Sports arbitration: determination of the applicable regulations and rules of law and their interpretation.

Author:Steingruber, Andrea Marco
 
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A discussion and comparison with commercial arbitration focusing on the Federation Internationale de Football Association ("FIFA") and on recent cases of termination of football players' employment contracts without just cause (1) decided in appeal arbitration proceedings.

  1. Introduction

    Sport is characterised by its particular rules (2) and by what has also been perceived as the lex sportiva. (3) Therefore, unsurprisingly, arbitration has been seen as the privileged dispute resolution method in the field of sport even though the Swiss Federal Tribunal has held that rules issued by private associations (4) could neither be characterised as "law" nor recognised as "lex sportiva transnationalis". (5)

    Sports arbitration presents distinctive features when compared to commercial arbitration. (6) These are mainly attributable to the structural organisation of sport, but also to the role of the Court of Arbitration for Sport ("CAS") in appeal arbitration proceedings, i.e. in cases of appeal against a decision rendered by a federation, association or sports-related body where the statutes or regulations of such bodies, or a specific agreement, provides for an appeal to the CAS.

    This article will, by focusing on the Federation Internationale de Football Association ("FIFA") and on recent cases of termination of football players' employment contracts without just cause, discuss how the federation's structure of FIFA - an association in accordance to Swiss law - and the CAS Code influence the determination of the applicable regulations and rules of law and their interpretation in appeal arbitration proceedings.

    The article begins with a brief description of the structural organisation of sport in general and of football in particular (Section II). Then the FIFA Regulations on the Status and Transfer of Players ("FIFA Status Regulations") are considered (Section III), followed by an overview of the dispute resolution instances involved in termination of employment contracts without just cause cases in football (Section IV). The main part of the article is devoted to a discussion about the determination of the applicable regulations and rules of law by CAS Panels (Section V) and about the law applicable to the merits in cases regarding the termination of football players' employment contracts without just cause (Section VI). The article will then analyse the interpretation of Article 17 of the FIFA Regulations on the Status and Transfer of Players by considering how features of sport affect interpretation of regulations (Section VII). Finally, conclusions are drawn (Section VIII).

  2. The structural organisation of sport

    1. In general: the federation's structure (7)

      Historically, the federation's structure has built up from the bottom with a relatively uniform mechanism, although in different epochs depending upon the countries and the sport disciplines. (8) Starting from the clubs, sport federations have developed, beginning at a regional level, then national, and lastly international and worldwide. (9) Sport clubs represent at the same time the basic cell and the initial grouping of the federation's structure. (10) Sport clubs can be party to international disputes in team sports, for instance when they participate in international competitions like the Champions League organised by the UEFA, (11) or when they engage a player playing in a foreign club. (12) In disciplinary matters the World Anti-Doping Code also provides consequences for teams. (13)

      The traditional structure of sport organisations is that of a pyramid: the base consists of individuals or clubs who are members of associations which constitute regional or national federations; the national federations are then eventually combined in a single international federation. (14) The main characteristic of the federative movement resides in its monopolistic character: indeed for almost all sport disciplines (15) at every level only one federation exists (16) ("one flag" principle). (17) It is also important to note that there is a membership merely between individuals (e.g. athletes) and associations, or associations and national federations, but not between individuals and organisations of the level after next; also neither athletes nor any federation can be a member of the International Olympic Committee (IOC). (18)

    2. Of football in particular

      The Federation Internationale de Football Association ("FIFA") is an association governed by Swiss law, founded in 1904 and based in Zurich. (19) It has 208 member associations and its goal, enshrined in its Statutes, is the constant improvement of football. FIFA employs some 310 people from over 35 nations and is composed of a Congress (legislative body), Executive Committee (executive body), General Secretariat (administrative body) and committees (assisting the Executive Committee). (20)

      With regard to the admission as a Member of FIFA, Article 10 of the FIFA Statutes provides that:

      1. Any Association which is responsible for organising and supervising football in its country may become a Member of FIFA. In this context, the expression "country" shall refer to an independent state recognised by the international community. Subject to par. 5 and par. 6 below, only one Association shall be recognised in each country.

        ....

      2. The Association's legally valid statutes shall be enclosed with the application for membership and shall contain the following mandatory provisions:

        ...

        1. to recognise the Court of Arbitration for Sport, as specified in these Statutes.

      3. Each of the four British Associations is recognised as a separate Member of FIFA.

        ...".

        While, according to Article 10(1) of the FIFA Statutes, normally only one Association shall be recognised in each country, Article 10(5) of the FIFA Statutes provides for an exception for the four British Associations (21) which are recognised as separate Members of FIFA. (22)

  3. An overview of the FIFA Regulations on the Status and Transfer of Players ("FIFA Status Regulations")

    1. Adoption and scope of the FIFA Status Regulations

      The Executive Committee of FIFA has issued the Regulations on the Status and Transfer of Players and annexes, which form an integral part of the basic text, based on Article 5 of the FIFA Statutes of 19 October 2003.

      With regard to the scope, Article 1(1) of the FIFA Status Regulations states that the regulations "lay down global and binding rules concerning the status of players, their eligibility to participate in organised football, and their transfer between clubs belonging to different associations."

      Article 1(3)(b) of the FIFA Status Regulations provides that:

      "Each association shall include in its regulations appropriate means to protect contractual stability, paying due respect to mandatory national law and collective bargaining agreements. In particular, the following principles must be considered.

      ...

      * article 17 paragraphs 1 and 2: the principle that in the event of terminations of contract without just cause, compensation shall be payable and that such compensation may be stipulated in the con-tract;

      * article 17 paragraphs 3-5; the principle that in the event of termination of contract without just cause, sporting sanctions shall be imposed on the party in breach."

    2. Maintenance of contractual stability between professionals and clubs

      1. General

        According to Article 13 of the FIFA Status Regulations (Respect of contract) "a contract between a professional and a club may only be terminated upon expiry of the term of the contract or by mutual agreement". However, Article 17 of the FIFA Status Regulations deals with the consequences of terminating a contract without just cause.

      2. Article 17 of the FIFA Status Regulations: consequences of terminating an employment contract without just cause

        With regard to the consequences of terminating a contract without just cause, Article 17 of the FIFA Status Regulations provides that:

        "The following provisions apply if a contract is terminated without just cause:

      3. In all cases, the party in breach shall pay compensation. Subject to the provisions of article 20 and Annexe 4 in relation to training compensation, and unless otherwise provided for in the contract, compensation for the breach shall be calculated with due consideration for the law of the country concerned, the specificity of sport, and any other objective criteria. These criteria shall include, in particular, the remuneration and other benefits due to the player under the existing contract and/or the new contract, the time remaining on the existing contract up to a maximum of five years, the fees and expenses paid or incurred by the former club (amortised over the term of the contract) and whether the contractual breach falls within a protected period.

      4. Entitlement to compensation cannot be assigned to a third party. If a professional is required to pay compensation, the professional and his new club shall be jointly and severally liable for its payment. The amount may be stipulated in the contract or agreed between the parties.

      5. In addition to the obligation to pay compensation, sporting sanctions shall also be imposed on any player found to be in breach of contract during the protected period. This sanction shall be a four-month restriction on playing in official matches. In the case of aggravating circumstances, the restriction shall last six months. In all cases, these sporting sanctions shall take effect from the start of the following season at the new club. Unilateral breach without just cause or sporting just cause after the protected period shall not result in sporting sanctions. Disciplinary measures may, however, be imposed outside the protected period for failure to give notice of termination within 15 days of the last official match of the season (including national cups) of the club with which the player is registered. The protected period starts again when, while renewing the contract, the duration of the...

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