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].