Asser International Sports Law Blog

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

The Russian Doping Scandal at the Court of Arbitration for Sport: The IPC’s Rio Ineligibility of Russian Paralympic Athletes

Editor's note: This blog is part of a special blog series on the Russian doping scandal at the CAS. Last year I analysed the numerous decisions rendered by the CAS ad hoc Division in Rio and earlier this year I reviewed the CAS award in the IAAF case.

Unlike the International Association of Athletics Federations (IAAF), the International Paralympic Committee (IPC) was very much unaffected by the Russian doping scandal until the publication of the first McLaren report in July 2016. The report highlighted that Russia’s doping scheme was way more comprehensive than what was previously thought. It extended beyond athletics to other disciplines, including Paralympic sports. Furthermore, unlike the International Olympic Committee (IOC) the IPC had a bit more time to deal with the matter, as the Rio Paralympic Games were due to start “only” in September.

After the release of the McLaren Report, the IPC president Sir Philip Craven was “truly shocked, appalled and deeply saddened at the extent of the state sponsored doping programme implemented in Russia”. He immediately announced the IPC’s intention to review the report’s findings and to act strongly upon them. Shortly thereafter, on 22 July, the IPC decided to open suspension proceedings against the National Paralympic Committee of Russia (NPC Russia) in light of its apparent inability to fulfil its IPC membership responsibilities and obligations. In particular, due to “the prevailing doping culture endemic within Russian sport, at the very highest levels, NPC Russia appears unable or unwilling to ensure compliance with and the enforcement of the IPC’s Anti-Doping Code within its own national jurisdiction”. A few weeks later, on 7 August, the IPC Governing Board decided to suspend the Russian Paralympic Committee with immediate effect “due to its inability to fulfil its IPC membership responsibilities and obligations, in particular its obligation to comply with the IPC Anti-Doping Code and the World Anti-Doping Code (to which it is also a signatory)”. Indeed, these “obligations are a fundamental constitutional requirement for all National Paralympic Committees (NPCs), and are vital to the IPC’s ability to ensure fair competition and to provide a level playing field for all Para athletes around the world”. Consequently, the Russian Paralympic Committee lost all rights and privileges of IPC membership. Specifically, it was not entitled to enter athletes in competitions sanctioned by the IPC, and/or to participate in IPC activities. Thus, “the Russian Paralympic Committee will not be able to enter its athletes in the Rio 2016 Paralympic Games”. More...


The World Anti-Doping System at a Crossroads

“One day Alice came to a fork in the road and saw a Cheshire cat in a tree. ‘Which road do I take?’ she asked. ‘Where do you want to go?’ was his response. ‘I don’t know,’ Alice answered. ‘Then,’ said the cat, ‘it doesn’t matter.”

Tomorrow the Foundation Board of the World Anti-Doping Agency (WADA) will gather in Glasgow for its most important meeting since the creation of the Agency. Since the broadcasting of a documentary alleging systematic doping in Russian athletics by the German public broadcaster in December 2014, the anti-doping world has been in disarray. The various independent investigations (the Pound Report and the McLaren Report) ordered by WADA into doping allegations against Russian athletes have confirmed the findings of the documentary and the truth of the accusations brought forward by Russian whistle-blowers. Undeniably, there is something very rotten in the world anti-doping system. The current system failed to register a widespread, and apparently relatively open, state-sponsored scheme aimed at manipulating any doping test conducted in Russian territory. Moreover, it was not WADA that uncovered it, but an independent journalist supported by courageous whistle-blowers. More...


The Russian Ballet at the CAS Ad Hoc Division in Rio - Act V: Saving the last (Russian) woman standing: The Klishina miracle

Editor's note: This is the (belated) fifth part/act of our blog series on the Russian eligibility cases at the CAS ad hoc Division in Rio. The other acts are available at:


Act V: Saving the last (Russian) woman standing: The Klishina miracle 

Darya Klishina is now an Olympic celebrity. She will enter the history books not because she won a gold medal or beat a world record. Instead, her idiosyncrasy lies in her nationality: she was the sole Russian athlete authorized to stand in the athletics competitions at the Rio Olympics. And yet, a few days before the start of the long jumping contest in which she was due to take part, the IAAF surprisingly decided to revoke her eligibility (‘And Then There Were None’). But Klishina appealed the decision to the CAS ad hoc Division and, as all of you well-informed sports lawyers will know, she was allowed to compete at the Olympics and finished at a decent ninth place of the long jump finals.

Two important questions are raised by this case:

  • Why did the IAAF changed its mind and decide to retract Klishina’s authorization to participate?
  • Why did the CAS overturn this decision? More...


The Russian Ballet at the CAS Ad Hoc Division in Rio - Act IV: On Bringing a sport into disrepute

Editor's note: This is the fourth part/act of our blog series on the Russian eligibility cases at the CAS ad hoc Division in Rio.


Act IV: On Bringing a sport into disrepute

Paragraph 2 of the IOC Decision: “The IFs will also have to apply their respective rules in relation to the sanctioning of entire NFs.” 

 

In paragraph 2 of its Decision, the IOC mentioned the possibility for IFs to “apply their respective rules in relation to the sanctioning of entire NF's”.This is exactly what the International Weightlifting Federation (IWF) did when it decided on 29 July 2016 to exclude the whole Russian Weightlifting Federation (RWF) from the Rio Olympics for having brought the sport into disrepute. Indeed, Article 12. 4 of the IWF Anti-doping Policy, foresees that:

“If any Member federation or members or officials thereof, by reason of conduct connected with or associated with doping or anti-doping rule violations, brings the sport of weightlifting into disrepute, the IWF Executive Board may, in its discretion, take such action as it deems fit to protect the reputation and integrity of the sport.”More...



The Russian Ballet at the CAS Ad Hoc Division in Rio - Act III: On being sufficiently tested

Editor's note: This is the third part/act of our blog series on the Russian eligibility cases at the CAS ad hoc Division in Rio.


Act III: On being sufficiently tested 

Paragraph 2 of the IOC Decision: “The IFs should carry out an individual analysis of each athlete’s anti-doping record, taking into account only reliable adequate international tests, and the specificities of the athlete’s sport and its rules, in order to ensure a level playing field.”

Daniil Andienko and 16 other members of the Russian rowing team challenged the decision of the World Rowing Federation (FISA) to declare them ineligible for the Rio Olympics. The FISA Executive Committee took the decision on 24 July 2016 because they had not “undergone a minimum of three anti-doping tests analysed by a WADA accredited laboratory other than the Moscow laboratory and registered in ADAMS from 1 January 2015 for an 18 month period”.[1] In their submissions, the Russian applicants did not challenge the IOC Decision, and thus the criteria enshrined in paragraph 2, but only its application by FISA.[2] The Russian athletes argued that FISA’s decision deviated from the IOC Decision in that it was imposing as an additional requirement that rowers must “have undergone a minimum of three anti-doping tests analysed by a WADA accredited laboratory other than the Moscow laboratory and registered in ADAMS from 1 January 2015 for an 18-month period”.[3] The Panel acknowledged that “the IOC Executive Board decision does not refer explicitly to the requirement of three tests or to a period of 18 months”.[4] Nonetheless, it “finds that the Challenged Decision is in line with the criteria established by the IOC Executive Board decision”.[5] Indeed, the IOC’s Decision “provides that in order to examine whether the level playing field is affected or not (when admitting a Russian athlete to the Rio Olympic Games), the federation must look at the athlete's respective anti-doping record, i.e. examine the athlete's anti-doping tests” and that “[i]n doing so, the IOC Executive Board decision specifies that only "reliable adequate international tests" may be taken into account”.[6] In this regard, the Panel, and FISA, share the view that “a reliable adequate international test can only be assumed if the sample has been analyzed in a WADA-accredited laboratory outside Russia”.[7]More...



The Russian Ballet at the CAS Ad Hoc Division in Rio - Act I: Saved by the Osaka Déjà-Vu

Since it was first introduced at the Atlanta Games in 1996,[1] the CAS ad hoc Division has never been as crowded as it was during this year’s Rio Olympics. This is mainly due to the Russian doping scandal, which has fuelled the CAS with Russian athletes challenging their ineligibility to compete at the Games. The CAS recently revealed that out of 28 awards rendered, 16 involved Russian athletes challenging their ineligibility. This Russian ballet is a direct result of the shocking findings of Richard McLaren’s Independent Person (IP) Report ordered by the World Anti-Doping Agency (WADA). McLaren’s investigation demonstrated that the Russian State was coordinating a sophisticated doping system. The revelation triggered an outrage in the media and amongst other competitors. Numerous calls (especially by WADA and various National Anti-Doping Organisations) were heard urging the IOC to ban the entire Russian delegation from the Olympics. The IAAF decided to exclude the whole Russian athletics team, [2] with the exception of Darya Klishina, but, to the disappointment of many, the IOC refused to heed these calls and decided, instead, to put in place a specific procedure to assess on a case-by-case basis the eligibility of Russian athletes.

The IOC’s Decision (IOC Decision) of 24 July foresees that the International Federations (IFs) are competent to determine whether each Russian athlete put forward by the Russian Olympic Committee (ROC) to participate in the Olympics meets a specific set of conditions. Moreover, the ROC was also barred from entering athletes who were sanctioned for doping in the past, even if they have already served their doping sanction. In the end, a majority of the Russian athletes (278 out of 389 submitted by the ROC) cleared the IOC’s bar relatively easily, but some of them did not, and many of the latter ended up fighting for their right to compete at the Rio Olympics before the CAS ad hoc Division.[3] In the following blogs, I will analyse the ten published CAS awards related to Russian athletes.[4] It is these legal fights that I suggest to chronicle in the following parts of this blog. To do so, I have divided them in five different (and analytically coherent) Acts:

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

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


The Headlines

For the world of Sport, the elsewhere known “sleepy month” of August turned out to be the total opposite. Having only just recuperated from this year’s Tour de France, including a spectacular uphill sprint on bicycle shoes by later ‘Yellow Jersey’ winner Chris Froome, August brought another feast of marvellous sport (and subsequent legal drama): The 2016 Olympic Games in Rio de Janeiro.More...


From Lord of the Rings to Lord of the Drinks – A legal take on the downfall of Yuri van Gelder at the Rio Olympics. By Guido Hahn (Erasmus University Rotterdam)

Editor’s note: Guido graduated cum laude from the Vrije Universiteit Amsterdam. He teaches law at the Erasmus Universiteit Rotterdam. He specializes in sports law and provides legal advice for the professional sports sector.


Introduction

This blog is a commentary on a recent case that hit like a bombshell in the Netherlands (and beyond) during the recent Olympic Games in Rio. The case concerns a Dutch athlete, Yuri van Gelder, who reached the Olympic finals in his sport, got sent home by ‘his’ NOC (NOC*NSF) after a night out in Rio and launched legal proceedings in front of a Dutch court to claim back his place in the finals. This commentary will attempt to explain the Dutch ruling and evaluate whether a different legal route would have been possible and preferable. More...


Fear and Loathing in Rio de Janeiro – Displacement and the Olympics by Ryan Gauthier (Thompson Rivers University)

‎Editor's Note: Ryan is Assistant Professor at Thompson Rivers University, he defended his PhD at Erasmus University Rotterdam in December 2015. His dissertation examined human rights violations caused by international sporting events, and how international sporting organisations may be held accountable for these violations.

Introduction

On Sunday, August 21, the 2016 Summer Olympic Games in Rio de Janeiro will end. The spotlight will dim not only on the athletes who return to their home countries to ply their trade in relative obscurity, but also on the country of Brazil.[1] Once the Games have ended, life will go ‘back to normal’, although for many residents of Rio de Janeiro, what is ‘normal’ is anything but. More...



Sporting nationality and the Olympic Games: selected issues by Yann Hafner (University of Neuchâtel)

Editor’s note: Yann Hafner is a Phd researcher at the University of Neuchâtel specialized in sports and nationality issues. He is also Legal Affairs Manager at the Fédération Internationale de Volleyball. Yann is an editor of the ASSER International Sports Law Blog and has previously published on the blog on nationality conundrums at the FIFA World Cup 2014 in Brazil (see here).  

This contribution aims to decipher the relationship between sporting nationality and the Olympic Games. To this end, the author will first define sporting nationality and discuss athletes’ eligibility in national team in the context of the Olympic Games. Then, selected issues in relation with sporting nationality and the Olympic Games (with an emphasis on issues related to the Rio 2016 Olympic Games) will be investigated. More...



Asser International Sports Law Blog | Unpacking Doyen’s TPO Deals – Sporting Lisbon’s rebellion in the Rojo case. By Antoine Duval and Oskar van Maren

Asser International Sports Law Blog

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

Unpacking Doyen’s TPO Deals – Sporting Lisbon’s rebellion in the Rojo case. By Antoine Duval and Oskar van Maren

In this blog we continue unpacking Doyen’s TPO deals based on the documents obtained via footballleaks. This time we focus on the battle between Doyen and Sporting over the Rojo case, which raises different legal issues as the FC Twente deals dealt with in our first blog.

 

I.              The context: The free-fall of Sporting

Sporting Lisbon, or Sporting Club de Portugal as the club is officially known, is a Portuguese club active in 44 different sports. Although the club has the legal status of Sociedade Anónima Desportiva, a specific form of public limited company, it also has over 130.000 club members, making it one of the biggest sports clubs in the world.

The professional football branch of Sporting is by far the most important and famous part of the club, and with its 19 league titles in total, it is a proud member of the big three cartel, with FC Porto and Benfica, dominating Portuguese football. Yet, it has not won a league title since 2002.

The members of Sporting get to elect the club’s president. A typical election campaign is akin to a political one with regard to status, media coverage and campaign funds. In fact, former Sporting president Pedro Santana Lopes went on to become the Prime Minister of Portugal in 2004-2005. In 2011, the elections were hotly disputed with Godinho Lopes defeating his main rival Bruno de Carvalho by only 300 votes. A request by De Carvalho to recount the votes was later dismissed, causing local unrests and police intervention.

Under Godinho Lopes’ presidency, Sporting obtained very poor sporting results, including a seventh place in the 2012/13 season, the worst ranking in the club’s history. New elections were held in 2013 and won by Bruno de Carvalho in a landslide. In addition to underwhelming results on the field, it turned out that the financial health of the club off the field was also at risk. Bruno de Carvalho faced a loss of €43 million in the 2012/13 season alone. This large financial debt was one of the reasons why on 1 October 2014, the General Assembly approved the proposal by the new Board of Directors to press liability charges against Godinho Lopes for breaching due diligence duties.

In the midst of the financial and managerial chaos surrounding Sporting, one dispute stands out as being relevant to our series of blogs on Doyen’s TPO deals. Faced with financial difficulties, Godinho Lopes had recourse to Doyen Sport to finance the recruitment of a number of players, amongst them Marco Rojo, an Argentine defender coming from Spartak Moscow in 2012. After two years at the club, the player was transferred against a healthy €20 million fee to Manchester United in 2014. However, the club staunchly refused to pay out the share of the economic rights owned by Doyen. Thus, giving way to a legal dispute on which we will put the spotlight in this blog. Although the case is still pending in front of CAS, several documents related to it were published on the footballleaks website.[1]

 

II.            The facts: the Rojo case

Before analysing the fine prints of the Economic Rights Participation Agreement (ERPA) between Doyen and Sporting concerning the economic rights of Rojo, a bit of background on the player and his career is needed. Marcos Rojo is an Argentine professional football player who appeared on the elite football scene at a young age. In 2009, by the age of 19, he won the Copa Libertadores with his side Estudiantes de la Plata, and in 2011, aged 21, he was a regular starter for the Argentinian national team during the Copa America. Sporting, under Godinho’s presidency, signed Rojo from Spartak Moscow for €5.43 million in July 2012.[2] In order to finance the signing of Rojo, Sporting needed fresh money, thus it turned to Doyen as a “last resort initiative”.[3] As provided by the ERPA, the Maltese investment company paid € 3 million and obtained in return 75% of Rojo’s Economic rights. The agreement includes similar provisions to the ones outlined in detail in our FC Twente blog. Notably, in the case Sporting would receive a transfer offer for Rojo of more than €8 million, Doyen could request that the club accept the offer or pay an amount equivalent to 75% of the offer to buy back the rights of the player from the fund. Moreover, in the case the club was to renew the contract of the player or failed to avoid that his contract runs out, it was bound to pay a minimum fee of €4.2 million (in case of renewal, Doyen could also chose to keep its share of the player’s economic rights).

Rojo’s outstanding 2014 World Cup (he was selected for the World Cup All-Star Team) triggered interest from English Premier League clubs, most notably Southampton and Manchester United. Both sides were keen on signing him in the summer of 2014, but Sporting president De Carvalho had no intention of selling him. According to De Carvalho, Rojo was key to the club’s ambition of becoming Portuguese champion. Sporting claimed that Doyen, via its director Nelio Lucas, was “promoting and forcing this transfer” and, thus, “violating his duty to respect Sporting’s independence in transfer related matters”.[4] De Carvalho maintained that Doyen’s influence breached then art.18bis of the FIFA RSTP. In retaliation against Doyen’s perceived influence, Sporting refused to pay to Doyen the agreed 75% share of the proceeds from the transfer of Rojo to Manchester United. Instead, it argued that Doyen had breached its contractual duties and declared the ERPA (and the guarantees attached to it) null and void. Nonetheless, the club did transfer back to Doyen the €3 million it invested at the outset. Hence, Sporting put Doyen’s contractual edifice to the test and Doyen was forced to go to court (and more precisely to the Court of Arbitration for Sport) to try to enforce its rights under the ERPA agreement.

 

III.         The showdown: The CAS as ultimate arbiter of the legality of Doyen’s TPO contracts

The ERPA signed by Doyen and Sporting contains both a clause defining Swiss law as the law applicable to the contract and the CAS as the jurisdiction competent to deal with disputes arising out of the contract.[5] Henceforth, it was mandatory for Doyen to turn to the CAS as soon as it became obvious that it would not recoup the 75% it believes it was owed on Rojo’s transfer. The dispute was finally heard by a CAS panel in June of this year and the final decision is still, as far as we know, pending (see the outstanding coverage of the issue by Tariq Panja from Bloomberg, here and here). The case is of great importance to Doyen, if the CAS finds that Doyen’s ERPA is contrary to Swiss law, this finding will most likely apply to each of Doyen’s TPO deals that are based on a similar model and dramatically weaken its contractual position. The good news for Doyen is that it probably has only relatively few ERPA’s still in place (for example FC Twente and Doyen agreed to put an end to their agreement), as the FIFA ban should have blocked it from entering into new agreements.

This case is not about former article 18bis of the FIFA RSTP, as is often misunderstood. This would come only into play if FIFA were to sanction Sporting for having had recourse to an ERPA with Doyen, an issue that might still arise and a configuration potentially already at play in the FC Twente case. The Rojo dispute between Sporting and Doyen, however, is of a purely contractual nature. It is only about whether Doyen’s TPO deals are compatible with Swiss civil law. In this regard, footballleaks has recently published a very interesting document: a confidential report by a Swiss law firm on the legality of Doyen’s Model ERPA in light of Swiss law. This report raises a number of thorny legal issues that the CAS will have to weigh on.

The ERPA between Doyen and Sporting must abide by the requirements of Swiss civil law. In general, the Swiss Civil Code is favourable to contractual autonomy, yet there are some restrictions to the freedom of the parties. To be valid, an agreement should not be contrary to the bonos mores. In other words, the moral values or ethical principles supported by the Swiss legal system. Indeed, as foreseen by Art. 20.1 of the Swiss Code of Obligations, a “contract is void if its terms are impossible, unlawful or immoral”.

The whole Rojo case in front of the CAS is likely to hang on the determination whether Doyen’s ERPA model is immoral or not from the Swiss perspective. Immorality is constituted especially if the contract introduces a serious imbalance between the obligations of the parties. The Swiss law firm mandated by Doyen doubted the signature of an ERPA would create such imbalance, simply because “both the FUND [Doyen] and the Club have rights and obligations according to the Agreement”.[6] This falls a bit short. As we have seen, Doyen uses the leverage offered by the financial difficulties of clubs (FC Twente or Sporting) to impose very harsh contractual conditions and high interest rates. This harshness is clearly acknowledged in the ERPA. For example, clause 10.6 indicates that Sporting “is conscious of the harshness and the severity of the consequences of clauses 10.4 and 10.5”. Whether the embedded contractual imbalance in the ERPA is sufficient to be deemed immoral under Swiss law is for the CAS to decide, but it is not a possibility that should be discarded lightly. Moreover, this potential immorality is also supported by the willingness of FIFA to ban TPO as it points at the conflicts of interest and integrity risks arising out of its use.

The ERPA could also be contrary to art. 27.2 of the Swiss Civil Code, which provides that: “No person may surrender his or her freedom or restrict the use of it to a degree which violates the law or public morals”. According to the Swiss law firm contracted by Doyen, this is especially the case if a legal entity’s “economic freedom is restricted in such a way that its economic existence is in danger”.[7] It also argued that, “the undertakings of the Club cannot in principle be considered excessive”, as “there is no obvious disparity between the considerations of the Parties”.[8] Here again, the arguments provided by Doyen’s law firm are feeble at best. In fact, the contractual imbalance is openly acknowledged in Doyen’s own contract. The economic freedom of Sporting (or FC Twente for that matter) is so drastically reduced that a club is forced into selling its best players at Doyen’s will.[9] Those players are at the heart of the “economic existence” of a club. In fact, the fate of FC Twente illustrates how the loss of its best players led to the club facing financial and sporting bankruptcy.

Finally, Sporting is also likely to have argued that Doyen was in breach of its contractual duties. Clause 14 of the ERPA stipulates that Doyen “recognizes that the Club is an independent entity in so far as the Club’s employment and transfer-related matters are concerned and [Doyen] shall not, either though this Agreement or otherwise, seek to exert influence over these matters […]”. The Club claimed in its termination letter of the ERPA that “Doyen has seriously and irremediably violated its obligations of non-influence in Sporting transfer policy […] which constitutes a material breach of the agreement”. Swiss contract law may entail the right for Sporting to refuse to execute its part of the deal in case of breach of contract by Doyen. In that regard, Sporting would have had to factually demonstrate the faulty character of Doyen’s intervention in Rojo’s transfer.

It is certainly not a given that the CAS will consider Doyen’s ERPA contrary to Swiss law or for Doyen to be in breach of its contractual duties, but there are credible legal arguments that point in both directions. Surely, the hubris of the management of Sporting and FC Twente is chiefly responsible for the terrible deals closed with Doyen. Yet, Doyen leveraged their dire financial situations and irrational ambitions to strong-arm them into one-sided agreements that are imposing unfair terms on the clubs. Doyen takes on very little risk: If a player fails to become a star, the fund will recoup its investment plus very reasonable interests (unless the club is bankrupt); if a player breaks through, it will pocket the jackpot. The fund is a true vulture fund geared to the football industry. It buys under-priced assets (economic rights attached to players) in fire sales and hopes for a huge profit.

We will hear soon from the CAS whether it deems this practice legal under Swiss law. In any event, FIFA has decided to ban TPO outright, raising the opposite question of the compatibility of the ban with EU law. This will be the subject of our final blog.

 


[1] The documents used, especially the ERPA applicable to Rojo and the termination letter send out by Sporting, might be blocked or unavailable due to complaints lodged by Doyen. They are on file with the authors.

[2] http://www.transfermarkt.nl/marcos-rojo/profil/spieler/93176.

[3] Rojo ERPA, 23 August 2012, p.2.

[4] Letter of termination of the ERPA, 14 August 2014, para.15. See also paras 17-20.

[5] Rojo ERPA, 23 August 2012, clause 22 and 23.

[6] FRORIEP, ‘Memorandum on certain questions of Swiss law in relation to a draft ERPA’, para.16.

[7] Ibid, para.23.

[8] Ibid, para.25.

[9] Doyen could not ignore the fact that those clubs were in such financial difficulties, that they would be unable to pay on their own the share of a transfer offer above the agreed amount and thus retain their player.

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