.^[17] Yet, in a subsequent decision (the only one by the DRC upholding the validity of an UEO to date), the fact that the player had kept taking part in training sessions and playing official matches for the club after the extension had quite a different impact on the reasoning of the Chamber.^[18] More recently, the DRC stated that the fact that the player trained with the club for a month after the alleged renewal does not imply his tacit acceptance of the unilateral extension.^[19]

The applicable law

As seen in the first part of this blog, each national jurisdiction interprets the validity of UEOs differently. Consequently, the choice of applicable law can play a major role in the outcome of a case, although the issue arises mainly when the dispute is brought before the CAS. The matter is complicated by the fact that CAS panels have a certain degree of discretion in deciding the law applicable to a dispute, and by the circumstance that even when they apply the same law they might reach different conclusions. With regard to the latter point, let us take into consideration two cases in which the CAS has established Greek law as the applicable law. In one occasion the Panel deemed “appropriate to mitigate the letter of Greek law by the spirit of general principles”, as its content concerning UEOs was considered inconsistent with “general principles of labour law”^[20] and consequently dismissed the appeal of the club. In another one, instead, the Panel concluded that the dispute had to be decided according to FIFA Regulations and Swiss law on a subsidiary basis, “with the important exception of any issues related to the Contract […] which shall be decided in accordance with Greek law”.^[21] Therefore, given that in Greece unilateral options allowing clubs to automatically extend employment contracts are legal, the Panel upheld the validity of the clause.^[22]

A radically different approach was taken by the CAS in the Atlético Peñarol case discussed above. In the absence of an express choice of law of the parties, the Panel deemed the FIFA Regulations and, subsidiarily, Swiss Law applicable. It is worth recalling the reasoning of the Panel, as it could pave the way to a reasonable solution for the UEOs issue. The arbitrators noted that the application of art. 187 of the Swiss LDIP gives wide freedom of choice to the parties, who can even require the arbitrators to decide ex aequo et bono, i.e. without any reference to specific State laws. This means that art. 187 LDIP allows, a fortiori, to refer to rules that transcend the particular State laws, such as sports regulations. The Panel stressed that sport is a phenomenon that naturally crosses borders, and thus it is necessary to ensure uniform legal standards. Only if the same terms and conditions apply to everyone who participates in organised sport, is the integrity and equal opportunity of sporting competition guaranteed. In practice, the FIFA Statutes and Regulations provide such uniform rules. Additionally, the arbitrators underlined that the application of Uruguayan law would lead to a result incompatible with the minimum standards of protection of employees provided by Swiss labour law. Hence, the CAS concluded that the Uruguayan system of UEOs is not compatible with the FIFA Regulations. Furthermore, the Panel noted that these options effectively bypass the basic principles of the FIFA regulations, which “very particularly protect the interests of training clubs through training compensation and the solidarity contribution […] It is not possible that this protection of the contents of a contract between clubs and players can be bypassed in order to serve only the interests of one party, in this case the club, which does not itself have to make a commitment. So the Panel considers that the unilateral contract renewal system is not compatible, in its very principle, with the legal framework which the new FIFA rules were designed to introduce”.^[23] In other words, the Uruguayan system seemed to reintroduce, through the backdoor, the system that was abolished with the reforms of the FIFA Regulations 1997, 2001 and 2005.^[24]In such a system the player is bound to a contract negotiated at a moment of his career when he did not have a strong bargaining power. Which is to say, the player is left at the mercy of the club. The arbitrators stressed that only the most talented players can escape this mechanism, when the club receives an important transfer offer for their services.^[25]In that occasion, the player will hardly refuse the transfer knowing that, doing otherwise, he will be bound to the club because of the UEO in his contract.

Conclusions: The way forward

We have seen in part 1 of this blog that we lack a coherent regulatory framework for UEOs at the national level. This second part has also shown that things are not much clearer at the DRC and the CAS, as the two bodies, while agreeing on the existence of certain criteria, take different approaches on the assessment of each of them (except for the increase in salary). Furthermore, the outcome of a case can be heavily dependent on the applicable law. Consequently, the future validity of UEOs is uncertain, given that no uniformity can be found in the CAS jurisprudence.

The uncertainties related to the applicable law issue are manifold. Upholding the validity of national law, although granting some advantages in terms of foreseeability, presents two main drawbacks. First of all for the clubs which draft the contracts and cannot predict to what extent this law will be deemed applicable by the CAS and, consequently, are unable to draft the contract with all the necessary information desirable in respect to UEO clauses.^[26]Secondly, and most importantly, this approach overlooks the fact that football is a global phenomenon, and the transfer market a transnational one, which requires uniform rules at the international level.

The conclusion reached by the Panel in the Atlético Peñarol case is a fair starting point in the quest for more certainty in the matter. The undisputable merit of that award was to clearly highlight (i) the unequal nature of a clause that is accepted by the player at the early stages of his career and (ii) the necessity to have a body of regulations that can be understood and predicted by the entire international football family.[27] Let us conclude, therefore, that only the universal application of a set of regulations, such as the FIFA RSTP, would ensure legal rationality, predictability and, significantly, “the equality of treatment between all the addressees of such regulations, independently of the countries from which they are”.^[28]A fortiori, when at stake is the fundamental freedom of movement and choice of footballers, the need to rely on a uniform body of principles and rules, a lex sportiva, universally applicable without discrimination becomes crucial.

However, applying the FIFA Regulations in a standardised way still leaves a problem unsolved. This body of rules is in fact silent on the very issue of UEOs. FIFA could tackle the issue in a variety of ways, for instance by codifying in the RSTP a revisited version of the Portmann criteria. Suggesting precise reforms to FIFA goes beyond the purpose of this blog, but one thing is sure: in the face of the extreme uncertainty that surrounds the validity of these clauses, having one single body of rules expressly targeting the issue and universally applicable would be of great help to all the parties involved.

[1] The case concerned the contracts of two Uruguayan players, Carlos Heber Bueno Suárez and Christian Gabriel Rodríguez Barotti with the Uruguayan football club Atlético Peñarol. Pursuant to their contracts, the professional services of Bueno and Rodríguez could be extended unilaterally by the club for two years, provided that their salary would increase in accordance with the National Consumer Price Index. At the end of the season, and after being suspended and deprived of the possibility of playing for four months, the players signed for the French club Paris Saint Germain, and refused the club’s unilateral extension. See TAS 2005/A/983 & 984, Club Atlético Peñarol v. Carlos Heber Buen Suárez, Christian Gabriel Rodríguez Barotti & Paris Saint Germain, award of 12 July 2006. In fact, the framework has slightly changed over the last few years in South America. In Argentina, for instance, the 2009 Collective Bargaining Agreement (CBA) n. 557/09, signed by the Association de Futbol Argentino (AFA) and the Union of Amateur and Professional Football Player provides the current guidelines. In this context, contracts of athletes who have reached the age of 21 can be extended once for one year only, provided that a salary increase of 20% is guaranteed as a consequence of the extension. Extension options for players older than 21 shall be considered null and void, even in the circumstance that AFA has registered the contract, and consequently the player is to be declared a free agent and thus free to sign a contract with another club (see Colucci, Hendricks, Regulating Employment Relationships in Professional Football, A Comparative Analysis, European Sports Law and Policy Bulletin 1/2014, 26). See also Juan de Dios Crespo Pérez’s commentary of the case in A. Wild (ed.) CAS and Football: Landmark Cases (2011), 118. 

[2] F. de Weger,The Jurisprudence of the FIFA Dispute Resolution Chamber, 169.

[3] Prof Portmann considered South American law the law applicable to the substance of the matter. Nevertheless, according to the author, in order to be considered valid, the option not only had to be consistent with local employment law, Collective Bargaining Agreements and regulations of the relevant national association, but it also had to respect mandatory rules of Swiss law and Swiss ordre public. Although he considered the principle of parity of termination rights not part of ordre public per se (and, therefore, the circumvention of that right that these clauses entail not problematic in itself), he stressed that an excessive self-commitment of one of the parties to a contract could indeed result in an infringement of Swiss and international ordre public.

[4] In the unpublished decision 12 January 2007 (see F. de Weger, The Jurisprudence of the FIFA Dispute Resolution Chamber, 169), the DRC made reference to the five elements of the Portmann report to conclude that the option was not valid because, among other considerations, the notice period was too short.

[5] See decision 30 November 2007 n. 117707 and decision 7 May 2008 n. 58860.

[6] See decision18 March 2010 n. 310607, where the DRC interestingly pointed out that the inequality derives from the fact that the player, given the circumstances of contractual inferiority existing at the time he signs his first contract, either accepts the contract with the UEO or gives up on playing football with that team.

[7]TAS 2005/A/983 & 984, Club Atlético Peñarol v. Carlos Heber Buen Suárez, Christian Gabriel Rodríguez Barotti & Paris Saint Germain, award of 12 July 2006, para. 66.

[8]CAS 2006/A/1157, Club Atlético Boca Juniors v. Genoa Cricket and Football Club S.p.A., Award of 31 January 2007, para. 16. The Panel had “great difficulty in following Dr Portmann’s reasoning, and in accepting the validity and enforceability of a unilateral option”. The arbitrators deemed more important, instead, to put emphasis on the general assumption that a person, and a fortiori a minor who had just moved with his family to another country, cannot be required to perform a contract for personal services against his or her will.

[9] The CAS held recently that “these criteria may be taken into consideration and are important, but […] they are not absolute rules, the failure of which would determine the absolute invalidity of the option clause”, in CAS 2014/A/3852, Ascoli Calcio 1898 S.p.A. v. Papa Waigo N’diaye & Al Wahda Sprts and Cultural Club, award of 11 January 2016, para. 86.

[10] More precisely, a Panel held “the need to not accord too much weight and value to the Portmann criteria at the expense of the very important specifics and circumstances behind each individual dispute” CAS 2013/A/3260, Grêmio Foot-ball Porto Alegrense v. Maximiliano Gastón López, Award of 4 March 2014, para. 76, see also para. 68-69.

[11] In Decision 22 July 2004, the DRC noted that because the player’s economic conditions remained substantially unaltered in the renewal, the option was invalid.

[12] See Decision 23 March 2006, para 14. In this case, the DRC deemed that a monthly increase of less than € 1.000 of the player’s salary could not be seen as a significant economic gain for the player.

[13] See CAS 2004/A/678, Apollon Kalamarias F.C. v. Oliveira Morais, award of 20 May 2005, para. 21 and TAS 2005/A/983 & 984, Club Atlético Peñarol v. Carlos Heber Buen Suárez, Christian Gabriel Rodríguez Barotti & Paris Saint Germain, award of 12 July 2006, para. 93. See also CAS 2005/A/973, Panathinaikos Football Club v. Sotirios Kyrgiakos, Award of 10 October 2006 and CAS 2013/A/3260, Grêmio Foot-ball Porto Alegrense v. Maximiliano Gastón López, Award of 4 March 2014, para. 77.

[14]CAS 2004/A/678, Apollon Kalamarias F.C. v. Oliveira Morais, award of 20 May 2005, para 21.

[15] See CAS 2005/A/973, Panathinaikos Football Club v. Sotirios Kyrgiakos, Award of 10 October 2006, para. 23. In which the Panel considered inappropriate to compare between the salary of the extended contract from the Greek club and the salary the footballer would have received at a club in the Scottish league (the Rangers FC) since “it is well known that football clubs operating in richer markets are able to offer a higher income to players”.

[16]CAS 2013/A/3260, Grêmio Foot-ball Porto Alegrense v. Maximiliano Gastón López, Award of 4 March 2014, para. 70.

[17] See Decision 13 May 2005. Here the DRC also pointed out the non-decisiveness of the acceptance by the player of a payment of €1,950 after the extension as a result of the new contract.

[18] See Decision 21 February 2006, in which the DRC noted that: (i) the player had waited almost five months after the beginning of the extension to bring the case before the FIFA.

[19] See Decision 31 July 2013.

[20]CAS 2004/A/678, Apollon Kalamarias F.C. v. Oliveira Morais, award of 20 May 2005, para 24. The Panel dismissed the appeal of the club even though its contract with the player seemed to be drafted in conformity with Greek Sports Law, which – pursuant to Law 2725/99 – allows for the unilateral renewal of the contract provided that (i) the overall duration of the contract, including the extensions, does not exceed five years and that (ii) the financial terms are agreed at the signing of the initial contract.

[21]CAS 2005/A/973, Panathinaikos Football Club v. Sotirios Kyrgiakos, Award of 10 October 2006, para.10.

[22] The Panel, which considered “inappropriate to apply substantive Swiss law to the contract as it has no connection whatsoever with Switzerland (para. 8), made reference to the same Law 2725/99.

[23]TAS 2005/A/983 & 984, Club Atlético Peñarol v. Carlos Heber Buen Suárez, Christian Gabriel Rodríguez Barotti & Paris Saint Germain, award of 12 July 2006, paras. 81-83 (the translation is of the author).

[24] Ibid., para. 80.

[25] Ibid., para. 79.

[26] Ibid.

[27] J-S Leuba, R Fox, J de Dios Crespo Pérez, G L Acosta Perez and F m de Weger, ‘Contractual Stability: Unilateral Options’, in A. Wild (ed.) CAS and Football: Landmark Cases (2011), 119.

[28] Ibid.

Editor’s note: Tomáš Grell is currently an LL.M. student in Public International Law at Leiden University. He contributes to the work of the ASSER International Sports Law Centre as a part-time intern.

In its press release of 28 February 2017, the International Olympic Committee ('IOC') communicated that, as part of the implementation of Olympic Agenda 2020 ('Agenda 2020'), it is making specific changes to the 2024 Host City Contract with regard to human rights, anti-corruption and sustainable development. On this occasion, IOC President Thomas Bach stated that ''this latest step is another reflection of the IOC's commitment to embedding the fundamental values of Olympism in all aspects of the Olympic Games''. Although the Host City of the 2024 Summer Olympic Games is scheduled to be announced only in September this year, it is now clear that, be it either Los Angeles or Paris (as Budapest has recently withdrawn its bid), it will have to abide by an additional set of human rights obligations.

This two-part blog will take a closer look at the execution of the Olympic Games from a human rights perspective. The first part will address the most serious human rights abuses that reportedly took place in connection with some of the previous editions of the Olympic Games. It will also outline the key characteristics of the Host City Contract ('HCC') as one of the main legal instruments relating to the execution of the Olympic Games. The second part will shed light on the human rights provisions that have been recently added to the 2024 HCC and it will seek to examine how, if at all, these newly-added human rights obligations could be reflected in practice. For the sake of clarity, it should be noted that the present blog will not focus on the provisions concerning anti-corruption that have been introduced to the 2024 HCC together with the abovementioned human rights provisions.

Examples of Olympic Games-related human rights abuses 

The large majority of Olympic Games-related human rights abuses fall into one of the following categories: (i) violations of labour-related rights; (ii) forced evictions; and (iii) repressions of civil rights, in particular the right to freedom of expression and the right to peaceful assembly. In addition, the execution of the Olympic Games can entail negative environmental impacts.

Violations of labour-related rights 

International labour standards are primarily laid down in a number of conventions and other instruments adopted by the International Labour Organization ('ILO'). The ILO identifies four cornerstone principles, namely the right to freedom of association and collective bargaining, the elimination of all forms of forced labour, the abolition of child labour and the elimination of discrimination in respect of employment and occupation.[1] These principles are also reflected to a certain extent in the Universal Declaration of Human Rights ('UDHR'),[2]the International Covenant on Civil and Political Rights ('ICCPR'),[3]the International Covenant on Economic, Social and Cultural Rights ('ICESCR')[4] and regional human rights treaties, such as the European Convention on Human Rights ('ECHR').[5] Other fundamental labour-related rights include, for instance, the right to rest, leisure, fair wages or safe and healthy working conditions.[6]

Thousands of workers coming from both inside and outside of the Host Country are recruited in the run-up to the Olympic Games to ensure that Olympic venues are built on time. Regrettably, these workers are often subjected to multiple violations of their labour-related rights. A report published by Human Rights Watch ahead of the 2008 Summer Olympic Games in Beijing revealed, inter alia, that internal migrant workers frequently faced delayed payment of their wages and were denied basic services linked to China's household registration system, known as Hukou.[7] Furthermore, the freedom of association of these workers was restricted as they could not join China's only legal trade union body, the state-sponsored All-China Federation of Trade Unions.[8] The 2014 Winter Olympic Games in Sochi received a significant influx of migrant workers coming to Russia mostly from Central Asia. Several reports demonstrated that, in addition to unpaid wages or excessive working hours, migrant workers in Sochi were also prevented from moving to another employer as their work permits or personal identity documents were often withheld.

Forced evictions 

The United Nations Committee on Economic, Social and Cultural Rights ('CESCR') defines the term 'forced eviction' as ''the permanent or temporary removal against their will of individuals, families and/or communities from the homes and/or land which they occupy, without the provision of, and access to, appropriate forms of legal or other protection''.[9] The CESCR further specifies that forced evictions might be permissible if the individuals concerned are provided with an adequate compensation for any affected property or, in cases where forced evictions result in the individuals concerned being rendered homeless, an adequate alternative housing, resettlement or access to productive land.[10] Moreover, forced evictions should be carried out in conformity with general principles of reasonableness and proportionality.[11]

Some of the previous editions of the Olympic Games have seen whole communities being removed from their homes to make way for stadiums, accommodation facilities and infrastructure. According to research conducted by the Centre on Housing Rights and Evictions, at least 1.25 million people were displaced prior to the Beijing Games.[12] Thousands of families had been relocated from favelas in Rio de Janeiro before the 2016 Summer Olympic Games were opened. Doubts have been raised whether the affected individuals were provided with an adequate compensation and other guarantees as referred to above.[13]

Repressions of civil rights

Rule 50 (2) of the Olympic Charter stipulates that ''no kind of demonstration or political, religious or racial propaganda is permitted in any Olympic sites, venues or other areas''. Based on this provision, the Host Country may adopt laws and take measures restricting the right to freedom of expression[14] and the right to peaceful assembly.[15] The Chinese government was accused of curtailing the right to freedom of expression of domestic and foreign journalists prior to the Beijing Games. In February 2014, four LGBT-advocates from Russia were detained when they were about to protest against discrimination at the Sochi Games.

Rule 50 (2) of the Olympic Charter also prevents athletes from making political statements in any Olympic sites or venues. At the 1968 Summer Olympic Games in Mexico City, the IOC showed no tolerance for the black power salute, a political demonstration conducted by Afro-American athletes Tommie Smith and John Carlos (gold and bronze medallists in the 200-meter sprint) with the view of supporting their compatriots in the struggle against racial segregation. At the Sochi Games, the IOC did not allow Ukrainian athletes to wear black armbands in commemoration of those who died during the conflict in the country. It is arguable that such examples constitute an unlawful interference with the freedom of expression of athletes competing in the Olympic Games.[16]

Negative environmental impacts

Despite not being generally accepted as a human right per se, the right to a safe and healthy environment might be inferred from other human rights, including, for instance, the right to life or the right to food and water.[17] It should also be noted that environmental concerns are closely intertwined with the concept of sustainable development, as exemplified in the Rio Declaration on Environment and Development which provides that ''environmental protection shall constitute an integral part of the development process and cannot be considered in isolation from it''.[18]

The first Olympic Games that were widely criticized for disregarding environmental considerations were the 1992 Winter Olympic Games in Albertville.[19] By contrast, it is widely recognized that the 1994 Winter Olympic Games in Lillehammer were executed in an environmentally-sustainable manner, arguably in response to the Rio Declaration on Environment and Development which was agreed upon only few months after the closing ceremony of the Albertville Games.[20] Insofar as the more recent editions of the Olympic Games are concerned, the Rio Games faced serious difficulties relating to the polluted waters of Guanabara Bay, an Olympic venue for sailing events. In a similar vein, preparations of the upcoming 2018 Winter Olympic Games in Pyeongchang have been marred by allegations of destroying 500-year-old virgin forest to make room for a ski slope.

Introduction to the HCC

The previous section has portrayed some of the most serious human rights abuses associated with the execution of the Olympic Games. These abuses call for an adequate response from the IOC. Before proceeding to analyse whether the human rights provisions recently introduced to the 2024 HCC may constitute an effective remedy, it is essential to take a cursory look at the HCC as one of the main legal instruments linked to the execution of the Olympic Games.

What should be known in the first place

Following the completion of the selection procedure, the HCC is entered into by the IOC on the one hand and the successful Candidate City ('Host City') and the National Olympic Committee of the Host Country ('Host NOC') on the other hand. Within five months after the execution of the HCC, the Host City and the Host NOC shall form the Organising Committee of the Olympic Games ('OCOG'), an entity endowed with legal personality under the laws of the Host Country.[21] The Host City and the Host NOC shall subsequently ensure that, within one month after the OCOG's formation, the OCOG becomes a party to the HCC and adheres to all its terms.[22] Even though the Host Country itself is not a party to the HCC, it plays an important role in fulfilling the obligations contained therein. For instance, the Host Country Authorities are required to take all necessary measures to guarantee the safe and peaceful celebration of the Olympic Games.[23]

As such, the HCC in its current form consists of four separate documents which apply in the following order of precedence: (i) The HCC – Principles; (ii) The HCC – Operational Requirements which provides a detailed description of the main deliverables and other obligations to be performed by the Host City, the Host NOC and the OCOG, including, inter alia, obligations relating to finances, media or the Olympic Torch Relay; (iii) The Games Delivery Plan which outlines the main planning framework, timelines and milestones to be respected by the Host City, the Host NOC and the OCOG; and (iv) The Candidature Commitments which concerns all guarantees and other commitments contained in the Host City's candidature documentation.[24] Since the present blog deals exclusively with the HCC – Principles, all references to the HCC throughout this post should be taken to include the HCC – Principles only.

The HCC is governed by the domestic laws of Switzerland.[25] The parties thereto undertake to submit all their disputes concerning the validity, interpretation or performance of the HCC to the Court of Arbitration for Sport ('CAS'). If, for any reason, the CAS refuses to exercise its jurisdiction in a particular case, the domestic courts in Lausanne shall be competent.[26]

The main purpose of the HCC is to delegate the execution of the Olympic Games from the IOC to other actors, namely the Host City, the Host NOC and the OCOG.[27] As a general rule, these actors shall be jointly and severally liable for all their obligations, guarantees and other commitments under the HCC, whether entered into individually or collectively.[28] The Host City is primarily tasked with delivering the public infrastructure. It may create and grant powers to an Olympic Delivery Authority[29], a public entity that ''combines the functions of a local council, planning authority, transport executive, trading standards office and police service''.[30] The Host NOC is concerned predominantly with sport-related matters, whilst the OCOG is responsible for hiring suppliers and contractors to build Olympic venues, lodging athletes and officials or elaborating reports on a regular basis.[31] This is not to say, however, that the IOC is not involved in the execution of the Olympic Games. Given that the Olympic Games are the exclusive property of the IOC,[32] the IOC provides significant financial and other benefits to its agents, determines the core requirements, exercises supervision and takes measures in case of non-compliance with the HCC.

Core requirements

First and foremost, the Host City, the Host NOC and the OCOG undertake to respect the Olympic Charter and the IOC Code of Ethics. By signing the HCC (or acceding thereto), they also agree to carry out their operations ''in a manner which promotes and enhances the fundamental principles and values of Olympism as well as the development of the Olympic Movement''.[33] Other core requirements laid down in the HCC relate mostly to human rights, anti-corruption, environmental protection and sustainability, security, betting and prevention of manipulation of competitions, intellectual property rights, entry and stay of athletes and Games-related personnel, taxes, media and marketing. The provisions concerning human rights, environmental protection and sustainability will be specifically examined at a later stage.

IOC's supervision of the execution of the Olympic Games

In order to monitor the progress of, and provide guidance to, the OCOG, with respect to the planning, organisation, staging and financing of the Olympic Games, the IOC creates a Coordination Commission with members representing the IOC, the International Federations, the National Olympic Committees, OCOGs from the past, the IOC Athletes' Commission and the International Paralympic Committee, as well as experts designated or approved by the IOC.[34] As part of their mandate, members of the Coordination Commission conduct site inspections and meet with representatives of the OCOG and the Host Country on a regular basis.[35]

Measures in case of non-compliance with the HCC

The most serious measure contemplated by the HCC in the event of non-compliance therewith is its termination by the IOC and subsequent withdrawal of the Olympic Games from the Host City, the Host NOC and the OCOG. Termination of the HCC might be prompted by a failure on the part of the Host City, the Host NOC and/or the OCOG to perform ''any material obligation pursuant to the HCC or under any applicable law''.[36] That being said, the HCC sets out a two-step procedure for its termination and subsequent withdrawal of the Olympic Games. First, the IOC notifies the Host City, the Host NOC and/or the OCOG and calls upon the relevant party to remedy its failure within 60 days of receiving the notification. This time limit is shortened to 30 days if the opening ceremony of the Olympic Games is less than 120 days away.[37] Second, if the relevant party does not respond to its failure in a timely and accurate manner, the HCC shall be terminated and the Olympic Games withdrawn with immediate effect.[38] Apart from termination of the HCC and subsequent withdrawal of the Olympic Games, the IOC may decide, for example, to withhold any grant to be made to the OCOG in accordance with the HCC.[39]

Conclusion

Against the background of the reform proposals embodied in Agenda 2020, the initial failure of the 2024 HCC to incorporate human rights obligations, other than those relating to non-discrimination, was presented as an astonishing omission. Although the IOC has recently surrendered to public pressure and it has finally added human rights obligations to the 2024 HCC, its role does not end here. The second part of this blog will examine whether the insertion of human rights obligations to the 2024 HCC is to be regarded as a turning point in history of the Olympic Games or risks being an empty promise.

[1]   ILO Declaration on Fundamental Principles and Rights at Work; Article 2.

[2]   UDHR; Article 23.

[3]   ICCPR; Articles 8, 22, 26.

[4]   ICESCR; Articles 2, 8.

[5]   ECHR; Articles 4, 11, 14.

[6]   ICESCR; Article 7.

[7]   Human Rights Watch, 'One Year of My Blood: Exploitation of Migrant Construction Workers in Beijing', March 2008, at 22, 39.

[8]   Ibid., at 42.

[9]   CESCR General Comment No. 7; para. 3.

[10]  Ibid., paras. 13, 16.

[11]  Ibid., para. 14.

[12]  Centre on Housing Rights and Evictions, 'Fair Play for Housing Rights: Mega-Events, Olympic Games and Housing Rights', June 2007, at 154.

[13]  R. Gauthier, The International Olympic Committee, Law and Accountability, Routledge, 2017, at 90.

[14]  ICCPR; Article 19 (2), (3).

[15]  Ibid., Article 21.

[16]  F. Faut, 'The Prohibition of Political Statements by Athletes and its Consistency with Article 10 of the European Convention on Human Rights: Speech is Silver, Silence is Gold?', (2014) 14 (3) ISLJ 253.

[17]  A. Boyle, 'Human Rights and Environment: Where Next?', (2012) 23 (3) EJIL 613, at 617.

[18]  Rio Declaration on Environment and Development; Principle 4.

[19]  S. Samuel, W. Stubbs, 'Green Olympics, Green Legacies? An Exploration of the Environmental Legacies of the Olympic Games', (2012) 48 (4) International Review for the Sociology of Sport 485, at 487.

[20]  Ibid.

[21]  2024 Host City Contract – Principles; Article 3.1.

[22]  Ibid., Article 3.3.

[23]  Ibid., Article 17.1.

[24]  Ibid., Article 1.1.

[25]  Ibid., Article 51.1.

[26]  Ibid., Article 51.2.

[27]  Ibid., Article 2.

[28]  Ibid., Article 4.1.

[29]  In practice, an Olympic Delivery Authority might operate under different names.

[30]  M. James, G. Osborn, 'London 2012 and the Impact of the UK's Olympic and Paralympic Legislation: Protecting Commerce or Preserving Culture', (2011) 74 (3) Modern Law Review 410, at 419-420.

[31]  Gauthier (supra note 13) at 65-66.

[32]  Olympic Charter; Rule 7.2.

[33]  2024 Host City Contract – Principles; Article 13.1.

[34]  Ibid., Article 27.1. See also Olympic Charter; Rule 37.

[35]  A. Geeraert, R. Gauthier, 'Out-of-control Olympics: Why the IOC is Unable to Ensure an Environmentally Sustainable Olympic Games', (2017) 19 Journal of Environmental Policy & Planning 10.

[36]  2024 Host City Contract – Principles; Article 38.2. (d).

[37]  Ibid., Article 38.3. (a).

[38]  Ibid., Article 38.3. (b).

[39]  Ibid., Article 36.2. (b).

This is a follow-up contribution to my previous blog on human rights implications of the Olympic Games published last week. Together with highlighting some of the most serious Olympic Games-related human rights abuses, the first part has outlined the key elements of the Host City Contract ('HCC') as one of the main legal instruments regulating the execution of the Olympic Games. It has also indicated that, in February 2017, the International Olympic Committee ('IOC') revised the 2024 HCC to include, inter alia, explicit human rights obligations. Without questioning the potential significance of inserting human rights obligations to the 2024 HCC, this second part will refer to a number of outstanding issues requiring clarification in order to ensure that these newly-added human rights obligations are translated from paper to actual practice.

Implementation of Agenda 2020 into the HCC 

In December 2014, the IOC Session unanimously approved Olympic Agenda 2020 ('Agenda 2020'), a set of 40 recommendations intended to protect the uniqueness of the Games and strengthen Olympic values in society. Agenda 2020 makes five specific recommendations with respect to the HCC which should have been taken into account as of the 2022 HCC concluded between the IOC on the one hand and the City of Beijing and the Chinese Olympic Committee on the other hand.[1]

Most importantly, Agenda 2020 encourages the IOC to include in the HCC clauses reflecting the prohibition of discrimination as well as the protection of environmental and labour-related rights.[2] Fundamental Principle 6 of the Olympic Charter, now also reflected in Article 13.2. (a) of the 2024 HCC, reads as follows: ''The enjoyment of the rights and freedoms set forth in this Olympic Charter shall be secured without discrimination of any kind, such as race, colour, sex, sexual orientation, language, religion, political or other opinion, national or social origin, property, birth or other status.'' Non-discrimination on the basis of sexual orientation had been absent from the Olympic Charter prior to Agenda 2020. As far as environmental and labour-related matters are concerned, the Host City, the Host National Olympic Committee ('Host NOC') and the Organising Committee of the Olympic Games ('OCOG') are obliged under the 2024 HCC to ''ensure that their activities in relation to the organisation of the Olympic Games comply with any international agreements, laws and regulations applicable in the Host Country, with regard to planning, construction, protection of the environment, health and safety, labour and working conditions and cultural heritage''.[3] For the first time, the 2024 HCC also makes a specific reference to the United Nations' Sustainable Development Goals.[4]

In addition to promoting non-discrimination, environmental protection and labour-related rights, Agenda 2020 also fosters transparency by demanding the IOC to: (i) make the HCC public; (ii) disclose details of the IOC's financial contribution to the OCOG; and (iii) provide the HCC at the outset of a bidding procedure.[5] Moreover, Agenda 2020 suggests that entities other than the Host City and the Host NOC may become signatories to the HCC in line with the local context.[6]

What exactly has been added to the 2024 HCC?

As indicated above, the prohibition of discrimination,[7] and to a certain extent also the protection of labour-related rights,[8] appeared for the first time in the 2022 HCC, reflecting the recommendations laid down in Agenda 2020.[9] Moving to the 2024 HCC, the core human rights provision inserted therein demands that the Host City, the Host NOC and the OCOG in their activities related to the execution of the Games ''protect and respect human rights and ensure any violation of human rights is remedied in a manner consistent with international agreements, laws and regulations applicable in the Host Country and in a manner consistent with all internationally-recognized human rights standards and principles, including the United Nations Guiding Principles on Business and Human Rights, applicable in the Host Country''.[10] Of particular importance is the explicit reference to the United Nations Guiding Principles on Business and Human Rights ('UN Guiding Principles'), a non-binding legal framework intended to minimize adverse human rights impacts triggered by business activities. The UN Guiding Principles are based on three pillars, namely (i) the State duty to protect human rights; (ii) the corporate responsibility to respect human rights; and (iii) access to remedy.

The following sections will address some of the issues that remain outstanding even after the insertion of human rights obligations to the 2024 HCC.

No direct involvement of the Host Country

First and foremost, the Host Country itself is not directly obliged to protect and respect human rights under the 2024 HCC. Instead, the provision discussed above imposes human rights obligations on the Host City, the Host NOC and the OCOG. It is critical to note that the relevant provision requires the Host City, the Host NOC and the OCOG not only to respect, but also to protect human rights, suggesting that these entities shall take positive actions to facilitate the enjoyment of human rights. This begs the question whether the Host City, the Host NOC and the OCOG have the political, legal and financial capacity to effectively take such positive actions.

For instance, the Host City and the OCOG would be expected to include human rights obligations in their contracts with suppliers of public infrastructure and sporting facilities. However, even if they do so under the threat of contract's termination and further sanctions, it may not suffice to prevent Olympic Games-related human rights abuses from occurring. Unlike the Host Country Authorities, the Host City, the Host NOC and the OCOG do not possess the necessary powers to monitor and adjudicate the human rights compliance of their sub-contractors. Furthermore, much of the infrastructure build-up might be conducted by the Host Country directly and would therefore evade the scope of application of the HCC.

Who determines when human rights obligations are violated? 

In practice, human rights obligations arising out of a contractual relationship are not easy to deal with, because it might be rather difficult to decide whether they have been observed or not. For this reason, it is essential to entrust an independent body with competence to decide whether the Host City, the Host NOC or the OCOG have complied with their human rights obligations under the HCC. Unfortunately, the 2024 HCC in its current form does not stipulate who is responsible for adopting a decision determining that the Host City, the Host NOC and the OCOG are in breach of their human rights obligations. 

It follows that the IOC itself (via the Coordination or Legal Affairs Commission) may take on this inquisitorial and quasi-judicial role. However, this would lead a very interested party to monitor and adjudicate the human rights compliance of the Host City, the Host NOC and the OCOG. The potential for a conflict of interests is evident, as the IOC could face negative financial and other consequences if it decides to withdraw the Games from the Host City, the Host NOC and the OCOG. In this configuration, the incentives will therefore be strongly opposed to finding for a lack of compliance.

Instead, we could imagine a separate, truly independent body consisting of NGO members, athletes' representatives, union representatives, CAS arbitrators and independent experts (such as academics or judges at the European Court of Human Rights). This body could have an investigative and an adjudicative chamber (not unlike the FIFA Independent Ethics Committee), ensuring a separation between monitoring and adjudicating. Should the Host City, the Host NOC or the OCOG consider sanctions imposed under such a mechanism arbitrary, they might still activate the CAS arbitration clause[11] and challenge the validity of these sanctions before the CAS.

Will the sanctions contemplated by the HCC be effective? 

As explained in the first part of this blog, the most severe sanction contemplated by the HCC in the event of non-compliance is the withdrawal of the Games from the Host City, the Host NOC and the OCOG with prior notice.[12] It should be emphasized, however, that a removal of the Games would result in both financial and reputational harm being incurred by the IOC.[13] Therefore, it is arguable whether the IOC would in practice be ready to withdraw the Games. In fact, the IOC has withdrawn the Games so far only due to the outbreak of the First and Second World War, when the Games were cancelled altogether.[14] Being aware of the IOC's unwillingness to withdraw the Games, the Host City, the Host NOC and the OCOG may not perceive the threat of losing the Games as credible. Consequently, these entities may not feel obliged to adhere to their human rights obligations under the HCC.

With regard to other enforcement measures, the IOC is entitled, inter alia, to retain all amounts held in the General Retention Fund[15] or withhold any payment due, or grant to be made to the OCOG pursuant to the HCC.[16] By not providing the relevant financial contribution to the OCOG, the IOC would risk delays in construction and other preparatory works – something the IOC certainly wants to avoid. Eventually, these sanctions might prove to be as inefficient as the threat of losing the Games, given that the IOC may turn a blind eye to violations of the HCC in order to safeguard its financial and other interests. Besides financial considerations, the IOC's reluctance to impose sanctions on the Host City, the Host NOC and the OCOG follows from the fact that the IOC would thereby implicitly acknowledge its mistaken decision to award the Games to a particular Host City in the first place.

Conclusion

This blog has identified three specific concerns potentially relativizing the impact of the human rights obligations recently added to the 2024 HCC. First, the Host City, the Host NOC and the OCOG as the formal addresses of these obligations may not have the capacity to ensure the human rights compliance of their sub-contractors. Second, the 2024 HCC in its current form lacks clarity as to when the Host City, the Host NOC and the OCOG are in breach of their human rights obligations and who is responsible for adopting a decision to that effect. Third, being aware of the IOC's unwillingness to withdraw the Games due to financial and other interests involved, it is likely that the Host City, the Host NOC and the OCOG might refuse to abide by their human rights obligations under the HCC. This is not to say, however, that introducing human rights requirements is not an important step forward, but as always with this type of decisions the devil will be in the implementation.

[1]   The 2022 HCC was executed in Kuala Lumpur on 31 July 2015.

[2]   Agenda 2020; Recommendation 1.5.

[3]   2024 Host City Contract – Principles; Article 15.2. (b).

[4]   Ibid., Article 15.1.

[5]   Agenda 2020; Recommendations 1.6., 1.7., 1.10.

[6]   Ibid., Recommendation 1.9.

[7]   2022 Host City Contract; Preamble (L.).

[8]   Ibid., Article 21.

[9]   Agenda 2020; Recommendation 1.5.

[10]  2024 Host City Contract – Principles; Article 13.2. (b).

[11]  Ibid., Article 51.2.

[12]  Ibid., Articles 38.2., 38.3.

[13]  R. Gauthier, The International Olympic Committee, Law and Accountability, Routledge, 2017, at 144-145.

[14]  Ibid., at 144.

[15]  According to Article 8.2. (d) of the 2024 HCC, the General Retention Fund represents a percentage (5 %) of ''any sums of money or equivalent value-in-kind payable to the OCOG in relation to the International Programme''. It is maintained and controlled by the IOC.

[16]  2024 Host City Contract – Principles; Article 36.2. (a), (b).

Editor's note: This report compiles all relevant news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. You are invited to complete this survey via the comments section below, feel free to add links to important cases, documents and articles we might have overlooked.

The Headlines

The end of governance reforms at FIFA?

The main sports governance story that surfaced in the press (see here and here) during the last month is related to significant personal changes made by the FIFA Council within the organization’s institutional structure. In particular, the FIFA Council dismissed the heads of the investigatory (Mr Cornel Borbély) and adjudicatory (Mr Hans-Joachim Eckert) chambers of the Independent Ethics Committee, as well as the Head (Mr Miguel Maduro) of the Governance and Review Committee. The decision to remove Mr Maduro was taken arguably in response to his active role in barring Mr Vitaly Mutko, a Deputy Prime Minister of Russia, from sitting on the FIFA Council due to an imminent conflict of interests. These events constitute a major setback to governance reforms initiated by the football’s world governing body in 2015. For a more detailed insight into the governance reforms at FIFA, we invite you to read the recent blog written by our senior researcher Mr Antoine Duval.

The CAS award in Real Madrid CF v. FIFA

At the end of the month, the CAS finally published its award delivered in the arbitration procedure between the Spanish club Real Madrid CF and FIFA regarding the transfer of minor football players. Mr Michele Bernasconi, sitting as a Sole Arbitrator, partially upheld the appeal filed by Real Madrid CF against the decision rendered by the FIFA Appeal Committee on 8 April 2016. The Sole Arbitrator reduced the ban (registering new players both on a national and international level) imposed on the Spanish club by the FIFA Appeal Committee from two to one entire transfer period. Moreover, Real Madrid CF is now obliged to pay CHF 240,000 instead of the original fine amounting to CHF 360,000. 

UEFA incorporates human rights and anti-corruption criteria into bidding requirements

UEFA has recently made available the Bid Dossier Template for the 2024 European Championship that will be held either in Germany or Turkey. Amongst other things, the two remaining candidates shall describe in their bid dossiers a global strategy for integrating the United Nations Guiding Principles on Business and Human Rights in order to protect, respect and fulfil universal human rights, including child rights and the rights of workers. On this occasion, UEFA President Mr Aleksander Čeferin stated that ‘it was imperative […] to introduce specific articles on the respect and protection of human rights in the bidding requirements for all our competitions.’ By incorporating human rights criteria into bidding requirements, UEFA joins the International Olympic Committee and FIFA in their efforts to tackle human rights abuses associated with mega sporting events.

The return of Claudia Pechstein: Bundesverfassungsgericht edition

Claudia Pechstein is back! For those who have already forgotten the case, this is a dispute involving a German Speed Skater and Olympic gold medallist challenging the validity of a CAS award imposing a doping ban (for greater detail see our previous blogs here and here, and the article by Antoine Duval and Ben van Rompuy). Nothing less than the survival of the CAS, at least as we know it, is at stake. While Claudia Pechstein lost in front of the Bundesgerichtshof, the decision was harshly criticized (here and here) and she decided to challenge the ruling in front of the German Bundesverfassungsgericht (constitutional court). Since last month, we know that the Bundesverfassungsgericht will hear and decide the claim, this as such is already a sign that the judges deem the case worthy of consideration and should be cause for concern for those wishing to keep the CAS as it currently is. The silver lining for CAS might be in the Bundesverfassungsgericht’s Solange jurisprudence, which could find a new expression in this peculiar context (as suggested here), it would preserve the CAS’s existence while forcing it to change.

Sports Law Related Decisions

• CAS – Award delivered in the arbitration between Arijan Ademi and UEFA
• CAS – Award delivered in the arbitration between IAAF and All Russia Athletics Federation & Vladimir Mokhnev
• CAS –Award delivered in the arbitration between Real Madrid and FIFA
• Supreme Court of Spain – Decision concerning the Spanish cyclist Roberto Heras

Official Documents and Press Releases

• CAS – CAS maintains the temporary bans imposed on six Russian athletes until 31 October 2017, at the latest
• CAS –CAS reduces the sanctions of football players Enrique Luis Triverio and Pablo Cesar Aguilar Benitez
• European Commission – State Aid: Commission approves Slovak support of EUR 36 million for the construction of the national football stadium in Bratislava
• European Commission – The Council approves the new work plan for sport
• Federal Constitutional Court of Germany – Pechstein's constitutional complaint to be heard in 2017
• FIBA – FIBA’s mid-term congress ratifies new headgear rule
• FIFA –Circular no. 1583: Amendment to Article 78 of the FIFA Disciplinary Code
• FIFA – FIFA welcomes outcome of NCP mediation process on workers’ welfare in Qatar
•  FIFA –Member associations release reports on intermediaries
• FIFA – Outcome of second meeting of Governance Committee
• FIFA –Suspension of the Malian FA lifted
•  IOC – Joint statement following the meeting of IOC President, Professor Richard McLaren and WADA President
• Tennis Integrity Unit –Junn Mitsuhashi banned for life for match-fixing offences
• UEFA – Bid Dossier Template for EURO 2024
• WADA –WADA Foundation Board takes decisive action on the Way Forward for the Agency and for Clean Sport

In the news

Doping

• Andy Brown Russia’s National Anti-Doping Plan denies institutional doping
• Andy Brown Spanish police dismantle new sports doping ring
• Michael Pavitt Russia in danger of missing Pyeongchang 2018 as International Paralympic Committee maintain suspension
• Michael Pavitt Russian race walker Trofimov handed four-year ban
  

Football

• Murad Ahmed FIFA ousts governance chief in ‘night of long knives’
• The Associated Press FIFA says blackface in Sochi parade was ‘inappropriate’
• BBC Sport Gothenburg v AIK: ‘Match-fixing attempt’ leads to Swedish fixture postponement
• Simon Bradley FIFA chief Infantino seeks ‘absolute power’ after ousting ethics heads
• Children Win UEFA incorporates human rights and anti-corruption criteria into bidding requirements
• Simon Evans FIFA’s chief ethics investigator and ethics judge replaced
• Graham Dunbar Two more members leave FIFA governance panel
• Nizaar Kinsella The laws of the transfer market could be rewritten with landmark court case in Italy
• James Lynch FIFA’s chance to show they put people ahead of money is now
•  Francine McKenna Will PwC throw the red card on its Swiss firm over FIFA
• Liam Morgan Palestine threaten to take FIFA to CAS after ‘illegal’ postponement of vote by Infantino
• Tariq Panja and Gaspard Sebag Soccer star homes raided in money-laundering investigation

Other

• Amnesty International Qatar: Abuse of migrant workers remains widespread as World Cup stadium hosts first match
• Graham Dunbar Swim body monitoring VP’s alleged role in FIFA bribery case
• Daniel Etchells American tennis player Kryvonos given 10-year ban for match-fixing
• Richard Martin Cycling: Authorities ordered to pay Heras compensation after appeal fails
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Editor's Note: Frans M. de Weger is legal counsel for the Federation of Dutch Professional Football Clubs (FBO) and CAS arbitrator. De Weger is author of the book “The Jurisprudence of the FIFA Dispute Resolution Chamber”, 2^nd edition, published by T.M.C. Asser Press in 2016. Frank John Vrolijk specialises in Sports, Labour and Company Law and is a former legal trainee of FBO and DRC Database.

In this first blog, we will try to answer some questions raised in relation to the Article 12bis procedure on overdue payables based on the jurisprudence of the DRC and the PSC during the last two years: from 1 April 2015 until 1 April 2017.[1] The awards of the Court of Arbitration for Sport (hereinafter: “the CAS”) in relation to Article 12bis that are published on CAS’s website will also be brought to the reader’s attention. In the second blog, we will focus specifically on the sanctions applied by FIFA under Article 12bis. In addition, explanatory guidelines will be offered covering the sanctions imposed during the period surveyed. A more extensive version of both blogs is pending for publication with the International Sports Law Journal (ISLJ). If necessary, and for a more detailed and extensive analysis at certain points, we will make reference to this more extensive article in the ISLJ.

In 2015, FIFA announced a very significant addition to the Regulations on the Status and Transfer of Players (hereinafter: “the RSTP”): the inclusion of a new provision on overdue payables by defaulting clubs towards players and other clubs. On 1 April 2015, the 2015 edition of the RSTP gave birth to a fast-track procedure to deal with overdue payables enshrined in Article 12bis (hereinafter: “the 12bis procedure”). In its Circular letter no. 1468, FIFA also strongly urged all of its member associations to make sure that their affiliated clubs were informed of this new provision immediately.

From Article 12bis, which is also laid down in the 2016 edition of the RSTP, it follows that clubs are required to comply with their financial obligations towards players and other clubs as per the terms stipulated in the contracts signed with their professional players and in the transfer agreements signed with other clubs. In accordance with Article 12bis FIFA is entitled to sanction clubs that have delayed a due payment for more than 30 days without a prima facie contractual basis.

It was a real thorn in the side of FIFA that too many clubs, on a worldwide level, did not comply with their financial contractual obligations without legitimate reasons.[2] With the introduction of this provision, it was not only FIFA’s aim to continue its process to further speed up its proceedings, but also to establish a stronger system regarding overdue payables towards players and clubs. FIFA stressed that it wanted to further improve efficiency and provide clear regulatory steps to deal with overdue payables from clubs to players and from clubs to other clubs.

As from 1 April 2015, the Dispute Resolution Chamber (hereinafter: “the DRC”) and the Players’ Status Committee (hereinafter: “the PSC”) are FIFA’s competent authorities to deal with claims on overdue payables in relation to Article 12bis. Both FIFA committees were given a wide scope of discretion to impose sanctions on defaulting clubs, such as fines and transfer bans. In fact, the possibility to impose sanctions is critical to support a stronger and more efficient dispute resolution system regarding overdue payables, as we will see in the second blog.

The introduction of FIFA’s 12bis procedure also gave rise to many (legal) questions. For example, are only clubs and players entitled to lodge a claim before respectively the PSC and the DRC? Or are other parties, such as coaches and national associations, also entitled to raise their claims under 12bis? Do claims for training compensation and solidarity contribution fall under 12bis? Can the 12bis procedures be considered as a real fast-track procedure? Under what circumstances can an offence be considered a repeated offence? And also, since the imposition of sanctions is key to the efficacy of the 12bis procedure, under what conditions will these sanctions be imposed? These are only a small sample of the questions that arose after the introduction of the 12bis procedure. In this first blog, we will try to answer the most important questions raised based on the jurisprudence of the DRC, PSC and CAS.

General preliminary observations

As a starting point, it must be noted that exactly 137 decisions by the DRC and the PSC regarding Article 12bis have been published by FIFA on its website between 1 April 2015 and 1 April 2017.[3] Of these 137 decisions, 99 decisions have been dealt with by the DRC, including 58 decisions issued by the DRC Single Judge. Additionally, 32 decisions were passed by a Chamber of three judges, whereas 24 of these decisions were passed by circulars and eight were passed by a decision of a sitting Chamber in Zürich, Switzerland. Only nine FIFA decisions were passed by a Chamber of five judges.   

From the 38 decisions of the PSC, 37 were issued by its Single Judge and only one[4] was issued by a Chamber of three judges via a circular. It can be noticed that in most “renouncement of right cases” (in which defaulting clubs have not replied to the claim of the claimant party), a Single Judge has dealt with the case.

Analysing the decisions, it is striking that all claimants in the 137 decisions won their cases. In other words, in none of the decisions of the DRC and the PSC it was found that a “prima facie contractual basis” existed for the respondent party, which would justify non-compliance with the original contract. A sanction was imposed in all decisions.

It can further be observed that in the great majority of the decisions, the respondent party did not reply to the claim. As we will see, the absence of a reply will generally result in more severe 12bis sanctions for the defaulting club.

The jurisprudence of FIFA also illustrates that the 12bis procedure are a step towards swifter proceedings. In the last years we have already noted a positive development with regard to the length of ‘regular’ proceedings before FIFA (not including the 12bis procedures). With regard to the 12bis procedure, FIFA stressed that it has shortened the timeframe for decisions taken on overdue payables, with decisions now being taken within eight weeks and claimants being notified of a decision within nine weeks of lodging their complete claim. After analysing the 12bis decisions of the DRC and the PSC, it is clear that FIFA actually lived up to these expectations. The average duration of a 12bis procedure is two months. It is only exceptionally that a 12bis decision lasted longer (four or ultimately five months) or even took less time (one or one and a half months).[5] As illustrated in Figure 1, approximately 67% of the PSC and the DRC procedures were concluded within eight weeks. Approximately 80% of both FIFA decisions were dealt with within 10 weeks.

Figure 1

The scope of Article 12bis

The two years of jurisprudence show that the personal scope of Article 12bis must be interpreted strictly. As follows from the text of Article 12bis(3), only players and clubs are entitled to lodge a claim before FIFA. Put another way, coaches, national associations and intermediaries do not have standing to sue in the 12bis procedure. This textual interpretation of the provision is confirmed by the jurisprudence of the DRC and the PSC. In fact, none of the reviewed decisions of the DRC or the PSC involved a party who was not a club or a player.

Additionally, it can be concluded that claims for training compensation or related to solidarity mechanism are also excluded from the scope of Article 12bis, as this opportunity is not provided in the provision. Moreover, the current jurisprudence does not leave room for any other interpretation. With regard to training compensation and solidarity mechanism, this means that FIFA gives to “overdue payables” a different meaning than the UEFA Club Licensing and Financial Fair Play Regulations, since outstanding amounts for training compensation and solidarity mechanism are considered by UEFA as overdue payables. The same is true for outstanding payments due by clubs to other (than player) club employees and debts by clubs to social/tax authorities; such outstanding amounts will not be considered by FIFA as ‘overdue’ under Article 12bis.

Generally, the DRC deals mainly with contracts signed by clubs with professional players. These include employment contracts but it is to be expected that separate agreements could also fall under the scope of Article 12bis as long as specific elements of that separate agreement suggest that it was in fact meant to be part of the actual employment relationship, as the DRC decided in many other cases (not being 12bis procedures). This is for example the DRC’s position with regard to image right contracts.^[6] Based on the jurisprudence reviewed, it follows that termination agreements fall under the scope of Article 12bis.[7] The PSC will only deal with transfer agreements, including both transfers on a definite[8] as well as on a temporary basis[9]. It is to be expected that agreements between clubs that do not concern the status of players, their eligibility to participate in organised football, and their transfer between clubs belonging to different associations, will most likely not fall under Article 12bis.[10]

Finally, it also follows from Article 12bis(3) that the creditor (player or club) must have put the debtor club in default in writing, granting a deadline of at least 10 days to comply with its financial obligations. Regarding this 10-days deadline, FIFA follows a strict interpretation, as we will see in the following paragraph.

The existence of an ‘overdue payable’ 

As follows from the wording of Article 12bis and the corresponding jurisprudence, two prerequisites must be met to establish that an overdue payable exists under Article 12bis. First, the club must have delayed a due payment for more than 30 days without a “prima facie contractual basis”. Second, the creditor (which is the player or club) must have put the debtor club in default in writing, granting a deadline of at least 10 days to comply with its financial obligations. In all the published decisions the FIFA committees verified that a 10-days deadline had been granted. We can therefore assume that this 10-days deadline is a prerequisite for the DRC and the PSC to proceed with the claim. Although Article 12bis is not entirely clear as regards the start of the “10-days deadline”, the jurisprudence shows that it runs as soon as the 30 days have elapsed.[11]

Disputes can arise with regard to the fulfilment of the “10-days deadline”. For example, in the CAS award of 9 May 2016, the player had filed a statement of claim before the DRC on 25 March 2015 and then sent a letter to the club on 30 March 2015 (i.e. five days after filing a claim at the DRC) putting the club in default for the overdue payment. The club however argued that this was a violation of Article 12bis(3) of the RSTP, edition 2015, as it did not make any legal sense whatsoever to address a default notice to a party after lodging a claim at FIFA. The CAS however stated that it was clear that the player had already given the club ample opportunity (the player stated that it had already provided three separate notices of default) to fulfil its obligations in conformity with Article 12bis.[12] The CAS therefore found it curious that the FIFA administration still requested the player to issue yet another default notice in such a situation when it was clear that the player had already given the club many opportunities to fulfil its obligations. This part of the award is interesting. On the one hand it shows that (the) FIFA (administration) obliges creditors to send a “10-days deadline” default letter under all circumstances, while on the other hand it is to be expected that the CAS might show more flexibility. Interestingly, in a case before the PSC, the claimant club put the respondent club in default of payment, starting the 10-days deadline on the exact same date of the submission. This practice was accepted by the PSC.[13] In other words, in order to gain time, claimants might be able to lodge a claim in front of FIFA before the “10-days deadline” of Article 12bis has passed.  

To establish whether “overdue payables” exist, it is decisive that the “overdue payables” existed after 1 April 2015 (the date on which Article 12bis came into force). This is also confirmed by the CAS. In its CAS award of 17 June 2016, the Italian club Pescara referred to the fact that the agreement between Pescara and the Belgian club Standard Liège was entered into on 10 July 2012, while Article 12bis did not take effect until 1 April 2015. Pescara stated that it had no means to know that Article 12bis would be enacted nearly three years later. The Sole Arbitrator however found it decisive and stressed that the claim made by Standard Liège was made after 1 April 2015 and that Standard Liège referred clearly to the overdue payables from Pescara. At the end, all that matters, according to the CAS, was the existence of overdue payables at the assessment date and that the assessment date was after 1 April 2015.[14]

For the sake of clarity, the fact that the DRC and the PSC have decided in 12bis procedures that a defaulting club must pay to the claimant overdue payables does not touch upon the question whether the contract has been terminated with just cause. To put it bluntly, a decision in a 12bis procedure does not justify a unilateral termination based on Article 14 of the RSTP; no legal connection exists in this regard. The jurisprudence of the DRC in relation to its ‘regular’ proceedings (not being 12bis procedures) generally shows that a valid ground for unilateral termination exists only in case there is outstanding remuneration for a period of three (or sometimes two) months.[15] This means the existence of an overdue payable under Article 12bis does not automatically give the claimant the legal right to unilaterally terminate the contract with the defaulting club. It should also be noted in this regard that it follows from Article 12bis(9) that the terms of Article 12bis are without prejudice to the application of further measures derived from Article 17 RSTP in case of a unilateral termination of the contractual relationship.

In the second blog we will focus specifically on the sanctions available to FIFA under Article 12bis and will provide explanatory guidelines covering the sanctions imposed during the period surveyed.

[1] This contribution discusses the jurisprudence of the FIFA Dispute Resolution Chamber (DRC) and the Players’ Status Committee (PSC) as published on FIFA’s website in the period between 1 April 2015 and 1 April 2017. Decisions published after the date of 1 April 2017 (even if issued before this date) will fall outside the scope of this contribution. The awards of the CAS in  relation to Article 12bis will also be discussed in this contribution. However, only the awards as published on the website of CAS before 1 April 2017 will be discussed in this contribution. As far as we know, several cases regarding art. 12bis are currently also pending before CAS.

[2] As was also introduced in FIFA Circular no. 1468, dated 23 January 2015, the new Art. 12bis is added to the list of provisions that are binding at national level and must be included in the association’s regulations (cf. Art. 1(3)(a) of the RSTP.

[3] Dispute Resolution Chamber: http://www.fifa.com/governance/disciplinary/dispute-resolution-system.html. Accessed 1 April 2017. Players’ Status Committee: http://www.fifa.com/governance/disciplinary/dispute-resolution-system.html. Accessed 1 April 2017.

[4] PSC 20 June 2016, no. op0616676.

[5] See for the shorter procedures: inter alia DRC 18 May 2016, no. op0516646, DRC 29 February 2016, no. op0216229, DRC 15 July 2016, no. op0916308 and DRC 30 November 2015, no. 11151578. See for the longer procedures: inter alia DRC 3 June 2016, no. op0616046, DRC 7 April 2016, no. op04161633, DRC 15 October 2015, no. op1015914 and DRC 1 October 2015, no. 1015648.

[6] DRC 13 December 2013, no. 12131045 and DRC 17 January 2014, no. 114396. See also DRC 30 August 2013, no. 08133402, DRC 10 February 2015, no. 02151030 and DRC 28 March 2014, no. 03141211. See also CAS 2014/A/3579 Anorthosis Famagusta FC v. Emanuel Perrone, award of 11 May 2015.

[7] See inter alia DRC 26 November 2015, no. op11151356.

[8] See inter alia PSC 13 September 2016, no. op09161090.

[9] See inter alia PSC 11 June 2015, no. op0615618 and PSC 20 February 2017, no. op02172015.

[10] Art. 1(1) RSTP, edition 2016.

[11] Moreover, parties should be aware that the 30 days deadline will start to run only after the so-called “grace periods” has passed, which also explicitly follows from the applicable jurisprudence of FIFA. A grace period can be considered as the period immediately after the deadline for an obligation during which the amount due, or other action that would have been taken as a result of failing to meet the deadline, is waived provided that the obligation is satisfied during the grace period. See DRC 14 November 2016, no. 11161545-E. Also in “regular” DRC cases so-called “grace periods” are accepted. See inter alia DRC 6 November 2014, no. 11141064.

[12] See CAS 2015/A/4153 Al-Gharafa SC v. Nicolas Fedor & FIFA, award of 9 May 2016. From this award it follows that FIFA applied the incorrect version of the RSTP in its decision of 22 June 2015 as a result of which Art. 12bis was not applicable.

[13] PSC 30 November 2015, no. 10151052.

[14] Also in its award of 17 June 2016, another Sole Arbitrator stressed that as Art. 12bis has been implemented within the 2015 edition of the RSTP, FIFA has the power to impose a sanction listed in Art. 12bis(4) RSTP in that specific case. See CAS 2015/A/4310 Al Hilal Saudi Club v. Abdou Kader Mangane, award of 17 June 2016.

[15] See inter alia DRC 7 September 2011, no. 9111901 (two months) and DRC 11 May 2011, no. 129795 (three months). See also DRC 17 December 2015, no. 12151368. Please note that CAS will hold on to a period of three months in order to establish that a just cause exists; See inter alia CAS 2015/A/4158 Qingdao Zhongneng Football Club v. Blaz Sliskovic, award of 28 April 2016.

Editor's Note: Frans M. de Weger is legal counsel for the Federation of Dutch Professional Football Clubs (FBO) and CAS arbitrator. De Weger is author of the book “The Jurisprudence of the FIFA Dispute Resolution Chamber”, 2nd edition, published by T.M.C. Asser Press in 2016. Frank John Vrolijk specialises in Sports, Labour and Company Law and is a former legal trainee of FBO and DRC Database.

This second blog will focus specifically on the sanctions available for FIFA under Article 12bis. It will provide explanatory guidelines covering the sanctions imposed during the period surveyed.

Introduction

The possibility to impose sanctions under article 12bis constitutes one of the pillars of the 12bis procedure. Pursuant to Article 12bis of the RSTP, edition 2016, the DRC and the PSC may impose a sanction on a club if the club is found to have delayed a due payment for more than 30 days without a prima facie contractual basis[1] and the creditor have put the debtor club in default in writing, granting a deadline of at least 10 days.[2] The jurisprudence in relation to Article 12bis also shows that sanctions are imposed ex officio by the DRC or the PSC and not per request of the claimant.

If the basic conditions for the application of Article 12bis are fulfilled, said provision provides for the following sanctions that may be imposed on the defaulting club:

1.    a warning;

2.    a reprimand;

3.    a fine; or

4.    a ban from registering any new players, either nationally or internationally, for one or two entire and consecutive registration periods (hereinafter: “the registration ban”).[3]

Based on the wording of Article 12bis, i.e. the use of the word ‘may’, it is left to the discretionary power of the DRC and the PSC to decide whether or not to impose a sanction on the debtor club.[4] However, this discretionary power has never been used in favour of a defendant in all the published DRC or PSC decisions under review. In other words, a sanction, going from a warning to a transfer ban of two entire and consecutive periods, was imposed in all decisions. Despite the fact that it follows from Article 12bis(4) that sanctions may apply cumulatively, this option was only used once.[5] It seems that it will come into play only if the debtor club did not comply with its obligations on multiple occasions and only after the maximum sanction of a transfer ban of two entire and consecutive periods has been imposed on the debtor club. The discretionary power under Article 12bis is different from the sanction of a transfer ban as laid down in Article 17(4) of the RSTP. The latter article states that the competent body ‘shall’ sanction, as opposed to Article 12bis, which states that the competent body ‘may’ sanction.[6]

 The Warning

Out of the 99 published 12bis decisions of the DRC, 17 warnings have been imposed. Additionally, seven warnings have been imposed out of the 38 published 12bis decisions before the PSC. As follows from the jurisprudence of FIFA,[7] (only) a warning will be given by the FIFA committees in the event two conditions are cumulatively met:

1.             the club (duly) replied to the claim; and

2.             it is not a repeated offence.

It is however important to note that the height of the outstanding amount of overdue payables is not correlated with the imposition of a warning. The outstanding overdue payables in the 24 proceedings ending with a warning range from an overdue payable of 3,468 Euros (hereinafter: “EUR”) in two decisions of the DRC,[8] up to an amount of EUR 1,000,000 in a PSC decision.[9]

The jurisprudence also points out that the debtor club must reply to the claim in order to contain the possible sanction to a warning. Although several decisions refer to the fact that the club should have “duly replied to the claim”,[10] other decisions do not mention “duly” and these consider it enough that the club only “replied to the claim”.[11] Despite this difference in terminology, we conclude that almost any form of reply provided by the debtor club will be considered sufficient. In fact, no distinctive value is ascribed to the word “duly”.

The respondents gave divergent reasons for their non-compliances. One club contested the applicability of Article 12bis,[12] other clubs stated to have administrative difficulties[13] or financial difficulties,[14] whereas others claimed that they were communicating with the player’s agent to settle the matter amicably.[15] Apart from the claim related to the applicability of Article 12bis, which was rejected because the claimant lodged his claim after the entry into force of Article 12bis RSTP,[16] all the arguments raised were not considered valid reasons for non-payment of the outstanding monies. Although the jurisprudence does not give an exact answer to the question what would be considered “a prima facie contractual basis”, it can be concluded that the aforementioned circumstances did not fulfil these criteria.

Notwithstanding the above, the condition of having “(duly) replied to the claim” has recently been tackled by the DRC. In its decision of 23 May 2016, the respondent replied to the claim per e-mail.[17] The DRC considered this reply not to be sufficient to fulfil the standards of “(duly) replied to the claim” because “the Respondent only replied to the claim by e-mail and e-mail petitions shall have no legal effect in accordance with art. 16 par. 3 of the Procedural Rules.” In other words, the respondent should have replied by fax or ordinary mail.

Additionally and in line with the above, the DRC or the PSC has only imposed a warning when there was no repeated offence. In other words, the respondent in a 12bis procedure must actually be considered as a “first offender” in order to (only) get a warning. From the 24 decisions in which a warning has been imposed, there is only one not fulfilling the abovementioned two conditions.[18] In this (PSC) decision, the respondent party did not reply to the claim. However, during the course of the proceedings the respondent made a partial payment to the claimant.[19] Therefore, the PSC decided to impose a warning on the respondent, irrespective of the absence of a reply. In light of this decision, it must be kept in mind that making a partial payment during the course of the 12bis proceedings might alleviate the duty to ‘reply to the claim’.

 The Reprimand

Only two of the decisions published by FIFA contain a reprimand.[20] One decision was issued by the DRC,[21] the other one by the PSC.[22]

In the DRC decision, overdue payables of EUR 40,000 were due to the claimant based on a termination agreement.[23] In its reply to the claim, the respondent admitted that it had to pay compensation to the claimant, but only until he would have found a new club. The respondent considered that, since the claimant found a new club immediately after the agreed termination, no compensation was due.[24] Notwithstanding this, the DRC judge considered that there was no documentary evidence with regard to the argument of the respondent. Therefore, the DRC judge considered that the respondent had delayed a due payment for more than 30 days without a prima facie contractual basis. Based on the foregoing paragraph and the fact that the respondent replied to the claim, one would think that a sanction in the form of a warning should be imposed on the respondent. However, the DRC highlighted that the DRC judge had already imposed a warning on the respondent previously. Thus, it referred to Article 12bis(6), which establishesthat“a repeated offence will be considered as an aggravating circumstance and lead to more severe penalty”.[25] Therefore, a reprimand was imposed.[26] In a similar decision of 26 May 2016, the PSC also imposed a reprimand.[27]

In conclusion, one could say that a reprimand is considered as a severe sanction and thus will not be imposed on a first offender. Although there have only been two (published) decisions of FIFA wherein a reprimand was actually imposed, one can expect that a reprimand will be imposed on a repeated offender who replied to the claim in his first and second 12bis procedure. The crucial advice that can be derived from the above analysis is that a respondent club should always reply in a 12bis procedure, because the warning and reprimand do not bring any financial or sportive consequences with it, contrary to the fine and the registration ban, which will be discussed hereunder.

The Fine
Introduction 

The only sanction that leads to direct financial consequences is the fine. The fine is a sanction that can be imposed in a 12bis procedure and needs to be paid by the debtor club to FIFA. As opposed to the warning and the reprimand, the jurisprudence shows that a fine will be imposed in the event that the respondent did not reply to the claim.

66 out of the 99 DRC and 29 out of the 38 PSC decisions involved a fine. After analysing the jurisprudence, we conclude that it is necessary to distinguish between a fine in a DRC procedure and a PSC procedure. In fact, the amount of the outstanding overdue payables differs considerably in both procedures.[28] Additionally, the level of the corresponding fines in DRC procedures compared to the PSC procedures are different.[29] The amounts of overdue payables in a 12bis procedure before the PSC are structurally higher than the amounts in a 12bis procedure before the DRC, while the amount of the fine is not structurally higher in a PSC procedure. Due to these differences between the DRC and the PSC, we decided to discuss the use of fines in the DRC and PSC procedures separately. Our aim was to determine how the judges define the level of the fine in a 12bis procedure. To do so, we use the so-called “category method”, which will be explained below.

Fines imposed by the DRC 

After analysing the decisions of FIFA in which fines were imposed, it seems that they do not correspond to a percentage of the outstanding overdue payables.[30] Instead, the level of a fine can be determined by means of several categories of fines. At least four general conclusions can be derived from the jurisprudence regarding the level of the fine for a defaulting club. 

Firstly, the level of the fine imposed by the DRC increases when the overdue payable is higher. Secondly, there are three categories of fines: i) a fine for the club which did not reply to the claim and is considered to be a first offender (First Category Offence);[31] ii) a fine for a club which did not reply to the claim and has been found by the DRC to have neglected its contractual obligations in the recent past (not being a 12bis procedure) (Second Category Offence) ;[32] and iii) a fine for a club which did not reply to the claim and has been sanctioned in a 12bis procedure previously (Third Category Offence).[33] Thirdly, the fine for a respondent club in a Second Category Offence is double the size of the fine for a respondent club in a First Category Offence.[34] Finally, the fine in a Third Category Offence is three times the size of the given fine in a First Category Offence.[35]

Based on our comprehensive study, we can conclude that the DRC determines the level of the fine by taking into consideration the above-mentioned three categories (First, Second and Third Category Offence) subject to an approximate range in relation to the outstanding amount due. Although the ranges are very hard to define with only 66 published DRC decisions yet, the below table sheds some light and provides for eight standard situations referring to various ranges of overdue payables: 

Fines imposed by the PSC 

With regard to the PSC decisions, the authors tried to use the same method as for the DRC procedures. At first sight, it looks as if the PSC and the DRC use the same ranges for fines. However, the PSC decisions seem more arbitrary. It is therefore more difficult to draw definitive conclusions in relation to the PSC 12bis decisions. For example, in the decision of 12 October 2015, decided by a PSC’s Single Judge, a fine of CHF 15,000 was handed out to a first offender club with an overdue payable of EUR 1 million.[39] However, one can doubt whether this fine can be considered appropriate. In fact, a first offender club in another decision received the same fine, although with smaller overdue payables of EUR 200,000.[40] Another striking decision involves a fine of CHF 7,500 based on an overdue payable of USD 50,000.[41] In a comparable situation before the DRC, also with regard to a first offender, the club was sanctioned with a fine of CHF 5,000.[42] It is also remarkable that (only) in some cases the single judges did motivate the higher fines by mentioning the criteria for a Second- or Third Category Offence. After analysing these decisions more closely, one notices that two of the three Single Judges always mention the criteria of the Second- or Third Category Offence, while one only did it once (out of his six decisions). Because of this absence of motivation, one cannot definitely conclude whether these decisions fall into the Second- and Third Category Offence as defined in the context of the DRC’s jurisprudence. However, looking past these (minor) inconsistencies, we believe that most of the PSC decisions do fall within the ranges set out in Figure 2.[43] Additionally, one starts to see emerging an additional category, which is the fine of CHF 25,000. Figure 3 provides an overview of the height of the fines in relation to the various overdue payables in PSC proceedings.

Figure 3

Transfer Ban

The toughest sanction that can be imposed by the DRC or the PSC in a 12bis procedure is the ban from registering any new players, either nationally or internationally, for one or two entire and consecutive registration periods. Contrary to the transfer ban enshrined in Article 17(4) of the RSTP, in a 12bis procedure a club can be banned from registering new players for the next one or two registration periods. This ban will be imposed if the amount due to the claimant is not paid by the respondent within 30 days as from the date of notification of an Article 12bis decision.[49]

Out of the 137 published 12bis decisions, 16 decisions (15 from the DRC, 1 from the PSC) indicated that a ban will be imposed if the amount due to the respective claimant is not paid by the respondent within 30 days as from the date of notification of the decision. Moreover, 13 decisions refer to a ban for one entire registration period. In three decisions the DRC decided to threaten a ban for the next entire two registration periods. 

What is striking is that in all decisions the respondents did not only not reply to the claim (or only after the investigation phase was closed which is equivalent to not replying)[50], but more importantly the respondents were found to have breached their financial obligations several times before. Either, the defaulting clubs were found to have delayed several outstanding payments for more than 30 days, or the respondent had (also) been found by the DRC as well as the DRC judge responsible for not complying with its financial obligations on various other recent occasions. We also encountered cases in which both conditions were met.[51]

Another striking element of the decisions in 12bis procedures is that the amount due is not deemed relevant to justify the imposition of a registration ban on the debtor club. In fact, a registration ban has been imposed with regard to an overdue payable of EUR 7,500,[52] but also regarding an overdue payable of EUR 250,000.[53]  

It seems that a ban for one entire period will be imposed in two situations:

1) the debtor club has been found by the DRC or the PSC to have delayed a due payment for more than 30 days without a prima facie contractual basis once, as a result of which a fine was imposed, and the debtor club has been found by the DRC to be responsible for not complying with its financial obligations towards players on various occasions in the recent past;[54] or

2) the debtor club has been found by the DRC or the PSC to have delayed a due payment for more than 30 days without a prima facie contractual basis twice, as a result of which a fine was imposed in at least one of the decisions.[55]

Put differently: the jurisprudence of the DRC and the PSC clearly shows a debtor club systematically receiving a registration ban for one entire period if the club had neglected its financial obligation towards players in more than one earlier decision by the DRC or the PSC, and if in these proceedings the respondent failed to reply to the claim and therefore received a fine from FIFA. What remains not entirely clear is what the DRC and PSC exactly mean by “various occasions in the recent past”. This could also refer to convictions in employment-related matters prior to the introduction of the 12bis procedure on 1 April 2015.

In the only PSC decision wherein a registration ban for one entire period was imposed, the debtor club had only once been found by the PSC to have delayed a due payment for more than 30 days without a prima facie contractual basis, as a result of which a fine was imposed.[56] The decision of the PSC did not mention that the respondent was responsible for not complying with its financial obligations towards players on various occasions in the recent past. This might suggest a differing interpretation between the DRC and the PSC.

The two years of jurisprudence further show that a registration ban for two entire and consecutive periods will be imposed when the debtor club has been found by the DRC or the PSC to have delayed a due payment for more than 30 days without a prima facie contractual basis twice, as a result of which fines (or even a registration ban of 1 period)[57] has been imposed and the debtor club has been found by the DRC to be responsible for not complying with its financial obligations towards players on various occasions in the recent past.[58]

Final Remarks 

The 12bis procedure can be considered as a powerful instrument for swift dispute resolution, which could be of great benefit to players and clubs. FIFA has put in place a fast track procedure and a strong enforcement system with respect to overdue payables by defaulting clubs towards players and clubs. So far, FIFA has contributed to the resolution of international disputes in 12bis procedures in a very efficient manner leading to a shortened timeframe for decisions, with an average duration of approximately two months.

The sanctioning power of FIFA is one of the fundamental strengths of the 12bis procedure. In all the 137 published decisions of the DRC and the PSC, a sanction was imposed on the defaulting clubs, varying from a warning to a registration ban. 

From the FIFA decisions, in which fines were imposed on defaulting clubs, it can also be derived that the level of the fine is determined by taking into consideration the earlier-mentioned three categories of wrongdoings (First, Second and Third Category Offence), subject to an approximate range in relation to the outstanding amount due. However, the 12bis decisions of the DRC so far are more systematic and predictable than the PSC’s. Finally, the heaviest sanction, the transfer ban, will only be imposed in case the defaulting club not only did not reply to the claims, but also breached its financial obligations several times in the past. Fortunately, FIFA does not shy away from using sanctions, but only clubs that went too far will face the more severe ones.

Although the conclusions drawn by the authors can help practitioners confronted to 12bis procedures, they are based only on the published jurisprudence between 1 April 2015 and 1 April 2017. It must be taken into account that FIFA committees might change their interpretation and implementation practice regarding the 12bis procedure in the future. However, the jurisprudence of FIFA committees reviewed and analysed in this article can at least shed some light on the functioning of FIFA’s 12bis procedure, and in particular on its effective sanctioning regime, over the last two years.

[1] Art. 12bis(2) RSTP, edition 2016.

[2] Art. 12bis(3) RSTP, edition 2016.

[3] Art. 12bis(4) RSTP, edition 2016.

[4] Art. 12bis(2) RSTP and Art. 12bis(4) RSTP, edition 2016.

[5] DRC 14 November 2016, no. op11161545-E. For a more detailed analysis of DRC decisions, the authors make reference to this more extensive ISLJ article.

[6] Although it follows however from a literal interpretation of Art. 17(4) RSTP that it is a duty of the competent body to impose sporting sanctions whenever a club is found to have breached an employment contract during the protected period, according to the CAS there is a well-accepted and consistent practice of the FIFA DRC not to apply automatically a sanction but to leave it to its free discretion to evaluate the particular and specific circumstances on a case by case basis. SeeCAS 2014/A/3765Club X. v. D. & FIFA, award of 5 June 2015.

[7] See inter alia DRC 16 February 2016, no. op02161765.

[8] DRC 28 January 2016, no. op1501703 and DRC 28 January 2016, no. op01161539.

[9] See PSC 7 May 2015, no. op0515353. Even EUR 50,000 higher in PSC 2 June 2016, no. op0616540. The highest outstanding payable in a DRC decision is EUR 950,000. See DRC 11 September 2015, no. 09151030.

[10] See inter alia DRC 28 January 2016, no. op01161539.

[11] See inter alia DRC 13 January 2016, no. op0116826.

[12] DRC 15 October 2015, no. op1015914. See also CAS 2015/A/4153Al-Gharafa SC v. Nicolas Fedor & FIFA, award of 9 May 2016 and CAS 2016/A/4387Delfino Pescara 1936 v. Royal Standard Liège & FIFA, award of 8 July 2016. 

[13] PSC 9 July 2015, no. op0715599 and PSC 7 May 2015, no. op0515353.

[14] DRC 13 January 2016, no. op0116826, DRC 25 April 2016, no. op0416115, DRC 7 July 2016, no. op0716778, PSC 2 June 2016, no. op0616540 and PSC 13 September 2016, no. op09161090.

[15] DRC 16 February 2016, no. op02161765 and DRC 15 March 2016, no. op0316303.

[16] Also confirmed in CAS 2016/A/4387Delfino Pescara 1936 v. Royal Standard Liège & FIFA, award of 8 July 2016.

[17] DRC 23 May 2016, no. op0516571. The DRC can be quite sceptical towards information that is contained in emails. See interalia DRC 31 July 2013, no. 07133206.

[18] PSC 3 June 2015, no. op0615400.

[19] For a more detailed analysis of the DRC decision, see our pending ISLJ article.

[20] However, some decisions – wherein a heavy sanction such as a transfer ban was issued – refer to an earlier conviction of the debtor club wherein a reprimand was given. See inter alia DRC 26 October 2016, no. op10160931-E.

[21] See DRC 26 November 2015, no. op11151356.

[22] See PSC 26 May 2016, no. op05160482.

[23] DRC 26 November 2015, no. op11151356.

[24] DRC 26 November 2015, no. op11151356, paras. (II) 7 and 8.

[25] DRC 26 November 2015, no. op11151356, para. (II) 17.

[26] DRC 26 November 2015, no. op11151356, para. (II) 18.

[27] For a more detailed analysis of this decision, see our pending ISLJ article.

[28] For a more detailed analysis of DRC decisions in this regard, see our pending ISLJ article.

[29] Cf. DRC 28 January 2016, no. op01161541 and PSC 12 October 2015, no. op10151035. In the DRC decision, the debtor club had an overdue payable of USD 100,807. In this case, the DRC imposed a fine of CHF 15,000. In the PSC decision, the debtor club had an overdue payable of EUR 1 million. However, the PSC imposed the same fine of CHF 15,000.

[30] For a more detailed analysis of the “percentage method”, see our pending ISLJ article.

[31] If these criteria were cumulatively met, the jurisprudence points out that a fine was given by FIFA to a club in a 12bis procedure. A First Category Offence was also given to a debtor club who responded to the claim, but was already sanctioned with a warning and reprimand in earlier 12bis procedures. In that case, the warning and the reprimand sanctions were exhausted and, thus, a fine was ordered by the DRC.

[32] See inter alia DRC 18 May 2016, no. op0516646. For a more detailed analysis of the DRC decisions, see our pending ISLJ article.

[33] See inter alia DRC 3 July 2015, no. op0715641. For a more detailed analysis of the DRC decision, t see our pending ISLJ article.

[34] For a more detailed illustration of DRC decisions, see our pending ISLJ article.

[35] Idem.

[36] This range differs from the range the authors have set in a previous article (see Global Sports Law and Taxation Reports, ‘Overview of the jurisprudence of the FIFA DRC in 12bis procedures’, March 2017). This difference is based on recently published jurisprudence: see DRC 28 February 2017, no. op02172117-E.

[37] DRC 11 September 2015, no. 09151030.

[38] For a more detailed analysis of DRC decisions, see our pending ISLJ article.

[39] PSC 12 October 2015, no. op10151035.

[40] PSC 12 October 2015, no. op10151010. Even more striking is the fact that this decision was dealt with on the same date as the aforementioned decision in footnote 61 above, by the same Single Judge. Only two weeks later, in PSC 29 October 2015, no. op10151014, the PSC imposed a fine of CHF 25,000 with regard to an overdue payable of EUR 590,000 to a first offender club.

[41] PSC 9 July 2015, no. op0715584.

[42] DRC 5 October 2015, no. op10151049.

[43] Only PSC 12 October 2015, no. op10151035 seems to be the odd one out.

[44] See footnote  58.

[45] This border is brought to 250,000, based on PSC 16 November 2015, no. op11151300, wherein a fine based on a Third Category Offence of CHF 45,000 was imposed with an overdue payable of USD 250,000, which sets the border at approximately 250,000.

[46] This border is brought to 500,000, based on PSC 25 February 2016, no. op0216170, wherein a fine of CHF 20,000 based on a First Category Offence was imposed with an overdue payable of EUR 450,093, which sets the border at approximately 500,000.

[47] This border is brought to 750,000, based on the decision PSC 29 June 2016, no. op0616676, wherein a fine of CHF 30,000 based on a First Category Offence was imposed with an overdue payable of EUR 750,000. In a decision with an overdue payable of EUR 675,000 (PSC 24 November 2015, no. op11151385), a fine of CHF 50,000 based on a Second Category Offence was given, which sets the border at approximately 750,000.

[48] At least until an overdue payable of USD 1,367,500 falls within this category; see PSC 21 August 2015, no. op0815530.

[49] See inter alia DRC 8 September 2016, no. op0916308. However, this may differ in a situation where sanctions are imposed cumulatively.

[50] See DRC 8 September 2016, no. op0916308 and DRC 15 July 2016, no. op0716703.

[51] In the context of a retroactive application of Article 12bis, as discussed in the context of the CAS award of 17 June 2016 (see CAS 2015/A/4310 Al Hilal Saudi Club v. Abdou Kader Mangane, award of 17 June 2016), it can be questioned whether the decisions of FIFA bodies prior to the date of 1 April 2015 (which per definition were decisions in ‘regular’ FIFA proceedings) can be taken into account and held against the club in default. For a more detailed analysis of this legal issue of retro-active application, see our pending ISLJ article. See also Lombardi, P., Worlds Sports Law Report, September 2016, “Article 12bis of the FIFA Regulations: 18 months on”, p. 5.

[52] DRC 26 May 2016, no. op0516585.

[53] PSC 20 June 2016, no. op0616676.

[54] See inter alia DRC 8 September 2016, no. op0916308.

[55] See inter alia DRC 27 October 2015, no. op10151248, wherein the debtor club had received a fine in both earlier decisions. In DRC 17 October 2016, no. op10161355-E, the debtor club had only received a fine in the second decision.

[56] PSC 20 June 2016, no. op0616676.

[57] DRC 29 July 2016, no. op0716699. The previous decision, wherein a transfer ban for one entire period was imposed, is also published: DRC 4 February 2016, no. op02161733.

[58] See inter alia DRC 13 September 2016, no. op09161247.

Editor’s note: Mario Vigna is a Senior Associate at Coccia De Angelis Vecchio & Associati in Rome, Italy. His main practice areas are sports law, commercial law, and IP law. He also has extensive experience in the Anti-doping field, serving as Deputy-Chief Prosecutor of the Italian NADO and as counsel in domestic and international sports proceedings. He is a frequent speaker at various conferences and workshops. He was not involved in either of the cases discussed below.

I.              Introduction 

Gambling in football is a popular and potentially lucrative activity. It also raises numerous issues. When faced with the issue of gambling, the European Court of Justice (now Court of Justice of the EU) determined that gambling was economic activity per se, notwithstanding gambling’s vulnerability to ethical issues, and thus could not be prohibited outright.[1] With the legality of gambling established, it was left to the proper legislative bodies (national legislatures, national and international federations, etc.) to regulate gambling in order to guard against fraud and corruption. Gambling was not going to disappear; the dangers inherent to gambling would require attention. 

Given the amounts of money sometimes at stake, it is unsurprising that fraud and corruption are constant threats in football gambling. Match-fixing, i.e. wherein participants in a match deliberately attempt to secure a specific result to allow certain gamblers to obtain favorable rewards, is one prominent form of such corrupt activity. FIFA and UEFA, as well as other relevant bodies, have attempted to regulate match-fixing to protect the integrity of football competitions. After all, illicit gambling not only enables unjust enrichment on behalf of the corrupt gamblers and their accomplices; illicit gambling undermines the trust that spectators have in an activity and can lead to a decline in interest as a result.

The Italian Football Federation (FIGC) has adopted a strict liability approach to deter and punish match-fixing. Under the operative rules, clubs and federations whose agents or members engage in match-fixing activity are liable for match-mixing regardless of whether the club or federation itself knew of or condoned the conduct. Unfortunately, two relatively recent appeal decisions—Novara and Pro Patria—have handicapped this strict liability regime by allowing clubs to escape or reduce their liability on account of dubious mitigating circumstances. These decisions have undermined the efficacy of strict liability as a doctrine, and consequently diminish the efforts against match-fixing.

This blog post argues first that strict liability is effective in deterring match-fixing activity so long as adjudicatory bodies enforce it with appropriate rigidity. In fact, the doctrine of strict liability is widespread, in sports law and other fields, precisely because it can be effective. Next, this post critiques the decisions in Novaraand Pro Patria, contending that both decisions misapply the principle of proportionality and erroneously recognize certain circumstances to mitigate against liability. As a corrective to these two decisions, this post concludes by outlining an effective application of strict liability and highlighting important regulatory efforts that out to be adopted. And while the discussion herein focuses on Italian football, the ideas explained are widely applicable across all sports and throughout all levels of competition. 

II.            Italian Law, Rules, and Regulations Against Match-fixing in Football

On the eve of the 2006 World Cup, which Italy won, Italian investigators uncovered efforts involving several major football clubs aimed at rigging referee selection for matches. This scandal became known as Calciopoliandimplicated clubs from both Serie A and Serie B (respectively the first and second divisions in Italian football). Subsequent investigations in 2011 and 2015 led to additional scandals concerning clubs competing inSerie B and Lega Pro (the third division of Italian football), among them Scommessopoli (Bet City), Last Bet, Dirty Soccer, and Treni del Gol. Match-fixing, it was revealed, was a real problem in Italian football.

The FIGC, as the national football federation, maintains regulatory and disciplinary authority over all Italian football competitions and activity. To address the problem of match-fixing, the FIGC employs a set of regulation that deems match-fixing activity improper and sanctionable under a strict liability principle. Article 4 of the FIGC Code of Sport Justice (CSJ) states:

2. Clubs are strictly liable for disciplinary purposes for the actions of their managers, members and the individuals set forth in art. 1, par. 5

[…]

5. Clubs are presumptively liable for the wrongdoing committed for their benefit by any person. Liability is excluded when it is clearly or reasonably doubtful that the club participated in the wrongdoing or ignored it. [2]

Thus, clubs are liable for match-fixing even if they are not intimately aware of or complicit in the match-fixing efforts that benefit the club; liability is found once someone associated with the club—a player, an agent, etc.—engages via their acts or omissions in match-fixing activity. Match-fixing is explicitly prohibited in Article 7 of the CSJ[3], which also provides that strict liability applies for match-fixing and is punishable subject to the degree of faultborne by the club.[4] Here, it is important to note that under Article 7 the adjudicating body has discretion to assess a club’s degree of fault and reduce accordingly the corresponding sanction(s). This discretion is important; it is, however, in making use of this discretion that the appeal bodies erred in Novara and Pro Patria.

III.          Novara and Pro Patria: Setting the Wrong Precedent

The FIGC Code of Sport Justice applies strict liability to clubs for match-fixing but allows for consideration of mitigating circumstances to reduce the sanction(s) if appropriate. The problem is that currently there is no standard for what qualifies as appropriate mitigating circumstances. Novara and Pro Patria highlight this problem. In both cases, Italian football clubs—Novara Calcio and Aurora Pro Patria—were sanctioned for match-fixing, but later had those sanctions reduced on appeal on the basis of mitigating factors. This blog post contends that those reductions were ill-informed. If strict liability is to work as a deterrent and truly discourage match-fixing, acceptable mitigating factors against strict liability require greater scrutiny than provided in these two cases.

A.   Novara Calcio

An investigation by the Italian media, coined Scommessopoli, uncovered one of the largest match-fixing schemes in Italian footnall history. Scommessopoli was a wide-ranging, multi-dimensional enterprise; players were involved, as were Italian and foreign criminal groups—in total, the investigation alleged that at least twenty-two clubs and sixty-one people participated in match-fixing efforts. One of the individuals involved, Cristian Bertani, played for Novara Calcio, a club in the Italian Serie B. According to the findings of the National Disciplinary Commission, Bertani conspired with a foreign gambling group and a local criminal group to fix matches. Consequently, the National Disciplinary Commission sanctioned Bertani’s club Novara Calcio under the strict liability regime in effect. Novara Calcio was fined EUR 35,000 and received a four-point deduction from the league table.[5]

The club appealed the decision to the FIGC Court of Justice. On appeal, the court reduced the deduction to three points and eliminated the fine entirely:

“[The reduced sanction] leads to a more accurate assessment of the overall conduct of the Appellant of all the activity carried out by the club, whether in a preventative or subsequent manner, specifically aimed at fighting the phenomenon of illicit sports or eliminating the consequences… In this sense, recalling among others, the approval by Novara Calcio of the first organizational model of the legislative decree no. 231/2001 related to the Code of Ethics; earning the ISO 9001:2008 certification of quality, being the first football association to earn it; having contracted since February 2012 the professional services in order to study the betting quota over the matches played by the club, bringing a discipline scheme over those studies thanks to an Antifraud Code in April 2012 “[6]

In essence, the Court reduced the sanctions on account of the club’s implementation of self-protection tools in accordance with the organizational model set forth in the Legislative Decree no. 231/2001. The problem with this decision, however, is that the efforts in question were taken after the incident. The Court treated this post-incident measures as mitigating circumstances, even though these measures were not operative when Bertani attempted to fix matches.

Such allowance of post-incident mitigating factors is inappropriate and undercuts the effort to prevent match-fixing. Indeed, only the prior adoption of an adequate organizational model against match-fixing by a club should (potentially) mitigate against strict liability. Two requirements should be satisfied: (1) prior adoption, and (2) adequate measures. Legislative decree no. 231/2001 and Italian jurisprudence both distinguish between superficial adoption of an organizational model—which is insufficient by itself—and the adoption of an organizational model with demonstrated sufficient, concrete measures to prevent wrong-doing. Only the latter satisfactorily deters potential wrong-doing, and only the latter should (potentially) shield against strict liability so long as a club can prove its preventative efforts were adequately effected. With Novara Calcio, the problem was that the adoption of an organization model was merely superficial, in addition to being after-the-fact, and that the club did not have to prove that the adopted measures were or would be effective in combatting match-fixing.

B.    Aurora Pro Patria 

In 2015, the Catanzaro Police Department arrested more than forty individuals for alleged participation in match-fixing in matches of the Italian 4^th Division. Three arrestees were former members of the club Aurora Pro Patria—two players and one coach—accused of match-fixing activities while employed by Pro Patria. All three were found guilty in the ensuing proceedings. Thus, under the doctrine of strict liability, Pro Patria received a seven-point deduction as a sanction for the conduct of its employees.[7]

Pro Patria appealed the ruling and sanction. And like the Novara case, the sanction was reduced: 

Having found the defendant liable, it cannot but follow the confirmation of the strict liability held by the association (Club). As marked by the vast jurisprudence, indeed, the referred liability cannot be avoided but graduated in the presence of circumstances that would see to deserve special consideration.

… the thorough preventative activity put in action by Aurora Pro Patria, that even when they were not obliged to, they still adopted the model of conduct as set out in the rule Legislative Decree no. 231/2001, they imposed a Code of anti-fraud and have entered into a contract with Federbet [a monitoring company] by which said company will check the flux of the bets related to the activity of the club, we determine that, given the relevant circumstances, the sanction against the association (club) must be reduced…”[8]

The Court reduced the sanction to a three-point deduction. Although the appeal court affirmed strict liability, it undercut its potency by accepting as mitigating circumstances factors that were not in place when the unlawful conduct occurred. The appeal court was in some ways excusing a violation, at least partially, for efforts the responsible party undertook to not commit the same violation again in the future. The efforts had no impact on the violation that already took place.

C.    Problems Posed by the Novara and Pro Patria Rulings 

After being charged with match-fixing, both Novara and Pro Patria hired monitoring companies that supposedly help prevent, or at least detect, potential match-fixing activity. These post-facto efforts were deemed by ruling bodies compelling enough to reduce sanctions imposed for match-fixing. This precedent of reducing on account of mitigating circumstances occurring after the match-fixing activity occurred poses two issues.

First, the precedent undermines the strict liability regime by allowing the reduction of a club’s liability where it fixes the problem ex post facto, thereby providing clubs with a loophole to escape with minimal harm. Second, the precedent does not consider the actual efficacy of the hired monitoring companies or their methods. Without a regulatory framework and established standards for monitoring companies and certification of their services, i.e. no way of assessing whether the hired companies actually make any difference when it comes to the prevalence of match-fixing, nothing separates effective monitoring from the appearance or claim of monitoring.

IV.          A Better Way of Evaluating Mitigating Circumstances

An adjudicatory body rightfully must consider the particular context of each case. Accurate and fair decisions acknowledge that not all cases concerning similar issues deserve equal treatment. Mitigating circumstances are an important aspect of any fair legal system. With Novara and Pro Patria, however, the appeal bodies erred by giving weight to certain post-incident mitigating circumstances that had no bearing on the issue at hand. Further, allowing the hire of a monitoring company to mitigate a club’s liability introduces a separate issue, i.e. the efficacy of the monitoring company and its services. Both appeal decisions reduced the capacity of strict liability to deter match-fixing. If a strict liability regime is to be effective in combatting match-fixing, then clear standards for evaluating mitigating circumstances in cases like Novara and Pro Patria are necessary.

Before proposing a way forward, it is important to first try and understand why the appeal decisions reduced the sanctions in the cases at hand. Inherent to the appeals’ justification is the doctrine of proportionality, or the notion that any punishment must fit the crime and cannot be more extreme than is warranted. In Novara and Pro Patria, it seems that the appeal bodies thought that the clubs’ liability for the conduct of their employees should be limited. In other words, while the appeal bodies certainly assigned liability to the clubs, they were unwilling to allow that liability to support too onerous sanctions.

This, of course, misses the point of strict liability in the first place. Strict liability is used to assign liability notwithstanding immediate fault because the liable party is best positioned to absorb the liability and/or work to prevent the wrongful conduct. Punishments for strict liability in match-fixing, if reduced to minimal amounts, do little to nothing to promote clubs to actively prevent match-fixing. The Court of Arbitration for Sport (CAS) re-affirms this point:

With regard to the alleged disproportionality of the Decision, the Panel first of all wishes to stress that the fight against match-fixing is considered to be extremely important for the purpose of preserving confidence in and the integrity of sport.[9]

Part of the proportionality calculus must be the severity of the wrongdoing concerned. Match-fixing is, arguably, the greatest wrong in sports. Therefore, hefty punishments should not violate proportionality. 

The Novara and Pro Patria appeal decisions also over-value the post-incident preventative actions (which is an oxymoron!). The treatment of post-incident actions as mitigating circumstances suggests future offenders will be able to correct wrongful conduct after-the-fact simply by hiring a company that claims to monitor match-fixing activity. Even if a club were to hire a monitoring company prior to any wrongful conduct, the mere signing of a contract with a monitoring company is generally a questionable preventative measure. Clubs that employ monitoring companies and are then subsequently charged with liability for match-fixing should only have sanctions (and thus liability) reduced if they prove to the court that the monitoring company undertook actual and sufficient efforts to monitor and prevent match-fixing.

Merely employing a monitoring company without any regard for the efficacy of its services is an inadequate escape route from strict liability. After all, these companies are unregulated and unaccredited; there is no guarantee that the companies do any work, or that any work the company performs is effective. At a minimum, then, a club must demonstrate that in conjunction with a monitoring company it undertook significant and adequate measures to prevent match-fixing by its employees and agents.

A standard for monitoring companies is important in light of the Novara and Pro Patria rulings, which will support a booming (and unregulated) market for monitoring companies. Clubs may now look to symbolically contract with these companies to escape liability if/when they are accused of match-fixing. The football community should not allow such a deregulated and opaque market to emerge.

V.            Conclusion

Match-fixing poses one of the most elemental dangers to professional football—it damages the credibility of the sport and could potentially damage the market. The doctrine of strict liability discourages a club’s participation in match-fixing activities, and incentivizes clubs to put into place measures that ensure their employees abide by anti-match-fixing regulations. Judges and tribunals must not lose sight of the broader picture when determining sanctions in match-fixing cases. In light of the Novara and Pro Patria decisions, this blog post offers a way forward to maintain strict liability’s capacity to effectively combat match-fixing: (1) post-incident efforts should not be considered as mitigating circumstances, and (2) monitoring companies and their services must meet a certain standard if they are to absolve, partially or fully, a club from its liability.

Strict liability can be effective so long as courts and tribunals do not unduly handicap it. Match-fixing is still a prominent threat in football and in sports in general. Now is not the time to weaken the most effective tool (strict liability) available to combat match-fixing. While the preceding discussion focuses on Italian football, the lessons are universal for all sports, at all levels.

[1] Case Her Majesty's Customs and Excise v. Gerhart Schindler and Jôrg Schindler, C-275/92 Judgement of 24th March 1994 [1994] ECR 1-01039.

[2] Unofficial translation from Italian: “Responsabilità delle società 1 […]; 2. Le società rispondono oggettivamente, ai fini disciplinari, dell'operato dei dirigenti, dei tesserati e dei soggetti di cui all’art. 1 bis, comma 5; 3 […]; 4 […] 5. Le società sono presunte responsabili degli illeciti sportivi commessi a loro vantaggio da persone a esse estranee. La responsabilità è esclusa quando risulti o vi sia un ragionevole dubbio che la società non abbia partecipato all'illecito o lo abbia ignorato; 6 […].”

[3]“Committing, by any means, acts to alter the development or outcome of a match or competition or to assure any advantages in the ranking constitutes a sporting wrongdoing.” Unofficial translation from Italian: “1. Il compimento, con qualsiasi mezzo, di atti diretti ad alterare lo svolgimento o il risultato di una gara o di una competizione ovvero ad assicurare a chiunque un vantaggio in classifica costituisce illecito sportivo.”

[4] Art. 7, par. 4: It is considered the strict liability of a club in the sense of art. 4, par. 5 and the fact is punishable subject to the degree of fault, with the sanctions foreseen in art. 18, par. 1 sections (g), (h), (i), (l), and (m). Unofficial translation from Italian: “Se viene accertata la responsabilità oggettiva o presunta della società ai sensi dell'art. 4, comma 5, il fatto è punito, a seconda della sua gravità, con le sanzioni di cui alle lettere g), h), i), l), m) dell’art. 18, comma 1.” The sanctions consist, broadly speaking, in the deduction of points, to be sent to the bottom of the table, to be disqualified from the competition, to have a tittle taken away or the barred from participating in a specific competition.

[5] The sport prosecutor had sought a six-point deduction.

[6] Unofficial translation from Italian: “A ciò conduce una più attenta valutazione della complessiva condotta della reclamante, di tutta la attività da questa posta in essere, invero tanto in via preventiva che successiva ed espressamente finalizzata a combattere il fenomeno degli illeciti sportivi ovvero ad eliminarne le conseguenze… In questo ambito vanno riassuntivamente richiamati, tra gli altri interventi, l’approvazione da parte del Novara Calcio del primo modello organizzativo ex decreto legislativo n. 231/01 e relativo Codice etico; l’approvazione nel gennaio del 2012 di un nuovo modello organizzazione e di gestione; il conseguimento nel marzo ancora di quest’anno di certificazione di qualità ISO 9001:2008 come prima società calcistica in Italia; l’aver affidato nel febbraio 2012 a soggetto professionale lo studio dell’andamento delle quote di scommesse legate alle partite che avrebbe giocato il Novara da quel momento alla fine del campionato, successivamente deliberando di continuare l’opera di monitoraggio delle partite; disciplinando infine tale sistema con l’adozione di un Codice Antifrode.”

[7] The sport prosecutor sought a twenty-point reduction as an exemplary punishment and to increase its deterrent effect.

[8] Federazione Italiana Giouco Calcio; COMUNICATO UFFICIALE N. 48/TFN– Sezione Disciplinare (2015/2016), p. 81.

[9] CAS 2013/A/3297 Public Joint-Stock Company “Football Club Metalist” v. UEFA & PAOK FC, award of 29 November 2013. (Case about match-fixing and sanctions under UEFA rules.)

 Editor's note: This report compiles all relevant news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. You are invited to complete this survey via the comments section below, feel free to add links to important cases, documents and articles we might have overlooked.

The Headlines

 
ISLJ Annual Conference on International Sports Law

On 26 and 27 October, the T.M.C. Asser Institute in The Hague will host the first ever ISLJ Annual International Sports Law Conference. This year’s edition will feature panels on the Court of Arbitration for Sport, the world anti-doping system, the FIFA transfer regulations, human rights and sports, the labour rights of athletes, and EU law and sport. We will also welcome the following distinguished keynote speakers:

•    Miguel Maduro, former Advocate General at the European Court of Justice and former head of FIFA’s Governance Committee
•    Michael Beloff QC, English barrister known as one of the ‘Godfathers’ of sports law
•    Stephen Weatherill, Professor at Oxford University and a scholarly authority on EU law and sport
•    Richard McLaren, CAS arbitrator, sports law scholar and former head of the World Anti-Doping Agency’s (WADA) investigation into the Russian doping scandal
  

You will find all the necessary information related to the conference here. Do not forget to register as soon as possible if you want to secure a place on the international sports law pitch! [Please note that we have a limited amount of seats available, which will be attributed on a ‘first come, first served’ basis.]

The CAS award in Atlético de Madrid v. FIFA

On 1 June 2017, the CAS communicated that it had rendered an award in the arbitration procedure between the Spanish club Atlético de Madrid and FIFA regarding the transfer of minor football players. The CAS Panel confirmed the transfer ban imposed on Atlético de Madrid by the FIFA Appeal Committee in its decision of 8 April 2016. This means that, unlike Real Madrid CF whose ban was reduced by the CAS from two to one entire transfer period, Atlético de Madrid remains banned from registering players both nationally and internationally for two complete and consecutive transfer periods. However, the CAS Panel found that not all of the alleged violations of the FIFA regulations concerning the registration of minor football players could be upheld. As a result, Atlético de Madrid is now obliged to pay CHF 550,000 instead of the original fine amounting to CHF 900,000. The award is not yet available.

The CAS award in ACF Fiorentina v. Mohamed Salah and Chelsea FC

This three-party dispute emerged from a loan agreement concluded between Chelsea FC and ACF Fiorentina in early 2015. Accordingly, the Egyptian international Mohamed Salah was loaned from Chelsea FC to ACF Fiorentina for the period between 2 February 2015 and 30 June 2015, with the option to extend the loan period for twelve more months from 1 July 2015 to 30 June 2016, if certain conditions were fulfilled. In July 2015, the player decided to remain at Chelsea FC while the representatives of the Italian club demanded his return to Florence. In August 2015, Salah joined A.S. Roma on a season-long loan from Chelsea FC.

Soon after the commencement of the 2015/2016 season, ACF Fiorentina lodged a complaint with FIFA, alleging that the player breached the loan agreement without just cause, and that Chelsea FC induced him to do so. The Italian club requested a compensation of EUR 32 million and sporting sanctions against both Chelsea FC and Salah. On 26 May 2016, the FIFA Dispute Resolution Chamber rejected the complaint (‘FIFA DRC Decision’). Disappointed with this decision, ACF Fiorentina filed an appeal with the CAS on 11 October 2016.

In the shadow of Salah’s recent transfer from A.S. Roma to Liverpool FC, the CAS announced on 30 June 2017 that it had dismissed ACF Fiorentina’s appeal and confirmed the FIFA DRC Decision. The award is not yet available.

FIFA’s Human Rights Policy

The amount of work done by international sports federations to strengthen their human rights compliance increases every month. In June 2017, the world’s governing body of football published FIFA’s Human Rights Policy, a document clarifying FIFA’s approach to the implementation of its human rights commitment in accordance with the United Nations Guiding Principles on Business and Human Rights. Simultaneously, FIFA also published its Activity Update on Human Rights mapping the most significant steps taken by the world’s governing body of football over the past twelve months to mitigate human rights risks with which it is repeatedly involved.

Sports Law Related Decisions

• European Commission – State Aid: Denmark support to local sports associations
• European Commission – State Aid: United Kingdom Horserace Betting Levy
• European Court of Justice – Opinion of Advocate General Szpunar in the case between the English Bridge Union Limited and Commissioners for Her Majesty’s Revenue & Customs

Official Documents and Press Releases

• Athletics Integrity Unit – A letter to athletes from the Chair of the Athletics Integrity Unit
• CAS – The CAS confirms the transfer ban imposed on Club Atlético de Madrid for breaches of the FIFA rules regarding the transfer of minors
• CAS –The CAS dismisses the appeal filed by Russian boxer Misha Aloyan
• CAS – The CAS dismisses the appeal of ACF Fiorentina in relation to the transfer of Mohamed Salah to Chelsea FC
• CAS – The CAS registers an appeal filed by the Palestine Football Association
• FIFA – Activity Update on Human Rights
• FIFA – Human Rights Policy
• FIFA – Statement on CAS decision relating to Atlético de Madrid
• FIFA –Statement on Human Rights Watch report on Russia
• FIFA –Statement on recent media coverage regarding the ‘Garcia Report’
• Michael J.Garcia and Cornel Borbély – Report on the inquiry into the 2018/2022 FIFA World Cup bidding process
• Human Rights Watch –Red card: Exploitation of construction workers on World Cup sites in Russia
• IOC –Beijing 2022 advances its sustainability and legacy plans
• IOC –Former United Nations Secretary-General Ban Ki-Moon proposed to head IOC’s Ethics Commission
• ITF –Decision in the case of Yuri Schwanke de Andrade
• Play the Game –Report on Autonomy in National Olympic Committees 2017
• UEFA – CFCB update on break-even monitoring for 2016/2017
• UEFA –Comprehensive bidding regulations approved for all finals and final tournaments
• UEFA –Salzburg and Leipzig admitted into UEFA Champions League
• WADA –Proposed International Standard for Code Compliance by Signatories – Version 1.0
• WADA –WADA permits RUSADA to plan and coordinate testing under the supervision of international experts and the UK Anti-Doping Agency
• WADA –WADA suspends UCLA Laboratory accreditation for specific prohibited substances

In the news

Doping

• AP News Ukrainian race walker Olena Shumkina banned for doping
• Andy Brown Spanish Court rejects argument that blood tests violate privacy
• Andy Brown Urine samples at Moscow lab still under Russian protection
• Nick Butler Weightlifting given December deadline to address doping problems by IOC
• Canadian Centre for Ethics in Sport Cycling Athlete Suspended for the Presence of Testosterone
• Martha Kelner Russia’s entire 2014 World Cup squad face FIFA doping investigation
• Samuel Petrequin French anti-doping officials worried about cocaine use
• Reuters Three Russian runners banned for four years after Beijing retests
• Rebecca R. Ruiz IOC Chief says Russia will face sanctions, despite new anti-doping efforts

Football

• BBC News Paul Pogba: Man Utd cleared by FIFA over deal but Juventus face charges
• Festus Chuma FIFA investigates Magogo, Ugandan football chief
• David Conn FIFA’s anti-corruption efforts criticised after speedy clearing of Gianni Infantino
• David Conn Jorge Mendes and Wolves: How deep does the agent’s influence run?
• Graham Dunbar Swiss prosecutors confirm about 25 FIFA investigations
• Karen Freifeld and Joshua Franklin Julius Baer battles FIFA corruption fallout as ex-banker set to plead guilty
• Tom Hays Ex-banker pleads guilty to US charge in FIFA probe
• Marina Hyde FIFA lets Qatar 2022 sail on, its moral lines in the sand still on the horizon
• Paul Nicholson China’s FA ushers in transfer tax, doubling cost of imported foreign players
• Ben Rumsby Garcia report into FIFA’s bidding process that awarded World Cups to Russia and Qatar is leaked
• Rory Smith FIFA pulls back the curtain, but will it ever see the light?
• The Times of India Banned Jerome Valcke gets October CAS appeal date
• Tirana Times Skenderbeu stripped of championship title over match-fixing

Other

• Jules Boykoff Los Angeles has the perfect chance to push back against a troubled IOC
• Nick Butler Barelli criticises FINA vice-President Ramsamy before CAS hearing
• Daniel Etchells Cost of Rio 2016 Olympics rises to $ 13.2 billion - $ 3.5 billion over budget
• Sean Ingle British bobsleigh team told: Keep quiet about bullying or miss Olympics
• Mari Yamaguchi Tokyo Olympics cost twice the initial estimate: Why?

Academic Materials

• Borja García and Henk Erik Meier Global Sport Power Europe? Efficacy of the European Union in Global Sport Regulation
• Peter Millward World Cup 2022 and Qatar’s Construction Projects: Relational Power in Networks and Relational Responsibilities to Migrant Workers
• Matt Mitten Why and How the Supreme Court Should Have Decided O’Bannon v. NCAA
• James Montague The Billionaires Club: The Unstoppable Rise of Football’s Super-rich Owners
• Tom Serby Sports Corruption: Sporting Autonomy, Lex Sportiva and the Rule of Law

Blog 

Asser International Sports Law Blog

• Tomáš Grell The Olympic Games and Human Rights – Part I: Introduction to the Host City Contract
• Tomáš Grell The Olympic Games and Human Rights – Part II: Human Rights Obligations Added to the Host City Contract: Turning Point or Empty Promise?

Law in Sport

• Daniel Burgess An explanation of interim injunctions in sports litigation
• Miguel Liétard Fernández-Palacios The role of the UEFA Ethics and Disciplinary Inspector in disciplinary proceedings
• Paul J. Greene and Tomislav Kasalo Key challenges facing athletes in contaminated supplement cases: A review of the Arijan Ademi decision
• Joseph M. Hanna The National Hockey League (NHL) trying to eject two retired players from concussion lawsuit
• Saurabh Mishra A short analysis of FIBA’s decision to permit the use of headgear
• Raj Pahuja Why the eSports industry needs to be aware of local laws in order to be successful in the Middle East

Others

• Andreas Selliaas Could CAS verdict shoot down Kuwaiti suspensions?

Upcoming Events

• 31 August-1 September – EU Sports Law and Policy Summer School, Business and Law Building, Edge Hill University, Ormskirk, the United Kingdom
• 26-27 October – ISLJ Annual Conference on International Sports Law, T.M.C. Asser Institute, The Hague, the Netherlands (Early bird fee until 15 September!)
• 26-30 November – Play the Game 2017: Riding Waves of Change, Eindhoven, the Netherlands

Editor’s note: Tomáš Grell holds an LL.M. in Public International Law from Leiden University. He contributes to the work of the ASSER International Sports Law Centre as a research intern.

Concerns about adverse human rights impacts related to FIFA's activities have intensified ever since its late 2010 decision to award the 2018 and 2022 World Cup to Russia and Qatar respectively. However, until recently, the world's governing body of football had done little to eliminate these concerns, thereby encouraging human rights advocates to exercise their critical eye on FIFA. 

In response to growing criticism, the Extraordinary FIFA Congress, held in February 2016, decided to include an explicit human rights commitment in the revised FIFA Statutes which came into force in April 2016. This commitment is encapsulated in Article 3 which reads as follows: ''FIFA is committed to respecting all internationally recognized human rights and shall strive to promote the protection of these rights''. At around the same time, Professor John Ruggie, the author of the United Nations Guiding Principles on Business and Human Rights ('UN Guiding Principles') presented in his report 25 specific recommendations for FIFA on how to further embed respect for human rights across its global operations. While praising the decision to make a human rights commitment part of the organization's constituent document, Ruggie concluded that ''FIFA does not have yet adequate systems in place enabling it to know and show that it respects human rights in practice''.[1]

With the 2018 World Cup in Russia less than a year away, the time is ripe to look at whether Ruggie's statement about FIFA's inability to respect human rights still holds true today. This blog outlines the most salient human rights risks related to FIFA's activities and offers a general overview of what the world's governing body of football did over the past twelve months to mitigate these risks. Information about FIFA's human rights activities is collected primarily from its Activity Update on Human Rights published alongside FIFA's Human Rights Policy in June 2017.

The most salient human rights risks

FIFA faces human rights risks through its events, commercial subsidiaries and business partners, member associations or other parties. This section identifies sources of human rights risks that are most often associated with FIFA's activities.

Bidding and selection

Allegations of corruption have cast a shadow over FIFA's decision to organize the 2018 and 2022 World Cup in Russia and Qatar respectively.[2] If these allegations were proven to be true, it would be conceivable that financial incentives provided by the successful candidates helped them not only to secure the right to stage the tournament, but also to evade certain requirements, including those related to human rights. As Ruggie puts it, ''lack of financial integrity […] is a foundational source of human rights risks''.[3]

Moreover, in the past, countries bidding to host FIFA's tournaments have not been required to present a strategy addressing human rights risks that may arise in connection with the tournament’s organization. This allowed Qatar to win the bidding contest for the 2022 World Cup without explaining how it plans to protect migrant workers from the adverse impacts of the kafala system. Another example is Papua New Guinea that was awarded the 2016 U-20 Women's World Cup despite the country's high rate of sexual violence against women.

Construction

FIFA delegates the organization of the World Cup to the Local Organizing Committee ('LOC'), a separate legal entity created by the government and the national football association of the Host Country. The LOC is responsible, inter alia, for the delivery of World Cup-related infrastructure. In order to meet their deadlines, contractors hired by the LOC may ignore safety standards or force their employees to work overtime. Other reported practices include, for instance, appalling living and working conditions, non-payment of salaries, withholding identity documents or restrictions on the freedom of association.

In March 2017, Norwegian football magazine Josimar uncovered a series of human rights abuses faced by North Korean men working at Zenit Arena in Saint Petersburg. As recently as 14 June 2017, Human Rights Watch documented the mistreatment of construction workers at five other World Cup stadium construction sites in Russia. As the situation in Qatar has not been much better,[4] the Netherlands Trade Union Confederation filed in December 2016 a lawsuit with the Commercial Court of the Canton of Zürich, asking the court to find FIFA responsible for alleged human rights violations of migrant workers. The court dismissed the lawsuit on jurisdictional grounds in January 2017 (for a detailed analysis, see our blogs here and here).

Discrimination

Article 4 of the FIFA Statutes prohibits ''discrimination of any kind against a country, private person, or group of people on account of race, skin colour, ethnic, national or social origin, gender, disability, language, religion, political opinion or any other opinion, wealth, birth, or any other status, sexual orientation or any other reason''. In practice, FIFA must enforce this provision by taking further action to tackle issues such as anti-gay legislation in countries where its tournaments are staged, homophobic chants by fans or gender discrimination in the world of association football. 

Players' rights 

In January 2017, the international players' association FIFPro published a Global Employment Report on working conditions in men's professional football. Out of nearly 14,000 players interviewed, 41% reported having experienced delayed salary payments over the past two seasons. Players who lodge a formal complaint against their club put themselves at risk of being excluded from the squad or subjected to violence and harassment. FIFPro strongly condemned these practices and called upon FIFA to reform its Regulations on the Status and Transfer of Players('RSTP') to ''provide stronger protections of players against material breaches of contracts by clubs''.[5] Another issue that merits closer attention is human trafficking in football, especially as it often involves minors.[6]

Other 

In addition to the above, FIFA could better address human rights abuses that may occur (i) in the supply chains of its licensees; (ii) in the process of land acquisition for stadiums and event-related infrastructure; or (iii) in connection with event-related security measures.

Overview of the measures taken by FIFA

First and foremost, FIFA strengthened its internal capacity to deal with human rights risks. In 2016, FIFA established the Governance Committee which provides, via its Human Rights Working Group, strategic guidance to the FIFA Council on human rights-related matters. At the operational level, the overall responsibility for the implementation of FIFA's human rights commitment rests with the Secretary General who delegates the day-to-day management of human rights-related work to the Sustainability and Diversity Department. In September 2016, FIFA employed a Human Rights Manager to work within this department. Moreover, in March 2017, FIFA appointed an independent Human Rights Advisory Board with the view of accelerating its efforts to embed respect for human rights. Composed of experts from the United Nations, trade unions, civil society and business, the Advisory Board is scheduled to meet at least twice a year. It has already contributed to the development of FIFA's Human Rights Policy, a landmark document clarifying FIFA's approach to the implementation of its human rights commitment in accordance with the UN Guiding Principles.

The rest of this section looks at the most significant steps taken by FIFA in each of the areas outlined above.

Bidding and selection

The FIFA Council has recently agreed that, as of the 2026 World Cup, human rights requirements will feature in the bidding procedure. This is of paramount importance as it means that countries failing to present an effective human rights strategy should not be allowed to host the World Cup. In other words, the protection of human rights will constitute a material factor in the bid evaluation. Had such requirements existed at the time of the bidding procedure for the 2022 World Cup, Qatar would arguably never have been selected.

The bidding procedure for the 2026 World Cup, the first to feature 48 teams, is currently in an early stage, and therefore bidding requirements are not yet available. The Host Country of the 2026 World Cup will be announced in 2020 at the latest.

Construction

As part of the implementation of the Sustainability Strategy for the 2018 World Cup, FIFA and the Russia 2018 LOC have launched a Decent Work Monitoring System aimed at detecting non-compliance with labour standards at World Cup stadium construction sites. Under this system, two-day on-site inspections are conducted on a quarterly basis by the Klinsky Institute of Labour Protection and Working Conditions, at times accompanied by the Building and Wood Workers' International ('BWI') and the Russian Building Workers Union ('RBWU').[7] After each inspection, companies are provided with a report containing recommendations for further improvement of working conditions. This report is forwarded to FIFA and the Russia 2018 LOC, and, in cases where the health or safety of workers are seriously threatened, also to the competent Russian authorities. As of 14 June 2017, a total of 58 inspections have been carried out.[8]

In Qatar, the Supreme Committee for Delivery and Legacy ('Supreme Committee'), an entity tasked with the delivery of World Cup-related infrastructure,[9] has developed a comprehensive set of Workers' Welfare Standards ('WWS'). Inspired by international labour standards, the WWS are mandatory for all contractors working on World Cup-related construction projects. To see whether contractors are adhering to these standards, the Supreme Committee has designed a four-tier monitoring system which comprises due diligence conducted by the Supreme Committee, the British company Impactt Ltd.,[10] the Qatari Ministry of Labour and contractors themselves. As of February 2017, the implementation of the WWS is further monitored via on-site inspections carried out jointly by the Supreme Committee and the BWI.[11]

Discrimination 

Establishment of the Anti-Discrimination Monitoring System in May 2015 is regarded as the most significant step taken by FIFA to combat discrimination in the world of football. This system uses independent observers who are present at matches identified as involving heightened risks of discriminatory incidents. Based on the reports provided by these observers, FIFA may open disciplinary proceedings and eventually impose sanctions on member associations. For instance, several Latin American associations have been sanctioned for homophobic chants by spectators during the 2018 World Cup qualifying matches.

Internally, FIFA promotes gender equality by requiring each of the six confederations to reserve at least one seat in the FIFA Council for women.[12]

Players' rights

As far as the protection of players' rights is concerned, FIFA informs that it has introduced certain measures intended to preserve confidentiality of the data available in theTransfer Matching System.[13] Furthermore, on 1 March 2015, FIFA modified the RTSP so as to put in place 'fast-track' proceedings for disputes concerning overdue payable claims (for a detailed analysis, see our blogs here and here).[14]

Other

In addition to contractors working on World Cup-related construction projects, other companies having business relationships with FIFA are now required to strengthen their human rights compliance. These include the suppliers of FIFA-licensed balls, artificial turf and technology used in games. Before a license agreement is entered into between FIFA and the supplier, FIFA must satisfy itself that both the supplier and its manufacturer are in compliance with the World Federation of the Sporting Goods Industry ('WFSGI') Code of Conduct, whose purpose is ''to guide WFSGI members in the standards and practices expected in the workplaces that they operate or contract from''.[15] Should FIFA-licensees cease to comply with the standards laid down in the WFSGI Code of Conduct, FIFA may decide to withdraw its license.

Concluding Remarks

The aforementioned report on human rights violations of World Cup-related construction workers in Russia, published by Human Rights Watch in June 2017, came as a major setback to the otherwise encouraging measures taken by FIFA in respect of human rights compliance. This and similar reports demonstrate that FIFA's human rights activities have not yet produced their desired effect. To increase the efficiency of its human rights activities in the future, FIFA should probably engage in a tougher discussion with the competent authorities of the Host Country. This is important because event-related human rights abuses often flow from inadequate domestic legislation and administrative practices of the Host Country.[16] Examples from the past show that FIFA is able to exert pressure on the future Host Country to modify its domestic legislation when it is in the interest of FIFA's sponsors.[17] At the risk of stating the obvious, it is hard to understand why FIFA's sponsors should be prioritized over thousands of people facing human rights abuses in connection with the organization of the World Cup. Thus, a lot will depend on FIFA's amendment of the bidding requirements for the 2026 World Cup. Though it may sound optimistic and far-fetched, if FIFA were to award the World Cup taking into account human rights compliance of the potential Host Countries, it could become a strong force in spreading the human rights gospel across the globe.

[1]   John G. Ruggie, 'For the Game. For the World. FIFA and Human Rights' (April 2016) p. 19.

[2]   Jonathan Calvert and Heidi Blake, 'Plot to Buy the World Cup' (The Sunday Times, 1 June 2014). See also David Conn, 'France Investigates Votes for 2018 and 2022 World Cups and Questions Blatter' (The Guardian, 27 April 2017).

[3]   See Ruggie's report (n 1) p. 21.

[4]   Amnesty International, 'The Ugly Side of the Beautiful Game: Exploitation of Migrant Workers on a Qatar 2022 World Cup Site' (30 March 2016).

[5]   FIFPro, '2016 FIFPro Global Employment Report: Working Conditions in Professional Football' (January 2017) p. 30.

[6]   See Ruggie's report (n 1) p. 25.

[7]   In August 2016, the BWI and the RBWU signed a memorandum of understanding with FIFA and the 2018 World Cup LOC.

[8]   FIFA, 'Statement on Human Rights Watch Report on Russia' (14 June 2017).

[9]   The Supreme Committee works closely with the Qatar 2022 LOC.

[10]  In April 2017, Impactt Ltd. published its first report.

[11]  The Supreme Committee and the BWI signed a memorandum of understanding in November 2016.

[12]  FIFA Statutes, Article 33(5). See also FIFA, '2016 Reform Committee Report' (2 December 2015) p. 9.

[13]  RSTP, Definitions.

[14]  RSTP, Article 12bis.

[15]  WFSGI Code of Conduct, Introduction.

[16]  It should be noted that, in December 2016, the Qatari government introduced certain reforms to its labour laws. However, Amnesty International asserted that these reforms ''barely scratch the surface of labour exploitation''.

[17]  One such example is the well-known 'Budweiser Law' – a law enacted by Brazil in the run-up to the 2014 World Cup allowing beer sales at match venues despite the fact that the sale of alcohol had been prohibited in Brazil's stadiums for almost ten years.

 Editor's note: This report compiles all relevant news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser.

The Headlines

ISLJ Annual Conference on International Sports Law 

On 26 and 27 October 2017, the T.M.C. Asser Institute in The Hague will host the first ever ISLJ Annual International Sports Law Conference. This year's edition will feature panels on the Court of Arbitration for Sport, the world anti-doping system, the FIFA transfer regulations, human rights and sports, the labour rights of athletes, and EU law and sport. We will also welcome the following distinguished keynote speakers:

• Miguel Maduro, former Advocate General at the European Court of Justice and former head of the FIFA's Governance Committee;
• Michael Beloff QC, English barrister known as one of the 'Godfathers' of sports law;
• Stephen Weatherill, Professor at Oxford University and a scholarly authority on EU law and sport;
• Richard McLaren, CAS Arbitrator, sports law scholar and former head of the World Anti-Doping Agency's investigation into the Russian doping scandal.

You will find all the necessary information related to the conference here. Do not forget to registeras soon as possible if you want to secure a place on the international sports law pitch! [Please note that we have a limited amount of seats available, which will be attributed on a 'first come, first served' basis.]

FC Red Bull Salzburg and RB Leipzig given the green light to participate in the 2017/2018 UEFA Champions League

In July, UEFA published the decision on eligibility of FC Red Bull Salzburg and RB Leipzig to participate in the 2017/2018 edition of the UEFA Champions League, handed down by the Adjudicatory Chamber of the UEFA Club Financial Control Body ('CFCB') on 16 June 2017. Having examined the clubs' submissions and, in particular, taking note of multiple personal and other changes made by FC Red Bull Salzburg, the CFCB Adjudicatory Chamber concluded that the company Red Bull did not have a decisive influence over the Austrian club in the sense of Article 5.01(c)(iv) of the UEFA Champions League Regulations 2015-2018 Cycle, 2017/2018 Season. Simultaneously, the CFCB Adjudicatory Chamber held that FC Red Bull Salzburg was not able to exercise by any means a decisive influence in the decision-making of RB Leipzig (or vice versa) at the time when the decision in question was delivered. In the end, both clubs were given the green light to participate in the 2017/2018 edition of the UEFA Champions League as the CFCB Adjudicatory Chamber believed it would not threaten the integrity of the UEFA's flagship club competition.

The CAS award in International Ski Federation v. Therese Johaug and the Norwegian Olympic and Paralympic Committee and Confederation of Sports

On 22 August 2017, the CAS published its award rendered in the dispute featuring the International Ski Federation, the Norwegian cross-country skier Therese Johaug and the Norwegian Olympic and Paralympic Committee and Confederations of Sports ('NIF'). By way of reminder, the seven-time world champion tested positive for Clostebol in September 2016. Consequently, the NIF Adjudication Committee imposed a 13-month period of ineligibility on Johaug, effective as of 18 October 2016. Not satisfied with the length of the sanction, the International Ski Federation filed an appeal with the CAS on 6 March 2017, asking the latter to lengthen Johaug's ban to at least 16 months. Despite the Norwegian's otherwise clean anti-doping record, the CAS eventually sided with the International Ski Federation and lengthened Johaug's ban to 18 months, effective as of 18 October 2016. As a result, she will now miss the 2018 Winter Olympic Games in Pyeongchang.

Sara Errani banned from professional tennis for two months

The Italian female tennis player Sara Errani is currently serving a two-month ban imposed on her by an Independent Tribunal appointed under Article 8.1 of the 2017 Tennis Anti-Doping Programme. This sanction is a direct consequence of an out-of-competition doping control test which took place on 16 February 2017 and revealed the presence of Letrozole in the body of the former French Open finalist. Apart from not being eligible to enter any tournament before 3 October 2017, Errani is also obliged to return prize money she earned at events played during the period between 16 February 2017 and 7 June 2017, given that all her results achieved during the said period were disqualified. It should be noted, however, that the Italian Anti-Doping Agency reportedly petitioned the CAS to lengthen Errani's ban, and thus it will be the CAS that will have the final word on the matter.

Sports Law Related Decisions

• CAS – Award delivered in the arbitration between Chunhong Liu and International Olympic Committee
• CAS –Award delivered in the arbitration between Lei Cao and International Olympic Committee
• CAS – Award delivered in the arbitration between Paolo Barelli and Fédération Internationale de Natation (FINA)
• CAS –Award delivered in the arbitration featuring the International Ski Federation (FIS), Therese Johaug and The Norwegian Olympic and Paralympic Committee and Confederation of Sports
• Sport Resolutions (UK) –Decision rendered in the case between ITF and Sara Errani
• UEFA –Decision rendered in the case concerning Rasenballsport Leipzig and FC Red Bull Salzburg

Official Documents and Press Releases

• Athletics Integrity Unit – Statement regarding the provisional suspension of two Ukrainian athletes
• CAS – Appeal filed by Tatyana Chernova dismissed
• CAS – Bulletin 2017/1
• CAS –The CAS confirms ranking of the Romanian football league 1 2016/2017
• CAS – The CAS confirms the decision rendered by the International Canoe Federation (ICF) in the case of Serghei Tarnovschi
• CAS – The CAS dismisses the appeals filed by the Bolivian Football Federation
• CAS – The CAS imposes four-year ban on Russian triple-jumper Anna Pyatykh
• CAS –The CAS reduces the ban imposed on Harold Mayne-Nicholls from three to two years
• CAS –The CAS rejects urgent application for provisional measures filed by Peter Sagan and Denk Pro Cycling GmbH
• CAS –The CAS suspends the IAAF Hyperandrogenism Regulations until the end of September 2017
• CAS – The CAS upholds the life bans imposed by the IAAF on Valentin Balakhnichev, Alexei Melnikov and Papa Massata Diack
• CAS –The CAS upholds the two-year period of ineligibility imposed on Roman Eremenko
• Deloitte –Annual Review of Football Finance
• FIFA – 2026 FIFA World Cup bidding process: FIFA receives expressions of interest
• FIFA –FIFA appoints monitoring committee to ensure oversight of Greek FA
• FIFA –FIFA suspends Sudan Football Association
• FIFA –FIFA lifts suspension of Sudan Football Association (SFA)
• FIFA –Normalisation committee appointed for Cameroonian FA
• FIFPro –Neymar deal is tip of the iceberg
• IOC – 2028 Host City Contract
• IOC – IOC approves new candidature process for Winter Olympic Games 2026
• IOC – IOC Executive Board confirms gender equality and more innovation for Winter Youth Olympic Games Lausanne 2020
• IOC – IOC makes historic decision in agreeing to award 2024 and 2028 Olympic Games at the same time
• IOC –Los Angeles declares candidature for Olympic Games 2028: IOC to contribute USD 1.8 billion to the Local Organising Committee
• IOC – Report of the IOC Evaluation Commission 2024
• IOC –Six candidates approved for IOC Athletes’ Commission elections in Pyeongchang
• Swiss Federal Tribunal –Appeal filed by Michel Platini rejected
• Tennis Integrity Unit – Briefing Note July 2017
• UNESCO – From ‘declaration to action’ at Ministerial Conference for Sport and Physical Education
• Union Cycliste Internationale (UCI) –Cycling Canada, Ontario Cycling Association, UCI and Canadian athlete Kristen Worley settle human rights application to promote inclusive sporting environments
• Union Cycliste Internationale (UCI) – Statement on Samuel Sánchez Gonzalez
• WADA – Annual report 2016
• WADA – Sierra Leone ratifies UNESCO Anti-Doping Convention
• WADA –Statement from WADA Athlete Committee
• WADA – WADA publishes RUSADA Roadmap to Code Compliance

In the news

Doping

• Nina Berglund Johaug drops doping appeal
• Andy Brown Russian Federal Government approves National Anti-Doping Plan
• Nick Butler IOC Executive Board approve plans for Independent Testing Authority in time for Pyeongchang 2018
• Nick Butler IOC target October for results of Schmid and Oswald Russian doping reports
• Daniel Etchells iNADO urges principled approach from IOC to Russia sanctions
• Nick Harris Russia’s football drugs cover-up: Eight months on and still no action as ethics team are ‘denied access to evidence’
• Martha Kelner Ethiopian pharmacy given trading ban for the illegal sale of EPO
• Martha Kelner Inside the doping hotspot of Ethiopia: Dodgy testing and EPO over the counter
• Martha Kelner and James Rudd Caster Semenya could be forced to undertake hormone therapy for future Olympics
• Duncan Mackay Olympic 50km race walk gold medallist to miss World Championships after IAAF doping investigation
• The Moscow Times Russia’s Sports Minister says no chance of Winter Games doping ban
• Michael Pavitt WADA Director General claims progress being made after visiting RUSADA headquarters
• Play the Game Paralympic committees boost Russia’s bid to be reinstated in time for Pyeongchang 2018
• Radio Poland New Polish Anti-Doping Agency launched
• Reuters Suspended Russian Anti-Doping Agency appoints new director

Football

•  Mohamed Fajah Barrie The crisis in Sierra Leone football deepens as FIFA suspends congress

• David Conn Paris St-Germain signing of Kylian Mbappé looks like defiance of UEFA
• James M. Dorsey The Gulf crisis: Qatar’s 2022 World Cup moves into the firing line
• ESPN FIFA places onus on Football Federation Australia to sort out governance issues with stakeholders
• Joseph Evans Spanish, French and Brazilian firms advise on record-breaking £200 million Neymar transfer to PSG
• The Guardian Spanish FA President Ángel María Villar Llona arrested on corruption charges
• Nicholas Hirst Spanish league wants EU to referee Neymar transfer saga
• Paul MacInnes UEFA’s Aleksander Ceferin talked about a salary cap – but could it ever happen?
• Liam Morgan Cameroon official accuses FIFA of ignoring CAS verdict on disputed FECAFOOT elections
• Liam Morgan FIFA threaten to take over running of Football Federation Australia as impasse continues
• Rory Smith The owner brought the money. The agent delivered the players. Now what?
• Peter Staunton Coutinho, Van Dijk and Diego Costa: Transfer market horribly stacked against players
• Stefan Szymanski Neymar transfer exposes football’s modern-day trafficking scheme
• Andrew Warshaw Ceferin warns Euro giants that FFP still has teeth, and floats possibility of salary cap
• Joe Wright FIFA investigating Neymar complaint over unpaid Barcelona loyalty bonus

Other

• Rizwan Ali Pakistan cricketer Sharjeel Khan banned for five years
• Aaron Bauer Coates welcomes Australian Olympic Committee’s report, but defiant on bullying claims
• Ben Bloom IAAF consider formal action against BBC for grilling medical expert on live TV
• Nick Butler IOC members unanimously support 2024 and 2028 joint awarding plans
• David Conn How Bahrain uses sport to whitewash a legacy of torture and human rights abuses
• Nicholas Hirst Sports bosses on thin ice in EU antitrust probe
• Marina Hyde Los Angeles has signed up but rapacious IOC is running out of conquests
• Sean Ingle Sebastian Coe alarmed by ‘human trafficking’ revelations in athletics
• Martha Kelner General public is losing faith in scandal-ridden sports, survey claims
• Juliet Macur What qualifies a woman to compete as a woman? An ugly fight resumes
• Reuters IOC snubs Infantino and Coe in new members list
• John Varano Major sports events: Are they worth it?
• Stephen Wade Rio Olympics look to IOC for help with USD 40 million debt
• Johnny Watterson and Sarah Bardon The Olympic Council of Ireland acting to remove Pat Hickey from Olympic positions

Academic Materials

• Steven A. Bank Will U.S. Soccer Be Forced to Adopt Promotion and Relegation?
• Stéphane Bermon and Pierre-Yves Garnier Serum Androgen Levels and Their Relation to Performance in Track and Field: Mass Spectrometry Results from 2127 Observations in Male and Female Elite Athletes
•  Ian S. Blackshaw International Sports Law: An Introductory Guide
• Philippe Broda Europe Versus Emerging Countries Within FIFA: Using Inflation as a Conflict Regulation Mechanism
• Namrata Chatterjee, Chiheb Kaibi, Ivan Kraljević and Adrienne Lerner A Proposal for Sport Governance Oversight
• Sherman J. Clark Why Sports Law?
• Pierre Cornu, Sabrina Cuendet and Laurent Vidal Disciplinary and Arbitration Procedures of the Sport Movement
• Despina Mavromati Disciplinary Sanctions for Misconduct in Tennis
• Rolf Ulrich et al. Doping in Two Elite Athletics Competitions Assessed by Randomized-Response Surveys

Blog

Asser International Sports Law Blog

• Mario Vigna Mitigating Circumstances and Strict Liability of Clubs in Match-fixing: Are We Going in the Wrong Direction? An Analysis of the Novara and Pro Patria Cases
• Frans de Weger and Frank John Vrolijk Overdue Payables in Action: Reviewing Two Years of FIFA Jurisprudence on the 12bis Procedure – Part I
• Frans de Weger and Frank John Vrolijk Overdue Payables in Action: Reviewing Two Years of FIFA Jurisprudence on the 12bis Procedure – Part II

Law in Sport

• Nick De Marco Betting and football’s ticking time bomb: Joey Barton v. FA
• Tiran Gunawardena, Carol Couse and Mark Hovell Trends in digital brand engagement, image rights and sponsorship deals in sport
• Andrew Haywood The lifecycle of an international athlete: Part I: Finding an agent and signing with a sports club
• Rebecca O’Kelly-Gillard and Chris Lavey Top of the league: How football clubs protect and exploit their brands in a global marketplace
• John Shea Six key lessons for clubs on the protection of minors from the FC Barcelona and Real Madrid appeals
• Dan Smith #Sport: The digital battle between sponsors, rights holders and ambush marketers
• Lloyd Thomas A brief review of China’s new 100% ‘transfer tax’ on footballers
•  Gemma White and Louis Weston Why sport needs a unified approach to sanctions for corruption offences

Others

• Andy Brown Why life bans for doping will not work
• Nick De Marco Corruption in football: Player transfers, agents and the ‘privatisation of regulation’
• Kelsey Erickson and Susan Backhouse Doping: Why some athletes are reluctant to speak out
• Howard Jacobs The latest anti-doping hysteria and the problem of reducing complicated issues to 140 characters
• Ruth Kennedy Barcelona’s claim against Neymar: Valid claim or smoke and mirrors?
• David Owen IOC likes to say it redistributes 90% of revenues, but does it? And who to?
• Roger Pielke, Jr. Inconsistencies between Johaug vs. Sharapova at CAS
• Ed Thompson Neymar’s PSG transfer and the break-even test
• Ross Tucker Testosterone, performance and intersex athletes: Will the IAAF evidence be enough?

Upcoming Events

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Editor's Note: Christopher is an editor of the Asser International Sports Law Blog. His research interests cover a spectrum of sports law topics, with a focus on financial regulatory disputes, particularly in professional football, a topic on which he has regularly lectured at the University of the West of England.

It is five years since the Union of European Football Associations (UEFA) formally introduced ‘Financial Fair Play’ (FFP) into European football through its Club Licensing and Financial Fair Play Regulations, Edition 2012. With FFP having now been in place for a number of years, we are in a position to analyse its effect, its legality, and how the rules have altered over the last half decade in response to legal challenges and changing policy priorities. This article is split into three parts: The first will look at the background, context and law applicable to FFP; Part Two will look at the legal challenges FFP has faced; and Part Three will look at how FFP has iteratively changed, considering its normative impact, and the future of the rules.

Background

Certain aspects of FFP were incredibly controversial from the outset. To a neutral observer, this might seem confusing: FFP is, ostensibly, a set of rules designed to make sure clubs pay their bills on time, stay solvent, and do not need to look to external benefactors to cover their losses. Leading sports economist Stefan Szymanski described insolvency as “a chronic problem in the world of professional Association football”, so, superficially at least, a regulatory response to this would seem natural and appropriate. Where the market fails, it is the regulator’s duty to respond.

UEFA’s President at the time, Michel Platini, said “You, we, the fans and football lovers, have no interest in seeing clubs, the real heritage of European football, disappear due to risky management”. This is a sentiment with which most fans would agree.

Accordingly, UEFA incorporated FFP into its existing licensing requirements, meaning any club that wished to compete in a UEFA competition would be required to meet the financial standards set by FFP. These standards would be overseen and enforced by a new body within UEFA’s administration called the ‘Club Financial Control Body’. The Club Financial Control Body would be further segregated into an Investigatory Chamber and an Adjudicatory Chamber.

So, why the controversy? The contentious aspect of FFP was its ‘break even’ requirement. The ‘break even’ requirement is a de facto soft salary cap, tying the maximum amount a club can spend (with defined exceptions) to its revenue generation. An overview of the break even requirement as originally conceived can be found here. In essence, “The break-even result for a reporting period is calculated as relevant income less relevant expenses’’.^[1]“Income” includes receipts such as gate receipts, sponsorship, broadcasting rights, commercial activities and player sales; “expenses” includes wages, the cost of purchasing players and the cost of finance.^[2]

Crucially, when FFP was first introduced, losses could not be met or offset by equity participants (i.e. owners). This was pertinent to the prevailing financial climate in football, in which certain clubs across Europe were spending unprecedented sums with the support of wealth benefactors, who would cover the clubs’ losses. Such spending was seen at clubs such as Chelsea, Manchester City, Paris Saint Germain, Monaco, Malaga and Anzhi Makhachkala, with mixed results on and off the pitch.

Thus FFP was accused of calcifying football’s competitive hierarchy^[3] and foreclosing smaller clubs from sporting and consequent business success. This debate has been played out over the last five years in the academic literature^[4] and in various legal fora. The rules and the mechanisms for enforcing the rules have become increasingly sophisticated as the years have passed. UEFA, perhaps in response to these challenges, has made gradual, iterative changes to FFP that have seen the rules soften to accommodate exogenous equity input in defined permissible circumstances. These changes will be looked at in greater depth in Part Three.

The challenge of EU law

FFP has been described ‘legally fragile’, which is an apt description. This is because the rules cannot be said to be unquestionably permissible under European Union (EU) law; nor can they be said to be categorically in breach of EU law. The rules exist in a regulatory ‘grey’ area – FFP, in its particularly in its original, more restrictive, guise, may or may not have been illegal. This is a question for a competent (judicial) authority to decide; however, as will be discussed in more detail in Part Two, the route to such a decision has been far from straight forward, and in the intervening years, FFP has changed substantially.

The essential legal questions to determine the legality of FFP are:

1. Does FFP breach EU competition law?
2. Does FFP breach EU free movement law?
3. Is there a sanctuary for any breach of EU law under the doctrine of the specificity of sport?

EU competition law

Article 101 of the Treaty of the Functioning of the European Union (TFEU) prohibits agreements that have as their object or effect “prevention, restriction or distortion of competition within the internal market”.^[5] This puts regulatory associations such as UEFA in a difficult position. It is the very nature of regulation that competition is restricted or distorted; indeed, it is the very purpose of regulatory rules that participants subject to those rules alter their behaviour accordingly, which has an inevitable consequence on the competitive landscape.

Consideration should also be given to Article 102 TFEU, which prohibits undertakings (and in some circumstances collections of undertakings, i.e. oligopolies) that are in a dominant position from abusing their market dominance.

In view of this friction, the European courts have developed, through the case of Wouters, the concept of regulatory ancillarity.^[6] This is the doctrine under which, subject to a test of proportionality, reasonability and necessity, even in circumstances where there is a prima facie breach of competition law by a regulatory body (in that particular case by the Dutch Bar Association), this may be permissible under EU competition law where the regulatory body in question “could reasonably have considered that that regulation, despite the effects restrictive of competition that are inherent in it, is necessary for the proper practice of the [relevant profession]”.

The applicability of Wouters to a sporting regulatory context is confirmed and clarified in the landmark Meca-Medina case. In considering whether a regulatory rule breaches competition law, the European courts must determine: 

1. Whether the rules are necessary for the proper conduct of the sport;
2. Whether the penalties are inherent to the restrictions in questions; and
3. Whether the effects of the rules are proportionate to the aims pursued.

Should UEFA be unable to meet the test under the regulatory ancillarity doctrine, there is an alternative exemption with a lower threshold to which it could look. Within Article 101(3) TFEU, there is an exemption for agreements which promote “technical or economic progress, while allowing consumers a fair share of the resulting benefit” as long as such restrictions do not (a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; or (b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

It is open to UEFA to argue that FFP dampens inflation in football in a way that is for the improvement of the game and passes a benefit to ‘consumers’ (i.e. fans) by, for example, reducing the need for ticket price increases to sustain escalating players’ wages. This would perhaps be difficult for UEFA to establish, but the economics of FFP are complicated and second order effects should be borne in mind.

EU free movement – workers, services and/or capital 

The EU is built upon certain deeply enshrined freedoms. These include the free movement of workers (Article 45 TFEU), the free movement of services (Article 56 TFEU), and the free movement of capital. Any agreement that acts as an impediment to these freedoms is susceptible to a finding of illegality.

In order to be permissible under EU law, any rule or agreement that restricts any fundamental freedom must be:

1. Justified by a necessary objective in the general interest;
2. Suitable for achieving that objective; and
3. Proportionate.

In the case of sporting rules, the European courts have determined that the rule in question must not “go beyond what is necessary for achieving the aim pursued”,^[7] which is to reiterate that it must be proportionate – a recurrent theme in considering the legality of rules made by the governing bodies of sport, such as UEFA.

The criteria to be met by UEFA in establishing that FFP does not breach EU fundamental freedoms is in line with the threshold to be met in establishing compliance with EU competition law: FFP must be necessary, suitable and proportionate.

However, in the case of free movement law, it is far from obvious that FFP will have a substantive impact on fundamental freedoms. In previous writing on the subject, I have made the following analogy:

The restriction does not emanate from the rule per se, rather by the size of the club’s turnover; players are no more restricted from moving between clubs by FFP than this author is denied a Ferrari by his credit rating.^[8]

The specificity of sport under EU law

In the event that a competent adjudicative authority makes a prima facie finding that FFP is in breach of EU competition law or EU free movement law, there is still a possibility of an overall finding that FFP is not illegal under the doctrine of the specificity of sport; however, this would require the adjudicative body in question to row back considerably from the current position, and general trajectory, of the level of latitude granted to the governing bodies of sport by the European courts.

The concept of specificity will be familiar to all those with an interest in sports law and policy. It is the hypothesis under which, at its starkest interpretation, suggests governing bodies, not courts (or governments or other legislative bodies), are best placed to determine how sport should be run. Sports, it is argued, should have rule making autonomy. A more moderate view on specificity holds that due regard should be paid to the idiosyncrasies of the sports sector and the legitimate governance function played by governing bodies. 

The role of sports governing bodies, whose rules, as was the case with FFP, are often enacted in a broadly consensual way, with engagement, input and consent from key stakeholders, should be acknowledged and some due reverence should be paid to governing bodies' ability to regulate the sporting aspects under their aegis.

Indeed, the European Union had no express competence to in respect of sport until the introduction of Article 165 TFEU, a soft competency, which states that, “The Union shall contribute to the promotion of European sporting issues, while taking account of the specific nature of sport, its structures based on voluntary activity and its social and educational function.”

However, the distinction between elite football as being ‘purely sport’ and elite football as a business has become blurred in to the point of being indistinguishable; and the EU clearly has express competence to deal with business.

The general trend in decisions of the European courts has been to circumscribe self-determination by the governing bodies of sport. Through cases such as Bosman,^[9]Meca-Medina, and Bernard,^[10] the European courts have made it clear that sport cannot avoid or cherry-pick the applicability of EU law. This is acutely relevant in the case of FFP, which, after all, deals with how football clubs are run financially. There are obvious sporting consequences to this, but it is difficult to characterise FFP as anything other than a rule restrictive of the business of sport.

UEFA’s position on Article 165 is that “while sport is not ‘above the law’, there is now a provision in the Treaty itself recognising that sport cannot simply be treated as another ‘business’, without reference to its specific characteristics”. This is not an unreasonable position; sport is a unique industry in which, unlike other industries, the survival of competitors is important for any given club to flourish. Perhaps the courts could be persuaded that a carve-out based on specificity should be applicable to FFP – but this would require a seismic change of direction.

So it is incredibly unlikely that specificity as a discrete sui generis doctrine would give sanctuary to FFP were the rules deemed to be otherwise in breach of EU law. However, facts peculiar to the football industry (i.e. its specificity) should be considered as part of an assessment as to whether FFP is a proportionate mechanism to pursue UEFA’s objectives. As noted above, proportionality is a limb of the tests for derogations to EU competition and fundamental freedom law.

I have previously commented that: 

For football clubs, there is a strong correlational link between spending money and playing success. This has encouraged clubs to risk financial vulnerability in pursuit of improved match results, despite the mathematical impossibility of all clubs being able to improve their fortunes on the field. This innate instability has resulted in persistent insolvencies despite the remarkable growth in turnover seen in the professional game. Regrettably, when balance sheets weaken, the risk of insolvency increases; and once a club becomes insolvent, its survival is subject to the predilections of its creditors. The game’s governing bodies should aim to militate against…this volatility.

UEFA would doubtless argue that, given the specific nature of the industry it regulates, instituting a soft salary cap such as that implemented by FFP is a proportionate response. In that sense at least, the specificity of sport might be of consideration in the legality of FFP.

Conclusion 

It is difficult to say with any degree of conclusiveness whether FFP is legal or not. There are strong arguments either way. The marginal nature of the legal position has been problematic for UEFA and has undoubtedly led to the legal challenges to FFP over the last five years, which are discussed in greater depth in Part Two of this series.

The uncertain legal position, and the challenges generated by that lack of clarity has also, in all likelihood, shaped UEFA’s policy decisions as FFP has evolved in the years since its inception. These are discussed in Part Three of this series.

FFP has certainly been fertile ground for debate, and will likely continue to be so until such a time as there has been a determinative, binding view of its legality. When or whether this will happen remains to be seen.

^[1] Annex X, Club Licensing and Financial Fair Play Regulations, Edition 2012.

^[2]Ibid.

^[3] Thomas Peeters and Stefan Szymanski , 'Financial Fair Play in European Football ' [2014] 29(78) Economic Policy 343-390

^[4] See, for example, Serby, T. (2016) The state of EU sports law: lessons from UEFA’s ‘Financial Fair Play’ regulations, International Sports Law Journal 16(1–2):37–51; Flanagan, C (2013) A tricky European fixture: an assessment of UEFA’s Financial Fair Play regulations and their compatibility with EU law, International Sports Law Journal 13(1):148; Lindholm, J (2010) The Problem with Salary Caps Under European Union Law: The Case Against Financial Fair Play, Texas Review of Entertainment and Sports Law, Vol. 12.2, pp. 189-213

^[5] Noting that UEFA certainly constitute an association of undertakings in the relevant legal sense, see for example Case T-193/02 Piau (2005) ECR I-209, (2005) 5 CMLR 42 or EU Commission decision 2003/778/EC, 23 July 2003, Case COMP C.2-37.398 - Joint selling of the commercial rights of the UEFA Champions League §§ 106-107

^[6] As identified and defined by Whish and Bailey in Competition Law (OUP, 8th)

^[7] Case C-176/96, Jyri Lehtonen and Castors Canada Dry Namur- Braine ASBL v Fédération Royale Belge des Sociétés de Basketball ASBL (FRBSB) ECR (2000) I-2681

^[8] Flanagan, C (2013) A tricky European fixture: an assessment of UEFA’s Financial Fair Play regulations and their compatibility with EU law, International Sports Law Journal 13(1).

^[9] Case C-415/93 Union Royale Belge des Socie ́te ́s de Football Association ASBL v Jean-Marc Bosman (1995) ECR I-4921.

^[10] C-325/08 Olympique Lyonnais v Olivier Bernard and Newcastle United FC (2010) ECLI:EU:C:2010:143.