Editor’s note: Yann Hafner is a Phd researcher at the University of Neuchâtel specialized in sports and nationality issues. He is also Legal Affairs Manager at the Fédération Internationale de Volleyball. Yann is an editor of the ASSER International Sports Law Blog and has previously published on the blog on nationality conundrums at the FIFA World Cup 2014 in Brazil (see here).  

This contribution aims to decipher the relationship between sporting nationality and the Olympic Games. To this end, the author will first define sporting nationality and discuss athletes’ eligibility in national team in the context of the Olympic Games. Then, selected issues in relation with sporting nationality and the Olympic Games (with an emphasis on issues related to the Rio 2016 Olympic Games) will be investigated.

Defining sporting nationality at the Olympic Games

Sporting nationality is in essence twofold:

• on the one hand, sporting nationality is the eligibility concept in use within the world of sport to define the participation of athletes in international competitions[1], i.e. sporting events between the members of an international federation or the National Olympic Committees in the context of the Olympic Games[2]; and

• on the other hand, sporting nationality refers to the legal relationship between an athlete and the national governing body for whom he/she is eligible according to the applicable regulations[3]. Each international federation and organizers of multisport events, such as the International Olympic Committee (IOC), maintain their own set of rules[4]. Consequently, an athlete may have as many sporting nationalities as there are governing bodies in his/her sport[5].

Turning now to athletes’ eligibility for national teams, one should acknowledge that this issue has not always been a primary concern for sports governing bodies[6], including for the International Olympic Committee (IOC). For instance, the first three editions of the Olympic Games foresaw the participation of transnational teams, i.e. teams composed of athletes from different countries competing under one flag[7]. This most notably occurred in track and field, rowing, football, polo, swimming and tug of war[8]. The decision of the IOC to impose the creation of one National Olympic Committee per country in order to facilitate the organization of the Olympic Games put an end to this practice as of 1908. That said, the IOC did not regulate sporting nationality at the Olympic Games before 1920[9]. Nowadays, sporting nationality is governed by Rule 41 Olympic Charter 2015 which reads as follows:

“41 Nationality of competitors

1. Any competitor in the Olympic Games must be a national of the country of the NOC which is entering such competitor.

2. All matters relating to the determination of the country which a competitor may represent in the Olympic Games shall be resolved by the IOC Executive.

Bye-law to Rule 41

1. A competitor who is a national of two or more countries at the same time may represent either one of them, as he may elect. However, after having represented one country in the Olympic Games, in continental or regional games or in world or regional championships recognised by the relevant IF, he may not represent another country unless he meets the conditions set forth in paragraph 2 below that apply to persons who have changed their nationality or acquired a new nationality.

2. A competitor who has represented one country in the Olympic Games, in continental or regional games or in world or regional championships recognised by the relevant IF, and who has changed his nationality or acquired a new nationality, may participate in the Olympic Games to represent his new country provided that at least three years have passed since the competitor last represented his former country. This period may be reduced or even cancelled, with the agreement of the NOCs and IF concerned, by the IOC Executive Board, which takes into account the circumstances of each case.

3. If an associated State, province or overseas department, a country or colony acquires independence, if a country becomes incorporated within another country by reason of a change of border, if a country merges with another country, or if a new NOC is recognised by the IOC, a competitor may continue to represent the country to which he belongs or belonged. However, he may, if he prefers, elect to represent his country or be entered in the Olympic Games by his new NOC if one exists. This particular choice may be made only once.

4. Furthermore, in all cases in which a competitor would be eligible to participate in the Olympic Games, either by representing another country than his or by having the choice as to the country which such competitor intends to represent, the IOC Executive Board may take all decisions of a general or individual nature with regard to issues resulting from nationality, citizenship, domicile or residence of any competitor, including the duration of any waiting period.”

The connecting factor between an athlete and his/her National Olympic Committee is currently rooted in nationality[10]. The French version of the Olympic Charter refers however to being a “ressortissant” of the National Olympic Committee which is entering the athlete in the Olympic Games. Unfortunately, these two concepts do not necessarily overlap; the term ressortissant may have a broader meaning than nationality[11]. To add another layer of uncertainty, a Court of Arbitration for Sport (CAS) ad hoc Panel has adopted contradictory approaches in this respect:

•  In United States Olympic Committee (USOC) and USA Canoe/Kayak / International Olympic Committee (IOC), the Panel held that the Olympic Charter did not provide for any exception to the nationality requirement[12]; and

• In Angel Perez / International Olympic Committee (IOC), the same Panel held this time that “the word ‘nationality’ in Rule 46 and its Bye-law should be construed broadly. In so far as it is relevant to consider whether a person has lost his or her nationality, the Panel is of the view that a person may be found to have lost it both in circumstances where he or she is de jure or de facto stateless”[13]. Consequently, the Panel found that the athlete had changed his nationality for more than three years and was eligible to represent the United State Olympic Committee in the 2000 Sydney Olympic Games.

To our knowledge, CAS has never discussed the distinction between nationality and “ressortissant” further. This is not to provide certainty to athletes who may enter into a dispute over eligibility in national team.

It should finally be noted that the Olympic Charter does not mandate for the fulfillment of any other eligibility requirements, such as residency, except in the case of a change of sporting nationality. In this specific case, athletes must have to sit out for three years since they last represented their previous national team before being eligible for a second National Olympic Committee[14]. That said, the Olympic Charter stated that the Executive Board may take all decisions of a general or individual nature with regard to issues resulting from nationality, citizenship, domicile or residence of any competitor, including the duration of any waiting period. This clause aims at covering situations in which there is no National Olympic Committee to enter an athlete for instance[15].

Selected issues

The host nation syndrome:

All host nations of the Olympic Games share one common thread: the fear of not performing during “their” event. This is notably due to the fact that the country welcoming the world during the Olympic Games generally receives a certain quota of places in each sport[16], including for sports with little or no local tradition[17]. While certain nations have set up traditional talent detection and training programs in order to grow a new generation of elite athletes in time, others have chosen a completely different route; they either:

• Naturalize athletes; Italy[18], Greece and Australia have acted in such a way ahead of their Olympic Games[19]; or
• Openly advertise participation in the next Olympic Games on the (sporting) market, in particular to their diaspora.

The “Brazilian Rugby Players Wanted” campaign is the latest example of this. It was launched by the Brazilian Rugby Union (“Confederação Brasileira de Rugby”) in 2013 and aims at finding rugby players with a Brazilian passport or Brazilian descent who are currently unknown to the national governing body and who may qualify for its High Performance Program in view of the Rio 2016 Olympic Games.

The Team of Refugee Olympic Athletes:

On 2 March 2016, the IOC Executive Board decided to create a Team Refugee Olympic Athletes. The approach of the IOC was to allow athletes who had fled their country to be directly entered in the 2016 Rio Olympic Games without the need to resort to the National Olympic Committee of their nationality. To date, ten athletes meeting the relevant sporting requirements have been selected to be part of the Team Refugee Olympic Athletes.

Although portrayed as a first, the IOC Executive Board has made use of its powers on multiple occasions to allow the participation of athletes without a country or without a National Olympic Committee:

• 1992 Barcelona Olympic Games: athletes from the Federal Republic of Yugoslavia participated in the Olympic Games as Independent Athletes[20]. They were not allowed to bear the colors of their country due to sanctions of the UN Security Council (i.e. the Federal Republic of Yugoslavia was banned from all international competitions)[21];
• 2000 Sydney Olympic Games: Athletes from East Timor were authorised to participate under the Olympic banner due to the secession of their country from Indonesia[22];
•  2012 London Olympic Games: three athletes from the Netherland Antilles and one from South Sudan were placed under the Olympic flag[23]. The absence of a National Olympic Committee in these countries triggered the decision of the IOC. Athletes from the Netherland Antilles now compete with the Netherlands;
• 2014 Sochi Olympic Games: three Indian athletes marched under the Olympic banner during the opening Ceremony due to the suspension of their National Olympic Committee by the IOC. They were subsequently authorised to bear their own colors following the removal of the ban on their country.

The concept of a Unified Delegation:

The concept of a United Delegation is only in use for North and South Korea[24]. It is similar to a confederation of National Olympic Committees. In other words, they march together at the opening and closing Ceremonies but maintain separate sporting spheres[25]. Consequently, medalists are honored by the flag of their respective National Olympic Committee, not by their common flag. Of note, the North and South Korean National Olympic Committees are currently engaged in merger negotiations. If successful, there would be only one National Olympic Committee for two countries – and this would be unique in the Olympic Movement. The effects of such a merger on Rule 41 Olympic Charter are currently unknown.

[1] TAS 92/80 du 25 mars 1993, B. / Fédération Internationale de Basketball (FIBA), in : Reeb, Rec. I, n° 13 p. 287 ff.

[2] GARRIGUES Christian, Activités sportives et droit communautaire, Thèse (Université Robert Schuman), Strasbourg (S.I.) 1982, p. 569.

[3] “National eligibility rules confine the right to represent a national side and, thus, to participate in international competition: the criteria employed include nationality, place of birth and residence in the territory for a prescribed period of time” [MCARDLE David, Player Quotas, National Eligibility Restrictions, and Freedom of Movement under EU Law, European Union Studies Association (EUSA), Biennial Conference 2003 (8th), March 27-29, 2003, p. 14].

[4] Shachar Ayelet, Picking Winners: Olympic Citizenship and the Global Race for Talent, in : The Yale Law Journal, Vol. 120 (2011), p. 2134; Siekmann Robert, Sport and Nationality : Accelerated Naturalisation for National Representative Purposes and Discrimination Issues in Individual Team Competition under EU law, in : The International Sports Law Journal, 2011/3-4, 2011, p. 87; Wollmann Anna Sabrina, Vonk Olivier, Groot Gérard-René de, Towards a sporting nationality?, in : Maastricht Journal of European and Comparative Law, Volume 22, Number 2, 2015, p. 306.

[5] GUILLAUMÉ Johanna, L’autonomie de la nationalité sportive, in : Journal du droit international, année 138, n° 2/2011, Avril-Mai-Juin 2011, p. 323 ff.

[6] Hafner Yann, La nationalité sportive et les Jeux Olympiques, in : Droit & Olympisme : Contribution à l’étude juridique d’un phénomène transnational, Actes du colloque du 4 septembre 2013, Maisonneuve Mathieu (dir.), Aix-en-Provence (Presses Universitaires d’Aix-Marseille), 2015, p. 81.

[7] The existence of transnational teams is however supported by the International Olympic Committee in the context of the Youth Olympic Games. See: Parry Jim, The Youth Olympic Games – Some Ethical Issues, in : Sport, Ethics and Philosophy, Vol. 6, No 2, 2012, p. 144; Wong Donna, The Youth Olympic Games: Past, Present and Future, in : The International Journal of History of Sport, Vol. 28, No 13, 2011, p. 1836.

[8] Hafner Yann, La nationalité sportive et les Jeux Olympiques, in : Droit & Olympisme : Contribution à l’étude juridique d’un phénomène transnational, Actes du colloque du 4 septembre 2013, Maisonneuve Mathieu (dir.), Aix-en-Provence (Presses Universitaires d’Aix-Marseille), 2015, p. 81 and references.

[9] Rule 4 Olympic Charter 1920.

[10] WOLLMANN Anna Sabrina, Nationality Requirements in Olympic Sports, Oisterwijk (Wolf Legal Publishers) 2016, p. 59.

[11] Foreign nationals serving in the army of another state or persons under the protection of a sate (i.e. protected persons) are deemed ressortissant of this particular state. See: Weis Paul, Nationality and statelessness in international law, 2ème éd., Alphen an den Rijn – Germantown (Sijthoff & Noordhoff) 1979, p. 7.

[12] CAS ad hoc Division OG 2000/001 dated 13 September 2000, United States Olympic Committee (USOC) and USA Canoe/Kayak / International Olympic Committee (IOC), in : Reeb, Rec. II, p. 600 s., n° 22 ff.

[13] CAS ad hoc Division OG 2000/005 dated 19 September 2000, Angel Perez / International Olympic Committee (IOC), in : Reeb, Rec. II, p. 631, n° 27.

[14] Gillon and Poli conducted a survey during the 2004 Athens Olympic Games, and found that 2,6% of the athletes registered had previously represented another country [Gillon Pascal, Poli Raffaele, La naturalisation de sportifs et fuite des muscles. Le cas des Jeux Olympiques de 2004, in : La nationalité dans le sport : Enjeux et problèmes, Actes du Congrès des 10 et 11 novembre 2005, Oswald Denis (éd.), Neuchâtel (Editions CIES) 2006, p. 59]. This figure is slightly lower than the percentage of players who have changed national affiliation before participating in the 2014 FIFA World Cup [http://www.asser.nl/SportsLaw/Blog/post/blurred-nationalities-the-list-of-the-23-and-the-eligibility-rules-at-the-2014-fifa-world-cup].

[15] Rule 44.2 Olympic Charter 2015 provides that “Only NOCs recognised by the IOC may submit entries for competitors in the Olympic Games”. Accordingly, Beloff et al. note that “[t]his would seem to exclude the possibility of the IOC independently permitting athletes to compete in the Games, but is has been argued that the IOC enjoys a residual discretion to that effect” [Beloff Michael J. QC, Kerr Tim, Demetriou Marie, Beloff Rupert, Sports law, 2^ème éd., Oxford – Portland, Oregon (Hart) 2012, n° 1.72 p. 21].

[16] Gillon Pascal, Poli Raffaele, La naturalisation de sportifs et fuite des muscles. Le cas des Jeux Olympiques de 2004, in : La nationalité dans le sport : Enjeux et problèmes, Actes du Congrès des 10 et 11 novembre 2005, Oswald Denis (éd.), Neuchâtel (Editions CIES) 2006, p. 63.

[17] To avoid any embarrassment, certain international federations, such as the Fédération Internationale de Hockey (FIH), have now reviewed their Host Country Places policy. The host nation is no longer guaranteed a quota and must meet minimum sporting standards in order to enter a team: http://www.fih.ch/media/808384/2014-02-rio-2016-qualification-system-hockey-final.pdf (02.08.2016).

[18] Shachar Ayelet, Picking Winners: Olympic Citizenship and the Global Race for Talent, in : The Yale Law Journal, Vol. 120 (2011), p. 2093.

[19] BAYLE Emmanuel, DURAND Christophe, Sport professionnel et représentation nationale : Quel avenir ?, in : Reflets et Perspectives de la vie économique, Volume 39 (2-3), 2000, p. 164, footnote n° 29; Gillon Pascal, Poli Raffaele, La naturalisation de sportifs et fuite des muscles. Le cas des Jeux Olympiques de 2004, in : La nationalité dans le sport : Enjeux et problèmes, Actes du Congrès des 10 et 11 novembre 2005, Oswald Denis (éd.), Neuchâtel (Editions CIES) 2006, p. 58 and 63.

[20] Chappelet Jean-Loup, L’autonomie du sport en Europe, Strasbourg (Editions du Conseil de l’Europe) 2010, p. 24.

[21] Carrard François, Sports and politics on the international scene, in : Rivista di studi polici internazionali, Vol. 78, No 1, janvier-mars 2011, p. 31.

[22] Grasso John, Mallon Bill, Heijmans Jeroen, Historical Dictionary of the Olympic Movement, 5^ème éd., Lanham (Rowman & Littlefield) 2015, p. 582.

[23] Iorwerth Hywel, Hardman Alun, Rhys Jones Carwyn, Nation, state and identity in international sport, in : National Identities, Vol. 16, n° 4, 2014, p. 330 end note n° 1.

[24] To date, there have been three Unified Delegations in 2000; 2004 and 2008 (MERKEL Udo, The Politics of Sport Diplomacy and Reunification in Divided Korea: One Nation, Two Countries and Three Flags, in : International Review for the Sociology of Sport, vol. 43, no. 3, 2008, p. 298).

[25] Hafner Yann, La nationalité sportive et les Jeux Olympiques, in : Droit & Olympisme : Contribution à l’étude juridique d’un phénomène transnational, Actes du colloque du 4 septembre 2013, Maisonneuve Mathieu (dir.), Aix-en-Provence (Presses Universitaires d’Aix-Marseille), 2015, p. 91.

Editor's Note: Christopher is an editor of the Asser International Sports Law Blog. His research interests cover a spectrum of sports law topics, with a focus on financial regulatory disputes, particularly in professional football, a topic on which he has regularly lectured at the University of the West of England.

It is five years since the Union of European Football Associations (UEFA) formally introduced ‘Financial Fair Play’ (FFP) into European football through its Club Licensing and Financial Fair Play Regulations, Edition 2012. With FFP having now been in place for a number of years, we are in a position to analyse its effect, its legality, and how the rules have altered over the last half decade in response to legal challenges and changing policy priorities. This article is split into three parts: The first will look at the background, context and law applicable to FFP; Part Two will look at the legal challenges FFP has faced; and Part Three will look at how FFP has iteratively changed, considering its normative impact, and the future of the rules.

Background

Certain aspects of FFP were incredibly controversial from the outset. To a neutral observer, this might seem confusing: FFP is, ostensibly, a set of rules designed to make sure clubs pay their bills on time, stay solvent, and do not need to look to external benefactors to cover their losses. Leading sports economist Stefan Szymanski described insolvency as “a chronic problem in the world of professional Association football”, so, superficially at least, a regulatory response to this would seem natural and appropriate. Where the market fails, it is the regulator’s duty to respond.

UEFA’s President at the time, Michel Platini, said “You, we, the fans and football lovers, have no interest in seeing clubs, the real heritage of European football, disappear due to risky management”. This is a sentiment with which most fans would agree.

Accordingly, UEFA incorporated FFP into its existing licensing requirements, meaning any club that wished to compete in a UEFA competition would be required to meet the financial standards set by FFP. These standards would be overseen and enforced by a new body within UEFA’s administration called the ‘Club Financial Control Body’. The Club Financial Control Body would be further segregated into an Investigatory Chamber and an Adjudicatory Chamber.

So, why the controversy? The contentious aspect of FFP was its ‘break even’ requirement. The ‘break even’ requirement is a de facto soft salary cap, tying the maximum amount a club can spend (with defined exceptions) to its revenue generation. An overview of the break even requirement as originally conceived can be found here. In essence, “The break-even result for a reporting period is calculated as relevant income less relevant expenses’’.^[1] “Income” includes receipts such as gate receipts, sponsorship, broadcasting rights, commercial activities and player sales; “expenses” includes wages, the cost of purchasing players and the cost of finance.^[2]

Crucially, when FFP was first introduced, losses could not be met or offset by equity participants (i.e. owners). This was pertinent to the prevailing financial climate in football, in which certain clubs across Europe were spending unprecedented sums with the support of wealth benefactors, who would cover the clubs’ losses. Such spending was seen at clubs such as Chelsea, Manchester City, Paris Saint Germain, Monaco, Malaga and Anzhi Makhachkala, with mixed results on and off the pitch.

Thus FFP was accused of calcifying football’s competitive hierarchy^[3] and foreclosing smaller clubs from sporting and consequent business success. This debate has been played out over the last five years in the academic literature^[4] and in various legal fora. The rules and the mechanisms for enforcing the rules have become increasingly sophisticated as the years have passed. UEFA, perhaps in response to these challenges, has made gradual, iterative changes to FFP that have seen the rules soften to accommodate exogenous equity input in defined permissible circumstances. These changes will be looked at in greater depth in Part Three.

The challenge of EU law

FFP has been described ‘legally fragile’, which is an apt description. This is because the rules cannot be said to be unquestionably permissible under European Union (EU) law; nor can they be said to be categorically in breach of EU law. The rules exist in a regulatory ‘grey’ area – FFP, in its particularly in its original, more restrictive, guise, may or may not have been illegal. This is a question for a competent (judicial) authority to decide; however, as will be discussed in more detail in Part Two, the route to such a decision has been far from straight forward, and in the intervening years, FFP has changed substantially.

The essential legal questions to determine the legality of FFP are:

1. Does FFP breach EU competition law?
2. Does FFP breach EU free movement law?
3. Is there a sanctuary for any breach of EU law under the doctrine of the specificity of sport?

EU competition law

Article 101 of the Treaty of the Functioning of the European Union (TFEU) prohibits agreements that have as their object or effect “prevention, restriction or distortion of competition within the internal market”.^[5] This puts regulatory associations such as UEFA in a difficult position. It is the very nature of regulation that competition is restricted or distorted; indeed, it is the very purpose of regulatory rules that participants subject to those rules alter their behaviour accordingly, which has an inevitable consequence on the competitive landscape.

Consideration should also be given to Article 102 TFEU, which prohibits undertakings (and in some circumstances collections of undertakings, i.e. oligopolies) that are in a dominant position from abusing their market dominance.

In view of this friction, the European courts have developed, through the case of Wouters, the concept of regulatory ancillarity.^[6] This is the doctrine under which, subject to a test of proportionality, reasonability and necessity, even in circumstances where there is a prima facie breach of competition law by a regulatory body (in that particular case by the Dutch Bar Association), this may be permissible under EU competition law where the regulatory body in question “could reasonably have considered that that regulation, despite the effects restrictive of competition that are inherent in it, is necessary for the proper practice of the [relevant profession]”.

The applicability of Wouters to a sporting regulatory context is confirmed and clarified in the landmark Meca-Medina case. In considering whether a regulatory rule breaches competition law, the European courts must determine: 

1. Whether the rules are necessary for the proper conduct of the sport;
2. Whether the penalties are inherent to the restrictions in questions; and
3. Whether the effects of the rules are proportionate to the aims pursued.

Should UEFA be unable to meet the test under the regulatory ancillarity doctrine, there is an alternative exemption with a lower threshold to which it could look. Within Article 101(3) TFEU, there is an exemption for agreements which promote “technical or economic progress, while allowing consumers a fair share of the resulting benefit” as long as such restrictions do not (a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; or (b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

It is open to UEFA to argue that FFP dampens inflation in football in a way that is for the improvement of the game and passes a benefit to ‘consumers’ (i.e. fans) by, for example, reducing the need for ticket price increases to sustain escalating players’ wages. This would perhaps be difficult for UEFA to establish, but the economics of FFP are complicated and second order effects should be borne in mind.

EU free movement – workers, services and/or capital 

The EU is built upon certain deeply enshrined freedoms. These include the free movement of workers (Article 45 TFEU), the free movement of services (Article 56 TFEU), and the free movement of capital. Any agreement that acts as an impediment to these freedoms is susceptible to a finding of illegality.

In order to be permissible under EU law, any rule or agreement that restricts any fundamental freedom must be:

1. Justified by a necessary objective in the general interest;
2. Suitable for achieving that objective; and
3. Proportionate.

In the case of sporting rules, the European courts have determined that the rule in question must not “go beyond what is necessary for achieving the aim pursued”,^[7] which is to reiterate that it must be proportionate – a recurrent theme in considering the legality of rules made by the governing bodies of sport, such as UEFA.

The criteria to be met by UEFA in establishing that FFP does not breach EU fundamental freedoms is in line with the threshold to be met in establishing compliance with EU competition law: FFP must be necessary, suitable and proportionate.

However, in the case of free movement law, it is far from obvious that FFP will have a substantive impact on fundamental freedoms. In previous writing on the subject, I have made the following analogy:

The restriction does not emanate from the rule per se, rather by the size of the club’s turnover; players are no more restricted from moving between clubs by FFP than this author is denied a Ferrari by his credit rating.^[8]

The specificity of sport under EU law

In the event that a competent adjudicative authority makes a prima facie finding that FFP is in breach of EU competition law or EU free movement law, there is still a possibility of an overall finding that FFP is not illegal under the doctrine of the specificity of sport; however, this would require the adjudicative body in question to row back considerably from the current position, and general trajectory, of the level of latitude granted to the governing bodies of sport by the European courts.

The concept of specificity will be familiar to all those with an interest in sports law and policy. It is the hypothesis under which, at its starkest interpretation, suggests governing bodies, not courts (or governments or other legislative bodies), are best placed to determine how sport should be run. Sports, it is argued, should have rule making autonomy. A more moderate view on specificity holds that due regard should be paid to the idiosyncrasies of the sports sector and the legitimate governance function played by governing bodies. 

The role of sports governing bodies, whose rules, as was the case with FFP, are often enacted in a broadly consensual way, with engagement, input and consent from key stakeholders, should be acknowledged and some due reverence should be paid to governing bodies' ability to regulate the sporting aspects under their aegis.

Indeed, the European Union had no express competence to in respect of sport until the introduction of Article 165 TFEU, a soft competency, which states that, “The Union shall contribute to the promotion of European sporting issues, while taking account of the specific nature of sport, its structures based on voluntary activity and its social and educational function.”

However, the distinction between elite football as being ‘purely sport’ and elite football as a business has become blurred in to the point of being indistinguishable; and the EU clearly has express competence to deal with business.

The general trend in decisions of the European courts has been to circumscribe self-determination by the governing bodies of sport. Through cases such as Bosman,^[9] Meca-Medina, and Bernard,^[10] the European courts have made it clear that sport cannot avoid or cherry-pick the applicability of EU law. This is acutely relevant in the case of FFP, which, after all, deals with how football clubs are run financially. There are obvious sporting consequences to this, but it is difficult to characterise FFP as anything other than a rule restrictive of the business of sport.

UEFA’s position on Article 165 is that “while sport is not ‘above the law’, there is now a provision in the Treaty itself recognising that sport cannot simply be treated as another ‘business’, without reference to its specific characteristics”. This is not an unreasonable position; sport is a unique industry in which, unlike other industries, the survival of competitors is important for any given club to flourish. Perhaps the courts could be persuaded that a carve-out based on specificity should be applicable to FFP – but this would require a seismic change of direction.

So it is incredibly unlikely that specificity as a discrete sui generis doctrine would give sanctuary to FFP were the rules deemed to be otherwise in breach of EU law. However, facts peculiar to the football industry (i.e. its specificity) should be considered as part of an assessment as to whether FFP is a proportionate mechanism to pursue UEFA’s objectives. As noted above, proportionality is a limb of the tests for derogations to EU competition and fundamental freedom law.

I have previously commented that: 

For football clubs, there is a strong correlational link between spending money and playing success. This has encouraged clubs to risk financial vulnerability in pursuit of improved match results, despite the mathematical impossibility of all clubs being able to improve their fortunes on the field. This innate instability has resulted in persistent insolvencies despite the remarkable growth in turnover seen in the professional game. Regrettably, when balance sheets weaken, the risk of insolvency increases; and once a club becomes insolvent, its survival is subject to the predilections of its creditors. The game’s governing bodies should aim to militate against…this volatility.

UEFA would doubtless argue that, given the specific nature of the industry it regulates, instituting a soft salary cap such as that implemented by FFP is a proportionate response. In that sense at least, the specificity of sport might be of consideration in the legality of FFP.

Conclusion 

It is difficult to say with any degree of conclusiveness whether FFP is legal or not. There are strong arguments either way. The marginal nature of the legal position has been problematic for UEFA and has undoubtedly led to the legal challenges to FFP over the last five years, which are discussed in greater depth in Part Two of this series.

The uncertain legal position, and the challenges generated by that lack of clarity has also, in all likelihood, shaped UEFA’s policy decisions as FFP has evolved in the years since its inception. These are discussed in Part Three of this series.

FFP has certainly been fertile ground for debate, and will likely continue to be so until such a time as there has been a determinative, binding view of its legality. When or whether this will happen remains to be seen.

^[1] Annex X, Club Licensing and Financial Fair Play Regulations, Edition 2012.

^[2] Ibid.

^[3] Thomas Peeters and Stefan Szymanski , 'Financial Fair Play in European Football ' [2014] 29(78) Economic Policy 343-390

^[4] See, for example, Serby, T. (2016) The state of EU sports law: lessons from UEFA’s ‘Financial Fair Play’ regulations, International Sports Law Journal 16(1–2):37–51; Flanagan, C (2013) A tricky European fixture: an assessment of UEFA’s Financial Fair Play regulations and their compatibility with EU law, International Sports Law Journal 13(1):148; Lindholm, J (2010) The Problem with Salary Caps Under European Union Law: The Case Against Financial Fair Play, Texas Review of Entertainment and Sports Law, Vol. 12.2, pp. 189-213

^[5] Noting that UEFA certainly constitute an association of undertakings in the relevant legal sense, see for example Case T-193/02 Piau (2005) ECR I-209, (2005) 5 CMLR 42 or EU Commission decision 2003/778/EC, 23 July 2003, Case COMP C.2-37.398 - Joint selling of the commercial rights of the UEFA Champions League §§ 106-107

^[6] As identified and defined by Whish and Bailey in Competition Law (OUP, 8th)

^[7] Case C-176/96, Jyri Lehtonen and Castors Canada Dry Namur- Braine ASBL v Fédération Royale Belge des Sociétés de Basketball ASBL (FRBSB) ECR (2000) I-2681

^[8] Flanagan, C (2013) A tricky European fixture: an assessment of UEFA’s Financial Fair Play regulations and their compatibility with EU law, International Sports Law Journal 13(1).

^[9] Case C-415/93 Union Royale Belge des Socie ́te ́s de Football Association ASBL v Jean-Marc Bosman (1995) ECR I-4921.

^[10] C-325/08 Olympique Lyonnais v Olivier Bernard and Newcastle United FC (2010) ECLI:EU:C:2010:143.

The year is coming to an end and it has been a relatively busy one for the CAS Ad Hoc divisions. Indeed, the Ad Hoc division was, as usual now since the Olympic Games in Atlanta in 1996[1], settling  “Olympic” disputes during the Winter Olympics in Sochi. However, it was also, and this is a novelty, present at the Asian Games 2014 in Incheon.  Both divisions have had to deal with seven (published) cases in total (four in Sochi and three in Incheon). The early commentaries available on the web (here, here and there), have been relatively unmoved by this year’s case law. Was it then simply ‘business as usual’, or is there more to learn from the 2014 Ad Hoc awards? Two different dimensions of the 2014 decisions by the Ad Hoc Division seem relevant to elaborate on : the jurisdiction quandary (part. 1) and the selection drama (part. 2).

Part. 1: The Jurisdiction quandary: Too early to be judged!

The scope of jurisdiction of the Ad Hoc Division of CAS is provided for in article 1 of the ‘Arbitration Rules for the Olympic Games’ (the same is true for the Asian Games)[2]. However, legal uncertainties over this scope of jurisdiction remain a defining feature. Many earlier disputes in front of the Ad Hoc division have tackled this question, and this has been true again this year.[3]

It is not so much the scope rationae personae that might be problematic, although one case arose at the Asian games in which two former squash players were denied access to the Ad Hoc division on the basis of not being “participating athletes”.[4] Nor is it the rationae materiae that has been a real problem, as claimants tend to submit disputes, which are related to the Games. No, the problem child is usually the jurisdiction rationae temporis. Indeed, article 1 of the rules states that “any disputes covered by Rule 61 of the Olympic Charter, insofar as they arise during the Olympic Games or during a period of ten days preceding the Opening Ceremony of the Olympic Games” can be subjected to the jurisdiction of the Ad Hoc Division. So the key question is: When does a dispute “arise”? 

In the Birkner case[5], the Ad Hoc Division in Sochi had to grapple extensively with the question of when the dispute arose as, during the hearing, the respondent, Comitato Olympico Argentino, “denied the existence of a basis of jurisdiction of the panel”. The case concerned a selection drama for the Sochi Games (see part 2); jurisdiction rationae personae and rationae materiae were unproblematic. The CAS did examine whether the local remedies were exhausted, and considered that “that there were no internal remedies to exhaust”.[6] The only barrier left for jurisdiction to be asserted was the ratione temporis. In short, “did the dispute arise in the required time frame?”[7]

This “vexing issue” [8] was touched upon repeatedly in past Ad Hoc division awards.[9] In the Birkner case, it had to be demonstrated that the dispute arose not earlier than the 28 January 2014, 10 days before the opening ceremony scheduled for the 7 February 2014. The panel first reaffirmed the fact that “the date when the dispute arose cannot, per se, be the date when the Request for Arbitration is filed” .[10]  So, back to the key question, when did the dispute arise?

The award refers extensively to the Schuler case[11]. In its main holding on jurisdiction, the 2006 panel considered that “it would not be possible to say that a dispute had arisen until Ms Schuler had decided to appeal and had filed notice of her appeal”.[12] Nevertheless, the 2014 panel refused to consider the Schuler precedent to be applicable to the Birkner case for two reasons: the factual situation is different and the reasoning used in Schuler is fundamentally flawed.

On the factual side, contrary to the Schuler case, the panel finds that “[i]n the present case […] the explanation was not given on a date inside the required period, as it was either on 20 January 2014, which is the date of the letter of explanation, or on 22 January 2014, which is the date on which the Applicant says that she received that letter”.[13] Both of these dates being well before the 10 days period, the panel is of the opinion that it lacks jurisdiction. On the legal side, the panel is clearly not “convinced by the legal reasoning adopted in the Schuler case” .[14] In fact, it considers that “[s]uch conclusion could extend the jurisdiction of the ad hoc Division outside the precise and limited framework set by the Rules, which this Panel is required to respect and apply” [15]. The panel is of the opinion that “the date when a dispute arises is in general […] the date of the decision with which the Applicant disagrees” .[16] However, “[s]uch a date can arise later […] if […] the decision is not self-explanatory and requires some explanation in order for the parties to know with certainty that they are in disagreement”.[17]

This is a noteworthy consideration, which indicates a substantial reduction of the scope of jurisdiction of the CAS Ad Hoc Division. If the parties do not agree to the jurisdiction of CAS (in practice they often do not contest the jurisdiction[18]) it will render more difficult the referral of a dispute to the Ad Hoc Division. This understanding of the start of a dispute is contradicting the overall aim of the Ad Hoc Division, which is to deal swiftly with all disputes intimately linked to the Games. In this light, a more flexible interpretation of the jurisdiction rationae temporis, as suggested in the Schuler case, is preferable. Athletes are no legal experts; they (and sometimes their lawyers) need time to find their way through the jungle of sporting regulations and dispute resolution mechanisms potentially applicable. The crucial importance of the Olympic Games for an athlete’s career call for an interpretation of the start of the dispute that focuses on the intention to challenge the decision as highlighted in the Schuler award[19]. Moreover, any doubts concerning the starting date of the dispute should play in favour of the athlete, unless the time between the date of notification of the contentious decision and the decision to lodge a complaint in front of CAS is disproportionately (and abusively) long. The attack by the Birkner panel on the reasoning adopted in Schuler is no anodyne move; in the future it may threaten the access to justice of athletes and their ability to obtain a swift and fair decision, in a context where they most urgently need it.

[1] On the early days of the CAS Ad Hoc Division at the Olympics, the book by Gabrielle Kaufmann-Kohler is a must read : G. Kaufmann-Kohler, Arbitration at the Olympics, Kluwer Law, 2001.

[2] Article 1 of the Arbitration Rules for the OG stipulates that:

“The purpose of the present Rules is to provide, in the interests of the athletes and of sport, for the resolution by arbitration of any disputes covered by Rule 61 of the Olympic Charter, insofar as they arise during the Olympic Games or during a period of ten days preceding the Opening Ceremony of the Olympic Games.”

“In the case of a request for arbitration against a decision pronounced by the IOC, an NOC, an International Federation or an Organising Committee for the Olympic Games, the claimant must, before filing such request, have exhausted all the internal remedies available to him/her pursuant to the statutes or regulations of the sports body concerned, unless the time needed to exhaust the internal remedies would make the appeal to the CAS Ad Hoc Division ineffective.”

[3] CAS OG 14/03; CAS AG 14/01; CAS AG 14/02.

[4] See CAS AG 14/01, §2.5. See also CAS OG 12/03, §2.3.

[5] CAS OG 14/03

[6] CAS OG 14/03, §5.14

[7] CAS OG 14/03, §5.17-5-30

[8] CAS OG 14/03, §5.20

[9] Most notably in the Schuler case, CAS OG 06/002. For a general commentary see: I.S.LR. 2006 pp.50-51 and A. Rigozzi, ‘The decisions rendered by the CAS Ad Hoc Division at the Turin Winter Olympic Games 2006’, Journal of International Arbitration 23 (5): 453-466, 2006

[10] CAS OG 14/03, §5.21

[11] CAS OG 14/03, §5.24

[12] CAS OG 06/002, §14

[13] CAS OG 14/03, §5.25

[14] CAS OG 14/03, §5.25

[15] CAS OG 14/03, §5.27

[16] CAS OG 14/03, §5.28

[17] CAS OG 14/03, §5.28

[18] See for example CAS OG 14/01 §6.2 and CAS OG 14/02 §6.5

[19] In cases, in which the dispute overtly arose earlier than 10 days before the games such a restrictive interpretation could be tolerated. See for example: CAS OG 12/03, §2.3.23; CAS OG 12/02, §4.10; CAS OG 12/04, §5.2.