Yesterday, UEFA published the very much-expected settlements implementing its Financial Fair Play (FFP) regulations. Today, we address tomorrow’s challenges for FFP, we offer five, more or less realistic, scenarios sketching the (legal) future of the FFP regulations.

Scenario 1 : Happily ever after

We enter the brave new world of FFP. The settlements are not contested and Dupont’s EU law crusade sinks into oblivion. Meanwhile, the Qatari owners of PSG come up with a new marketing concept, the club recruits four locally trained players and wins the Champions league fielding the same starting team 14 times.[1] Thanks to FFP, in 2015, nobody is losing money anymore[2], Cristiano Ronaldo’s transfer to PSG for EUR 30 Mio. is by far the most expensive one and Arsenal’s coach Wenger feels rich for the first time in his career. No new FFP violation is registered, except for Shakhtar Donetsk, which messed up its financial accounts due to the move back to the rubble.

Scenario 2: Here we go again

FFP ends here for 2014, but history repeats itself in 2015. Clubs are still losing money and appear to fail to comply with the agreed settlements.[3] However, Manchester City and PSG have recourse to new innovative marketing contracts to turn their losses into profits.[4] To this end, the PSG squad members are named official ambassadors of the State of Qatar and their wages are covered by the Qatari state. The nightmare continues for Platini, who is stuck between a rock and a hard place. On one side he counts on Qatar’s vote and influence to win the FIFA presidency in June 2015, on the other he needs to defend his credibility in the eye of the German austerity hawks. The procedure is delayed until July, at which point the cases are referred to the adjudicatory chamber.[5] Both clubs are found in breach again, the chamber imposes a EUR 100 Mio. fine and Champions League squads are reduced to 18 players.[6]

Scenario 3: Settlements are not enough

Wenger is outraged! Fining PSG and Manchester City is a bit like fining a central bank: they’ll just print more money. 2014 was supposed to be the year his side would eventually get to play the Champions League without having to go through the preliminary rounds. Thus, Arsenal, backed by Everton, decides, on the 25 May 2014, to contest the settlements in front of the Adjudicatory Chamber.[7] Olympique de Marseille, always keen on fighting PSG on any turf, also appeals the settlement. However, in a final decision, the Adjudicatory Chamber dismisses the complaints. Far from abandoning their quest for justice, the clubs decide to refer the decision to CAS[8], where Everton, Arsenal and Marseille obtain a re-devaluation of the controversial sponsoring agreements. CAS hands out a two-year ban on transfers for both clubs, but comes short of kicking them out of the Champions League.[9] As usual, the final appeal to the Swiss Federal Tribunals is a waste of time: Arsenal will have to go through the preliminary round...again.

Scenario 4: My name is Dupont, Jean-Louis Dupont

All the parties agree with the settlements proposed, FFP seems to be heading for a smooth run. All, but one. Belgian lawyer Jean-Louis Dupont, secretly backed by wealthy clubs, challenged FFP in front of the Belgian Courts and the European Commission. He claims, loud and clear, that FFP is a restriction of EU Free Movement and Competition Law. In 2018, after 4 years of protracted litigation, the Court of appeal of Bruxelles finally decides to refer the matter to the Court of Justice of the EU in Luxembourg.[10] Meanwhile, the European Commission has also been enquiring on a putative infringement of EU competition law, but the new Commissioner for Competition Law, former French minister Pierre Moscovici, freezes the final decision after a phone call with Platini. On the 15 December 2020, the Court, in its instantly famous Striani judgement[11], considers FFP a clear restriction on EU free movement and competition law. In spite of the specificity of sport, its proportionality cannot be warranted. However, the judgement has no retroactive effect and both the Court and Advocate General considered that a better system could have been worked out. As soon as the ruling is known, UEFA enters in résistance: Platini calls up Sarkozy (by then old-new President of France), who, in a moment of rage, decides to leave the EU.

Scenario 5: The Reality Check

The FFP settlements will stand as they are; it is rather unlikely, though possible, that any affected party will raise an objection against them. PSG and Manchester City will not recruit any big players unless they sell big, but will most likely focus on getting decent locally-trained players on-board for the Champions League bench. The 2015 FFP edition will probably feature a replay of the current edition. We do not see, at least for PSG, any chance that it could accrue its revenues (except very creatively), in order to meet the target of a maximum EUR 30 Mio deficit. The main conundrum for the 2015 FFP process will be to design credible sanctions for a recidivist. On the EU law front, the process will take a lot of time. Regarding the Belgium Courts, any first instance decision will be appealed all the way to the highest Court and will undoubtedly end up in a very time-consuming procedural ping-pong with the Court of Justice of the EU (earliest final decision not before 2019-2020). The EU competition law complaint launched with the European Commission might be quicker to unfold, but will most likely be a forum for re-negotiating the FFP rules rather than to abolish them altogether (the transfer system overhaul at the turn of the century could serve as a model). On a final note, Wenger is surely disappointed by the apparent leniency of the sanctions, but for once he might be able to throw a bit of his weight around on the transfer market.

[1] The settlement for PSG and Manchester City include specific restrictions of the squads size for the Champions League: “[the club] accepts that for the duration of the settlement it will be subject to a limitation on the number of players that it may include on the “A” list for the purposes of participation in UEFA competitions. Specifically, for season 2014/15 PSG may only register a potential maximum of 21 players on the “A” list, instead of the potential maximum of 25 as foreseen in the relevant competition regulations.” Furthermore, pursuant to Article 18.08 of the Regulations of the UEFA Champions League: “As a minimum, eight places are reserved exclusively for “locally trained players” and no club may have more than four “association-trained players” listed on these eight places on List A.”

[2] The goals of the UEFA Club Licensing and FFP Regulations are stated at article 2.2. They affirm that FFP aims “to introduce more discipline and rationality in club football finances” and “to encourage clubs to operate on the basis of their own revenues”.

[3] The settlements read as follows: “In case [the Club] fails to comply with any of the terms of this Agreement, the  UEFA CFCB Chief Investigator shall refer the case to the Adjudicatory Chamber, as  foreseen in Art. 15 (4) of the Procedural Rules.”

[4] The reason why both clubs failed to adhere to the FFP rules is that their sponsorship contracts with related parties were deemed overvalued and therefore adjusted as required by Article 58.4 of the UEFA FFP Regulations.

[5]Article 15.4 of the Procedural rules governing the UEFA Club Financial Control Body, edition 2014, states that: “If a defendant fails to comply with the terms of a settlement agreement, the CFCB chief investigator shall refer the case to the adjudicatory chamber.”

[6] Article 29 of the Procedural rules governing the UEFA Club Financial Control Body, edition 2014 foresees that:

The following disciplinary measures may be imposed against any defendant other than an individual:

a) warning,

b) reprimand,

c) fine,

d) deduction of points,

e) withholding of revenues from a UEFA competition,

f) prohibition on registering new players in UEFA competitions,

g) restriction on the number of players that a club may register for participation in UEFA competitions, including a financial limit on the overall aggregate cost of the employee benefits expenses of players registered on the A-list for the purposes of UEFA club competitions,

h) disqualification from competitions in progress and/or exclusion from future competitions,

i) withdrawal of a title or award.

[7] Indeed, directly affected party (as Everton, Arsenal and Marseille in those case) can ask the adjudicatory chamber to review the settlements. Article 16.2. of the Procedural rules governing the UEFA Club Financial Control Body, edition 2014 foresees that: “Any decision of the CFCB chief investigator to conclude a settlement agreement or to apply disciplinary measures within the meaning of Article 14(1)(c) may be reviewed by the adjudicatory chamber at the request of a directly affected party within ten days from the date of publication of the decision.”

[8] Article 34 of the Procedural rules governing the UEFA Club Financial Control Body, edition 2014 confers to directly affected party a right to appeal final decisions to CAS.

[9] Supra, No 6

[10] Article 267 of the Treaty on the Functioning of the EU gives to national courts the possibility to refer a question concerning the interpretation of EU law to the Court of Justice of the EU.

[11] Daniel Striani is a player agent on who’s behalf the complaints by Dupont against FFP were launched.

Introduction: The new WADA Code 2015
Day 1: The impact of the revised World Anti-Doping Code on the work of National Anti-Doping Agencies
Day 2: The “Athlete Patient” and the 2015 World Anti-Doping Code: Competing Under Medical Treatment
Day 3: Proof of intent (or lack thereof) under the 2015 World Anti-Doping Code

Editor's note
Mike Morgan is the founding partner of Morgan Sports Law LLP. His practice is focused exclusively on the sports sector. He advises on regulatory and disciplinary issues and has particular experience advising on doping and corruption disputes.

Mike acted on behalf of National Olympic Committees at three of the last four Olympic Games and has represented other sports bodies, clubs and high profile athletes in proceedings before the High Court, the FIFA Dispute Resolution Chamber, the American Arbitration Association and the Court of Arbitration for Sport.

I. Introduction

According to the World Anti-Doping Agency (“WADA”), the 2015 World Anti-Doping Agency Code (the “2015 Code”), which came into effect on 1 January 2015,  is a “stronger, more robust tool that will protect the rights of the clean athletes”[1]. Among the key themes of the revised Code, is the promise of “longer periods of Ineligibility for real cheats, and more flexibility in sanctioning in other specific circumstances”[2].

While Article 10 of the 2015 Code unquestionably provides for longer periods of ineligibility, the validity of WADA’s claim that the harsher sanctions will be reserved for “real cheats” depends partly on how one defines the term “real cheat”, and partly on how the 2015 Code’s mechanisms for reducing sanctions are to be interpreted.

This blog reflects on the totality of the context from which the current sanctions regime arose.  That is important because Article 10 will have to be applied in a manner consistent with that context in mind if the 2015 Code is to become the tool promised by WADA and if it is to avoid the scrutiny of the courts.

II. Context

A.   Katrin Krabbe

In the lead up to the adoption of the first version of the WADA Code (the “2003 Code”), there was considerable debate as to what length of sanction could lawfully be imposed on an athlete for a first violation[3].

The decision finally to settle on a two-year ban for first offences was heavily influenced by the findings of the Munich Courts in the case of Katrin Krabbe, that a suspension exceeding two years was disproportionate[4]:

(a)           The Regional Court held that a two-year suspension imposed on an athlete for a first offence “represents the highest threshold admissible under fundamental rights and democratic principles”.[5]

(b)           The High Regional Court held that the three-year ban imposed by the IAAF “was excessive in respect of its objective. Such a rigid disciplinary measure as a sanction for a first sports offence is inappropriate and disproportionate”.[6]

And so it came to pass that a first violation under Article 10.2 of the 2003 Code would be punished with a two-year sanction. Various legal opinions procured by WADA between 2003 and 2008 affirmed the position that a two-year sanction for a first violation (1) was a significant incursion on the rights of the individual affected; and (2) was likely the limit of the severity that could be imposed in the absence of aggravating circumstances[7].

B.   Specified Substances

The 2003 Code proved somewhat inflexible, which resulted in two-year bans for unintentional and minor anti-doping rule violations. One of the starkest examples of that inflexibility arose in CAS OG 04/003 Torri Edwards v IAAF & USATF.

Edwards had consumed glucose powder that, unbeknownst to her, contained the stimulant nikethamide. A two-year ban was imposed on her on the basis that she could not meet the thresholds for “No Fault” and “No Significant Fault” and despite the fact that she had, in the words of the CAS panel, “conducted herself with honesty, integrity and character, and that she has not sought to gain any improper advantage or to ‘cheat’ in any way”[8].

Ms Edwards’ case became a cause célèbre, leading the IAAF to lobby WADA to have nikethamide and other similar stimulants reclassified as Specified Substances. The then vice-president of the IAAF, Dr Arne Lungqvist explained as follows:

I asked Torri Edwards whether she would allow me to use her case as an example of the importance of making some sort of differentiation between those weak stimulants that you can get over the counter by accident, carelessness, negligence or whatever.  We are not after those who are negligent.

WADA acceded to the IAAF’s lobbying and downgraded nikethamide to the Specified Substance list in September 2005. The IAAF Council shortly thereafter reinstated Edwards to competition further to the doctrine of lex mitior. Following Edwards’ reinstatement, Dr Lungqvist explained as follows:

The IAAF wishes to see strong penalties for real cheats. This was a different case, […]  I did not feel comfortable when I had to defend the then-existing rules against her at the CAS hearing in Athens.

I judge that Torri has paid a high price for having inadvertently taken a particular substance at the 'wrong' time, shortly before [the reclassification] and from now on such an intake would result in a warning only. (Emphasis added)

Four years later, WADA went one step further and, with the introduction of the 2009 version of the WADA Code (the “2009 Code”), broadened the list of substances that would be categorised as Specified Substances, promising “lessened sanctions….where the athlete can establish that the substance involved was not intended to enhance performance” under Article 10.4[10].  

The aim was to avoid the likes of the Edwards case. Indeed, a number of cases determined under the 2009 Code which involved the same glucose brand that had landed Edwards with a two-year ban in 2004, resulted in periods of ineligibility ranging between 0 – 6 months[11].

C.   The rise and fall of “aggravating circumstances”

The primary themes of the 2009 Code were, according to WADA, “firmness and fairness”. “Fairness” was to be reflected by the broadening of the Specified Substance list, while “firmness” was intended to manifest itself through the concept of “aggravating circumstances” [12].  

The presence of “aggravated circumstances” permitted Anti-Doping Organizations (“ADOs”) to increase periods of ineligibility beyond the standard two-year ban up to a maximum of four years[13].

A legal opinion commissioned by WADA in relation to the “aggravated circumstances” provisions (the “Third WADA Legal Opinion”) noted as follows[14]:

91. […] it is clear that the intention to enhance performance is not in and-of-itself an aggravating circumstance.

92. […] This provision makes it clear that cheating is an important element of the notion of aggravating circumstances. However, the mere fact of cheating alone is not sufficient. Additional elements are required.

93. The essence of the concept of aggravating circumstances is thus a qualified kind of cheating, which involves an additional element. (Emphasis added)

Not only, therefore, was actual cheating required to invoke the provision but there needed to be something more than the mere fact of cheating. Examples provided by the 2009 Code included being part of a doping scheme or using multiple prohibited substances[15]. 

The “aggravated circumstances” provision was rarely invoked and, when it was, it rarely resulted in the maximum increase[16]. That ultimately led to the removal of the “aggravated circumstances” provision from the 2015 Code and the introduction of standard four-year sanctions, explained as follows by WADA[17]:

There was a strong consensus among stakeholders, and in particular, Athletes, that intentional cheaters should be Ineligible for a period of four years.  Under the current Code, there is the opportunity for a four-year period of Ineligibility for an Adverse Analytical Finding if the Anti-Doping Organization can show “Aggravating Circumstances.” However, in the more than four years since that provision has been part of the Code, it has been rarely used. (Emphasis added)

The decision to double the standard two-year sanctions to four years may have surprised anyone who had ever read the Third WADA Legal Opinion, since that opinion had expressly cautioned as follows:

138. […] one should bear in mind that a four-year ban would most often put an end to an athlete’s (high level) career and thus be tantamount to a life ban. Therefore, an aggravated first offence could de facto be punished as harshly as numerous second offences (Article 10.7.1) and almost all third offences (Article 10.7.3).

139. This could raise problems if the ineligibility period were automatically of four years in the presence of aggravating circumstances. In reality, Art. 10.6 provides for an increased suspension of up to four years, which means that the adjudicating body is afforded sufficient flexibility to take into account all the circumstances to ensure that aggravating circumstances do not systematically result in a four-year period of ineligibility. (Emphasis added)

D.   Proportionality

The principle of proportionality plays an important role in the determination of sanctions applicable in doping matters. The principle pervades Swiss law[18], EU law[19] and general principles of (sports) law[20].  

The CAS itself has consistently measured sanctions imposed on athletes against the principle of proportionality both before the inception of the WADA Code and since.

(a)           Pre-WADA Code: the anti-doping rules of many sports prior to the creation of the WADA Code mandated fixed sanctions without the possibility of reductions. The CAS nevertheless sometimes reduced these sanctions on the basis they were not proportionate.[21]

(b)           Post-WADA Code: The WADA Code introduced mechanisms by which sanctions could be reduced or eliminated.  However, the CAS has made clear that the introduction of these mechanisms does not remove the obligation of disciplinary panels to measure the sanctions applied in any particular case against the principle of proportionality. In CAS 2005/A/830 Squizzato v. FINA, the CAS held that:

10.24 […] the Panel holds that the mere adoption of the WADA Code […] by a respective Federation does not force the conclusion that there is no other possibility for greater or less reduction a sanction than allowed by DC 10.5. The mere fact that regulations of a sport federation derive from the World Anti-Doping Code does not change the nature of these rules. They are still – like before – regulations of an association which cannot (directly or indirectly) replace fundamental and general legal principles like the doctrine of proportionality a priori for every thinkable case.

Though the 2015 Code asserts that it “has been drafted giving consideration to the principles of proportionality and human rights”[22], that obviously does not mean that proportionality no longer plays a part in the assessment of sanctions for the same reasons propounded by the CAS in Squizzato. Indeed, the 2015 Code itself recognises that it “is intended to be applied in a manner which respects the principles of proportionality and human rights”[23]. Moreover, the most recent CAS decisions in which the principle of proportionality was applied concerned the sanctioning regimes of the 2003 and 2009 Code, both of which mandated default sanctions of two years, not four years[24].  The principle of proportionality is, therefore, arguably even more relevant now than it previously was.

III. Comment

While the 2015 Code does have more mechanisms by which to modify the default sanctions than in previous versions of the WADA Code, that is partly because the default sanctions with regards to most of the violations have doubled[25]:

Athletes accused of committing a violation under Articles 2.1, 2.2, 2.3 or 2.6 are now in a position in which they are required to meet the Article 10.2 thresholds regarding “intent” simply to get them back to the two-year default sanctions that would have applied under previous versions of the Code[26].

If the 2015 Code is to become the tool promised by WADA and if it is to avoid or survive legal challenges, tribunals will need to ensure that their interpretations of the reduction mechanisms, such as those contained at Article 10.2, do not result in disproportionate sanctions.

The parameters within which the proportionality of a sanction falls to be measured were described as follows by the panel in CAS 2005/C/976 & 986 FIFA & WADA:

139. A long series of CAS decisions have developed the principle of proportionality in sport cases. This principle provides that the severity of a sanction must be proportionate to the offense committed. To be proportionate, the sanction must not exceed that which is reasonably required in the search of the justifiable aim. (Emphasis added)

The evaluation of whether a sanction is proportionate therefore begins with the identification of the “justifiable aim”. According to WADA, the increased sanctions were intended to target “intentional cheats”. That is echoed by the wording of Article 10.2.3 of the 2015 Code, which provides as follows:  

As used in Articles 10.2 and 10.3, the term “intentional” is meant to identify those Athletes who cheat. The term, therefore, requires that the athlete or other Person engaged in conduct which he or she knew constituted an anti-doping rule violation or knew that there was a significant risk that the conduct might constitute or result in an anti-doping rule violation and manifestly disregarded that risk [….] (Emphasis added)

The final sentence emphasised above is, arguably, open to interpretation.  However, the first line identifies the overarching aim of the provision – i.e. “the term ‘intentional’ is meant to identify those athletes who cheat”.

According to the Oxford Dictionary, a “cheat” is a “person who behaves dishonestly in order to gain an advantage” and the act of “cheating” amounts to “a fraud or deception”.  A reasonable inference, therefore, is that athletes who “cheat” are athletes who have acted knowingly and dishonestly to gain an unfair advantage.

Article 10.2 cannot, therefore, be intended to punish careless athletes.  Bearing in mind the limits pronounced by the courts in Krabbe and bearing in mind the “justifiable aim”, any interpretation of the provision that would result in a four-year ban for nothing more than careless – or even reckless, but otherwise honest - conduct would risk inviting the sort of scrutiny exercised by the German courts in the Pechstein[27] and Krabbe cases.

Likewise, the interpretation of the other reduction mechanisms, such as Article 10.5 (“No Significant Fault or Negligence”), will require the same degree of pragmatism.  If the parameters for “No Significant Fault” were to be applied as strictly today as they were in the Edwards case, anti-doping would end up right back to where it was in 2004, when the Code’s sanctioning regime was perceived to be so inflexible that it had to be overhauled in 2009. Assuming that the aim of the 2015 Code is not to take 11 years’ worth of backward steps, tribunals will have to ensure that “No Significant Fault” is interpreted in a manner that fulfils WADA’s promise of “greater flexibility”, particularly in cases involving Specified Substances and Contaminated Products[28].

IV. Concluding Remark

The 2015 Code has the potential to become the fairest WADA Code to date. However, it also has the potential to be the cruelest. Interpreting it in a manner consistent with the totality of the context from which it was conceived is the surest way to ensure that the right version prevails.

[1] https://www.wada-ama.org/en/what-we-do/the-code

[2] https://wada-main-prod.s3.amazonaws.com/wadc-2015-draft-version-4.0-significant-changes-to-2009-en.pdf

[3] See (1) http://library.la84.org/OlympicInformationCenter/OlympicReview/1999/OREXXVI26/OREXXVI26s.pdf; and (2) http://library.la84.org/OlympicInformationCenter/OlympicReview/1999/OREXXVI26/OREXXVI26t.pdf

[4] See Kaufmann-Kohler, G., Rigozzi, A., and Malinverni, G., “Doping and fundamental rights of athletes: comments in the wake of the adoption of the World Anti-Doping Code”, I.S.L.R. 2003, 3(Aug), 39–67 *61

[5] Krabbe v. IAAF et. al., Decision of the LG Munich of 17 May 1995, SpuRt 1995 p. 161, p. 167

[6] Krabbe v. IAAF et. al., Decision of the OLG Munich of 28 March 1996, SpuRt 1996 p. 133, 138

[7] See (1) Legal Opinion on the Conformity of Certain Provisions of the Draft World Anti-Doping Code with Commonly Accepted Principles of International Law, dated 23 February 2003, paragraphs 142 and 143; (2) Legal Opinion on whether Article 10.2 of the World Anti-Doping Code is compatible with the Fundamental Principles of Swiss Domestic Law, dated 25 October 2005, paragraph 3 (b) (aa) at page 26 and paragraph 3. (f) (aa) at page 32; and (3) Legal Opinion on the Conformity of Article 10.6 of the 2007 Draft World Anti-Doping Code with the Fundamental Rights of Athletes, dated 13 November 2007, at paragraphs 33, 114, 138 and 139

[8] See paragraph 5.8 of CAS OG 04/003 Torri Edwards v IAAF & USATF

[9] See IAAF press release dated 22 November 2005

[10] 2009 Code, Article 10.4 (“Elimination or Reduction of the Period of Ineligibility for Specified Substances under Specific Circumstances”)

[11] See (1) CAS 2011/A/2493 Antidoping Switzerland v/ X; (2) CAS 2013/A/3327 Marin Cilic v. International Tennis Federation & CAS 2013/A/3335 International Tennis Federation v. Marin Cilic; (3) AFLD Decision No. 2011-71 dated 7 July 2011; (4) AFLD Decision No. 2009-50 dated 10 December 2009

[12] Article 10.6 of the 2009 WADA Code (Aggravating Circumstances Which May Increase the Period of Ineligibility)

[13] Note that Violations under Articles 2.7 (Trafficking) and 2.8 (Administration) were not subject to the application of Article 10.6 since the sanctions for those violations (four years to life) already allowed discretion for aggravating circumstances

[14] Legal Opinion on the Conformity of Article 10.6 of the 2007 Draft World Anti-Doping Code with the Fundamental Rights of Athletes, dated 13 November 2007

[15] See commentary to Article 10.6 of the 2009 Code

[16] See CAS 2013/A/3080 Alemitu Bekele Degfa v. TAF and lAAF for a detailed assessment by the CAS of the “aggravated circumstances” provision

[17] WADA, Significant Changes between the 2009 Code and the 2015 Code, Version 4.0, 1 September 2013

[18] See paragraph 124 of CAS 2005/C/976 & 986 FIFA & WADA

[19] See paragraphs 47 and 48 of Case C-519/04 P Meca-Medina & Majcen v Commission [2006] ECR I-6991

[20] See paragraph 83 of the First WADA Legal Opinion

[21] See (1) CAS 1996/56 Foschi v. FINA; (2) CAS 2002/A/396 Baxter v. FIS; (3) CAS 2001/A/337 B. / FINA

[22] See page 11 of the 2015 Code - “Purpose, Scope and Organization of the World Anti-Doping Program and the Code”

[23] See the Introduction at page 17 of the 2015 Code

[24] See, for instance (1) CAS 2010/A/2268 I. v. FIA; and (2) TAS 2007/A/1252 FINA c. O. Mellouli & FTN

[25] Note that the table only reflects the default sanctions applicable before consideration of any of the mechanisms intended to increase or decrease those sanctions

[26] Note that article 10.2 only applies to those violations. For a detailed assessment of Article 10.2, see Rigozzi, Antonio and Haas, Ulrich and Wisnosky, Emily and Viret, Marjolaine, Breaking Down the Process for Determining a Basic Sanction Under the 2015 World Anti-Doping Code (June 10, 2015). ISLJ, (2015) 15:3-48

[27] See (1) Landesgericht (LG) München, 26. February 2014, 37 O 28331/12; and (2) Oberlandesgericht (OLG) München, 15 January 2015, Az. U 1110/14 Kart

[28] Notably, the concept of “No Significant Fault or Negligence” in previous versions of the Code was limited to ‘‘exceptional circumstances’’. That limitation has been removed in the context of Specified Substances and Contaminated Products under Article 10.5.1 of the 2015 Code. Thus, it should now be easier for athletes to trigger the application of “No Significant Fault” in those types of cases than it previously was. See Section 6.2 of Rigozzi et al for a detailed discussion of the point

Editor’s Note: Saverio Spera is an Italian lawyer and LL.M. graduate in International Business Law at King’s College London. He is currently an intern at the ASSER International Sports Law Centre. 

This blog is a follow up to my previous contribution on the validity of Unilateral Extension Options (hereafter UEOs) under national and European law. It focuses on the different approaches taken to UEOs by the FIFA Dispute Resolution Chamber (DRC) and the Court of arbitration for sport (CAS). While in general the DRC has adopted a strict approach towards their validity, the CAS has followed a more liberal trend. Nonetheless, the two judicial bodies share a common conclusion: UEOs are not necessarily invalid. In this second blog I will provide an overview of the similarities and differences of the two judicial bodies in tackling UEOs.

The emergence and function of the Portmann criteria

Since their first appearance in a case widely known as the South American Bosman for the impact it had on the whole system of contracts established by the Uruguayan Football Association, the so-called ‘Portmann’ criteria are often referred to in decisions on the validity of UEOs.^[1] In short, these criteria provide that:

1. the potential maximum duration of the employment relationship must not be excessive;
2. the option has to be exercised within an acceptable deadline before the expiry of the current contract;
3. the original contract has to define the salary raise triggered by the extension;
4. the content of the contract must not result in putting one party at the mercy of the other, and;
5. the option has to be clearly emphasized in the original contract so that the player can have full consciousness of it at the moment of signing.^[2]

These five requirements, proposed by Prof Wolfgang Portmann, were meant to represent the standard UEOs had to meet in order to be considered valid and biding upon the players. More precisely, in order not to constitute an excessive self-commitment that would result in a violation of Swiss ordre public.^[3] They emerged in the course of the South American Bosman as Prof. Portmann’s report was presented by Atlético Peñarol in the (unsuccessful) attempt to uphold the validity of the unilateral option the club had used in its employment contracts. From that moment on, the Portmann criteria became a recurrent theme in decisions by the DRC and the CAS. However, these criteria have been used over the years in a rather incoherent fashion and their importance in the assessment of UEOs is not unequivocal.

Thereafter, in its first decision, the DRC used the criteria to assess the validity of an UEO.^[4] But then it drastically drifted away from them. Actually, in the ensuing decisions the DRC did not refer to the five conditions at all. In some instances it limited itself to recall its established jurisprudence finding the validity of UEOs disputable since they give the stronger party in the employment relationship the power to unilaterally extend or terminate the contract.^[5] In another occasion, the DRC expressly dismissed the binding effect of the Portmann report, underlining that it only constitutes a non-binding recommendation.^[6]

Furthermore, interestingly, in the appeal proceedings of the Atlético Peñarol case the CAS did not mention the Portmann report in its evaluation of the UEO. The Panel only referred to it in the part of the award that assessed the question of the applicable law and noted that Prof Portmann’s starting point was radically different from that of the Panel, as he deemed Uruguayan law applicable to the dispute, while the Panel applied Swiss law/the RSTP.^[7] Having said that, the CAS also seems to have departed from its initial approach, but in a rather different way than the DRC. In an early award of 2007, the CAS refused to give too much weight to the Portmann report and focused its reasoning on other circumstances.^[8] Yet, the ensuing awards did not follow suit on this approach. In its more recent awards, the CAS held that the criteria constitute soft guidelines and often de facto relied on them to reach its conclusion on the validity of an option.^[9] In one occasion, the CAS even added to the list of requirements two criteria, “emanating from recent developments in the FIFA DRC and CAS jurisprudence”, namely (i) the proportionality between the extension and the main contract and (ii) the desirable limitation of the number of extensions to one.^[10]

Regarding the relevance of the Portmann criteria, it seems that the only shared trait between the DRC and the CAS is that both have drifted away from their approach. Though, in quite opposite ways. 

Increase in salary as a sine qua non condition for the validity of UEOs

The question of the increase of the player’s salary is considered central, by both the DRC and the CAS, in deciding the validity of UEOs.

In fact, an improvement of the player’s salary is considered by the DRC as a possible ‘validating’ circumstance since the first published decision on the issue.^[11] The FIFA Chamber placed particular emphasis on the necessity to offset the unequal bargaining power that UEOs give to football clubs. To do that, a significant economic gain for the player must be envisaged in the contract as a result of the extension. In the view of the DRC, this is a necessary but sometimes not sufficient condition for the validity of a UEO, since the specification of the financial terms of the renewal in advance “necessarily cannot take into account, neither by the player nor the club, the possible enhancement of the player’s value, and hence earning power, over a two year period”.^[12]

In its awards on the matter, the CAS contends that the player must derive a clear economic advantage from the exercise of the option.^[13] Thus, the increase in salary is the only requirement that is fully embraced by both the DRC and the CAS. It is interesting to note, however, that in only one occasion did the CAS explicitly mentioned that “[e]ven if the financial terms had to be specified in advance, they necessarily take no account of the possible enhancement of a players value – and hence earning power – over a five year period e.g.: if he becomes an international player during that time”.^[14] It is also worth noting that, at least in one award, the CAS concluded that an increase in salary has to be evaluated only in relation to the previous economic conditions of the player’s contract and not in relation to the salary he could earn somewhere else.^[15]

In light of the above, it is safe to conclude that an UEO coming with a substantial increase in salary for the player has good chances to be deemed valid by the DRC and the CAS. To this end, a few additional observations are relevant. Firstly, how much is enough? Unfortunately, no clear guidelines can be derived from the case law. Secondly, it is practically impossible to predict the increase in value of a football player over a long-term period. Consequently, what can be considered a reasonable increase in salary at the signing of the contract might be deemed insufficient a few years later. Lastly, and probably most importantly, this approach might overlook the fact that an increase in salary is not always the only element a footballer takes into account in his career, as sometimes more personal considerations might push a player to move to a different club in another country. For instance family reasons might play a significant role in such a decision. Furthermore, football players might often consider more convenient for the development of their careers to give up on an increase in salary in order to have the chance to move to a club with more playing opportunities. An increase in salary, even substantial, should not be the altar on which a footballer’s fundamental freedom of movement and, ultimately, of choice is sacrificed.

The player’s behaviour

The player’s stance has often been evaluated by the DRC in particular as a concurrent element in determining the validity of an UEO. The main argument is that a certain behaviour of the player, such as keeping training and playing official matches with the club, implies a tacit acceptance of the extension. Once again, the DRC and the CAS are not entirely on the same line. The DRC jurisprudence gives more weight to this aspect, while the CAS has mentioned that particular attention has to be paid to “the player’s conduct during the period leading to the negotiation of the alleged extension clause” only in one single case.^[16]

With regards to the circumstance that the player has played in official matches as a consequence of the extension, the DRC showed a swinging trend. In one instance, it deemed it not relevant.^[17] Yet, in a subsequent decision (the only one by the DRC upholding the validity of an UEO to date), the fact that the player had kept taking part in training sessions and playing official matches for the club after the extension had quite a different impact on the reasoning of the Chamber.^[18] More recently, the DRC stated that the fact that the player trained with the club for a month after the alleged renewal does not imply his tacit acceptance of the unilateral extension.^[19]

The applicable law

As seen in the first part of this blog, each national jurisdiction interprets the validity of UEOs differently. Consequently, the choice of applicable law can play a major role in the outcome of a case, although the issue arises mainly when the dispute is brought before the CAS. The matter is complicated by the fact that CAS panels have a certain degree of discretion in deciding the law applicable to a dispute, and by the circumstance that even when they apply the same law they might reach different conclusions. With regard to the latter point, let us take into consideration two cases in which the CAS has established Greek law as the applicable law. In one occasion the Panel deemed “appropriate to mitigate the letter of Greek law by the spirit of general principles”, as its content concerning UEOs was considered inconsistent with “general principles of labour law”^[20] and consequently dismissed the appeal of the club. In another one, instead, the Panel concluded that the dispute had to be decided according to FIFA Regulations and Swiss law on a subsidiary basis, “with the important exception of any issues related to the Contract […] which shall be decided in accordance with Greek law”.^[21] Therefore, given that in Greece unilateral options allowing clubs to automatically extend employment contracts are legal, the Panel upheld the validity of the clause.^[22]

A radically different approach was taken by the CAS in the Atlético Peñarol case discussed above. In the absence of an express choice of law of the parties, the Panel deemed the FIFA Regulations and, subsidiarily, Swiss Law applicable. It is worth recalling the reasoning of the Panel, as it could pave the way to a reasonable solution for the UEOs issue. The arbitrators noted that the application of art. 187 of the Swiss LDIP gives wide freedom of choice to the parties, who can even require the arbitrators to decide ex aequo et bono, i.e. without any reference to specific State laws. This means that art. 187 LDIP allows, a fortiori, to refer to rules that transcend the particular State laws, such as sports regulations. The Panel stressed that sport is a phenomenon that naturally crosses borders, and thus it is necessary to ensure uniform legal standards. Only if the same terms and conditions apply to everyone who participates in organised sport, is the integrity and equal opportunity of sporting competition guaranteed. In practice, the FIFA Statutes and Regulations provide such uniform rules. Additionally, the arbitrators underlined that the application of Uruguayan law would lead to a result incompatible with the minimum standards of protection of employees provided by Swiss labour law. Hence, the CAS concluded that the Uruguayan system of UEOs is not compatible with the FIFA Regulations. Furthermore, the Panel noted that these options effectively bypass the basic principles of the FIFA regulations, which “very particularly protect the interests of training clubs through training compensation and the solidarity contribution […] It is not possible that this protection of the contents of a contract between clubs and players can be bypassed in order to serve only the interests of one party, in this case the club, which does not itself have to make a commitment. So the Panel considers that the unilateral contract renewal system is not compatible, in its very principle, with the legal framework which the new FIFA rules were designed to introduce”.^[23] In other words, the Uruguayan system seemed to reintroduce, through the backdoor, the system that was abolished with the reforms of the FIFA Regulations 1997, 2001 and 2005.^[24]In such a system the player is bound to a contract negotiated at a moment of his career when he did not have a strong bargaining power. Which is to say, the player is left at the mercy of the club. The arbitrators stressed that only the most talented players can escape this mechanism, when the club receives an important transfer offer for their services.^[25]In that occasion, the player will hardly refuse the transfer knowing that, doing otherwise, he will be bound to the club because of the UEO in his contract.

Conclusions: The way forward

We have seen in part 1 of this blog that we lack a coherent regulatory framework for UEOs at the national level. This second part has also shown that things are not much clearer at the DRC and the CAS, as the two bodies, while agreeing on the existence of certain criteria, take different approaches on the assessment of each of them (except for the increase in salary). Furthermore, the outcome of a case can be heavily dependent on the applicable law. Consequently, the future validity of UEOs is uncertain, given that no uniformity can be found in the CAS jurisprudence.

The uncertainties related to the applicable law issue are manifold. Upholding the validity of national law, although granting some advantages in terms of foreseeability, presents two main drawbacks. First of all for the clubs which draft the contracts and cannot predict to what extent this law will be deemed applicable by the CAS and, consequently, are unable to draft the contract with all the necessary information desirable in respect to UEO clauses.^[26]Secondly, and most importantly, this approach overlooks the fact that football is a global phenomenon, and the transfer market a transnational one, which requires uniform rules at the international level.

The conclusion reached by the Panel in the Atlético Peñarol case is a fair starting point in the quest for more certainty in the matter. The undisputable merit of that award was to clearly highlight (i) the unequal nature of a clause that is accepted by the player at the early stages of his career and (ii) the necessity to have a body of regulations that can be understood and predicted by the entire international football family.[27] Let us conclude, therefore, that only the universal application of a set of regulations, such as the FIFA RSTP, would ensure legal rationality, predictability and, significantly, “the equality of treatment between all the addressees of such regulations, independently of the countries from which they are”.^[28] A fortiori, when at stake is the fundamental freedom of movement and choice of footballers, the need to rely on a uniform body of principles and rules, a lex sportiva, universally applicable without discrimination becomes crucial.

However, applying the FIFA Regulations in a standardised way still leaves a problem unsolved. This body of rules is in fact silent on the very issue of UEOs. FIFA could tackle the issue in a variety of ways, for instance by codifying in the RSTP a revisited version of the Portmann criteria. Suggesting precise reforms to FIFA goes beyond the purpose of this blog, but one thing is sure: in the face of the extreme uncertainty that surrounds the validity of these clauses, having one single body of rules expressly targeting the issue and universally applicable would be of great help to all the parties involved.

[1] The case concerned the contracts of two Uruguayan players, Carlos Heber Bueno Suárez and Christian Gabriel Rodríguez Barotti with the Uruguayan football club Atlético Peñarol. Pursuant to their contracts, the professional services of Bueno and Rodríguez could be extended unilaterally by the club for two years, provided that their salary would increase in accordance with the National Consumer Price Index. At the end of the season, and after being suspended and deprived of the possibility of playing for four months, the players signed for the French club Paris Saint Germain, and refused the club’s unilateral extension. See TAS 2005/A/983 & 984, Club Atlético Peñarol v. Carlos Heber Buen Suárez, Christian Gabriel Rodríguez Barotti & Paris Saint Germain, award of 12 July 2006. In fact, the framework has slightly changed over the last few years in South America. In Argentina, for instance, the 2009 Collective Bargaining Agreement (CBA) n. 557/09, signed by the Association de Futbol Argentino (AFA) and the Union of Amateur and Professional Football Player provides the current guidelines. In this context, contracts of athletes who have reached the age of 21 can be extended once for one year only, provided that a salary increase of 20% is guaranteed as a consequence of the extension. Extension options for players older than 21 shall be considered null and void, even in the circumstance that AFA has registered the contract, and consequently the player is to be declared a free agent and thus free to sign a contract with another club (see Colucci, Hendricks, Regulating Employment Relationships in Professional Football, A Comparative Analysis, European Sports Law and Policy Bulletin 1/2014, 26). See also Juan de Dios Crespo Pérez’s commentary of the case in A. Wild (ed.) CAS and Football: Landmark Cases (2011), 118. 

[2] F. de Weger, The Jurisprudence of the FIFA Dispute Resolution Chamber, 169.

[3] Prof Portmann considered South American law the law applicable to the substance of the matter. Nevertheless, according to the author, in order to be considered valid, the option not only had to be consistent with local employment law, Collective Bargaining Agreements and regulations of the relevant national association, but it also had to respect mandatory rules of Swiss law and Swiss ordre public. Although he considered the principle of parity of termination rights not part of ordre public per se (and, therefore, the circumvention of that right that these clauses entail not problematic in itself), he stressed that an excessive self-commitment of one of the parties to a contract could indeed result in an infringement of Swiss and international ordre public.

[4] In the unpublished decision 12 January 2007 (see F. de Weger, The Jurisprudence of the FIFA Dispute Resolution Chamber, 169), the DRC made reference to the five elements of the Portmann report to conclude that the option was not valid because, among other considerations, the notice period was too short.

[5] See decision 30 November 2007 n. 117707 and decision 7 May 2008 n. 58860.

[6] See decision18 March 2010 n. 310607, where the DRC interestingly pointed out that the inequality derives from the fact that the player, given the circumstances of contractual inferiority existing at the time he signs his first contract, either accepts the contract with the UEO or gives up on playing football with that team.

[7] TAS 2005/A/983 & 984, Club Atlético Peñarol v. Carlos Heber Buen Suárez, Christian Gabriel Rodríguez Barotti & Paris Saint Germain, award of 12 July 2006, para. 66.

[8] CAS 2006/A/1157, Club Atlético Boca Juniors v. Genoa Cricket and Football Club S.p.A., Award of 31 January 2007, para. 16. The Panel had “great difficulty in following Dr Portmann’s reasoning, and in accepting the validity and enforceability of a unilateral option”. The arbitrators deemed more important, instead, to put emphasis on the general assumption that a person, and a fortiori a minor who had just moved with his family to another country, cannot be required to perform a contract for personal services against his or her will.

[9] The CAS held recently that “these criteria may be taken into consideration and are important, but […] they are not absolute rules, the failure of which would determine the absolute invalidity of the option clause”, in CAS 2014/A/3852, Ascoli Calcio 1898 S.p.A. v. Papa Waigo N’diaye & Al Wahda Sprts and Cultural Club, award of 11 January 2016, para. 86.

[10] More precisely, a Panel held “the need to not accord too much weight and value to the Portmann criteria at the expense of the very important specifics and circumstances behind each individual dispute” CAS 2013/A/3260, Grêmio Foot-ball Porto Alegrense v. Maximiliano Gastón López, Award of 4 March 2014, para. 76, see also para. 68-69.

[11] In Decision 22 July 2004, the DRC noted that because the player’s economic conditions remained substantially unaltered in the renewal, the option was invalid.

[12] See Decision 23 March 2006, para 14. In this case, the DRC deemed that a monthly increase of less than € 1.000 of the player’s salary could not be seen as a significant economic gain for the player.

[13] See CAS 2004/A/678, Apollon Kalamarias F.C. v. Oliveira Morais, award of 20 May 2005, para. 21 and TAS 2005/A/983 & 984, Club Atlético Peñarol v. Carlos Heber Buen Suárez, Christian Gabriel Rodríguez Barotti & Paris Saint Germain, award of 12 July 2006, para. 93. See also CAS 2005/A/973, Panathinaikos Football Club v. Sotirios Kyrgiakos, Award of 10 October 2006 and CAS 2013/A/3260, Grêmio Foot-ball Porto Alegrense v. Maximiliano Gastón López, Award of 4 March 2014, para. 77.

[14] CAS 2004/A/678, Apollon Kalamarias F.C. v. Oliveira Morais, award of 20 May 2005, para 21.

[15] See CAS 2005/A/973, Panathinaikos Football Club v. Sotirios Kyrgiakos, Award of 10 October 2006, para. 23. In which the Panel considered inappropriate to compare between the salary of the extended contract from the Greek club and the salary the footballer would have received at a club in the Scottish league (the Rangers FC) since “it is well known that football clubs operating in richer markets are able to offer a higher income to players”.

[16] CAS 2013/A/3260, Grêmio Foot-ball Porto Alegrense v. Maximiliano Gastón López, Award of 4 March 2014, para. 70.

[17] See Decision 13 May 2005. Here the DRC also pointed out the non-decisiveness of the acceptance by the player of a payment of €1,950 after the extension as a result of the new contract.

[18] See Decision 21 February 2006, in which the DRC noted that: (i) the player had waited almost five months after the beginning of the extension to bring the case before the FIFA.

[19] See Decision 31 July 2013.

[20] CAS 2004/A/678, Apollon Kalamarias F.C. v. Oliveira Morais, award of 20 May 2005, para 24. The Panel dismissed the appeal of the club even though its contract with the player seemed to be drafted in conformity with Greek Sports Law, which – pursuant to Law 2725/99 – allows for the unilateral renewal of the contract provided that (i) the overall duration of the contract, including the extensions, does not exceed five years and that (ii) the financial terms are agreed at the signing of the initial contract.

[21] CAS 2005/A/973, Panathinaikos Football Club v. Sotirios Kyrgiakos, Award of 10 October 2006, para.10.

[22] The Panel, which considered “inappropriate to apply substantive Swiss law to the contract as it has no connection whatsoever with Switzerland (para. 8), made reference to the same Law 2725/99.

[23] TAS 2005/A/983 & 984, Club Atlético Peñarol v. Carlos Heber Buen Suárez, Christian Gabriel Rodríguez Barotti & Paris Saint Germain, award of 12 July 2006, paras. 81-83 (the translation is of the author).

[24] Ibid., para. 80.

[25] Ibid., para. 79.

[26] Ibid.

[27] J-S Leuba, R Fox, J de Dios Crespo Pérez, G L Acosta Perez and F m de Weger, ‘Contractual Stability: Unilateral Options’, in A. Wild (ed.) CAS and Football: Landmark Cases (2011), 119.

[28] Ibid.