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Doyen’s Crusade Against FIFA’s TPO Ban: The Ruling of the Appeal Court of Brussels

Since last year, Doyen Sports, represented by Jean-Louis Dupont, embarked on a legal crusade against FIFA’s TPO ban. It has lodged a competition law complaint with the EU Commission and started court proceedings in France and Belgium. In a first decision on Doyen’s request for provisory measures, the Brussels Court of First Instance rejected the demands raised by Doyen and already refused to send a preliminary reference to the CJEU. Doyen, supported by the Belgium club Seraing, decided to appeal this decision to the Brussels Appeal Court, which rendered its final ruling on the question on 10 March 2016.[1] The decision (on file with us) is rather unspectacular and in line with the first instance judgment. This blog post will rehash the three interesting aspects of the case.

·      The jurisdiction of the Belgian courts

·      The admissibility of Doyen’s action

·      The conditions for awarding provisory measures

 

I.      The jurisdiction of the Belgian courts

Doyen was not the only party to the dispute dissatisfied with the first instance ruling; FIFA and UEFA also appealed the decision challenging the territorial competence of the Belgian Court to hear the claims raised against FIFA’s TPO ban. They consider that the Swiss courts are solely competent to deal with civil disputes involving its rules and decisions.

As in first instance, the thrust of the ruling on this question turns on the interpretation of the Lugano convention of 2007 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. In principle, under Article 2(1) of the Convention: “Subject to the provisions of this Convention, persons domiciled in a State bound by this Convention shall, whatever their nationality, be sued in the courts of that State.” Thus, translated to the present dispute this would imply that FIFA and UEFA, which are Swiss Associations, are in principle to be sued in front of Swiss courts.

Moreover, to support their view that Swiss Courts have an exclusive jurisdiction, FIFA and UEFA also invoke Article 22(2) Lugano Convention stipulating that “proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or of the validity of the decisions of their organs, the courts of the State bound by this Convention in which the company, legal person or association has its seat. In order to determine that seat, the court shall apply its rules of private international law”. Yet, the Appeal Court is of a different opinion and refers to the jurisprudence of the CJEU indicating that Article 22(2) should be interpreted as referring to disputes lodged based on company law or their statutes against decisions of a company or association.

The principle enshrined in Article 2 Lugano Convention is not absolute, many exceptions are provided in the Lugano Convention itself. In particular, Article 5(3) Lugano Convention foresees that in delictual matters the court of the place where the harmful event occurred or may occur is competent. This entails both the place were the harmful conduct was put in motion and the place where the harm was felt. In the present case, the Appeal Court argues that it is “difficult to contest that by hindering the appellant to execute their partnership agreement and enter in future TPO or TPI agreements over specific players, the attacked ban is producing harmful effects on the Belgian territory”.[2] Furthermore, the TPO agreement between Doyen Sports and the ASBL RFC Seraing is not deemed fictitious, as it has been invoked by FIFA to hand out disciplinary sanctions to the ASBL RFC Seraing.[3]

Additionally, the Court derives also its competence from Article 6(1) Lugano Convention. This article provides that a party can be sued “where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings”. The key question is whether there is sufficient connectedness between the claims raised against l’URBSFA, FIFA and UEFA. The Court refers to the recent case law of the CJEU, which is relevant to the interpretation of the Lugano Convention, on the identical provision in the Brussels Regulation (notably the case C-352/13 at para. 20). It is of the view that “FIFA and URBSFA share a regulatory and disciplinary power that enables them both, acting jointly or separately, to adopt the contested ban, to enforce it and to adopt an individual decision susceptible to block, compromise and/or restrict the execution of the contract signed by the appellants”.[4] Thus, “the autonomous regulatory power of the URBSFA justifies its participation in this proceeding, alongside FIFA in order (i) to obtain that both be prevented to act; (ii) that each of them be deprived of the opportunity to contest the opposability of a decision to which they would not have been part and lastly (iii) to deny FIFA the possibility to circumvent an interdiction pronounced against it by having recourse to the regulatory power of the URBSFA”.[5] Finally, the Court argues “if the appellant were forced to lodge a claim against FIFA in front of the Swiss courts and against URBSFA in front of the Belgian Courts, this could potentially lead to irreconcilable solutions”.[6] As far as the claims against UEFA are concerned, which has not contrary to FIFA explicitly banned TPO, the Appeal Court is also convinced of their connectedness. It is so because UEFA “imposes to the clubs needing a license to participate in its competitions that they comply with the statutes and regulations of FIFA and, thus, with the disputed TPO ban “.[7]

This is again a powerful reminder that Sports Governing Bodies (SGBs) seated in Switzerland cannot evade the jurisdiction of the national courts of EU Member States when EU competition law is involved.[8] Under Article 5(3) Lugano Convention, EU Member States courts will be competent to deal with a civil liability claim based on EU competition law if the damage caused by the disputed measure/decision/regulation can be felt on the national territory of a Member State. Furthermore, if, as is usually the case for sports regulations, the rules have to be implemented by national sporting associations, the claims raised against the national SGBs will most likely be deemed connected to the original decisions/regulations of the international SGBs and justify the jurisdiction of the court of the domicile of the national SGB.[9]

 

II.    The admissibility of Doyen’s action

In this proceeding, as well as in the one initiated in front of the Paris court (FIFA’s legal submission in the Paris procedure has been published by football leaks), FIFA argues that Doyen’s action is not admissible due to the fact that the wrong administrator has initiated it. Indeed, under article 11.1 of Doyen’s own statutes the judicial representation is to be exercised by the local administrator designated by shareholder A acting in conjunction with the local administrator designated by shareholder B or by any other person designated by the general assembly. Yet, in practice Nelio Lucas, who fulfils none of the relevant criteria and was thus not authorized to act in Doyen’s name in judicial matters, lodged the action. However, Doyen could have under Belgium procedural rules ratified the judicial initiative taken by an incompetent organ. Doyen tried to do so but failed to organize the general assembly necessary to ratify Nelio Luca’s decision. Thus, the Court deems the action initiated by Doyen inadmissible. Luckily for Doyen it was not the sole party to the proceedings as the ASBL RFC Seraing joined the procedure. The Court believes the intervention of RFC Seraing in the proceedings is admissible and its interest to act is acknowledged. On this latter point, FIFA was arguing that RFC Seraing’s interest to act was inexistent due to the fact that the partnership agreement between Doyen and Seraing was contrary to the public order. However, in light of the divergent positions regarding the legality of TPO/TPI and of the on-going proceedings before various national courts and the European commission, the Belgium court is reluctant to admit that the interest of Seraing to act in this matter is illegitimate.

 

III.  Doyen’s (un)likelihood to prevail

As explained in our previous blog on the first instance ruling in the same matter, Doyen and Seraing can obtain provisory measures if they demonstrate that those measures are urgent and that they are likely to prevail on substance in the main proceedings.

On the urgency of adopting provisory measures, the Court sided with Seraing and Doyen. It found that Seraing is subjected to disciplinary sanctions, even though their execution is suspended, and is susceptible to incur further proceedings and sanctions if it enters into new TPO/TPI agreements with Doyen.[10] Moreover, it is un-doubtable that the prohibition of the agreement with Doyen has deprived Seraing of financial resources that cannot be easily substituted by classical loans from third parties.[11] Consequently, the Court considers that the urgency requirement for provisory measures is given.

Concerning the likelihood to prevail, however, the Court sided with the federations and refused to admit that the TPO/TPI ban was likely to restrict article 101(1) TFEU. On the one hand, as indices of the compatibility of the ban with EU law, it pointed out that the Commission was inclined to support the TPO ban, that FIFPro was clearly opposed to TPO and invokes fundamental values in support of the ban, and that the ban was adopted after a collective reflection involving many stakeholders and is aimed at tackling the negative externalities listed by the first instance court.[12] On the other hand, it refers to an academic article authored by Marmayou contesting the compatibility of TPO with EU law (this reference appears poorly chosen as the article is dedicated primarily to the FIFA regulations for intermediaries, for a stronger challenge to the compatibility of the TPO ban with EU law see Lindholm).[13] In any case, “it is obvious that a preliminary assessment cannot lead the Court to conclude, with sufficient certainty, that the ban would be contrary to EU competition rules”.[14] Finally, and this is the part of the ruling that seems to have been slightly misinterpreted by the press. The Court pointed out that Seraing and Doyen were asking in the main proceedings for a preliminary reference to the CJEU and that they were, therefore, conscious that they are not certain to prevail. However, the Appeal Court cannot, in the framework of a procedure involving provisory measures, ask a question to the CJEU, as it is unable to comply with the CJEU’s requirements for the admissibility of preliminary references (see the failed attempt in the UEFA FFP case). Hence, it is for the Commercial Court of Brussels, which is competent in the main proceeding, to decide whether it is necessary to do so. The Appeal Court (and the claimants as it cheekily points out) seems to believe that it could be needed, as it is not at all clear that the ban is contrary to EU competition law.


Conclusion

There are number of lessons that can be drawn from the judgment of the appeal court. Three stand out:

  1. FIFA and UEFA cannot evade the jurisdiction of EU courts. Indeed, if an EU competition law violation of their rules is invoked they can be brought before the jurisdictions of the Member States
  2. Doyen messed up in its original court filing by failing to abide by the procedure enshrined in its own statutes. This has no dire consequences in the Belgium proceedings due to presence of Seraing, but it might be a different story before the Paris court, where Doyen stands alone and the same procedural irregularity is invoked by FIFA.
  3. To FIFA’s great satisfaction, the case against the TPO ban is not deemed strong enough to allow for the adoption of provisory measures blocking its implementation. As pointed out in our previous blog (and here) EU competition law is not a golden bullet that can be invoked easily to strike down FIFA or UEFA regulations. There is a high justificatory burden and the claimants will face an uphill battle to demonstrate that the ban is disproportionate (especially in light of the broad support for the ban amongst many key stakeholders).

This was only a small skirmish in a long legal war still before us. It will not be definitely over until the CJEU decides the matter (in 2018 at the earliest) or Doyen bows out of the game in the face of the high legal fees incurred. What is already certain is that the way EU law applies to sport is not straightforward and does not entail an economic/neoliberal logic blindly favourable to an unrestricted freedom to invest.



[1] Cour d’appel Bruxelles, Doyen Sports et ASBL RFC Seraing United c. URBSFA, FIFA et UEFA, 2015/KR/54, 10 mars 2016.

[2] “Il est difficilement contestable qu’en empêchant les appelantes de poursuivre l’exécution de leur convention de collaboration et la conclusion de nouvelles conventions « TPO » ou « TPI » spécifiques à des joueurs, l’interdiction litigieuse produit des effets dommageables sur le territoire belge.” Ibid, para.50.

[3] “C’est également en vain qu’il est soutenu que la convention de collaboration litigieuse ne serait qu’un artifice destiné à saisir les juridictions belges. En effet, elle a connu une exécution par des payements de sommes de Doyen Sports à l’ASBL RFC Seraing et surtout, son existence a été invoquée par la FIFA pour mener des poursuites disciplinaires contre le club dirigé par l’ASBL RFC Seraing et lui infliger une sanction.” Ibid.

[4] “L’URBSFA et la FIFA se partagent donc un pouvoir réglementaire et de contrainte qui leur permet, à l’une et à l’autre, agissant ensemble ou séparément, d’adopter l’interdiction litigieuse, de la mettre en œuvre et de prendre une mesure ou une décision à caractère individuel de nature à empêcher, compromettre et/ou entraver l’exécution du contrat conclu entre les appelantes.” Ibid, para.57

[5] “Le pouvoir règlementaire autonome de l’URBSFA et son pouvoir d’action propre justifient sa présence dans la procédure, en même temps que la FIFA afin (i) d’obtenir l’empêchement d’agir de l’une et de l’autre ; (ii) de priver chacune d’elles de la possibilité de contester l’opposabilité d’une décision judiciaire qui serait rendue dans une cause à laquelle elle serait demeurée étrangère et enfin (iii) d’empêcher la FIFA de contourner une interdiction qui serait prononcée à son encontre en recourant au pouvoir réglementaire de l’URBSFA.” Ibid.

[6] “Si les appelantes étaient dans l’obligation d’attraire la FIFA devant les juridictions suisses tout en citant l’URBSFA devant les juridictions belges, cette situation serait susceptible de conduire à des solutions inconciliables […]”, ibid. para.58.

[7] “En ce qui concerne l’UEFA, la connexité existe également. En effet, si elle n’est pas l’auteur des dispositions réglementaires et si elle n’est pas intervenue comme soutien dans l’exercice de poursuites disciplinaires menées contre le RFC SERAING, elle impose aux clubs qui doivent obtenir une licence pour participer aux compétitions qu’elle organise, de se plier aux statuts et aux règlements de la FIFA et à l’interdiction en cause.” Ibid., para.59.

[8] The same solution was adopted in 2012 by the French Cour de Cassation (Highest French Civil Court) in a dispute opposing the French agent Piau to FIFA. See Cour de cassation, civile, Chambre civile 1, 1 février 2012, publié au bulletin.

[9] This solution was also adopted by the OLG in the Pechstein ruling, see Oberlandesgericht München, 15 January 2015, Az. U 1110/14 Kart, para.A.I.1.a)aa) and bb).

[10] « L’urgence est établie. L’ASBL RFC Seraing est sous le coup d’une sanction disciplinaire dont seule l’exécution a été suspendue et elle est susceptible d’encourir de nouvelles poursuites et sanctions pour le cas où elle conclurait de nouvelles conventions TPO/TPI avec Doyen Sports ou toute autre société menant des activités de financement similaires.” Cour d’appel Bruxelles, Doyen Sports et ASBL RFC Seraing United c. URBSFA, FIFA et UEFA, 2015/KR/54, 10 mars 2016, para.78.

[11] « Ensuite, il n’est pas douteux que l’interdiction de poursuivre la convention de collaboration du 30 janvier 2015 et de conclure de nouvelles conventions TPO/TPI la prive d’une source de financement, sans qu’il soit démontré par les intimées qu’elle pourrait lui trouver un substitut adéquat par des emprunts classiques auprès de tiers.”Ibid.

[12] « D’un côté, il faut constater que :
- la Commission paraît s’être orientée vers la condamnation de la TPO;
- la FIPpro y est clairement opposée et invoque à cette fin des valeurs essentielles;
- l’interdiction est le résultat d’une réflexion collective à laquelle ont participé de nombreux interlocuteurs - et non pas seulement l’UEFA ou certains de ses membres - et elle est l’aboutissement de plusieurs constats que relève le premier juge dans son ordonnance : opacité, absence de contrôle des instances dirigeantes, importance du phénomène puisqu’il concerne le marché mondial, environnement ouvert à la corruption et aux pratiques frauduleuses, importance des sommes en jeu, etc...” Ibid, para.81.

[13] « De l’autre, de sérieuses réserves sont émises à propos de la légalité de l’interdiction de la TPO/TPI (voir ainsi l’article de J.M. MARMAYOU, « La compatibilité du nouveau règlement FIFA sur les intermédiaires avec le droit européen » Les cahiers de droit du sport, 2015, p. 15, pièce 38bis des appelantes).” Ibid.

[14] « Il est patent qu’un examen en apparence ne permet pas de conclure, avec la force nécessaire, que l’interdiction porte atteinte aux règles de la concurrence.” Ibid, para.82.

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