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Recent sporting headlines have been dominated by the record levels of fees spent on football player transfers.
Behind the scenes, international disputes – involving parties from or based in different countries – related to transfers of players or the negotiation of player contracts have also increased enormously over the last few years.
Those disputes typically concern intermediaries – previously known as “player agents” – being cut-out of deals, not being paid under representation contracts, or deriving benefits from players or clubs to which they were not entitled.
In that context, this article will consider a key preliminary issue for any such international dispute – the question of jurisdiction.
The position to 1 April 2015
By way of background, when the ‘new’ FIFA Regulations on Working with Intermediaries (the “FIFA Intermediaries Regs.”) came into force on 1 April 2015, clarity on where disputes in connection with agent/intermediary activity ceased in regulatory terms.
Up to that date, under the then FIFA Player’s Agents Regulations (the “FIFA Players’ Agents Regs.”) domestic disputes in connection with players’ agents’ activity were as a last resort to be referred to an independent, duly constituted and impartial court of arbitration, whilst taking into account the FIFA Statutes and the laws applicable in the territory of the association.[1]
In the case of international disputes in connection with the activity of players’ agents, under the same FIFA Players’ Agents Regs, a request for arbitration proceedings was to be lodged with the FIFA Players’ Status Committee (the “FIFA PSC”).[2]
In short, until 1 April 2015 disputes concerning domestic transfers would be determined by domestic sport-specific panels, whilst those of an international nature would be dealt with by the FIFA PSC.
The current position
However, under the more recent FIFA Intermediaries Regs a dispute resolution forum is no longer provided for.
That lacuna has led to uncertainty as to the proper forum for disputes in connection with intermediaries’ activities; in summary, the negotiation of an employment contract between a player and a club or a transfer agreement between two clubs.[3]
Obviously, parties to a representation contract can expressly choose the forum to resolve any dispute between them.
Be that as it may, many representation contracts are at best unclear as to the intended dispute resolution forum or still expressly refer to the FIFA PSC, which no longer exists to resolve international disputes in connection with intermediaries’ activities.
As a result, preliminary issues as to jurisdiction are frequently being raised in practice either before sports-specific arbitral panels or national courts.
The potential jurisdictions
By way of starting-off point, there are three potential dispute resolution jurisdictions for an international dispute involving intermediary activity:
The CAS
The position as to the Court of Arbitration for Sport is relatively straight-forward.
The CAS will only accept jurisdiction over an intermediary dispute where there is “an arbitration clause contained in the contract…or by reason of a later arbitration agreement”[4].
In other words, unless the parties have agreed a clause to give it jurisdiction within the representation contract, or subsequently do so, the CAS will not accept jurisdiction for such a dispute.[5]
FA Rule K
The position as to the jurisdiction of Rule K is less clear-cut.
On a literal reading of the applicable rule, provided the parties are two or more “Participants”[6] then any dispute between them “shall be” subject to arbitration under Rule K[7].
On point, Rule K1(a) provides:
“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 the existence of validity of):
(i) the Rules and regulations of The Association which are in force from time to time;
(ii) the rules and regulations of An Affiliated Association or Competition which are in force from time to time;
(iii) the statutes and regulations of FIFA and UEFA which are in force from time to time; or
(iv) the Laws of the Game
shall be referred to and finally resolved by arbitration under these Rules.”
However, such a literal approach may be too simplistic an approach to the question of jurisdiction of Rule K.
Since Rule K arbitration is seated in England and Wales, and save as expressly excluded[8], it is subject to the Arbitration Act 1996 (the “Act”). That is because the governing law of Rule K arbitration is English law (both procedural and substantive).[9]
The Act provides that an arbitration agreement must be in writing[10], albeit mere exchange of communications or evidence in writing will suffice[11].
In other words, if there is no arbitration agreement between the parties – even if “Participants” as defined – it is arguable that the jurisdiction of Rule K does not apply to a dispute between those parties.
That may seem, at least at first blush, a surprising proposition when “any dispute” between “Participants” is expressed in terms under the FA Rules to be subject to Rule K.
Moreover, by extension, those “Participants” would the subject to some provisions of the FA Rules – such as in relation to misconduct under Rule E – but not in relation to Rule K. That would seem to create an anomalous position.
Nevertheless, as to whether the parties have reached an agreement for the purposes of the Act, the normal rules of contractual interpretation apply – albeit in more recent years English laws has adopted a more, “commercial common-sense” approach to that exercise.[12]
Ultimately, where the parties refer in the representation contract to the FA Rules, it may be relatively easy to demonstrate that the parties intended Rule K to apply as it is incorporated into their agreement by reference.
An issue, which has arisen recently, is whether a contract can be implied between the parties on the basis that those parties have agreed separately to adhere to the FA Rules. There are two recent competing High Court (of England and Wales) decisions on point.
First, in Davies v. Nottingham Forest Football Club Ltd.[13] (August 2017) it was found that a manager and a club were parties to an arbitration agreement for the purposes of the Act and therefore proceedings should be stayed pending Rule K arbitration, even though the manager and club did not have an express arbitration agreement between each other. That was on the basis that the court found an arbitration agreement could be implied by reference to the parties having agreed (albeit separately) to adhere to Rule K.
Secondly, Bony v. Kacou & Ors.[14] (September 2017) came to the opposite conclusion; whilst the parties had each agreed separately to adhere to Rule K that was a “vertical” contract with the FA, not a “horizontal” contract between themselves. As a result, the court accepted jurisdiction and did not order a stay for Rule K arbitration. Davies was not, though, cited in the Bony judgment.
In the author’s view, the Davies decision is to be preferred on the basis that it takes into account the practical realities of the FA Rules that “Participants” have to operate under for the purposes of their activities in (domestic) professional football. That agreement may be directly with the FA, but by implication it must also set out the framework under which they would operate with other “Participants”, including dispute resolution under Rule K. To suggest otherwise, does not make practical, “commercial common sense”.[15]
Nevertheless, until the Court of Appeal decides the point, there are two competing High Court of England and Wales’ decisions on the issue of the jurisdiction of Rule K arbitration when the relevant contract between the parties does not contain an express arbitration agreement to that effect. In the meantime, it is to be assumed that preliminary issues as to jurisdiction will frequently arise in both Rule K arbitrations and before national courts.
National courts
As indicated above, where a contract is silent as to the dispute resolution forum or the FIFA PSC is still mentioned, it may be difficult to establish the intention of the parties was that Rule K should have jurisdiction.
Indeed, a clause that refers to the FIFA PSC can plainly not be fulfilled and, therefore, could be void by reason of impossibility or frustration[16].
If that is the case – and absent any agreement to refer the dispute to the CAS – the parties may then have to resolve their dispute in national courts, applying domestic and, as the case may be, trans-national laws, such as EU law, to establish forum conveniens (appropriate forum)[17].
Conclusion
Player transfers and contract renegotiations are of an ever-increasing international nature. With derived international disputes also growing exponentially and the FIFA PSC no longer being the proper forum for such disputes, the most important first step for such a claim is to identify the proper jurisdiction for a potential claim by way of arbitration or otherwise.
For the reasons set out above, that may not be straight-forward, especially where there is an absence of an express arbitration agreement in the relevant contract. Furthermore, those defending such claims may well have good grounds to raise a preliminary issue as to jurisdiction in any event.
In the meantime, parties would be best advised to review the jurisdiction clauses in their representation contracts so that their intention as to their chosen forum for dispute resolution is clear be it to domestic sports-specific arbitration, such as under Rule K, to the CAS or national courts.
John Mehrzad is the Head of the Sports Law Group at Littleton Chambers. He is also regularly appointed as an FA Rule K Arbitrator and appears in his capacity as Barrister at, amongst others, Hearings before the CAS, FIFA and under FA Rule K, including on the issue of jurisdiction.
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[1] Art. 30(1) FIFA Players’ Agents Regulations (edition 2008) (the “FIFA Agents Regs.”): https://www.fifa.com/mm/document/affederation/administration/51/55/18/players_agents_regulations_2008.pdf
[2] Ibid, Art. 30 (2).
[3] See art. 1.1 FIFA Intermediaries Regs: https://www.fifa.com/mm/document/affederation/administration/02/36/77/63/regulationsonworkingwithintermediariesii_neutral.pdf and Appendix 1 of the FA Regulations on Working with Intermediaries: see links at http://www.thefa.com/football-rules-governance/policies/intermediaries/regulation-and-forms
[4] See R27 CAS Code (in force from 1 January 2017): http://www.tas-cas.org/fileadmin/user_upload/Code_2017_FINAL__en_.pdf
[5] It should be noted that the CAS has previously accepted jurisdiction when the parties referred to the FIFA PSC in their agreement but it refused jurisdiction to consider the claim and an arbitrator appointed by the High Court of the Canton of Zurich also refused jurisdiction since the parties intended to submit their dispute to an arbitral tribunal specialising in sports law: Swiss Federal Tribunal decision in 4A/246/2011. In that case, the SFT found that the parties intended their dispute to go to sports-specific arbitration and the CAS was suitable since appeals from the FIFA PSC would have gone to the CAS in any event.
[6] As defined at FA Rule A2: see links at http://www.thefa.com/football-rules-governance/lawsandrules/rules-of-the-association
[7] Ibid, FA Rule K1(a).
[8] See, for example, FA Rule K1(e) and K10(b).
[9] FA Rule K14(b).
[10] s.5(1) of the Act: http://www.legislation.gov.uk/ukpga/1996/23/section/5
[11] Ibid. s.5(2).
[12] See in particular Arnold v. Britton [2015] UKSC 36 per Lord Neuberger at 15: “When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to “what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean”, to quote Lord Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101, para 14. And it does so by focusing on the meaning of the relevant words, in this case clause 3(2) of each of the 25 leases, in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the lease, (iii) the overall purpose of the clause and the lease, (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party’s intentions. In this connection, see Prenn at pp 1384-1386 and Reardon Smith Page 6 Line Ltd v Yngvar Hansen-Tangen (trading as HE Hansen-Tangen) [1976] 1 WLR 989, 995-997 per Lord Wilberforce, Bank of Credit and Commerce International SA (in liquidation) v Ali [2002] 1 AC 251, para 8, per Lord Bingham, and the survey of more recent authorities in Rainy Sky, per Lord Clarke at paras 21-30.”
https://www.supremecourt.uk/cases/docs/uksc-2013-0193-judgment.pdf
[13] [2017] EWHC 2095 (QB) per HHJ Bird (sitting as a Judge of the High Court).
[14] [2017] EWHC 2146 (Ch) per HHJ Pelling QC (sitting as a Judge of the High Court).
[15] This was the basis upon which a contract was implied between yacht owners, despite their agreement only being with the race organiser, in Clarke v. The Earl of Dunraven (the Satanita) [1897] QC 59 (HL).
[16] See Halsbury’s Laws of England and Wales, Contract (Vol 22 (2012), 467.
[17] For disputes in the EU, see art. 4(3), Reg. EC 593/2008 as to the “close connection” test which ordinarily will be determined by having regard to where the contract was signed, performed and where the parties were resident.
