This is a follow-up contribution to my previous blog on human rights implications of the Olympic Games published last week. Together with highlighting some of the most serious Olympic Games-related human rights abuses, the first part has outlined the key elements of the Host City Contract ('HCC') as one of the main legal instruments regulating the execution of the Olympic Games. It has also indicated that, in February 2017, the International Olympic Committee ('IOC') revised the 2024 HCC to include, inter alia, explicit human rights obligations. Without questioning the potential significance of inserting human rights obligations to the 2024 HCC, this second part will refer to a number of outstanding issues requiring clarification in order to ensure that these newly-added human rights obligations are translated from paper to actual practice.

Implementation of Agenda 2020 into the HCC 

In December 2014, the IOC Session unanimously approved Olympic Agenda 2020 ('Agenda 2020'), a set of 40 recommendations intended to protect the uniqueness of the Games and strengthen Olympic values in society. Agenda 2020 makes five specific recommendations with respect to the HCC which should have been taken into account as of the 2022 HCC concluded between the IOC on the one hand and the City of Beijing and the Chinese Olympic Committee on the other hand.[1]

Most importantly, Agenda 2020 encourages the IOC to include in the HCC clauses reflecting the prohibition of discrimination as well as the protection of environmental and labour-related rights.[2] Fundamental Principle 6 of the Olympic Charter, now also reflected in Article 13.2. (a) of the 2024 HCC, reads as follows: ''The enjoyment of the rights and freedoms set forth in this Olympic Charter shall be secured without discrimination of any kind, such as race, colour, sex, sexual orientation, language, religion, political or other opinion, national or social origin, property, birth or other status.'' Non-discrimination on the basis of sexual orientation had been absent from the Olympic Charter prior to Agenda 2020. As far as environmental and labour-related matters are concerned, the Host City, the Host National Olympic Committee ('Host NOC') and the Organising Committee of the Olympic Games ('OCOG') are obliged under the 2024 HCC to ''ensure that their activities in relation to the organisation of the Olympic Games comply with any international agreements, laws and regulations applicable in the Host Country, with regard to planning, construction, protection of the environment, health and safety, labour and working conditions and cultural heritage''.[3] For the first time, the 2024 HCC also makes a specific reference to the United Nations' Sustainable Development Goals.[4]

In addition to promoting non-discrimination, environmental protection and labour-related rights, Agenda 2020 also fosters transparency by demanding the IOC to: (i) make the HCC public; (ii) disclose details of the IOC's financial contribution to the OCOG; and (iii) provide the HCC at the outset of a bidding procedure.[5] Moreover, Agenda 2020 suggests that entities other than the Host City and the Host NOC may become signatories to the HCC in line with the local context.[6]

What exactly has been added to the 2024 HCC?

As indicated above, the prohibition of discrimination,[7] and to a certain extent also the protection of labour-related rights,[8] appeared for the first time in the 2022 HCC, reflecting the recommendations laid down in Agenda 2020.[9] Moving to the 2024 HCC, the core human rights provision inserted therein demands that the Host City, the Host NOC and the OCOG in their activities related to the execution of the Games ''protect and respect human rights and ensure any violation of human rights is remedied in a manner consistent with international agreements, laws and regulations applicable in the Host Country and in a manner consistent with all internationally-recognized human rights standards and principles, including the United Nations Guiding Principles on Business and Human Rights, applicable in the Host Country''.[10] Of particular importance is the explicit reference to the United Nations Guiding Principles on Business and Human Rights ('UN Guiding Principles'), a non-binding legal framework intended to minimize adverse human rights impacts triggered by business activities. The UN Guiding Principles are based on three pillars, namely (i) the State duty to protect human rights; (ii) the corporate responsibility to respect human rights; and (iii) access to remedy.

The following sections will address some of the issues that remain outstanding even after the insertion of human rights obligations to the 2024 HCC.

No direct involvement of the Host Country

First and foremost, the Host Country itself is not directly obliged to protect and respect human rights under the 2024 HCC. Instead, the provision discussed above imposes human rights obligations on the Host City, the Host NOC and the OCOG. It is critical to note that the relevant provision requires the Host City, the Host NOC and the OCOG not only to respect, but also to protect human rights, suggesting that these entities shall take positive actions to facilitate the enjoyment of human rights. This begs the question whether the Host City, the Host NOC and the OCOG have the political, legal and financial capacity to effectively take such positive actions.

For instance, the Host City and the OCOG would be expected to include human rights obligations in their contracts with suppliers of public infrastructure and sporting facilities. However, even if they do so under the threat of contract's termination and further sanctions, it may not suffice to prevent Olympic Games-related human rights abuses from occurring. Unlike the Host Country Authorities, the Host City, the Host NOC and the OCOG do not possess the necessary powers to monitor and adjudicate the human rights compliance of their sub-contractors. Furthermore, much of the infrastructure build-up might be conducted by the Host Country directly and would therefore evade the scope of application of the HCC.

Who determines when human rights obligations are violated? 

In practice, human rights obligations arising out of a contractual relationship are not easy to deal with, because it might be rather difficult to decide whether they have been observed or not. For this reason, it is essential to entrust an independent body with competence to decide whether the Host City, the Host NOC or the OCOG have complied with their human rights obligations under the HCC. Unfortunately, the 2024 HCC in its current form does not stipulate who is responsible for adopting a decision determining that the Host City, the Host NOC and the OCOG are in breach of their human rights obligations. 

It follows that the IOC itself (via the Coordination or Legal Affairs Commission) may take on this inquisitorial and quasi-judicial role. However, this would lead a very interested party to monitor and adjudicate the human rights compliance of the Host City, the Host NOC and the OCOG. The potential for a conflict of interests is evident, as the IOC could face negative financial and other consequences if it decides to withdraw the Games from the Host City, the Host NOC and the OCOG. In this configuration, the incentives will therefore be strongly opposed to finding for a lack of compliance.

Instead, we could imagine a separate, truly independent body consisting of NGO members, athletes' representatives, union representatives, CAS arbitrators and independent experts (such as academics or judges at the European Court of Human Rights). This body could have an investigative and an adjudicative chamber (not unlike the FIFA Independent Ethics Committee), ensuring a separation between monitoring and adjudicating. Should the Host City, the Host NOC or the OCOG consider sanctions imposed under such a mechanism arbitrary, they might still activate the CAS arbitration clause[11] and challenge the validity of these sanctions before the CAS.

Will the sanctions contemplated by the HCC be effective? 

As explained in the first part of this blog, the most severe sanction contemplated by the HCC in the event of non-compliance is the withdrawal of the Games from the Host City, the Host NOC and the OCOG with prior notice.[12] It should be emphasized, however, that a removal of the Games would result in both financial and reputational harm being incurred by the IOC.[13] Therefore, it is arguable whether the IOC would in practice be ready to withdraw the Games. In fact, the IOC has withdrawn the Games so far only due to the outbreak of the First and Second World War, when the Games were cancelled altogether.[14] Being aware of the IOC's unwillingness to withdraw the Games, the Host City, the Host NOC and the OCOG may not perceive the threat of losing the Games as credible. Consequently, these entities may not feel obliged to adhere to their human rights obligations under the HCC.

With regard to other enforcement measures, the IOC is entitled, inter alia, to retain all amounts held in the General Retention Fund[15] or withhold any payment due, or grant to be made to the OCOG pursuant to the HCC.[16] By not providing the relevant financial contribution to the OCOG, the IOC would risk delays in construction and other preparatory works – something the IOC certainly wants to avoid. Eventually, these sanctions might prove to be as inefficient as the threat of losing the Games, given that the IOC may turn a blind eye to violations of the HCC in order to safeguard its financial and other interests. Besides financial considerations, the IOC's reluctance to impose sanctions on the Host City, the Host NOC and the OCOG follows from the fact that the IOC would thereby implicitly acknowledge its mistaken decision to award the Games to a particular Host City in the first place.

Conclusion

This blog has identified three specific concerns potentially relativizing the impact of the human rights obligations recently added to the 2024 HCC. First, the Host City, the Host NOC and the OCOG as the formal addresses of these obligations may not have the capacity to ensure the human rights compliance of their sub-contractors. Second, the 2024 HCC in its current form lacks clarity as to when the Host City, the Host NOC and the OCOG are in breach of their human rights obligations and who is responsible for adopting a decision to that effect. Third, being aware of the IOC's unwillingness to withdraw the Games due to financial and other interests involved, it is likely that the Host City, the Host NOC and the OCOG might refuse to abide by their human rights obligations under the HCC. This is not to say, however, that introducing human rights requirements is not an important step forward, but as always with this type of decisions the devil will be in the implementation.

[1]    The 2022 HCC was executed in Kuala Lumpur on 31 July 2015.

[2]    Agenda 2020; Recommendation 1.5.

[3]    2024 Host City Contract – Principles; Article 15.2. (b).

[4]    Ibid., Article 15.1.

[5]    Agenda 2020; Recommendations 1.6., 1.7., 1.10.

[6]    Ibid., Recommendation 1.9.

[7]    2022 Host City Contract; Preamble (L.).

[8]    Ibid., Article 21.

[9]    Agenda 2020; Recommendation 1.5.

[10]   2024 Host City Contract – Principles; Article 13.2. (b).

[11]   Ibid., Article 51.2.

[12]   Ibid., Articles 38.2., 38.3.

[13]   R. Gauthier, The International Olympic Committee, Law and Accountability, Routledge, 2017, at 144-145.

[14]   Ibid., at 144.

[15]   According to Article 8.2. (d) of the 2024 HCC, the General Retention Fund represents a percentage (5 %) of ''any sums of money or equivalent value-in-kind payable to the OCOG in relation to the International Programme''. It is maintained and controlled by the IOC.

[16]   2024 Host City Contract – Principles; Article 36.2. (a), (b).

Day 1: FIFA must regulate TPO, not ban it.
Day 2: Third-party entitlement to shares of transfer fees: problems and solutions
Day 3: The Impact of the TPO Ban on South American Football.
Day 4: Third Party Investment from a UK Perspective.
Day 5: Why FIFA's TPO ban is justified.

On 22 December 2014, FIFA officially introduced an amendment to its Regulations on the Status and Transfers of Players banning third-party ownership of players’ economic rights (TPO) in football. This decision to put a definitive end to the use of TPO in football is controversial, especially in countries where TPO is a mainstream financing mechanism for clubs, and has led the Portuguese and Spanish football leagues to launch a complaint in front of the European Commission, asking it to find the FIFA ban contrary to EU competition law.

Next week, we will feature a Blog Symposium discussing the FIFA TPO ban and its compatibility with EU competition law. We are proud and honoured to welcome contributions from both the complainant (the Spanish football league, La Liga) and the defendant (FIFA) and three renowned experts on TPO matters: Daniel Geey ( Competition lawyer at Fieldfisher, aka @FootballLaw), Ariel Reck (lawyer at Reck Sports law in Argentina, aka @arielreck) and Raffaele Poli (Social scientist and head of the CIES Football Observatory). The contributions will focus on different aspects of the functioning of TPO and on the impact and consequences of the ban.

Before the five blogs (starting with the complainant, La Liga, on Tuesday) will be published next week on a daily basis, we have the pleasure to kick off today with a light introduction to TPO. At the end of next week we will synthesise the debate and provide our preliminary take on the ban’s compatibility with EU law.

With this exciting Blog Symposium on one of the hottest sports law topics, we celebrate the first anniversary of the ASSER International Sports Law Blog (last year’s opening blog is here). We hope you will enjoy the read and feel free to comment! 

What is TPO? 

The use of the notion of TPO is often criticized because it misrepresents the situation it purposes to qualify. Indeed, no third-party owns a player, but only a share of the “economic right” linked to the transfer of the player’s “federative right”[1]. This is why, as you will see later next week, some of our authors refuse to use the term and have opted for alternative concepts, such as TPE (third-party entitlements) or TPI (third-party investment). Due to our legal obsession with the written word, we will personally hold onto TPO as it is the notion enshrined in FIFA’s regulations.

Beyond this semantic debate, a plurality of contractual constellations is captured under the umbrella term TPO. What is common to all cases is that a company or an individual provides a football club or a player with money in return for being entitled to a share of a player’s future transfer value. Thus, TPO is enshrined in a separate private law contract between a third-party and a club or a player. The plurality of TPO situations derives from this contractual basis. The parties are free under national private law to creatively draft those contracts as they see fit, each one of them being a specific type of TPO in itself. 

The main aim of the practice is to finance clubs. Often TPO is used to externalise the costs of recruiting a player, sometimes it is used to finance the general functioning of a club. However, the use of TPO is always intimately connected to the drive of professional clubs to diversify their funding sources in order to leverage their competitiveness in national and international competitions. Nowadays, a club like Atletico Madrid would probably not have been able to reach the final of the Champions League or win La Liga without having widespread recourse to it.

What are the problems with TPO?

We do not want to spoil too much of next week’s discussion, but we need to at least mention the possible problems that have been linked with the use of TPO and that might serve as a potential justification for banning it. TPO is first and foremost seen as an intrusion of a third-party in the life of a football club and a player with the potential for an illegitimate influence on the management of the team and the player’s career. The many conflicts of interest that might arise in the shadow of multiple, sometimes contradictory, investments are particularly feared. TPO is also seen as a dubious financing technique used to circumvent the new UEFA Financial Fair Play regulations and to prop up clubs that are chronically in financial troubles. Finally, there is a moral dimension. For example, UEFA president Michel Platini likened TPO to a type of modern “slavery”. In short, should it be acceptable for someone to own a share of an economic right personally attached to a player? Can a player be forced-sold on the basis of a TPO agreement? All these issues will be discussed extensively next week; they are central to the evaluation of the ban’s compatibility with EU competition law. 

Regulating TPO or banning it? That is the question!

TPO has been banned for some time in England, France and Poland, while it was authorized in the rest of the World. The English FA, profoundly traumatized by the Carlos Tévez case, decided to ban the practice as early as 2008. In other countries, particularly Spain, Portugal and South America, TPO has been, and still is, part of the “football culture”. For example, it is estimated that in Brazil’s top division 90% of the players are subjected to a TPO agreement. In these countries TPO is seen as a necessity for national football clubs - not only to compete with clubs in richer countries, but also for professional football to be financially viable. It was no surprise that the leagues and clubs of the abovementioned countries were against a blanket ban of TPO and would rather see it being regulated. They consistently expressed this opposition during the FIFA Congress in June 2014 and the working groups created by FIFA in September 2014 with the aim of tackling the issue. Nonetheless, on 26 September the FIFA executive committee took the decision to ban third-party ownership of players’ economic rights (TPO) with a short transitional period. Following this announcement, the FIFA circular fleshing out the legal details of the ban was published on 22 December. Article 18bis of the Regulations on the Status and Transfers of Players was amended and the Regulations now include a new Article 18ter.[2] These new articles came into force on 1 January 2015 and, after a transition period, TPO will officially be banned as of 1 May 2015.

This total ban raises many practical and legal questions. What is to become of the already signed TPO agreements? Will the ban be fully enforced? Or, will creative schemes arise to circumvent it? Was there a less restricting alternative to attain its objective? And…is it compatible with EU competition law? 

The debate is open!

[1] The legal construction underlying TPO is clearly explained (unfortunately only in Italian) by Leandro Cantamessa in his article, ‘Un Tema Semi-Nuovo di Diritto Sportivo Internazionale: la Third Party Ownership (TPO)’, in L’Europa e lo sport (a cura di) S. Bastianon, G. Giappichelli Editore, 2014, pp.123-134.

[2] Article 18bis(1) will now read : “No club shall enter into a contract which enables the counter club/counter clubs, and vice versa, or any third party to acquire the ability to influence in employment and transfer-related matter its independence, its policies or the performance of its teams.”

Article 18ter:

1.      No club or player shall enter into an agreement with a third party whereby a third party is being entitled to participate, either in full or in part, in compensation payable in relation to the future transfer of a player from one club to another, or is being assigned any rights in relation to a future transfer or transfer compensation.

2.      The interdiction as per paragraph 1 comes into force on 1 May 2015.

3.      Agreements covered by paragraph 1 which predate 1 May 2015 may continue to be in place until their contractual expiration. However, their duration may not be extended.

4.      The validity of any agreement covered by paragraph 1 signed between 1 January 2015 and 30 April 2015 may not have a contractual duration of more than 1 year beyond the effective date.

5.      By the end of April 2015, all existing agreements covered by paragraph 1 need to be recorded within the Transfer Matching System (TMS). All clubs that have signed such agreements are required to upload them in their entirety, including possible annexes or amendments, in TMS, specifying the details of the third party concerned, the full name of the player as well as the duration of the agreement.

6.      The FIFA Disciplinary Committee may impose disciplinary measures on clubs or players that do not observe the obligations set out in this article.