Rumours are swirling around the
decision (available in French here) of the Court of Appeal of Brussels in the
case opposing RFC Seraing United to FIFA (as well as UEFA and the Belgian
Football Federation, URSBFA) over the latter’s ban on third-party ownership.
The headlines in various media are quite dramatic (see here and here), references are made to a new Bosman, or to a shaken sport’s legal system. Yet, after swiftly reading the
decision for the first time on 29th August, I did not have, unlike with the Pechstein
ruling of the Oberlandesgericht München, the immediate impression that this
would be a major game-changer for the Court of Arbitration for Sport (CAS) and
the role of arbitration in sports in general. After careful re-reading, I
understand how certain parts of the ruling can be misunderstood or
over-interpreted. I believe that much of the press coverage failed to accurately
reflect the reasoning of the court and to capture the real impact of the
decision. In order to explain why, I decided to write a short Q&A
(including the (not water-proof) English translations of some of the key
paragraphs of the decision).
1.
What is the case about?
RFC Seraing United (hereinafter
Seraing) has, since the adoption of FIFA’s ban on third-party ownership, been
at the forefront of a legal crusade against the ban (as I have explained on this blog I personally believe the ban is
legitimate and compatible with EU law). The club has fought the ban tooth and
nail at the CAS (the award is here) and later at the Swiss Federal Tribunal (the
translation of the ruling is available here), in both instances unsuccessfully. It is now
challenging before the Belgian courts the sanctions that were imposed by FIFA, confirmed
by the CAS award, and enforced by the URSBFA. For this protracted and expensive
legal campaign, RFC Seraing enjoys the backing of Doyen, the infamous
investment firm at the centre of the football leaks scandal. The
29th August decision is the last episode in this saga and the first that has
been widely portrayed as a big win for RFC Seraing.
2.
What are the findings of the decision?
So, why is it widely reported as a
win for Seraing? This is because the Court of Appeal considered itself
competent to hear the case and disregarded the objections (in particular the
claim that a valid CAS arbitration clause existed) raised by FIFA, UEFA and the
URSBFA regarding its jurisdiction. However, the Court also refused to send a
request for a preliminary ruling to the Court of Justice of the European Union, a
long-standing demand of Seraing’s lawyers.
3.
Why did the Belgium court find that the CAS arbitration clause invoked
by FIFA & Co is invalid?
The core of the reasoning (found at
§13 to §15 of the decision) on the validity of the CAS arbitration clause included
in FIFA’s statutes turns on whether it aims at a « defined legal
relationship », a prerequisite for the validity of arbitration clauses
under Belgium law and the New York Convention. In laymen terms: if the clause
is too general and does not provide a clear definition of the scope of disputes
it covers, then it is invalid. Unlike reported in many outlets, the focus is
not directly on the free consent to CAS arbitration, and the Court of Appeal
does not declare the clause contrary to EU law or the ECHR on this basis, but
on the vague nature of the CAS arbitration clause enshrined in the FIFA
Statutes and its incompatibility with Belgian law.
In the case of Seraing, the clause invoked
by FIFA was by reference, meaning that the reference of Seraing’s statutes to its
compliance with the statutes of FIFA (at the time of initiating the proceedings
the 2015
FIFA Statutes), which include an arbitration clause, was supposed to
constitute a valid agreement to arbitrate the present dispute. Yet, as the
Court of Appeal points out, the FIFA statutes are rather vague with regard to
the nature of the disputes that are to be arbitrated. In fact, article 66.1
FIFA Statutes (2015 edition) provides simply that « FIFA recognises
the independent Court of Arbitration for Sport (CAS) with headquarters in
Lausanne (Switzerland) to resolve disputes between FIFA, Members,
Confederations, Leagues, Clubs, Players, Officials, intermediaries and licensed
match agents ». Moreover,
the Court of Appeal also refers to article 59.1 and 2 FIFA Statutes (presumably
this time 2018 edition) that does not allow recourse to national courts unless
provided by FIFA rules. It concludes that based on these provisions, « the
submission to arbitration is provided in general for all disputes between
certain parties, including FIFA, UEFA, URBSFA and football clubs (including RFC
Seraing), but without any precisions or indications with regard to the legal
relationship affected ». Hence, « the intention of the drafters of
this clause is clearly to capture all types of disputes between the designated
parties, turning it into a general clause, which cannot be found applicable as
it does not constitute an arbitration clause recognised under Belgian law ».
FIFA
submitted that the type of disputes governed by the arbitration clause were necessarily
limited to the social objective of FIFA and that the CAS’s competence was
limited to « sporting » disputes. But the Court of Appeal countered
that the former limit remains too vague to find that the clause targets a
« defined legal relationship ». It further deemed that the restriction
to « sporting » disputes was not included in the clause and that the
CAS could independently decide to amend the scope of the disputes that fall
under its competences. It also rejected the view of the URBFSA that the clause
was limited to disputes concerning « the statutes, regulations, directives
and decisions of the URBFSA, FIFA and UEFA ». And, it refused to consider
that the article 38.2. of Seraing’s statutes, providing that « [E]very
arbitral dispute with a foreign dimension, susceptible of being subjected to
the international bodies of FIFA and concerning the statutes, regulations,
directives of FIFA, will be submitted to its internal arbitral bodies », constitutes
a valid CAS arbitration clause as it refers to FIFA’s internal arbitral bodies
(even though no such arbitral bodies exist in practice).
A flurry of other less convincing
arguments raised by the defendants were also dismissed by the Court, which came
to the conclusion that the clause invoked did not aim at a defined legal
relationship and could therefore not be considered an arbitration clause in the
sense of articles 1681 and 1682, §1 of the Judicial Code. There is, however, no
indication that the Court of Appeal fundamentally objects to FIFA, UEFA or the
URSBFA imposing that certain
disputes be dealt with by the CAS. Crucially, the emphasis is on certain: what the Belgian court
criticized is the general all-inclusive wording of the current FIFA Statutes.
4.
What are the immediate consequences of this invalidity for FIFA and the
CAS?
For Seraing, the consequences are
vital, any other finding would have put an abrupt end to its case before the
Belgian court. Now, it will have the right to argue its case in front of the
Court of Appeal in October, and this is a victory in itself. Yet, beyond
Seraing, the systemic effects are in my view far less far-reaching than highlighted
in the media. FIFA was never immune from challenges by clubs (and other
football stakeholders). It was, for example, repeatedly attacked in front of
the European Commission on competition law grounds. Moreover, clubs, such as
the SV Wilhelmshaven, were already
challenging the implementation of CAS awards confirming FIFA sanctions in
national courts. In this regard, there is nothing new under the sun. Finally,
the Court of Appeal has not excluded that it would accept a reformulated CAS
arbitration clause with a better-defined scope (such as one that would narrow
it down only to disputes arising out of the regulations and decisions of FIFA).
In practice, not much should change
with the Seraing ruling. FIFA will continue to hand out its decisions
sanctioning clubs circumventing its rules. The Swiss courts, which are under
the Lugano
Convention primarily competent to hear challenges to the decisions of a
Swiss association, will continue to enforce the CAS arbitration clauses by
reference as they have always done, and clubs will, therefore, continue to have
to go through CAS arbitration (or they will have to wait to be sanctioned by
their national associations to initiate proceedings in front of national
courts). Furthermore, from a strategic point of view, few clubs (unless they
are desperate like SV Wilhelmshaven and/or backed by an external funder such as
Seraing) will be interested in starting a multi-year litigation odyssey in
national courts to challenge FIFA (or any other sports governing body, SGB).
The same is true for athletes (let’s remind that Claudia Pechstein is bankrupt
and still far from having won her case). Doing otherwise would mean being
ostracized from professional football for many years, something very few clubs
(and athletes) can afford. Thus, while the Seraing judgment confirms that going
to national courts is an option that is available to clubs challenging FIFA, it
does not affect the general governance context of global football (and sports
in general) that remains extremely unfavorable to litigation in national
courts. Challenging FIFA in national courts was never out of question, it was
(and remains) just very costly and very unlikely to succeed, and Seraing has
changed this state of affairs only at the margin.
5.
Why do I think Pechstein is more important than Seraing?
As pointed out, the Seraing case might
encourage a re-writing of FIFA’s statutes and reminded us that CAS arbitration
clauses cannot cover any and every dispute that can arise between SGBs and
clubs (or athletes), but it stops there and does not challenge the
institutional structure of the CAS, nor its centrality in the global governance
of sport. The Pechstein ruling of the OLG München was more interesting in this
regard, as it was addressing the core institutional problems of the CAS. These are
not related to the voluntary nature of CAS arbitration (I personally think there are
good reasons to bind athletes and clubs to CAS arbitration even against their
will). Instead, the critical focus should be on CAS’s structure as a
judicial institution that is not legitimated like any other arbitral tribunal
by autonomous free consent, but by public interests (e.g. the neutral
governance of global sports, the worldwide fight against doping or the
regulation of the transnational labour market in football). Thus, CAS’s
function and legitimacy must lie primarily in its role as an independent
counter-power to the transnational private authority exercised by SGBs. It is,
therefore, crucial that its independence from the SGBs be submitted to more
stringent control than it currently is (see our paper
with Ben Van Rompuy on this question). The OLG München recognized it in its
Pechstein ruling, but the BGH failed
to appreciate this profoundly constitutional question and the importance of at
the same time saving forced CAS arbitration and challenging the current set-up
of the CAS. The Pechstein case is now pending at the German Constitutional Court
and should be decided relatively soon (but the German press recently reported
that there is still no date for a hearing). The fact that the Constitutional Court
has accepted
to take the case on its docket is already a sign of its skepticism towards the
BGH’s decision. If we want to see a ground-breaking, earth-shattering,
revolutionizing new Bosman we better
turn our heads towards Karlsruhe, the winds of change in sport justice might come
from there...