Back to all news

Grahame Anderson on FA Rule K Arbitration Jurisdiction Challenges

Rule K Jurisdiction Challenges: Do you have to be a Participant to be bound by FA Arbitration by Grahame Anderson

In my football arbitration practice, I am seeing more Respondents seeking to dispute the jurisdiction of the Rule K arbitrator to deal with the claims brought against them on the basis that they are not (or the Claimant is not) a “Participant”.

There are some issues in the drafting of the FA Rules (“the Rules”), but my view is that this trend is a flash in the pan, a delaying tactic by Respondents with little or no substantive defence to the claims against them: after all, the upshot in most cases will be costlier and lengthier civil proceedings.

Starting point: the Rules

A sizeable majority of the cases I have seen in which the jurisdiction point has arisen involve player contract disputes. The usual story: player signs with intermediary, the intermediary-contract contains provisions entitling the agent to a fee irrespective of how any playing contract comes about, a different intermediary sources a deal, the player doesn’t want to pay under the intermediary-contract.

Often there will be an international element to proceedings which adds its own questions but not ones, in fairness to the Rule K system, that have troubled arbitrators at great length in my experience.

Rule K1 of the FA Rules provides:

‘AGREEMENT TO ARBITRATION

1 (a) Subject to Rule K1(b), K1(c)and K1(d) below, any dispute or difference between any two or more Participants (which shall include, for the purposes of this section of the Rules, The Association) including but not limited to a dispute arising out of or in connection with (including any question regarding the existence or validity of):

1. the Rules and regulations of The Association which are in force from time to time;
2. the rules and regulations of an Affiliated Association or Competition which are in force from time to time;
3. the statutes and regulations of FIFA and UEFA which are in force from time to time; or
4. the Laws of the Game

shall be referred to and finally solved by arbitration under these Rules.’

Some terms in Rule K1 are given specific definitions:

‘”Participant” means an Affiliated Association, Competition, Club, Club Official, Intermediary, Player, Official, Manager, Match Official, Management Committee Member, member or employee of a Club and all such persons who are from time to time participating in any activity sanctioned either directly or indirectly by The Association;

“Player” means any Contract Player, Out of Contract Player, Non-Contract Player or other player who plays or is eligible to play for a Club or is subject to any suspension from playing;

“Contract Player” means any player (other than a Player on a Scholarship) who is eligible to play under a written contract of employment with a Club;

“Non-Contract Player” means any Player (other than a Player on a Scholarship) who is eligible to play for a Club but has not entered into a written contract of employment;

“Out of Contract Player” means a Contract Player whose contract has expired;

“Club” means any football club;

“Football club” means any club which plays the game of football in England and is recognised as such by The Association;’

Accordingly, as a matter of the FA Rules, disputes that fall within the scope of Rule K1 are required to be dealt with by FA arbitration, on pain – presumably – of a misconduct charge. More importantly, however, there will be an (invariably written) arbitration agreement for the purposes of s. 6 of the Arbitration Act 1996. That much is not particularly interesting.

It is worth noting that (a) Rule K5(ii) gives the Tribunal the power to determine any questions as to its own jurisdiction; and (b) Rule K14(a) provides that any arbitration under the Rules shall be governed by English law. Under that same provision, the Tribunal must apply English law (both procedural and substantive) in determining any dispute referred to arbitration under the Rules.

However, on the face of the Rules, one must be a Participant to take part in Rule K arbitration. So two questions arise: (1) is it a requirement to be a Participant? (2) how broad is the definition of Participant?

Do you need to be a Participant?: applying English law

S. 5(1)-(2) of the Arbitration Act 1996 (the “1996 Act”) provides that:

“(1)  The provisions of this Part apply only where the arbitration agreement is in writing, and any other agreement between the parties as to any matter is effective for the purposes of this Part only if in writing.

The expressions “agreement”, “agree” and “agreed” shall be construed accordingly.

(2)  There is an agreement in writing –

1. if the agreement is made in writing (whether or not it is signed by the parties),
2. if the agreement is made by exchange of communications in writing, or
3. if the agreement is evidenced in writing.”

Focussing on the provisions of the 1996 Act as determinative of Rule K jurisdiction is the approach that has been taken in two recent High Court decisions:

• Davies v. Nottingham Forest Football Club Limited [2017] EWHC 2095 per HHJ Bird (sitting as a Deputy of the High Court): in that case there was no express incorporation of Rule K arbitration in the player contract. The case is also noteworthy for the Judge’s ruling that the parties were nevertheless party to an arbitration agreement by virtue of both being bound by the Rules. Importantly, in reaching that conclusion he notes that ‘Anyone who participates in the game of football (certainly at the professional level) is fully aware of the importance and the standing of the rules’ (paragraph 16.c).
• Bony v. Kacou & Ors. [2017] EWHC 2146 (Ch.) at para. 33-35 per HHJ Pelling QC (sitting as a Deputy of the High Court).

My recent but consistent experience is that arbitrators are reading these cases as saying that once there is a valid arbitration agreement in favour of Rule K, then the Rule K arbitrator has jurisdiction.

The wrinkle, if there is one, arises in how one conceives of Rule K arbitration in the first place. The Respondent argument, put bluntly, is that ‘the parties may have chosen the FA system, but the FA system has not chosen the parties.’ That is arguable but it is not working before arbitrators.

The two points are these:

• Rule K is not drafted in exclusive terms: it does not say “only disputes involving Participants” may be referred to Rule K arbitration, simply that where Participants are in dispute they are under an obligation to have their dispute resolved in that matter;
• The Rules are drafted in very broad terms: in Davies, what the Judge is getting at is that the Rules set out a regime designed to accommodate the whole of the (at the very least professional) footballing world. The idea is that where there is a “football dispute” – and I have seen that expression used as a term of art in arbitral awards – it goes before a Rule K arbitrator.

The answer then is no: you don’t have to be a Participant to submit a dispute to Rule K arbitration though, presumably, the dispute needs to be a football dispute.

How broad is the definition of Participant?

It follows from what is set out above that the answer is: “broad”. Again, the drafting of Rule K1 is deliberately wide in its ambit and the spirit of the Rules is that it encompasses as many football disputes as possible.

Look at the definition of Participant itself. It has a wide sweep, provided in the last phrase: ‘all such persons who are from time to time participating in any activity sanctioned either directly or indirectly by The Association.’

The use of “such” might be thought to restrict the scope of the phrase by reference to the definitions that come before but that would be to render it redundant (since all of the defined terms that precede it participate necessarily in an activity sanctioned by the Association). It is poor drafting but my experience is that arbitrators interpret this phrase as meaning, in effect, anyone involved in the game of football, thus chiming soundly with the High Court decisions referred to above.

Imagine a case in which an English intermediary signs a German player from a German club with a view to signing him up to a Premiership side. Hopes are dashed and in the end the player signs for a club in Ligue 1. Is the player a Participant? Arguably not, since he does not play for a Club, which is defined as an English football club. However, adopting the broader approach he does take part in “an activity sanctioned by” the FA. He takes part in the paradigm activity that the FA sanctions: Association Football (it just happens to be on the other side of the Channel).

Upshot

Jurisdictional challenges are unlikely to succeed if they are on the basis that a professional footballer (or those involved in the professional game) are not caught by the Rules. They are an expensive and probably fruitless stalling tactic which arbitrators are, in my experience, wising up to.

If the rules were to be construed as Respondents contend, the position becomes absurd:

• a recalcitrant party would be able to argue that there is simply no way of pursuing him for breach of his contractual obligations. If a Claimant sought to pursue litigation in the ordinary courts there would be a strong argument that the proceedings had to be stayed pending arbitration, given the existence of the agreement to arbitrate.
• Further, parties might be able to rely on their own wrongdoing in order to avoid proceedings, by pushing themselves out of the definition of Participant:
• For example, an intermediary who wrongfully fails to register with the FA would fall outwith the definition of Intermediary in Appendix I of the FA Regulations on Working with Intermediaries 2017-18 and, therefore, the definition of Participant in Rule A of the FA Rules. That intermediary would be in a position to rely on his own wrongful failure to register in order to defeat arbitral proceedings but nevertheless rely on an arbitration agreement to hinder ordinary litigation.
• There is also the issue – identified but not decided – in Davies that a Participant can escape arbitration by simply ceasing to be a Participant (see paragraphs 20 – 21), though this is unlikely to be correct.

The reason Rule K1(a) requires certain people (i.e., Participants) to arbitrate is the desire of the footballing authorities to keep footballing disputes ‘within the family’ (see submissions to that effect at paragraph 10 in Bony). However, there is no reason why football disputes more broadly should not also be dealt with by Rule K arbitrators.

The only instance in which a challenge is likely to succeed would be in the contract expressly excludes Rule K arbitration, though that would give rise to its own problems and it is difficult to see what the advantage to such a challenge would be.