Asser International Sports Law Blog

Our International Sports Law Diary
The Asser International Sports Law Centre is part of the T.M.C. Asser Instituut

International and European Sports Law – Monthly Report – June 2016. By Kester Mekenkamp

Editor’s note: This report compiles all relevant news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. You are invited to complete this survey via the comments section below, feel free to add links to important cases, documents and articles we might have overlooked.   


The headlines

What a month June turned out to be. Waking up the morning after the 23rd, the results of the UK referendum on EU membership were final. The words of Mark Twain: “Apparently there is nothing that cannot happen today”, might provide the most apt description of the mood felt at the time.[1] The Leave campaign’s narrow victory has brought along tremendous economic, political and legal uncertainties for both the UK and the (other) Member States. To give but one example, with regard to the implications of Brexit on Europe’s most profiting football league, we recommend an older blog by Daniel Geey and Jonny Madill. More...


The EU State aid and sport saga: The Showdown

It’s been a long wait, but they’re finally here! On Monday, the European Commission released its decisions regarding State aid to seven Spanish professional football clubs (Real Madrid on two occasions) and five Dutch professional football clubs. The decisions mark the end of the formal investigations, which were opened in 2013. The Commission decided as follows: no State aid to PSV Eindhoven (1); compatible aid to the Dutch clubs FC Den Bosch, MVV Maastricht, NEC Nijmegen and Willem II (2); and incompatible aid granted to the Spanish football clubs Real Madrid, FC Barcelona, Valencia CF, Athletic Bilbao, Atlético Osasuna, Elche and Hércules (3). 

The recovery decisions in particular are truly historic. The rules on State aid have existed since the foundation of the European Economic Community in 1958, but it is the very first time that professional football clubs have been ordered to repay aid received from (local) public authorities.[1] In a way, these decisions complete a development set in motion with the Walrave and Koch ruling of 1974, where the CJEU held that professional sporting activity, and therefore also football, is subject to EU law. The landmark Bosman case of 1995 proved to be of great significance as regards free movement of (professional) athletes and the Meca-Medina case of 2006 settled that EU competition rules were equally applicable to the regulatory activity of sport. The fact that the first ever State aid recovery decision concerns major clubs like Real Madrid, FC Barcelona and Valencia, give the decisions extra bite. Therefore, this blog post will focus primarily on the negative/recovery decisions[2], their consequences and the legal remedies available to the parties involved.[3] More...

International and European Sports Law – Monthly Report – May 2016. By Marine Montejo

Editor’s note: This report compiles all relevant news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. You are invited to complete this survey via the comments section below, feel free to add links to important cases, documents and articles we might have overlooked.   


The Headlines

Challenged membership put a lot of emphasis on football federations in May. The Court of Arbitration for Sport (“CAS”) has rendered an award, on 27 April 2016, ordering the FIFA Council to submit the application of the Gibraltar Football Association (GFA) for FIFA membership to the FIFA Congress (the body authorised to admit new members to FIFA). The GFA has sought since 1999 to become a member of UEFA and FIFA. In May 2013, it became a member of the UEFA and went on to seek membership of FIFA. More...


Operación Puerto Strikes Back!

Forget the European Championship currently held in France or the upcoming Olympic Games in Rio. Doping scandals are making the headlines more than ever in 2016. From tennis star Sharapova receiving a two-year ban for her use of the controversial ‘meldonium’, to the seemingly never-ending doping scandals in athletics. As if this was not enough, a new chapter was added on 14 June to one of the most infamous and obscure doping sagas in history: the Operación Puerto.

The special criminal appeal chamber,  the Audiencia Provincial, has held that the more than 200 blood bags of professional athletes that have been at the center of the investigations since 2006 can be delivered to the relevant sporting authorities, such as the Spanish Anti-Doping Agency (AEPSAD), WADA, the UCI and the Italian Olympic Committee (CONI). In other words, there is now a good chance that the identities of the involved athletes might eventually be revealed.

Source: http://www.telegraph.co.uk/sport/othersports/cycling/9834122/Operation-Puerto-doctor-Eufemiano-Fuentes-treated-tennis-players-athletes-footballers-and-a-boxer.html

This case note will analyze the court’s ruling and summarize its most important findings. Given the amount of time passed since the scandal first came to light (2004), the blog will commence with a short background summary of the relevant facts. More...

FIBA/Euroleague: Basketball’s EU Competition Law Champions League- first leg in the Landgericht München. By Marine Montejo

Editor's note: Marine Montejo is a graduate from the College of Europe in Bruges and is currently an intern at the ASSER International Sports Law Centre.

On 3 June 2016, the Landgericht München (“Munich Regional Court”) ordered temporary injunctions against the International Basketball Federation (“FIBA”) and FIBA Europe, prohibiting them from sanctioning clubs who want to participate in competitions organized by Euroleague Commercial Assets (“ECA”). The reasoning of the Court is based on breaches of German and EU competition law provisions. FIBA and FIBA Europe are, according to the judge, abusing their dominant position by excluding or threatening to exclude national teams from their international competitions because of the participation of their clubs in the Euroleague. This decision is the first judicial step taken in the ongoing legal battle between FIBA and ECA over the organization of European basketball competitions.

This judgment raises several interesting points with regard to how the national judge deals with the alleged abuse of a dominant position by European and international federations. A few questions arise regarding the competence of the Munich Regional Court that may be interesting to first look at in the wake of an appeal before examining the substance of the case. More...

The Müller case: Revisiting the compatibility of fixed term contracts in football with EU Law. By Kester Mekenkamp

Editor’s note: Kester Mekenkamp is an LL.M. student in European Law at Leiden University and an intern at the ASSER International Sports Law Centre.

On 17 February 2016, the Landesarbeitsgericht Rheinland-Pfalz delivered its highly anticipated decision in the appeal proceedings between German goalkeeper Heinz Müller and his former employer, German Bundesliga club Mainz 05.[1] The main legal debate revolved around the question (in general terms) whether the use of a fixed term contract in professional football is compatible with German and EU law. 

In first instance (see our earlier blog posts, here and here), the Arbeitsgericht Mainz had ruled that the ‘objective reasons’ provided in Section 14 (1) of the German Part-time and Fixed-term Employment Act (Gesetz über Teilzeitarbeit und befristete Arbeitsverträge, “TzBfG”), the national law implementing EU Directive 1999/70/EC on fixed-term work, were not applicable to the contract between Müller and Mainz 05 and therefore could not justify the definite nature of that contract.[2] In its assessment the court devoted special attention to the objective reason relating to the nature of the work, declining justifications based thereupon.[3] Tension rose and the verdict was soon labelled to be able to have Bosman-like implications, if held up by higher courts.[4] More...

The BGH’s Pechstein Decision: A Surrealist Ruling



The decision of the Bundesgerichtshof (BGH), the Highest Civil Court in Germany, in the Pechstein case was eagerly awaited. At the hearing in March, the Court decided it would pronounce itself on 7 June, and so it did. Let’s cut things short: it is a striking victory for the Court of Arbitration for Sport (CAS) and a bitter (provisory?) ending for Claudia Pechstein. The BGH’s press release is abundantly clear that the German judges endorsed the CAS uncritically on the two main legal questions: validity of forced CAS arbitration and the independence of the CAS. The CAS and ISU are surely right to rejoice and celebrate the ruling in their respective press releases that quickly ensued (here and here). At first glance, this ruling will be comforting the CAS’ jurisdiction for years to come. Claudia Pechstein’s dire financial fate - she faces up to 300 000€ in legal fees – will serve as a powerful repellent for any athlete willing to challenge the CAS.More...



The EU State aid and Sport Saga: Hungary revisited? (Part 2)

On 18 May 2016, the day the first part of this blog was published, the Commission said in response to the Hungarian MEP Péter Niedermüller’s question, that it had “not specifically monitored the tax relief (…) but would consider doing so. The Commission cannot prejudge the steps that it might take following such monitoring. However, the Commission thanks (Niedermüller) for drawing its attention to the report of Transparency International.”

With the actual implementation in Hungary appearing to deviate from the original objectives and conditions of the aid scheme, as discussed in part 1 of this blog, a possible monitoring exercise by the Commission of the Hungarian tax benefit scheme seems appropriate. The question remains, however, whether the Commission follows up on the intent of monitoring, or whether the intent should be regarded as empty words. This second part of the blog will outline the rules on reviewing and monitoring (existing) aid, both substantively and procedurally. It will determine, inter alia, whether the State aid rules impose an obligation upon the Commission to act and, if so, in what way. More...

The Rise and Fall of FC Twente

Yesterday, 18 May 2016, the licensing committee of the Dutch football federation (KNVB) announced its decision to sanction FC Twente with relegation to the Netherland’s second (and lowest) professional league. The press release also included a link to a document outlining the reasons underlying the decision. For those following the saga surrounding Dutch football club FC Twente, an unconditional sanction by the licensing committee appeared to be only a matter of time. Yet, it is the sanction itself, as well as its reasoning, that will be the primary focus of this short blog.More...

The EU State aid and Sport Saga: Hungary’s tax benefit scheme revisited? (Part 1)

The tax benefit scheme in the Hungarian sport sector decision of 9 November 2011 marked a turning point as regards the Commission’s decisional practice in the field of State aid and sport. Between this date and early 2014, the Commission reached a total of ten decisions on State aid to sport infrastructure and opened four formal investigations into alleged State aid to professional football clubs like Real Madrid and Valencia CF.[1] As a result of the experience gained from the decision making, it was decided to include a Section on State aid to sport infrastructure in the 2014 General Block Exemption Regulation. Moreover, many people, including myself, held that Commission scrutiny in this sector would serve to achieve better accountability and transparency in sport governance.[2]

Yet, a recent report by Transparency International (TI), published in October 2015, raises questions about the efficiency of State aid enforcement in the sport sector. The report analyzes the results and effects of the Hungarian tax benefit scheme and concludes that:

“(T)he sports financing system suffers from transparency issues and corruption risks. (…) The lack of transparency poses a serious risk of collusion between politics and business which leads to opaque lobbying. This might be a reason for the disproportionateness found in the distribution of the subsidies, which is most apparent in the case of (football) and (the football club) Felcsút.”[3]

In other words, according to TI, selective economic advantages from public resources are being granted to professional football clubs, irrespective of the tax benefit scheme greenlighted by the Commission or, in fact, because of the tax benefit scheme. More...

Asser International Sports Law Blog | EU Law is not enough: Why FIFA's TPO ban survived its first challenge before the Brussels Court

Asser International Sports Law Blog

Our International Sports Law Diary
The Asser International Sports Law Centre is part of the T.M.C. Asser Instituut

EU Law is not enough: Why FIFA's TPO ban survived its first challenge before the Brussels Court


Star Lawyer Jean-Louis Dupont is almost a monopolist as far as high profile EU law and football cases are concerned. This year, besides a mediatised challenge against UEFA’s FFP regulations, he is going after FIFA’s TPO ban on behalf of the Spanish and Portuguese leagues in front of the EU Commission, but also before the Brussels First Instance Court defending the infamous Malta-based football investment firm Doyen Sport. FIFA and UEFA’s archenemy, probably electrified by the 20 years of the Bosman ruling, is emphatically trying to reproduce his world-famous legal prowess. Despite a first spark at a success in the FFP case against UEFA with the Court of first instance of Brussels sending a preliminary reference to the Court of Justice of the EU (CJEU), this has proven to be a mirage as the CJEU refused, as foretold, to answer the questions of the Brussels Court, while the provisory measures ordered by the judge have been suspended due to UEFA’s appeal. But, there was still hope, the case against FIFA’s TPO ban, also involving UEFA and the Belgium federation, was pending in front of the same Brussels Court of First Instance, which had proven to be very willing to block UEFA’s FFP regulations. Yet, the final ruling is another disappointment for Dupont (and good news for FIFA). The Court refused to give way to Doyen’s demands for provisional measures and a preliminary reference. The likelihood of a timely Bosman bis repetita is fading away. Fortunately, we got hold of the judgment of the Brussels court and it is certainly of interest to all those eagerly awaiting to know whether FIFA’s TPO ban will be deemed compatible or not with EU law.


I.               Facts and Procedure

The case was introduced in March 2015 by Doyen Sports Investments Limited, the Maltese investment fund specialised in football and an obscure Belgium football club, the RFC Seresien/Seraing United, against the Belgium federation (URBSFA), FIFA and UEFA. For its part, FIFPro decided to voluntarily intervene in the debates.

Seraing United plays in the Proximus League, the Belgium Second Division, and signed a specific collaboration contract with Doyen Sports on 30 January 2015. This collaboration contract foresees that Doyen and Seraing United will collaborate to select at least two players in each summer transfer window to be recruited by Seraing via a TPI (Third-Party Investment). In return, Doyen will contribute 300 000€ for the 2015/2016 season to Seraing’s budget and own 30% of rights of the players it has picked. For example, during this summer’s transfer window Seraing and Doyen have concluded a TPI contract to finance the recruitment of Ferraz Pereira. It is this contract that led to the present dispute. Indeed, as Seraing indicated in its filing for registration that Ferraz Perreira was recruited via a TPI contract, the URBSFA decided to block the registration of the player in the FIFA TMS system. The procedure regarding the release of an International Transfer Certificate is still on-going in front of FIFA’s internal bodies.

The claimants demanded that the judge blocked any attempt of FIFA, UEFA and the Belgium federation to implement the TPO ban (in the form of FIFA Circular 1464) and, if necessary, to send a preliminary reference to the CJEU.


II.             Jurisdiction of the Brussels Court

The first key question, as in the FFP case, was whether the Brussels Court had jurisdiction over the matter. This was unproblematic as far as the demands against the Belgium federation are concerned, as it is seated in Belgium and a potential arbitration clause does not hinder the demand of provisory measures to the national judge under Belgium law.

As far as UEFA and FIFA are concerned, however, the question is more complex. The Brussels Court quickly side-lined the objection based on a putative CAS arbitration clause, but it went into greater details concerning its international jurisdiction on the basis of the Lugano Convention. Under article 6 par. 1 of the Lugano Convention a defendant can be sued in the court of a place where one of the defendants is domiciled if “the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings”. In the FFP case, it is this close connection between the claims raised against UEFA and the Belgium Federation that could not be decisively proven and that led the Court to declare itself incompetent to deal with the matter. In the present case, the Court clearly distinguishes between FIFA and UEFA.

Concerning the claims raised against FIFA, the Court considers that:

“The relations between FIFA and the URBSFA are characterized by the fact that FIFA is the association adopting the international regulations which national federations, members of FIFA, including the URBSFA, have the duty to respect and enforce against their own members, i.e. the football clubs.” (para.42 of the judgment)

It deduces from this consideration that the URBSFA will have to implement FIFA’s TPO ban. However, this close connection exists only insofar as the claims raised are connected with provisory measures to be applied on the Belgian territory. In the eyes of the Court, FIFA’s objections to its jurisdiction based on article 22.2 of the Lugano Convention are not relevant, insofar that the case does not involve primarily a question of company or association law. The Court, contrary to the FFP case against UEFA, concludes that it has jurisdiction to deal with the claims raised against FIFA. This is a first, clear, legal victory for Jean-Louis Dupont. Yet this does not apply to UEFA as it did not adopt the regulations challenged, nor is the Belgium federation implementing its rules when enforcing the TPO ban. Thus, a close link in the sense of article 6 par. 1 of the Lugano Convention is missing[1]. Neither is article 31 of the Lugano Convention suitable to ground the Court’s jurisdiction against UEFA[2]. Hence, the Court declares itself incompetent to deal with the claims raised against UEFA.

The Court’s recognition that it has jurisdiction to deal with the claims directed against FIFA’s TPO ban insofar as FIFA’s rules have to be implemented by the URBSFA on the Belgium territory meant that this time Dupont could hope for a viable preliminary reference. Yet, as we will see, this did not lead to the award of the provisory measures hoped by the claimants.

 

III.           The conditions for awarding provisory measures under Belgium law

Under Belgium law two main conditions need to be fulfilled to lead to the granting of provisory measures: there need to be urgency and “appearance of right” (condition de l’apparence), which is analogous to the likelihood to prevail. There is urgency when it is feared that harm of certain intensity, or the likelihood of a serious inconvenience, make an immediate decision preferable. In the present case, the Court considers that Doyen is necessarily negatively affected by the TPO ban, as it is unable to exercise its economic activity[3]. The ban prejudices also Seraing United, which is deprived of an opportunity to finance its activities in a difficult context (URBSFA’s new regulations restricting the conditions to be considered a professional club). Thus, the Court finds that the urgency of the matter is given.

However, and this is the crux of the case, the judge refuses to consider that there is an appearance of right. In other words, he denied that the claimants are likely to prevail on the substance of the application of EU competition law. This is the most important part of the judgment, as it is the first time that a judicial authority adopts a legally binding (though provisional) opinion on the potential compatibility of the TPO ban with EU competition law (the much-cited Spanish’s Competition Authority opinion is advisory and does not cover the application of EU competition law). The claimants argued that the TPO ban is contrary to EU competition law (Article 101 and 102 TFEU) and to the EU free movement rights (Article 63, 56 and 45 TFEU). While, FIFPro, to which the Court recognized the privilege of expressing the collective opinion of professional players, FIFA and UEFA considered that it is compatible with EU law. 

The Court, first, refers to the Piau ruling of the CJEU to affirm that FIFA has a dominant position on the market for the services of players’ agents[4]. This is not surprising. In fact the judge insists that the key legal question is whether there is an abuse of this dominant position. In this regard it considers that both abuses of dominant position under article 102 TFEU and restrictions on free competition under article 101 par. 1 TFEU must be analysed with due consideration to the specific sector in which FIFA is active and to the legitimate objectives it claims to pursue.[5] Subsequently, the judgment lists a number of factors highlighted by FIFA and FIFPro underlying the legitimate objectives of the ban:

·      These practices are mainly the deed of investment firms

·      From which we do not know the shareholders

·      Which conclude contracts with different clubs, potentially directly competing against each other on the field

·      These contracts are opaque as they are not registered

·      They can be easily transferred

·      The third-party investors are interested in the players’ quick transfers, in short sequences, as they will then reap their benefits

·      This is contradictory with the objective of contractual stability during the players contract with their club

·      If the transfer is not effectuated before the end of the employment contract (knowing that at this time the player recovers his full contractual freedom), the clubs are due to pay compensation […].[6]

The Court concludes that it is likely that third-party investors/owners will be in a conflict of interest, with equally important risks of manipulations and match-fixing arising, all of this in a totally opaque environment. Thus, though the TPI/TPO practice is apparently of financial nature, it is deemed to have important sporting consequences. Moreover, the Court remarks that the ban on the influence of third parties on clubs introduced by FIFA a few years ago via article 18 bis of the FIFA RSTP has proven ineffective. This hints at the necessity of a total ban. Additionally, it referred to the legitimate objectives of the ban invoked by FIFPro as representative of the point of view of the players.

In fine, the Court concluded that the likelihood that FIFA’s TPO ban would fail the tests of proportionality and necessity is not proven “with the force necessary” to warrant awarding provisional measures and, subsequently, rejects the demands of the claimants.


Conclusion: EU law is no magic bullet against FIFA’s regulations

Jean-Louis Dupont lost a new battle, but as far as FIFA’s TPO ban is concerned it is only the beginning of a long legal war. He still has a case to defend in the main proceedings and the opening of an investigation of the EU Commission to hope for (as well as a potential appeal to the CJEU in case the complaint on behalf of Doyen and the Iberian leagues is rejected). Nevertheless, this decision is no good omen for the future of his case. It is a worthy reminder that EU law is no magic bullets against the regulations of Sports Governing Bodies (SGBs), and FIFA in particular. The Meca-Medina/Wouters inherency test prevailing in competition cases and the similar proportionality test applied in the context of free movement rights ensure that the legitimate objectives of the regulatory practices of the SGBs are duly taken into account in the judicial or administrative review process. In fact, despite the recurrent complaints voiced by SGBs against EU law’s deregulatory bias and insensitivity to sports’ specificity, in reality the case law of the CJEU and the decisional practice of the Commission has been rather (too?) accommodating with sport’s specificities, regulatory needs and ideals. What EU law imposes is a duty to properly justify private regulations that find no sufficient legitimacy, to say the least, in the democratic nature of their legislative process[7]. Yet, especially when the diverse set of stakeholders active in a specific sporting field converge in favour of a particular policy orientation, as is the case with the TPO ban, which is supported by ECA and FIFPro, there is a strong presumption that the regulations concerned will be deemed proportionate and in the general interest. The implicit presumption of legitimacy and necessity of FIFA’s TPO ban can only be rebutted with extremely thorough arguments from the part of the claimants and will probably require that they convincingly demonstrate the easy availability of a less restrictive alternative system to deal with the perceived risks resulting from the widespread recourse to TPO/TPI agreements. As the Belgium Court aptly put it, the EU free movement rights are not absolute; if necessary they can, and will, be restricted in the name of the general interest[8].

 

[1] Ordinance, Brussels Court of First Instance, n°15/67/C, 24.07.2015, para.53-54

[2] Ibid, para. 55-57

[3] Ibid, para. 87.

[4] Ibid, para.94

[5]« L’existence d’un éventuel abus de position dominante (article 102 TUE) mais également celle d’une éventuelle restriction de la concurrence (article 101.1 TUE) sont notamment analysées au regard du secteur spécifique dans lequel la Fifa est active et des objectifs légitimes qui sous-tendent l’interdictiom nouvelle des TPI/TPO », Ibid, para.95.

[6] My translation of the bullet points included at para.95 of the decision.

[7] On this important role of EU law, see B. Van Rompuy, ‘The Role of EU Competition Law in Tackling Abuse of Regulatory Power by Sports Associations’, Maastricht Journal of European and Comparative Law, Vol.22, Issue 2, 2015 pp.179-208.

[8] « Ces droits ne sont pas absolus, mais peuvent connaître des limites nécessitées par l’intérêt général ». Para.99 of the decision.

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