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

On 2 December 2010, the FIFA Executive Committee elected Qatar as host of the 2022 FIFA World Cup ('World Cup'), thereby triggering a wave of controversies which underlined, for the most part, the country's modest size, lack of football history, local climate, disproportionate costs or corruption that accompanied the selection procedure. Furthermore, opponents of the decision to award the World Cup to the tiny oil-rich Gulf country also emphasized the country's negative human rights record.

More than six years later, on 3 January 2017, the Commercial Court of the Canton of Zurich ('Court') dismissed the lawsuit filed against FIFA[1] jointly by the Dutch trade union FNV, the Bangladeshi Free Trade Union Congress, the Bangladesh Building and Wood Workers Federation and the Bangladeshi citizen Nadim Shariful Alam ('Plaintiffs').[2] The Plaintiffs requested the Court to find FIFA responsible for alleged human rights violations of migrant workers in connection with the World Cup in Qatar. Had the Plaintiffs' claims been upheld by the Court, such decision would have had far-reaching consequences on the fate of thousands of migrants, mostly from India, Nepal and Bangladesh, who are currently working on the construction of sporting facilities and other infrastructure associated with organization of the World Cup. 

Based on the above, this two-part blog seeks to provide a general overview of the respective proceedings before the Court, focusing primarily on the key legal arguments regarding FIFA's responsibility for human rights abuses committed in the territory of a State being charged with organization of the World Cup. The first part will briefly describe the dire humanitarian conditions for migrant workers in Qatar following the country's successful bidding contest in 2010 and summarize the central claims advanced by the Plaintiffs. The second part will shed its light on the reasoning which led the Court to reject the Plaintiffs' claims. It will also examine the conclusions reached by the Court in context of the responsibilities of transnational corporations for extra-territorial human rights abuses they might have directly or indirectly triggered.

Human rights situation in Qatar 

In conformity with its Constitution[3] and international law[4], Qatar as a sovereign State shall ensure that human rights are respected within its jurisdiction. Qatar holds the world's highest ratio of immigrants to citizens, the latter representing only 10 % of the country's overall population which is estimated at 2,000,000. It has been suggested that the number of male migrant workers in Qatar has more than doubled since 2010, from 800,000 to approximately 1,700,000 at present.[5] According to the report published by the International Trade Union Confederation, more than 7,000 workers might die before the new stadiums finally open their gates for spectators in late November 2022. Regardless of the large volume of construction works which have to be done before the World Cup in Qatar actually kicks off, such figure simply cannot be ignored. To put this into some perspective, deaths of eight workers had been reported shortly before the start of the latest FIFA World Cup in Brazil. 

The vast majority of alleged human rights violations in Qatar stems from domestic labour law regulation which, until very recently, prescribed the so-called kafala system. Under the system, foreign workers are tied to their employers or sponsors, known as kafeels, that retain the final word on their legal residence in Qatar. Should a foreign worker wish to change his or her job within the country, an explicit consent is required from the kafeel. In this regard, François Crépeau, United Nations Special Rapporteur on the Human Rights of Migrants, characterized the kafala system as ''a source of abuse'' and carried on to conclude that ''there is no valid justification for maintaining this system''. In a similar vein, several non-governmental organizations condemned the kafala system. For instance, Amnesty International has identified eight particular ways in which some migrants working on the refurbishment of the Khalifa International Stadium in Doha are being exploited, ranging from forced labour to appalling living conditions. The nature of the kafala system could well be illustrated against the background of Zahir Belounis' case, a French-Algerian football player and former captain of Qatari club El Jaish. After his employment contract had been prematurely terminated by El Jaish, Belounis brought legal action against the club's directors[6] for unpaid wages. As a counteraction, the Qatari club refused to grant him an exit visa and, as a result, he remained trapped in the country without income for more than two years. However, there is a significant difference between the circumstances of Mr. Belounis' case and those migrants who are currently working on construction sites. While the former was in a position to pursue legal redress, the latter normally lack the necessary financial resources to do so. 

As regards the proceedings under scrutiny, the Plaintiffs contend that the kafala system violates Qatari domestic law, Swiss law and international labour and human rights law.[7] In particular, they argue that Qatar facilitates forced labour[8] by: (i) the employer's control over residence permits; (ii) prohibiting workers to switch employer; (iii) allowing abusive contracts; (iv) allowing high recruitment fees; (v) not effectively opposing passport confiscation; and (vi) the lack of effective redress and legal enforcement of the protection of workers' rights.[9] Given that their passports are routinely being retained[10], migrant workers are also constrained in their freedom of movement.[11] Owing to the fact that Qatari domestic law prohibits migrant workers from organizing in trade unions, their freedom of association[12] is virtually non-existent.[13] Furthermore, the Plaintiffs invoke[14] the violation of the fundamental right not to be discriminated against[15] and the right to an effective remedy.[16] 

In response to public outrage generated by the kafala system, Qatari government has been recently compelled to introduce certain reforms to its labour laws. Nonetheless, the ILO Committee of Experts on the Application of Conventions assumes that the respective changes will have little impact on observance of human rights in relation to migrant workers residing in Qatar. The ILO has already notified Qatar that, should not the humanitarian conditions for migrant workers be ameliorated before March 2017, it will subsequently launch a Commission of Inquiry. It is important to note, however, that the ILO's enforcement mechanisms are rather weak.[17]

Linkage to FIFA's responsibility 

The previous section has demonstrated the existence of reasonable doubts regarding Qatar's compliance with its human rights obligations. In order to hold FIFA accountable for Qatar's failure to respect human rights, a linkage needs to be established between FIFA's conduct and the respective violations occurring in the Gulf country. This section takes a closer look at how the Plaintiffs, from a legal point of view, strive to establish such linkage in their lawsuit. 

Pursuant to Article 3 of the 2016 FIFA Statutes, FIFA commits itself to preservation of ''all internationally recognised human rights.'' Article 4 thereof provides that ''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 is strictly prohibited and punishable by suspension or expulsion.'' FIFA supports its commitment to protect and promote human rights also by communicating its visions, such as the one to build a better future for all through football. That being said, the Plaintiffs argue that FIFA's obligation to respect human rights does not flow only from its internal regulations. In their view, FIFA shall bear responsibility primarily under Swiss law and (to a certain extent) also under international law.

FIFA's responsibility under Swiss law 

The Plaintiffs assert that Swiss tort law applies to the present case by virtue of the choice-of-law rules set forth in the Swiss Act on Private International Law ('IPRG').[18] In respect of FIFA's responsibility under Swiss tort law, the Plaintiffs' core argument rests on the so-called endangerment principle. According to this principle, a person that brings about a dangerous situation shall take the necessary precautions in order to prevent potential harm. Applied to the case at hand, FIFA's responsibility emanates primarily from its decision to award the World Cup to Qatar without simultaneously demanding that the country gets rid of the kafala system. The Plaintiffs firmly state that FIFA has the power to make such demands from World Cup-hosts.  

With regard to the strong position that FIFA holds vis-à-vis World Cup-hosts, the key features of the bidding procedure and subsequent coordination between FIFA and the elected country require further elaboration. Article 37 of the 2010 FIFA Statutes stipulates that ''the Organising Committee for the FIFA World Cup shall organise the FIFA World Cup in compliance with the provisions of the regulations applicable to this competition, the List of Requirements and the Organising Association Agreement.''[19] This Organising Association Agreement is signed with all countries (their national football associations) that wish to participate in the selection procedure. It contains the List of Requirements. The underlying purpose of such documentation is to ensure that potential World Cup-hosts are prepared to abide by FIFA's requirements in case they are eventually selected.[20] For example, the Organising Association Agreement concluded between FIFA and the South African Football Association ahead of the 2010 FIFA World Cup comprises a variety of requirements concerning, inter alia, infrastructure, security, broadcasting rights, intellectual property rights or financing. It is critical to note, however, that human rights demands are conspicuously absent from the agreement in question. The said agreement explicitly provides that ''FIFA owns the championship and all rights relating thereto on an exclusive worldwide basis, including all organisation, marketing, broadcast and other rights to the matches and other events.'' The Plaintiffs categorize the FIFA World Cup as 'take-it-or-leave-it' deal, claiming that host States are not in a position to negotiate about the requirements imposed by FIFA.[21] Indeed, the fear of losing the privilege to organize the prestigious FIFA World Cup serves as a significant impulse for World Cup-hosts to adhere to FIFA's standards. The Plaintiffs further note that FIFA uses its tremendous influence to force host States to modify their domestic laws for the duration of the tournament. In this regard, they particularly refer to the well-known 'Budweiser Law' – a law enacted by Brazil in the run-up to the 2014 FIFA World Cup which essentially allowed beer sales at match venues despite the fact that the sale of alcohol had been prohibited in Brazil's stadiums for nearly 10 years. 

Alternatively, the Plaintiffs put forward that, being aware of Qatar's unwillingness or inability to improve the human rights situation in the country, FIFA should have excluded Qatar from the bidding procedure.[22] Examples like that of Indonesia which was ruled out from the World Cup selection procedure because it did not provide sufficient government guarantees, demonstrate that FIFA possesses the power to take such action. In addition, the Plaintiffs suggest that FIFA may suspend a member in line with its Statutes.[23] As recently as 28 October 2016, Guatemala was suspended from international football due to the refusal of its national football federation ('FEDEFUT') to recognize the mandate of a normalisation committee established by FIFA predominantly in order to bring the FEDEFUT internal regulation in line with the FIFA Statutes. One of the most prominent cases of suspension dates back to the summer of 2014 when the FIFA Emergency Committee suspended the Nigeria Football Federation on account of government intervention. Earlier precedents show that FIFA had suspended its members also by reasons of negative human rights record (South Africa during the apartheid era or former Yugoslavia during the period of war in Balkan).[24] 

The Plaintiffs further maintain that FIFA's responsibility under Swiss tort law is also triggered by its ongoing failure to improve the plight of migrant workers trapped in Qatar by not demanding the Gulf country to efficiently set aside its controversial labour laws.[25]

FIFA's responsibility under international law 

The lawsuit filed with the Court refers to soft law provisions enshrined in the Guiding Principles on Business and Human Rights ('UN Guiding Principles') unanimously endorsed by the United Nations Human Rights Council in 2011. These principles address the corporate responsibility to respect human rights. United Nations High Commissioner for Human Rights, Mr. Zeid Ra'ad Al Hussein, described the UN Guiding Principles as ''the global authoritative standard, providing a blueprint for the steps all states and businesses should take to uphold human rights.'' Although the said principles do not constitute a binding source of international law, FIFA has already communicated its positive commitment to abide by these principles. At the same time, FIFA has announced that, starting from the 2026 FIFA World Cup, bidding regulations would incorporate human rights-related criteria. That being said, coupled with FIFA's large-scale commercial activities, the UN Guiding Principles seem to be more than a reasonable point of reference in this regard. 

In April 2016, Professor John Ruggie, the author of the UN Guiding Principles, completed the report on what it would entail for FIFA to embed human rights compliance across its global operations. His team has elaborated 25 specific recommendations which might be roughly summarized as follows: (i) adopt a clear and coherent human rights policy; (ii) embed respect for human rights; (iii) identify and evaluate human rights risks; (iv) address human rights risks; (v) track and report on implementation; and (vi) enable access to remedy. Likewise the lawsuit, the respective report articulated that FIFA shall use ''every opportunity to press host countries to support [FIFA's] new statutory human rights commitment.''

Conclusion 

In light of the foregoing considerations, the Plaintiffs asked the Court to oblige FIFA to redress the persistent human rights violations of migrant workers by compelling the competent Qatari authorities to bring about the necessary change. As an alternative, they requested the Court to declare the mere illegality of those human rights abuses. The monetary compensation sought by the Plaintiffs amounted to relatively modest sums.[26] 

In sum, the lawsuit under examination in this blog raises a number of remarkable challenges which would undoubtedly deserve a fair share of attention. The portrayal of FIFA as a stronger party in its relations with World Cup-hosts underscores the blurring distinction between the role of sovereign states and non-state actors in contemporary international society.[27] In fact, it raises crucial questions from the perspective of international legal theory. How is it possible that transnational corporations can interfere with the principle of state sovereignty? Is it only the consent of the state concerned that is involved? Where does this cornerstone principle of international law have its limits and to what extent is it relevant in current international relations? Although the Court does not give clear-cut answers to these questions, its position with respect thereto could be inferred from its ruling. This is exactly what remains to be tackled in the second part of this blog that will be published in the coming days. 

[1] Our most sincere acknowledgement goes to Prof. Liesbeth Zegveld who has kindly provided us with the relevant documentation and information that is subject to analysis in the present blog.

[2] Ruling of the Commercial Court of the Canton of Zurich, HG160261-O, 3 January 2017

[3] The Permanent Constitution of the State of Qatar, 2004, Art. 6

[4] Qatar is a State Party, inter alia, to the following international human rights law treaties: (i) Arab Charter on Human Rights; (ii) International Convention on the Elimination of All Forms of Racial Discrimination ('CERD'); (iii) Convention against Torture and Other Cruel, Inhumane or Degrading Treatment or Punishment; or (iv) United Nations Convention against Transnational Organized Crime and its accompanying Protocol to Prevent, Suppress and Punish Trafficking in Persons, especially Women and Children (also referred to as the Palermo Protocol). In addition, Qatar is a Member State of the International Labour Organization ('ILO') and has ratified six out of the eight ILO Conventions.

[5] Lawsuit submitted to the Court by the Plaintiffs on 8 December 2016, para. 97             

[6] In fact, some of the club's directors were high-ranked members of Qatari government

[7] Supra note 5, para. 259

[8] See the ILO 1930 Convention concerning Forced or Compulsory Labour (No. 29); the ILO 1957 Convention concerning the Abolition of Forced Labour (No. 105)

[9] Supra note 5, para. 160

[10] Ibid., para. 231

[11] See Art. 13 of the Universal Declaration of Human Rights; Arts. 26, 27 of the 2004 Arab Charter on Human Rights; Art. 5 (i) (d) CERD

[12] See Arts. 20, 23 (4) of the Universal Declaration of Human Rights; Arts. 24, 35 of the 2004 Arab Charter on Human Rights; Art. 5 (e) (ii) CERD; the ILO Declaration on Fundamental Principles and Rights at Work

[13] Supra note 5, para. 232 ff.

[14] Ibid., para. 239 ff.

[15] See the 1958 ILO Convention concerning Discrimination in Respect of Employment and Occupation; Art. 7 of the Universal Declaration of Human Rights; Arts. 3, 11 of the 2004 Arab Charter on Human Rights; Art. 5 CERD

[16] See Art. 8 of the Universal Declaration of Human Rights; Arts. 12, 22, 23 of the 2004 Arab Charter on Human Rights

[17] A. Erfani, 'Kicking Away Responsibility: FIFA's Role in Response to Migrant Worker Abuses in Qatar's 2022 World Cup', (2015) 22 (2) Jeffrey S. Moorad Sports Law Journal 623, at 641

[18] See Art. 133 (2) IPRG

[19] Reference is being made to the 2010 FIFA Statutes since they were in force at the time when the World Cup was awarded to Qatar (i.e. on 2 December 2010). Art. 37 of the 2010 FIFA Statutes is now reflected in Art. 43 of the 2016 FIFA Statutes.

[20] Supra note 5, para. 75

[21] Ibid., para. 267

[22] Ibid., para. 285

[23] See Art. 14 of the 2010 FIFA Statutes (now reflected in Art. 16 of the 2016 FIFA Statutes)

[24] Supra note 5, para. 288

[25] Ibid., para. 293

[26] Supra note 2, p. 2-3

[27] H. Meier, B. García, 'Protecting Private Transnational Authority against Public Intervention: FIFA's Power over National Governments', (2015) 93 (4) Public Administration 890

I think we would all agree that the reputation of players’ agents, nowadays called intermediaries, has never been a good one for plenty of reasons. But the truth is their presence in the football industry is much needed and probably most of the transfers would never take place if these outcast members of the self-proclaimed football family were not there to ensure a fluid and smooth communication between all parties involved.

For us, sports lawyers, intermediaries are also important clients as they often need our advice to structure the deals in which they take part. One of the most recurrent situations faced by intermediaries and agents operating off-the-radar (i.e. not registered in any football association member of FIFA) is the risk of entering in a so-called multiparty or dual representation and the potential risks associated with such a situation.

The representation of the interests of multiple parties in football intermediation can take place for instance when the agent represents the selling club, the buying club and/or the player in the same transfer, or when the agent is remunerated by multiple parties, and in general when the agent incurs the risk of jeopardizing the trust deposited upon him/her by the principal. The situations are multiple and can manifest in different manners.

This article will briefly outline the regulatory framework regarding multiparty representation applicable to registered intermediaries. It will then focus on provisions of Swiss law and the identification of the limits of dual representation in the light of the CAS jurisprudence and some relevant decisions of the Swiss Federal Tribunal.

A)   Regulatory framework:

Those agents acting in the market as registered intermediaries will necessarily be subjected to the specific football regulations enacted by FIFA and the national associations in which they operate. The answer as to the possibility to represent more than one party to a deal will therefore, be necessarily found in internal rules of each association. 

As opposed to the obsolete FIFA Players’ Agent Regulations[1], the FIFA Regulations on Working with Intermediaries (RWWI) allow intermediaries to represent more than one party in a transaction. Pursuant to the definition of intermediary[2] in combination with Article 8 RWWI, the only substantive requirement to intermediaries willing to act for multiple parties is that they obtain prior written consent and confirmation in writing on which party (i.e. the player and/or the club) will remunerate the services of the intermediary. The regulations, therefore, prioritize transparency over the question of who pays for the services of the intermediary. Consequently, it is not forbidden for an intermediary to represent and be paid by multiple parties to a transaction, as long as they all know and agree to it in advance.  

At a national level, most FIFA member associations[3] have followed the solution adopted in the RWWI and have transposed ad literam the right of intermediaries to multiparty representation as long as the transparency and information requirements are met (i.e. any potential conflict of interest is disclosed to the parties in advance, and subject to the prior written consent of the parties to the transaction).

However, there are still many agents that prefer to operate off-the-radar of organized football and its regulations. For these ‘rogue’ agents, the scenario is different and the question of the legality of multiparty representation will ultimately depend on the applicable law chosen by the parties[4]. Based on my personal experience, off-the-radar agents often end up acting through very rudimentary authorizations subject to the ordinary jurisdiction of the CAS. For this reason, I chose to dissect in this paper the limits of multiparty representation according to Swiss law, for based on article XY of the CAS Code of Sports Arbitration it represents the applicable law to ordinary disputes before the CAS when parties fail to make a particular choice of law.

The provisions of the contract of brokerage (“contrat de courtage”) in Articles 412-418 of the Swiss Code of Obligations (CO) are of relevance in this regard. The cornerstone provision concerning conflict of interest is found in Article 415 CO[5] whose English translation reads as follows:

“Where the broker acts in the interests of a third party in breach of the contract or procures a promise of remuneration from such party in circumstances tantamount to bad faith, he forfeits his right to a fee and to any reimbursement of expenses”.

The article differentiates between two non-cumulative hypothetical situations where the broker (i.e. agent) may be in a position of conflict of interests.

• First: the broker “Acts in the interest of a third party in breach of the contract”.
• Second: the broker “Procures a promise of remuneration from such party in bad faith”.

The first hypothesis establishes the prohibition of the broker to act in the interest of a third party if the obligations towards his client are breached. Accordingly, an agent representing a player is prevented from assisting the players’ contracting club to negotiate the terms of his employment contract, as he would be defending irreconcilable interests (i.e. the interest of the club to pay the lowest salary possible v/ the interest of the player to obtain the highest possible salary). Conversely, the same agent could be hired by the club in a different transaction without incurring a conflict of interest with the player. The condition triggering this first hypothesis will be thus, whether the agent acting for the third party is in breach of his contractual obligations.

It is important to note that the published English translation of the CO differs slightly from the original text of the code[6]. While the English translation refers to the breach of the “contract”, the original French version refers instead to a breach of the “obligations” which has obviously a broader scope, covering a wider range of situations than a contract might include.

This linguistic difference can be misleading as the obligations emanating from the CO may go beyond the obligations set forth in a simple authorization or a brokerage contract. By way of example, think of a very simple “Authorization” that does not explicitly prohibit the agent of the player to simultaneously act for the club. Sticking to literal text of the English translation, one could be tempted to believe that the agent was not acting in breach of the contract. However, the same situation seen under the lens of the legal obligations would imply that the agent could still be infringing the obligation of loyalty and trust stemming from the CO.

In view of the above, a correct evaluation of the first hypothesis will necessarily account for the legal obligations inherent to the brokerage contract, the scope of which might go beyond the obligations stipulated in the contract. Amongst these, the obligation of loyalty, the obligation to safeguard the interest of the client by not entering into conflictive situations, and the obligation of transparency and information.

The second hypothesis covers the prohibition in Swiss law of dual representation by procuring a promise of payment from third parties to the relationship broker/principal, if such a promise amounts to bad faith.

It needs to be underlined that this provision does not exclude dual payment, but subjects it to a certain limit, i.e. not incurring in bad faith. Delineating bad faith can turn out to be a difficult task as the concept itself has an inevitable component of subjectivity and, as opposed to good faith which is legally presumed (cf. Article 3 of the Swiss Civil Code), bad faith must always be proven by the party claiming it, who ultimately bears the burden of proof[7]. 

Applied to football agents, it can be safely assumed that an agent acting in good faith towards his client would necessarily act in a transparent way and inform his client that he is simultaneously acting for the other contracting party. Not disclosing such information in the context of negotiations can serve as indication of bad faith when combined with other elements. However, to prove the presence of bad faith will still require sufficient material evidence in order to discharge the burden of proof, since the simple negligence of the broker would not be sufficient to fall under the scope of the article.

The consequence for a broker (i.e. football agent) infringing the prohibition of dual representation in he hypotheses described in article 415 CO is the nullity of the contract and the forfeiture of the right to be remunerated, or the obligation to reimburse the amounts received if the infringement is ascertained after the realization of the contract and payment of the fee (“quod nullum est nullum producit effectum”).  

With the above premises in mind, a detailed look into the CAS and the Swiss Federal Tribunal jurisprudence regarding Article 415 CO will help identifying the scope of the legal obligations of a football agent towards his client (i.e. club and/or player), as well as the mechanisms used by the decision-making bodies to determine the existence of bad faith.

B)   Jurisprudence:

One of the very few CAS cases dealing with Article 415 CO in the context of football agents' relationships with clubs is the CAS award  2012/A/2988 PFC CSKA Sofia v. Loic Bensaid.

In short, the dispute opposed the flagship Bulgarian football club CSKA Sofia against a French football agent and revolved around the right of the latter to be remunerated by the club, considering he had acted simultaneously in representation of the player in the signature of the employment contract.

One of the many arguments used by the club in support of its alleged right not to pay the agent was based on Article 415 CO. The club asserted that the agent acted in violation of his obligations for having represented both parties. On the merits, the Sole Arbitrator concluded, nevertheless, that the agent had fulfilled the obligations of transparency and information as the Club was aware at all times that the agent also acted for the player and knew about the existence of the representation contract with the player[8]. The full knowledge and acceptance of the situation impeded the club to contend, at a later stage, the violation of the duty of loyalty and transparency.

Secondly, adhering to the grounds of the supporting FIFA decision, the Sole Arbitrator also remarked that the mandate between the Agent and the player did not contain any obligation to remunerate the services of the agent. The prohibition of agents to be remunerated twice for their services has been traditionally a key element in previous FIFA decisions where dual representation was at the center of the dispute[9]. This fact possibly led the Sole Arbitrator to also highlight this circumstance when assessing the behavior of the agent. However, the Sole Arbitrator further stated that, even if the mandate would have provided for a remuneration in favor of the agent (quod non), Article 415 CO would still not have been violated as the club failed to discharge the burden of proof as to the existence of bad faith, reinforcing with it that dual representation is only forbidden to the extent the agent acts in bad faith[10].

This final remark of the Sole Arbitrator is crucial as it evidences, in my view, that whether the player and the agent agreed upon a remuneration, remains in the end irrelevant for the evaluation of a possible violation of Article 415 CO. Indeed, pursuant to the CAS arbitrator’s interpretation of the article, the agent can be remunerated twice, as it is the disregard of the obligations inherent to the contract and in particular for the second hypothesis acting in bad faith that determines compliance with Article 415 CO.

To better illustrate the irrelevance of the “double remuneration” discussion, think for a moment of a brokerage contract where there is no explicit reference to the remuneration. Does such a lacuna in the contract imply that the brokerage is necessarily, pro bono? The answer is no, for as a general rule, mandates given in the context of professional relationships are presumed to be lucrative (see Art. 394(3) CO). That is precisely the case of football agents when they contract with players or clubs. This circumstance renders the reference to a remuneration in the contract a secondary element, or at least not an essential one. The former FIFA PAR (Ed. 2008[11]) followed this ratio legis when explicitly providing for a default remuneration of 3% of the players’ basic income where the parties cannot agree on the remuneration.

Beyond the specific CAS awards, some decisions of the Swiss Tribunal Federal help getting the full perspective on dual representation in the context of disputes subject to Swiss law. Although these do not refer to football agents, the similarities that exist with real estate and/or corporate brokers allow to derive important conclusions that can be applied to football agents.

A first decision worth mentioning is no. 4A_214/2014 of 15 December 2014. The case concerned a classic real estate intermediation where the agent agreed a commission from both the seller and the buyer involved in the transaction. The agent also failed to inform the seller of the existence of a better buying offer from a third potential buyer. In this context, after concluding the deal, the buyer refused to pay the agent, invoking Article 415 CO.

This case is important because it reveals the existence of two types of brokerage contracts under Swiss law (i.e. “courtage de negotiation” and the “courtage d’indication”). Whereas in a brokerage of negotiation the broker is entrusted by his client to negotiate the conditions of the transaction, in a brokerage of indication, the broker is simply called to indicate the possibility to conclude a transaction, with no negotiation duties involved. Furthermore, according to the doctrine cited in the decision, both types of contract are treated differently under Article 415 CO.

In casu, the Federal Tribunal qualified the contracts signed by the agent with the buyer and the seller as “courtage de negotiation” as he was entrusted with conducting all aspects related to the transaction. The agent was required to obtain the best possible conditions for his clients (e.g. the best buying and selling price respectively) and this circumstance directly generated an irremediable conflict of interest (i.e. the negotiation was either benefitting the financial interests of seller or the buyer) infringing the obligation of loyalty inherent to the brokerage contracts with the parties.

All in all, the Federal Tribunal rejected the appeal submitted by the real estate agent and confirmed the nullity of both contracts for violating Article 415 CO. The Federal Tribunal followed a strict interpretation of Article 415 CO according to which “no one can serve two masters” and thus, dual representation would only be possible (if so) in simple intermediations where no negotiation from the broker is required[12], in other words in “courtage d’indication”. In addition, in this case the agent also acted in bad faith for failing to disclose the existence of a more favorable offer to the detriment of the seller.

The main lesson that can be learnt from this decision is that Article 415 CO must be interpreted restrictively and that it has to be distinguished between those intermediation contracts that imply an active involvement of the agent (i.e. the agent is contractually required to negotiate the terms of a transaction for the player and/or the club) and those contracts of intermediation where the agent is called to simply indicate the possible opportunity for his client to conclude a deal with no other involvement in the transaction. In this last case, dual representation could be allowed for there would be no conflict of interests, and therefore, no infringement of the obligations under the brokerage contract. The specific contractual clauses are therefore crucial as they ultimately reveal the extent of the role assumed by the agent.

The second important decision by the SFT is more recent, no. 4A_529/2015 of 4 March 2016. The factual background of this dispute is extremely complex. In brief, the case revolved around the selling and buying of the shares of a company exploiting a luxurious Hotel located in Switzerland. The seller and the broker entered into a negotiation brokerage contract whereby the latter was entrusted to find a buyer of the company against the payment of remuneration. The principal had to agree with the final potential buyer. In the end, it was proved that the broker misled the principal about the true identity of the final buyer (to whom the principal expressly refused to sell), with whom the broker had also agreed remuneration. On the basis of these facts, the principal refused to pay the broker. 

The Federal Tribunal confirmed again that Article 415 CO is always interpreted strictly, and considered that by allowing the banned buyer to indirectly acquire the company, the broker acted in the interest of a third party against the obligation of loyalty. What is most significant about this decision is that the court delimitates very clearly the scope of the obligation of loyalty. It is described as a double-edged sword, implying on the one side: a positive obligation consisting of actively safeguarding and defending the interest of the principal; and on the other side: a negative obligation, consisting of abstaining from any conduct that could harm the interests of the client.  

In particular, the fact that the principal had not objected to a previous e-mail sent by the broker where he expressly indicated that the potential buyer was “C or any company indicated by it” was also irrelevant for the principal could not expect in ‘good faith’ that the buyer would make use of this substitution prerogative in favor of the real buyer. The arguments of the broker according to which it was not important for the principal to know who the buyer was and that he suffered no damage, were also dismissed.   

Finally, the argument of the broker according to which the remuneration to be received from the buyer was agreed after the transaction took place was also irrelevant in the eyes of the court.

With these cases in mind, when applying the holding of the SFT above to football agents' professional relationships, it follows that the scope of the obligation of loyalty will be significantly wider for football agents entrusted with negotiations than for agents simply tasked with identifying possible opportunities to close a deal.

Likewise, in order to determine the existence of a violation of the obligations assumed by the agent, it will not be enough to demonstrate that there has been no threat to the interests of the client or that the agent has not actively engaged in a conduct against those interests. Indeed, a simple passive conduct with the potential of jeopardizing the interests of the principal, such as failing to disclose relevant information, can be sufficient to violate the obligation of loyalty and deprive the agent from the right to be remunerated.

To this effect, the correct identification of the interest pursued by the client will ultimately determine the infringement by the agent of his obligations under the representation contract. In the end, the agent will only violate his obligation of loyalty as long as his behavior damages the interests of his client. These interests will vary depending on whether the principal is a football club or a player. If a club is trying to transfer or recruit a player, the interests will in most cases be of a financial nature. If instead, the principal is a football player terminating or signing a contract with a club, he might have non-economic interests (e.g. willing to play in a different championship, lack of integration of the family in the country etc.). Furthermore, the moment in which the remuneration is agreed is not relevant to establish the violation of the obligation of loyalty.

In conclusion, the contract of representation and its clauses in combination with the particular circumstances of each case will be fundamental to establish compliance with Article 415 CO when multiple representation takes place.   Football agents pretending to be remunerated by both contracting parties simultaneously without risking to violate their obligations must either enter into simple brokerage contracts with no negotiation attributions, or, when acting through a negotiation brokerage, always inform all parties in complete transparency. 

[1] See Article 19.8 FIFA PAR.

[2] “Definition of an intermediary

A natural or legal person who, for a fee or free of charge, represents players and/or clubs in negotiations with a view to concluding an employment contract or represents clubs in negotiations with a view to concluding a transfer agreement.” [Emphasis added]

[3] Only the FFF (France), the RFU (RUSSIA), the BFU (Bulgaria) the JFA (Japan) have explicitly adopted stricter rules prohibiting any conflict of interest. See Comparative Table of “The FIFA Regulations on Working with Intermediaries Implementation at a national level” (Ed. Michele Colucci).

[4] E.g. Arbitrage TAS 2007/O/1310 Bruno Heiderscheid c. Franck Ribéry.

[5] See article R45 of the CAS Code (ed. 2017).

[6] Art. 415. III. Déchéance:

“Le courtier perd son droit au salaire et au remboursement de ses dépenses, s'il agit dans l'intérêt du tiers contractant au mépris de ses obligations, ou s'il se fait promettre par lui une rémunération dans des circonstances où les règles de la bonne foi s'y opposaient.”

https://www.admin.ch/opc/fr/classified-compilation/19110009/index.html

[7] See. Decision of the SFT 131 III 511 para. 3.2.2 of  http://relevancy.bger.ch/php/clir/http/index.php?highlight_docid=atf%3A%2F%2F131-III-511%3Ade&lang=de&type=show_document

[8] See para. 118.

[9] E.g. Decision of the Single Judge of the PSC of 12 January 2012: “12. In view of the above, the Single Judge formed the view that, although the Claimant appears to have represented the Respondent and the player in the same transaction, the documentary evidence contained in the file clearly demonstrates that the Claimant could not have possibly been remunerated twice for his services. Consequently, and in accordance with the general principles of bona fide and pacta sunt servanda the Single Judge decided that the Respondent must fulfill the obligation it voluntarily entered into with the Claimant by means of the representation agreement concluded between the parties, and therefore, the Respondent must pay the Claimant for the services he rendered in connection with the transfer of the player to the Respondent.”

[10] See also para. 118.

[11] See i.c. article 20 para. 4 FIFA PAR (ed. 2008).

[12] See para. 1.1.3 of the SFT decision. An example of a courtage d’indication would be the brokerage of insurances, where the broker, acting for the policy-holder, is paid instead, by the insurance company.