Dahmane v KRC GENK

Court of Labour of Antwerp (Hasselt district) 6 May 2014

Chamber 2

Algemeen rolnummer 2009/AH/199

The Facts 

• Dahmane signed with KRC GENK on 1 July 2007 for four years (till 30 June 2011). Dahmane unilaterally terminated the contract January 2008. 
• KRC GENK demanded from Dahmane compensation of EUR 878.888,88 (36 months wages) at the labour court of Tongeren. The demand was based on Article 5 § 2 of the Law for Professional Sportsmen (24 February 1978) and the Royal Decree of 13 July 2004 that Determines the Amount of the Compensation based on the Law for Professional Sportsmen. According to the Royal Decree (of 2004) the compensation had to be equal to 36 months of salary in the case of Dahmane. 

• Dahmane demanded EUR 250.000,00 from KRC GENK compensation calculated in accordance with the Labour Agreements Law (03 July 1978). D. argued that according to article 40 § 1 of this law, the severance pay can only amount to 12 months of salary.  

• 25 May 2009 - The Labour Court agreed with the demands of KRC GENK, whereas it disagreed with Dahmane’s. Dahmane placed an appeal. 

• 22 June 2010 – Court of Labour decided that Dahmane had unlawfully unilaterally terminated the labour contract between him and KRC GENK. Dahmane had to reimburse KRC GENK with a compensation equal to 36 months of salary, because Dahmane fell under the Law regarding Labour Agreements of Professional Sportsmen of 24 February 1978. The Court rejected Dahmane’s request for damages.   

• The Court of Labour turned to the Belgian Constitutional Court with the preliminary question whether the Law for Professional Sportsmen of 24 February 1978 breaches the Articles 10 and 11 of the Belgian Constitution on Equal Treatment, as there was an inconsistency with the Labour Agreements Law of 03 July 1978 under which the severance pay can only amount to 12 months of salary. Secondly, it was questioned whether the rule in question infringed the freedom of employment.  

• 18 May 2011 – the Belgian Constitutional Court declared itself incompetent to answer the preliminary questions because the question whether a professional sportsmen falls under either the Law for Professional Sportsmen or the Labour Agreements Law solely depended on Royal Decree on Determining the Amount of the Compensation based on the Law for Professional Sportsmen (13 July 2004). According to Belgian law, the legality of the Royal Decree has to be decided by the Court of Labour itself. 

• Therefore, the judgment of 6 May 2014 was the second time the Court of Labour dealt with the case regarding the unilateral termination of the player’s contract between Dahmane and KRC GENK. This time it had to decide whether the Royal Decree breached the Belgian Constitution.
  

The Case 

• The demands by Dahmane:

  • That the Court of Labour rejects the Royal Decree on Determining the Amount of the Compensation based on the Law for Professional Sportsmen (13 July 2004) because it breaches the Belgian Constitution (part II, §1).

  • That the Court of Labour asks the CJEU the preliminary question whether the Royal Decree of 2004 breaches Article 45 TFEU since the free movement of professional sportsmen is unreasonably restricted by the Royal Decree (part II, §1).

• KRC GENK arguments:

  • Football has specific characteristics that can be summarized in:

    • Atypical employment market

    • Atypical professional career (part III.b. §5).

  • That the difference between labour agreements of professional sportsmen on the one hand “normal” labour agreements is based on the “specific character of labour agreements of professional sportsmen en the specific character of sport in general”.

    The “specificity of sport” forms a special statute for sport, whereby common law cannot be applied unabridged (part III.b. §6).

  • Referring to European Case Law, and the Commission’s White book on sport, KRC GENK highlighted that to achieve the objectives inherent to sport, which include avoiding competition distortions and the preservation of the stability of participating sport clubs, certain specifics measures can be taken aimed at guarantying  legal certainty of labour relationships in the sport sector (part III.b. §6).

• The Court's holdings
  

  • Agreed that sport exhibits certain characteristics that can deviate from other labour relationships between employer and employee, but held that since the Royal Decree in question did not mention the specificity of sport, this exception is inapplicable (part III.b. §5).

  • KRC GENK did not take the economic aspect of sport (e.g. the pursuit of economic profits) into account in its arguments, and the importance of fair competition in this regard. These economic objectives are not exclusive to the sport sector but underlie the market economy in general. Therefore, the Court sees no valid reason as to why a separate Royal Decree is necessary to achieve the objectives of the sport sector when similar objectives are pursued by other economic sectors. In other words, no separate laws should be applicable to sport when it pursues economic objectives (part III.b. §6).

  • As regards KRC GENK’s arguments that for football in particular certain legislative deviations preventing richer clubs from buying all the good players from smaller clubs, thereby distorting competition, are justifiable, the Court found them to be incorrect. Even though football’s transfer system causes movement of footballers to differ from the “normal” functioning of the labour market, in this case it is important to draw a distinction between the buying and selling of players between clubs on the one hand, and the unilateral termination of a player’s contract by either club or player on the other. Yet again the Court saw no reason why the specificity of football should enable the adoption of Royal Decrees breaching article 10 and 11 of the Belgian Constitution (part III.b. §6).

  • The Court took into account that the average career of a professional sportsman is relatively short (12 years according to RKC GENK and six to eight years according to Dahmane). A compensation amounting to 36 months of salary would for many professional sportsmen be equal to 1/3 of total career revenues and is therefore not justified in the present case (part III.b. §7).

  • The Royal Decree applies to professional sports in general, not only to football, KRC GENK’s can therefore not rely on the specificity of football to justify its legality (part III.b. §6 and §7).

  • Given that the Royal Decree is declared contrary to the Constitution, the Court sees no reason to make a preliminary reference to the ECJ (part III.b. §12).

Conclusion: the Court considered that a Royal Decree imposing a compensation of 36 months of salary on a player breaching his contract is disproportionate. Furthermore, the Court found the Royal Decree unjustifiable under the Constitutional principle of equal treatment and non-discrimination (part III.b. §8).

2015 was a good year for international sports law. It started early in January with the Pechstein ruling, THE defining sports law case of the year (and probably in years to come) and ended in an apotheosis with the decisions rendered by the FIFA Ethics Committee against Blatter and Platini. This blog will walk you through the important sports law developments of the year and make sure that you did not miss any.

The Court of Arbitration for Sport challenged by German Courts 

The more discrete SV Wilhelmshaven ruling came first. It was not even decided in 2015, as the ruling was handed out on 30 December 2014. Yet, unless you are a sports law freak, you will not have taken notice of this case before 2015 (and our blog). It is not as well known as the Pechstein ruling, but it is challenging the whole private enforcement system put in place by FIFA (and similar systems existing in other SGBs). Indeed, the ruling foresees that before enforcing a sanction rendered by FIFA, the national (or in that case regional) federation must verify that the award underlying the sanction is compatible with EU law. The decision has been appealed to the Bundesgerichtshof (BGH) and a final ruling is expected in 2016.

Later on, in January, the Oberlandesgericht München dropped its legal bomb in the Pechstein case. The court refused to recognize the CAS award sanctioning Claudia Pechstein with a doping ban, as it was deemed contrary to German antitrust rules. The reasoning used in the ruling was indirectly challenging the independence of the CAS and, if confirmed by the BGH, will trigger a necessary reform of the functioning and institutional structure of the CAS. Paradoxically, this is a giant step forward for international sports law and the CAS. The court acknowledges the need for CAS arbitration in global sport. However, justice must be delivered in a fair fashion and the legitimacy of the CAS (which relies on its independence from the Sports Governing Bodies) must be ensured (see our long article on the case here).

We will see how the BGH will deal with these cases in 2016. In any event, they constitute an important warning shot for the CAS. In short, the CAS needs to take EU law and itself seriously. If it truly addresses these challenges, it will come out way stronger.

The new World Anti-Doping Code and the Russian Doping Scandal

On the doping front, 2015 is the year in which the new World Anti-Doping Code (WADC) came into force (see our Blog Symposium). The Code introduces substantial changes in the way the anti-doping fight is led and modifies the sanction regime applicable in case of an adverse analytical finding. It is too early to predict with certainty its effects on doping prevalence in international sports. For international sports lawyers, however, it is in any event a fundamental change to the rules applicable to anti-doping disputes, which they need to get closely acquainted with.

The new World Anti-Doping Code was largely overshadowed by the massive doping scandal involving Russian sports, which was unleashed by an ARD documentary (first released in 2014) and revived by the crushing report of the Independent Commission mandated by the World Anti-Doping Agency to investigate the matter. This scandal has shaken the legitimacy of both the anti-doping system and the International Association of Athletics Federations (IAAF). It has highlighted the systematic shortcomings of the anti-doping institutions in Russia, and, the weakness of the control exercised on these institutions at a transnational level, be it by IAAF or WADA.

In 2015 again, doping proved to be a scourge intimately linked with international sports. The confidence and the trust of the public, and of clean athletes, in fair sports competitions is anew put to the test. WADA, which was created in the wake of another massive doping scandal in the nineties, has shown its limits. In practice, the decentralization of the enforcement of the WADC empowers local actors, who are very difficult to control for WADA. Some decide to crackdown on Doping with criminal sanctions (see the new German law adopted in December 2015), others prefer to collaborate with their national athletes to improve their performances. The recent proposals at the IOC level aiming at shifting the testing to WADA can be perceived as a preliminary response to this problem. Yet, doing so would entail huge practical difficulties and financial costs.

EU law and sport: 20 years of Bosman and beyond

2015 was also the year in which the twentieth anniversary of Bosman was commemorated through multiple conferences and other sports law events. The ASSER International Sports Law Centre edited a special edition of the Maastricht Journal of European and Comparative Law and a book celebrating the legacy of the ruling is forthcoming with the publisher Springer. The ruling did not have the dramatic effects predicted at the time of the decision, since football is still alive and kicking. Surely, it has given way to new challenges and sharply accelerated the transnationalization of football (and sport in general). A key legacy of Bosman is that this transnationalization, which goes hand in hand with the commercialization of sport, cannot side-line an essential category of stakeholders: the athletes.

It is with this spirit in mind, and a little push of the ASSER International Sports Law Centre, that the European Commission decided to open an investigation into the rules of the International Skating Union (ISU) barring, under the threat of a life ban, speed skaters (and any other affiliate) from joining speed skating competitions which are not condoned by the ISU. Though the case is rather low profile outside of the Netherlands, this is an important step forward for the EU Commission, as it had not opened an EU competition law investigation in sporting matters in almost 15 years. Many other competition law complaints (e.g. TPO or Formula 1) involving sport are currently pending in front of the EU Commission, but it is still to decide whether it will open a formal investigation. 2015 is also the year in which we have desperately expected the release of the EU State aid decisions regarding football clubs, and amongst them Real Madrid, but in the end this will be a matter for 2016.

FIFA and the chaotic end of the Blatter reign

FIFA is not the only SGB to have put an abrupt end to the (very) long reign of its great leader (think of the messy downfall of Diack at the IAAF). Yet, when talking about FIFA and football, the resonance of a governance crisis goes well beyond any other. It is truly a global problem, discussed in nearly all news outlets. This illustrates very much how a Swiss association became a global public good, for which an Indian, Brazilian, American or European cares as much as a Swiss, who is in traditional legal terms the only one able to influence FIFA’s structure through legislation. The global outrage triggered by the progressive release by the US authorities of information documenting the corrupt behaviour of FIFA executives has led to two immediate consequences: a change of the guard and a first reform of the institution.

There are now very few FIFA Executive Committee members left who were present in 2010 for the election of Qatar as host city for the 2022 World Cup. The long-time key figures of FIFA, Blatter, Platini and Valcke, are unlikely to make a comeback any time soon. And, the upcoming February election of the new FIFA president is more uncertain than ever with five candidates remaining. Simultaneously, FIFA has announced some governance reforms, which aim at enhancing the transparency of its operation and the legitimacy of its decision-making. We are living through a marvellous time of glasnost and perestroika at FIFA. The final destination of this transformative process remains unknown. There are still some major hurdles to overcome (starting with the one association/one vote system at the FIFA congress) before FIFA is truly able to fulfil its mission in a transparent, accountable and legitimate manner. We hope it will be for 2016!

The ASSER International Sports Law Blog in 2015

Finally, a few words on our blog in 2015. In one year we have published 60 posts, our most-read-blog concerned the Pechstein ruling that was read 3054 times.

Our peak day was reached on 4 September with 621 page views (thanks to a great post on the Essendon case by @jrvkfootball).

Our readers are based all around the world, but the majority is based in the EU and the US.

We hope to be able to keep you interested and busy in 2016 and we wish you a great year!

The ASSER International Sports Law Blog Team