In the last five years, the Striani
case has been the main sword of Damocles hanging over UEFA’s Financial Fair
Play Regulations. At the very least, the only real judicial threat they have
faced (apart from the relatively harmless challenge mounted in the Galatasaray case at the CAS). Indeed, a Belgian
player agent, Daniele Striani, represented by Bosman’s former lawyer Jean-Louis
Dupont, attempted, in various fora, to challenge the compatibility of UEFA’s
CL&FFP Regulations with EU law. Striani lodged a complaint with the
European Commission (which was quickly rejected in October 2014) and initiated a private
action for damages before the Brussels Court of First Instance. The latter
deemed itself not competent to decide on the matter, but nevertheless accepted to
order a provisory stay of the enforcement of the UEFA FFP Regulations pending a
preliminary reference to the Court of Justice of the EU (see Ben van Rompuy’s
blog on the case here). The CJEU unsurprisingly rejected to enter into the matter, but UEFA and Striani
decided to appeal the first instance ruling to the Court of Appeal, which
rendered its decision on 11 April. It is unclear at this stage whether Striani
will attempt to challenge it at the Belgian Cour de Cassation (Highest Civil
Court), however this would entail considerable risks and costs and his lawyers
to date have not indicated that they would do so (see here).
While the ruling of the Court of
Appeal does not touch upon the much-discussed question of the compatibility of
UEFA’s FFP Regulations with EU law (see our many blogs on the question here, here and here), it remains an interesting decision to
discuss broader questions related to the procedural ease in challenging
regulatory decisions passed by sports governing bodies (SGBs) based in
Switzerland. Competition law constitutes the main legal tool available to
sports stakeholders looking to challenge existing regulatory arrangements from
the outside (e.g. not going through the internal political systems of the SGBs
or the CAS route). Recent cases, such as the ISU decision of the European Commission, the Pechstein case in front of the German courts or
the Rule 40 decision of the German competition
authority, have demonstrated the potency of competition law to question the
legality of the rules and decisions of the SGBs.[1]
In this regard, the decision of the Brussels Court of Appeal narrows the range
of parties allowed to challenge in European courts the SGBs’ rules and
decisions on the basis of competition law.
I.
A Strict Interpretation of Article 5(3) of the Lugano Convention
Striani, supported by a number of fans
based in France and the UK (presumably PSG and Manchester City supporters), was
challenging the UEFA FFP rules for their indirect effects. In short, the core
claim was that the FFP Regulations, by curtailing the ability of clubs to
invest on the transfer market, had the effect of depriving Striani from the
chance to earn more money for his services as an intermediary and the fans from
a chance to see better players join their favorite team and therefore improve
the quality of the team’s performance. Undoubtedly, these effects were not
primary objectives of the FFP rules, which were aimed at constraining the ability
of clubs to invest at a loss. Moreover, the rules were only constraining clubs
qualified to the European competitions. The question from the point of view of
private international law, was whether Striani and the fans could rely on
Article 5(3) Lugano Convention to sue UEFA in front of the the Belgian
courts.[2]
The Court of Appeal acknowledged
that in this case it was dealing with an action in liability for a breach of
competition law but sided with UEFA in considering that the hypothetical damage
suffered by the claimants in Belgium was too indirect for it to be competent. It
came to this conclusion after a journey through well-known European private
international law judgments, such as Mines de Potasse d’Alsace, Dumez France or Shevill, and other less known (mainly French and
Belgian) judgments in cases involving Swiss-based SGBs.[3]
In the present case, it noted that « the challenged UEFA Regulation does
not prohibit M. Striani and MAD Management […] from exercising the activity of
an intermediary in Belgium or abroad, nor does it regulate the conditions in
which this activity is to be exercised ».[4]
Moreover, the targeted provisions « do not prohibit the relevant clubs from
having recourse to agents […] nor do they limit this activity ».[5]
In fact, the prejudice alleged by Striani and MAD Management « is only an
indirect consequence of the adoption of the challenged UEFA Regulation »,
as « it is not related directly to the activity of the claimants and does
not have direct consequences on this activity in Belgium or abroad ».[6]
Thus, the Court decided that jurisdictions of the seat of UEFA (the Swiss courts)
are sole competent to hear the matter.
This conclusion is not surprising. It
was also the one reached by the first instance court, which however still decided
quite surprisingly to send a preliminary reference to the CJEU and to order a
stay in the enforcement of the UEFA FFP Regulations (the latter move was
condemned by the Court of Appeal). Yet, it carries implications in the context
of transnational sports regulation. Indeed, this is a domain in which the
consumers (e.g. fans) are heavily impacted by decisions taken by international SGBs
located mainly in Switzerland. The regulatory decisions of these bodies have
undoubtedly structural effects on the way a particular sport is experienced by
the fans. Moreover, due to the monopoly positions of the SGBs over their sports,
these decisions are rarely challenged by competitors (such as the International Swimming League). They often bind the fans and
determine the quality of the competitions they are watching and are doing so
without providing them any type of say in the regulatory process. Sure, fans
(or agents) will still be able to sue the SGBs in Swiss courts, but those have
proven extremely ‘benevolent’ vis-à-vis the SGBs and are unlikely to apply EU
competition law. In short, the Belgium court has consolidated the exclusion of actors
indirectly affected by the decisions of the SGBs from European courts. What
happens in Switzerland stays in Switzerland…
II.
The irresponsibility of the URBSFA for UEFA’s decisions
The second strategy used by
Striani’s lawyers to anchor the dispute in Belgium was their attempt to involve
the Belgium football federation, URBSFA, in the case. Indeed, as the URBSFA is
seated in Belgium, there is no issue with regard to the competence of the
Belgium courts in its regard. However, here the problem arises in connection to
the URBSFA’s causal contribution to the adoption and enforcement of the
challenged UEFA FFP Regulations. Indeed, the court held that « the
fact that URBSFA is a member of UEFA does not turn it into a co-author of the
regulations; the reasoning of the claimants ignores the separate legal
personality of UEFA ».[7]
The claimants were also alleging that the URBSFA was contributing to the
enforcement of the FIFA rules, yet the court finds that they are
« confusing the licensing role conferred to the national federations […]
with the specific rules regarding the financial balance of clubs enshrined in
Articles 57 to 63 of the attacked regulations ».[8]
In fact, the « federal regulations of the URBSFA do not impose any
constraints, or sanctions, with regard to the challenged break-even rules;
these are of the sole competence of UEFA. »[9]
Hence, the court concludes that no particular wrongful conduct can be
attributed to the URBSFA linked to the harm alleged by the claimants.
By doing so, the Court of Appeal holds
onto the formalist idea of the separate corporate personalities and brushes
over the fact that national federations are at least politically co-responsible
for the policies adopted, e.g. they hold the voting power inside the international
federations. In this context, invoking the corporate veil might let national
federations too easily off the hook, even though it is certainly true that a
single national federation does not have a decisive voting power or influence
inside an international SGB. Here, there is an interesting parallel with the
functioning of the European Union itself, as it seems that decisions taken by
UEFA (not unlike the EU’s) are not politically (or in this case legally) attributable
to the individual member associations (the famous blame Brussels culture). The
idea of a joint action between national and international federations leading
to the exercise of collective power might be more suitable to capture the
transnational regulatory dynamics at play in sports and could lead to some form
of joint liability. In any event, this part of the decision highlights another
difficulty in anchoring a case outside of Switzerland, as national federations will
often be deemed an inadequate defendant due to their relatively passive role in
the adoption and enforcement of the regulations of the international SGBs.
Conclusion
Striani’s crusade against UEFA’s FFP
Regulations came to a strange end. While legal scholars and practitioners have
been discussing at length whether FFP can be deemed compatible with EU law or
not (I’ve spoken in favor of compatibility under certain circumstances, but many
others have disputed it), the much-awaited ruling did not even touch upon this
question. Indeed, the Brussels Court of Appeal simply denied its competence to
hear the matter and sentenced the claimants to pay quite high legal fees to
UEFA. By doing so, it did not simply put an end to a case that felt quite
artificial and which might have been a pawn in a wider game between UEFA and
some powerful clubs, it also closed the door on a variety of stakeholders willing
to challenge the rules and decisions of SGBs outside of Switzerland. Indeed, if
this interpretation of the Lugano Convention were to stand, it would for
example exclude fans from being able to launch liability claims, on their home
judicial turf, against international SGBs for the damage inflicted to their
clubs.
Besides those directly impacted, in
the case of FFP primarily the clubs (would the players be sufficiently directly
affected? Maybe, maybe not), those that wish to challenge the rules and
decisions of the SGBs are condemned to turn to the Swiss courts, which are
rather well-known for their deference to the wide regulatory autonomy of international
SGBs. In short, what happens in Switzerland (e.g. the adoption and enforcement
of the SGBs’ regulations) is to stay judicially in Switzerland. This will be a reassuring
news for the network of Swiss private associations that rule over international
sports as it will reduce the risk of facing civil litigation outside of their well-chartered
home turf. In fact, it is extremely rare for those directly affected (e.g. the
clubs and athletes) to be ready to go to court to challenge them. As evidenced
by the case of Bosman or Pechstein, the short-term costs in doing so are
disproportionately high (boycott and career-end for the former, bankruptcy for
the latter) while the chances of success remain quite limited. Similarly, a
football club is unlikely to take the risk of going against UEFA or FIFA,
unless it has nothing left to lose (e.g. like SV Wilhelmshaven). In sum, even
if I believe UEFA’s FFP rules could be allowed to stand under EU law, this
ruling sheltered UEFA from having to deal with this question, at least for the
time being.