Editor’s note: Stefano
Bastianon is Associate Professor in EU Law and EU sports law at the
University of Bergamo and lawyer admitted to the Busto Arsizio bar.
1. EU law and the CAS case-law
Bearing in mind these questions, it is possible to
affirm that under EU law, the specificity of sport
i) refers to the inherent characteristics of sport that
set it apart from other economic and social activities and which have to be
taken into account in assessing the compatibility of sporting rules with EU
law; and
ii) under EU law these inherent characteristics of
sport must be considered on a case by
case basis, per the Wouters test
as developed by the ECJ in the Meca Medina ruling.
Both aspects can be found in the CAS case-law too,
although the CAS case-law shows some remarkable differences and peculiarities. From
a general point of view, the application of the principle of specificity of
sport in the CAS case-law represents an aspect of the more general issue
related to the application of EU law by the CAS. However, the purpose of this
paper is not to fully examine if and to what extent the CAS arbitrators apply
EU law rules on free movement and competition; rather, the aim is to analyse
the way the CAS deals with the concept of the specificity of sport,
highlighting similarities and differences compared to the ECJ.
Taking for granted that ‘a CAS panel is not only
allowed, but also obliged to deal with the issues involving the application of
[EU] law’,[1]
as far as the compatibility of sporting rules with EU law is concerned the CAS
case-law shows different degrees of engagement. For instance, in the ENIC
award concerning the so-called UEFA integrity rule, the CAS panel went through
a complete competition-law analysis in perfect harmony with the Wouters et al.
ruling by the ECJ.[2]
On the contrary, in the above-quoted Mutu case, the issue of
compatibility of the FIFA’s transfer regulations with EU competition law was
analysed in a rather simple way, merely stating that the FIFA rules at stake
were not anti-competitive under EU competition law without giving any reason to
support this conclusion.
More recently, in the Galatasaray
and Milan A.C. awards, concerning the
UEFA’s financial fair-play regulations, the CAS applied a detailed analysis of EU competition
law. However, in both cases, according to the CAS the proportionate character
of sanctions listed in the UEFA’s financial fair-play regulations cannot affect
the evaluation of the legitimacy of these regulations under Art. 101 TFEU. This
conclusion represents a clear breaking point with respect to the ECJ case-law,
according to which the evaluation of the restrictive effects of a rule
necessarily presupposes the analysis of the proportionate character of the
sanction imposed in the event of a violation of that rule as well.[3] In
regard to EU free movement, the CAS case-law tends to be less analytical in
terms of the principle of proportionality. For instance, in the RFC Seraing award which concerned both EU free movement and
competition law, the CAS panel mainly focused on the legitimate objectives of
the contested rule (FIFA’s ban on Third-Party Ownership – TPO), merely affirming
that the restrictive measures under EU free movement were justified and
inherent in the pursuit of those objectives.
2. Art. 17 FIFA RSTP and the specificity of sport
In practice, the CAS case-law on the specificity of
sport is mainly related to the application of Art. 17 (1) of the FIFA Regulations on the status and transfer of players
concerning the consequences of terminating a contract without just cause.[4] According to Art. 17(1), ‘the
party in breach shall pay compensation. Subject to the provisions of Art. 20
and Annexe 4 in relation to training compensation, and unless otherwise
provided for in the contract, compensation for the breach shall be calculated
with due consideration for the law of the country concerned, the specificity of
sport, and any other objective criteria. These criteria shall include, in
particular, the remuneration and other benefits due to the player under the
existing contract and/or the new contract, the time remaining on the existing
contract up to a maximum of five years, the fees and expenses paid or incurred
by the former club (amortised over the term of the contract) and whether the
contractual breach falls within a protected period’.
Although written in very general terms, from Art. 17(1)
it is possible to derive that:
i) it does not
provide the legal basis for a party to freely terminate an existing contract at
any time, prematurely, without just cause;
ii) the provision clarifies that compensation is due;
iii) the amount of compensation to be awarded must
necessarily take into account all of the specific circumstances of the case. It
is for this reason that Art. 17.1 of the FIFA RSTP does not establish a single
criterion or even a set of rigid rules, but rather provides guidelines to be
applied to fix just and fair
compensation.
It is evident that Art. 17 of the FIFA RSTP involves
or points to the specificity of sport. Beyond what Art. 17 implicitly states,
the CAS case-law has contributed to defining the scope of the specificity of
sport.
To fully understand the relevance of specificity of
sport in the context of Art. 17 FIFA RSTP, it is important to investigate the
rationale of this provision as well as the principle of positive interest. To
expand, the rationale of the rule is to foster the maintenance of contractual
stability between professionals and clubs. In the post-Bosman era, the
concept of contractual stability was introduced to replace the former transfer-fee
system by compensation due for the breach or undue termination of an existing
agreement.[5] According to the CAS
jurisprudence, Art. 17 of FIFA RSTP plays a central role: ‘the purpose of Art.
17 is basically nothing else than to reinforce contractual stability, i.e. to
strengthen the principle of pacta sunt servanda in the world of
international football, by acting as deterrent against unilateral contractual
breaches and terminations, be it breaches committed by a club or by a player. This,
because contractual stability is crucial for the well functioning of the
international football. The principle pacta sunt servanda shall apply to
all stakeholders, "small" and "big" clubs, unknown and top
players, employees and employers, notwithstanding their importance, role or
power. The deterrent effect of Art. 17 FIFA Regulations shall be achieved
through the impending risk for a party to incur disciplinary sanctions, if some
conditions are met (cf. Art. 17 para. 3 to 5 FIFA Regulations), and, in any
event, the risk to have to pay a compensation for the damage caused by the
breach or the unjustified termination. In other words, both players and club
are warned: if one does breach or terminate a contract without just cause, a financial compensation
is due, and such compensation is to be calculated in accordance with all those
elements of Art. 17 FIFA Regulations that are applicable in the matter at
stake, including all the non-exclusive criteria listed in para. 1 of said
article that, based on the circumstances of the single case, the panel will
consider appropriate to apply’.[6]
The concept of positive interest, is strictly linked
to the way of calculating the compensation. In case of breach or unjustified
termination of the contract, the judging body will have to establish the damage
suffered by the injured party, taking into consideration the circumstances of
the case, the arguments raised by the parties and the evidence produced. In so
doing the judging authority shall be led by the principle of the so-called
positive interest (or “expectation interest”), i.e. it will determine an
amount geared towards placing the injured or aggrieved party in the position
they would otherwise have been, had the contract been performed .[7] More
specifically, according to the CAS case-law, ‘the principle of
the “positive interest” shall apply not only in the event of an unjustified
termination or a breach by a player, but also when the party in breach is the
club. Accordingly, the judging authority should not satisfy itself in assessing
the damage suffered by the player by only calculating the net difference
between the remuneration due under the existing contract and a remuneration
received by the player from a third party. Rather, the judging authority will
have to apply the same degree of diligent and transparent review of all the
objective criteria, including the specificity of sport, as foreseen in Art.
17 FIFA Regulations’.[8]
Pursuant to the above-mentioned jurisprudence, in the
joint cases FC Shakhtar Donetsk (Ukraine) v/ Mr.
Matuzalem Francelino da Silva (Brazil) & Real Zaragoza SAD (Spain) &
FIFA and Mr. Matuzalem Francelino da Silva (Brazil) & Real Zaragoza
SAD (Spain) v/ FC Shakhtar Donetsk (Ukraine) & FIFA, the Panel emphasised
that ‘by asking the judging authorities, i.e. the competent FIFA bodies and,
in the event of an appeal, the CAS, to duly consider a whole series of
elements, including such a wide concept like "sport specificity", and
asking the judging authority to even consider "any other objective
criteria", the authors of Art. 17 FIFA Regulations achieved a balanced
system according to which the judging body has on one side the duty to duly
consider all the circumstances of the case and all the objective criteria
available, and on the other side a considerable scope of discretion, so that
any party should be well advised to respect an existing contract as the
financial consequences of a breach or a termination without just cause would
be, in their size and amount, rather unpredictable. At the end, however, the
calculation made by the judging authority shall be not only just and fair, but
also transparent and comprehensible’.[9]
Similarly, in the joint cases FC Sion v. Fédération Internationale de Football
Association (FIFA) & Al-Ahly Sporting Club and E. v.
Fédération Internationale de Football Association (FIFA) & Al-Ahly Sporting
Club, according to the Panel ‘Art. 17.1 of the FIFA
Transfer Regulations also asks the judging body to take into due consideration
the “specificity of sport”, that is the specific nature and needs of sport, so
as to attain a solution which takes into account not only the interests of the
player and the club, but also, more broadly, those of the whole football
community (…). Based on this criterion, the judging body should therefore
assess the amount of compensation payable by a party keeping duly in mind that
the dispute is taking place in the somehow special world of sport. In other
words, the judging body should aim at reaching a solution that is legally
correct, and that is also appropriate upon an analysis of the specific nature
of the sporting interests at stake, the sporting circumstances and the sporting
issues inherent to the single case (…). Taking into account the specific
circumstances and the course of the events, a CAS panel might consider as
guidance that, under certain national laws, a judging authority is allowed to
grant a certain “special indemnity” in the event of an unjustified termination.
The specific circumstances of a sports case might therefore lead a panel to
either increase or decrease the amount of awarded compensation because of the
specificity of sport (…). However, in the Panel’s view, the concept of
specificity of sport only serves the purpose of verifying the solution reached
otherwise prior to assessing the final amount of compensation. In other words,
the specificity of sport is subordinated, as a possible correcting factor, to
the other factors’.[10]
Pursuant to such case-law, in the well-known Webster cases the CAS referred
to the specificity of sport from two different perspectives:
i) based
on the fact that Art. 17.1 expressly refers to the specificity of sport and
that it is in the interest of football that solutions to compensation be based
on uniform criteria rather than on provisions of national law chosen by the
parties led the panel to the conclusion that it was not appropriate to apply
the general principles of Scottish law on damages for breach of contract;
ii) the Panel
recalled that ‘in light of the history of
Art. 17 (…) the specificity of sport is a reference to the goal of finding
particular solutions for the football world which enable those applying the
provision to strike a reasonable balance between the needs of contractual
stability, on the one hand, and the needs of free movement of players, on the
other hand, i.e. to find solutions that foster the good of football by
reconciling in a fair manner the various and sometimes contradictory interests
of clubs and players’.[11]
More specifically, in FC
Pyunik Yerevan v. L., AFC Rapid Bucaresti & FIFA, the panel
considered ‘that the specificity of the sport must obviously take the
independent nature of the sport, the free movement of the players (…) but also
the football as a market, into consideration. In the Panel's view, the
specificity of the sport does not conflict with the principle of contractual
stability and the right of the injured party to be compensated for all the loss
and damage incurred as a consequence of the other party’s breach. This rule is
valid whether the breach is by a player or a club. The criterion of specificity
of sport shall be used by a panel to verify that the solution reached is just and fair not only under a strict civil (or common) law
point of view, but also taking into due consideration the specific nature and
needs of the football world (and of parties being stakeholders in such
world) and reaching therefore a decision which can be recognised as being an
appropriate evaluation of the interests at stake, and does so fit in the
landscape of international football. Therefore, when weighing the specificity
of the sport a panel may consider the specific nature of damages that a breach
by a player of his employment contract with a club may cause. In particular, a
panel may consider that in the world of football, players are the main asset of
a club, both in terms of their sporting value in the service for the teams for
which they play, but also from a rather economic view, like for instance in
relation of their valuation in the balance sheet of a certain club, if any,
their value for merchandising activities or the possible gain which can be made
in the event of their transfer to another club. Taking into consideration all
of the above, the asset comprised by a player is obviously an aspect which
cannot be fully ignored when considering the compensation to be awarded for a
breach of contract by a player’.[12]
In Al Gharafa S.C. &
M. Bresciano v. Al Nasr S.C. & FIFA, the panel first identified
the following basic principles:
i) the
fundamental importance to reach a solution that is legally correct and appropriate
to the specific nature of the sporting interests at stake, and
ii) the sporting circumstances and the
sporting issues inherent to the single case;
The panel then underlined that ‘the “specificity of
sport” is not an additional head of compensation, nor a criteria allowing to decide
in ex aequo et bono, but a correcting factor which allows the Panel to
take into consideration other objective elements which are not envisaged under
the other criteria of Art. 17 RSTP”.[13] On that basis, the panel
decided to increase the amount of compensation for damages, taking into account the sporting
importance of the player for the team and the behaviour of the player at the
time of the termination. To the contrary, in FC Senica A.S. v. Vladimir Vukajlovic &
FIFA, the panel referred to the specificity of sport and that
neither club or player was interested in
maintaining their labour relationship, as the basis for excluding any
compensation to the player.[14]
3. Concluding remarks
It should be rather clear that
the concept of specificity of sport has different meanings and purposes in the ECJ
and CAS jurisprudence. According to the ECJ case-law, ante its Meca Medina ruling, the reference to the special
character of sport was a way to deal with purely sporting rules in the context
of EU law; on the contrary, after the judgment in 2006, this approach seems
rather questionable. Unfortunately, at present the specificity of sport looks
less like a guiding principle than a concept in search of itself. Perhaps also
for this reason the ECJ has always carefully avoided defining it or expressly
mentioning it; at the same time, the 2011 definition
by the Commission – i.e. the specificity of sport encompasses all the
characteristics that make sport special – sounds rather tautological.On the contrary, in the CAS case-law the concept of
specificity of sport is expressly referred to in cases of breach or unjustified
termination of football contracts and amounts to a criterion, among others, to
be taken into account to make the compensation just and fair not only under a strict civil law point of view but also
taking into due consideration the specific nature and needs of the football
world. In this context, according to the CAS jurisprudence the specificity of
sport is neither an additional basis for compensation nor a criterion allowing a
decision one way or the other in equity. Instead, it represents a correcting
factor allowing the panel to award extra compensation in cases where the panel
is not convinced that the costs so far awarded fully compensate the party
entitled to compensation under Art. 17 FIFA RSTP. That said, the concept
of specificity of sport remains rather unclear and vague in the CAS case-law as
well.