LET'S TALK SPORTS LAW

[Author: Raghav Khetan, Student of Law at Jindal Global Law School, India]

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Introduction

It was nearing the end in the crucial Champions league quarter final, for the 2018-19 season, between Manchester City and Tottenham Hotspur. With the score tied at four goals each, Tottenham were looking to progress to the semi-finals of the coveted competition on away goals. Pandemonium ensued when Manchester city scored at the last minute to leapfrog in front of the tie, and with only a few seconds left to play it was certain that they would progress further. However, their celebrations were cut short by a VAR review that overturned the goal due to an offside, which led Tottenham to claim victory over the still-rejoicing, yet confused city players.

Manchester city could face a similar situation, wherein they are under threat of sanctions from the Premier League, which could retrospectively strip them off their league titles, for the alleged breaches of the Premier League Rules. This conundrum could be further aggravated by the Premier League’s statement that the club would not be able to appeal the sanctions imposed on them to the Court of Arbitration for Sport (CAS).

The situation at play

Subsequent to being acquired by the Abu Dhabi United Group (ADUG) in 2008, Manchester city have established themselves as one of the most dominant and successful clubs in Europe. This was made possible by recruiting the best talent from around the world that, by necessary implication, involved substantial capital investment in paying transfer fees and buying-out player contracts. Consequently, there were serious concerns over their funding as to whether it was in line with (the Union of European Football Associations’ (UEFA) and the Premier League’s financial fair play (FFP) regulations.

One of the requirements to ensure compliance by clubs to the FFP regulations is the break-even rule, that allows clubs to only utilize revenue for player transfers and wages generated from ‘football related activities.’ In short, clubs are not allowed to spend more than they earn as revenue, and such revenue must be generated only out of the club’s footballing activities. This inevitably rules out State-backed owners, like the ADUG, from directly financing their club’s investments.

As a result, Manchester City’s financial operations have been under scrutiny and have warranted an investigation ever since the club’s takeover by the ADUG. Subsequently, the Premier League began an investigation into the financial operations involving the club and how they could sustain such brazen spending decisions, without any element of subterfuge. In February of 2023, the Premier League concluded a four-year preliminary investigation and imposed sanctions on the club for various breaches of its rules. The matter is now under reference to an independent commission, who can level open ended sanctions and have been made the final deciding authority, with no appeal to CAS from their decision.

Moot Question

The primary objective of this article is not to analyze the very substance of the sanctions imposed on the club or going into the merits of the claims made by the parties. It instead aims to question whether the Premier League can deny Manchester City a right to appeal to the Court of Arbitration for Sport (CAS) for the sanctions imposed on them.

The Premier League has its own set of regulations that dictate and govern terms of appeal from the League’s internal dispute resolution mechanisms. These regulations do not affirmatively or negatively recognize CAS’ jurisdiction as a forum for appeal. Manchester City, being a member club of the Premier League, are subjected to these regulations and consequently, stipulated to adhere to the provisions regarding the finality of decisions. This can have grave implications for clubs, who may not have any further recourse against the internal decisions of their national federations to any higher adjudicatory authority like the CAS. In these situations, it would be prudent to also observe how CAS jurisprudence has dealt with matters related to the jurisdiction of football disputes arising out of the club’s respective domestic leagues or federations. Exploring the CAS’ power to rule on its own jurisdiction would also be a necessary corollary to analyze the permissible range of cases that the tribunal would choose to adjudicate upon.

This article would, thus, seek to analyze whether Manchester City can proceed with an appeal to CAS against the sanctions imposed on them vis-a-vis the applicable CAS, Premier League, and FIFA rules and regulations. This article would also draw upon previous CAS jurisprudence and certain Swiss law principles that help establish the primary jurisdictional limits of the tribunal.

UEFA v. Manchester city

The Premier League’s recent sanctions on the club are not the first time such sanctions have been levied upon them. In 2020, the top European footballing authority, UEFA, had found Manchester City guilty of breaching their FFP regulations and imposed a two-year embargo on the club from participating in their prestigious and lucrative competitions.

However, unlike the Premier League regulations, the UEFA Club Financial Control Body (CFCB) Procedural Rules and UEFA Statutes provided the club with a direct appeal mechanism to the CAS. The statutes recognized CAS’ jurisdiction as “exclusively” binding upon the parties in case of an appeal, to the “exclusion of any ordinary court or any court of arbitration.” Manchester city were thus able to file an appeal before CAS who eventually overruled the two-year ban on the club.

On the contrary, the present situation (in connection with the Premier League regulations) would preclude Manchester City from approaching the highest chamber for sports dispute resolution. This presents a fundamental question over the jurisdictional limits of CAS and whether aggrieved parties, like Manchester City, can successfully claim a right to appeal before the tribunal, despite their sporting league barring them from appealing the sanctions.

Analyzing whether Manchester City can invoke CAS’ jurisdiction

The Code of Sports-related Arbitration bifurcates the CAS’ jurisdiction into three primary divisions: ordinary, anti-doping and appeals division. While the ordinary jurisdiction is exercised by CAS as a court of first instance, its appellate jurisdiction is invoked as an appeal from the decision of a sporting body or federation. Additionally, the tribunal generally adjudicates upon two main categories of contentious disputes: commercial and disciplinary. While contractual breaches and cases of civil liability form the corpus of commercial disputes, a major chunk of disciplinary disputes arise from on-field or off the field matters, that include breaches of financial norms like the ones in the present case. Previous CAS jurisprudence suggests that the majority of the disciplinary cases find their genesis as an appeal from the decision of a sporting body or federation (like the Premier League).

Premier League Rules

As mentioned earlier, the Premier League Board recently concluded a preliminary investigation into the financial activities of Manchester city and charged the club for numerous violations of its financial rules. Article W.3 of the Premier League Rules permits the Board to refer any possible case of a disciplinary sanction to an independent commission, which has been provided with a very wide ambit of powers under Article W.51. Such powers include the ability to impose various penalties on the club that could range from anywhere between a hefty fine to points deduction or even retrospectively stripping the club of its titles which they won during the seasons in which the alleged breaches took place. The commission has the power to invite the respondent club to place any mitigating factors before it and then “make (any) such order as it thinks fit.”

Further, Article W.63 provides that an appeal from the decision of the commission shall only lie before an Appeal Board, which would be constituted for such purpose. The Appeal Board is empowered to adjudicate upon the decision of the commission and has the power to either accept or reject the commission’s penalty on the aggrieved club.  However, the most crucial aspect of the Appeal Board is that its decisions would be final and binding on the member club that made the appeal. The finality provision is borrowed from the Arbitration rules under Section X of the Premier League Rules, which states that the award rendered by the Appeal Board would be conclusive, with no right of appeal from it. Further, any decision made by the League’s internal dispute resolution mechanism which is in the nature of a “sporting sanction”, would not allow any further right to appeal. Thus, the Premier League Rules do not expressly recognize CAS’ jurisdiction and (in this case) would preclude Manchester City from making any appeal to CAS against a penalty imposed by the Premier League commission.

Requirement to invoke CAS’ appellate jurisdiction.

Nevertheless, it would be relevant, at this stage, to venture into the CAS’ procedural rules regarding the admissibility of an appeal. As enumerated before, the CAS has three primary divisions, one of which is its appeals division. The Code for Sports-related Arbitration governs the CAS’ procedural rules and confines the appellate jurisdiction of the tribunal only to specific instances. Articles R27 and R47 of the CAS Code provide the primary stepping stones to invoke an appeal before the Tribunal. In Al-Wehda Club v. Saudi Arabian Football Federation, while dealing with the admissibility of an appeal, the tribunal found two primary grounds that need to be satisfied in order to invoke its jurisdiction:

(i) a final decision from internal point of view of a federation, association or sports-related body and,

(ii) an arbitration clause inserted into the statutes or regulations of the said body or a specific arbitration agreement conferring jurisdiction of the CAS.

Thus, for a party to successfully approach the CAS and its appellate jurisdiction, it must ensure that the appellant has exhausted all sufficient legal remedies available to them prior to the appeal, and admit the existence of a specific agreement conferring jurisdiction to the CAS. In Bulgarian Football Union (BFU) v. Fédération Internationale de Football Association (FIFA), the tribunal found that the appellant had exhausted all prior legal remedies before approaching it, as the FIFA Disciplinary Committee’s decision was final and there was no possible appeal from such decision to the FIFA Appeal Committee (as per the FIFA statutes).

Similarly, in the present case Manchester City would satisfy this requirement only if they appeal the Premier League’s Appeal Board’s decision. As observed before, the first step of the Premier League’s internal dispute resolution mechanism is the Board’s reference of an alleged violation to the Commission, whose decision can then be appealed before the Appeal Board in accordance with the relevant Rules. The Rules also provide that the decision of such an Appeal Board would be final, which by necessary implication means that there would not be any further internal mechanism left for member clubs to exhaust. Thus, to ensure that Manchester City complies with the requirement of exhausting all prior remedies, they must first appeal any prospective decision from the Commission to an Appeal Board and then may challenge the decision of the Appeal Board before the CAS.

However, this requirement is usually not a problem for aggrieved parties, as they only decide to approach the CAS’ jurisdiction after exhausting all prior legal remedies available to them. The primary issue would arise with the second requirement i.e., the presence of an arbitration clause or a specific arbitration agreement in the statutes or regulations of the body. This is because, like the Premier League, several national leagues do not choose to grant jurisdiction to the CAS in their Rules and instead give finality to their internal mechanisms. This raises a crucial question about the effectiveness of such internal decision making by national federations, by way of excluding the involvement of an independent adjudicator like the CAS.

Notwithstanding, there may be solutions for aggrieved members of such national federations to invoke the CAS’ jurisdiction despite there being no reference in their regulations. An obvious question to be asked in this context is whether Manchester City can prefer an appeal to the CAS after exhausting prior legal remedies, despite the Premier League Rules having no express recognition to its jurisdiction? Such an alternative view, that deviates from the established CAS jurisprudence, would be explored by venturing into the applicability of FIFA’s Statutes to the present case and whether they can “supersede” the Premier League’s internal rules. As stated, the norm for invoking CAS’ appellate jurisdiction remains the fulfilment of the abovementioned twin requirements, which has been constantly upheld by the tribunal. However, the viability of the alternative approach would also be looked into, as to whether Manchester City would indirectly be governed by the FIFA Statutes since they form a part of the organizational framework of a specific international governing body.

Kompetenz – Kompetenz

Before venturing into the moot analysis, we must aim to locate CAS’ authority to rule on its own jurisdiction. A very well recognized principle in international arbitration, which is also regarded as a direct corollary of the principle of autonomy to an arbitration agreement, is ‘Kompetenz-Kompetenz’. This principle allows an arbitral tribunal to decide on its own competence, such as whether or not the said dispute is within the confines of the tribunal’s jurisdiction.

Since the seat of the CAS is based in Switzerland, the lex arbitri applicable to it would be the Swiss national arbitration law i.e., the Swiss Private International Law (PILA). Article 186 of the PILA grants authority to the CAS to rule on its own jurisdiction, implying that mere recognition of the CAS as an arbitral tribunal would not be sufficient to claim its jurisdiction, and such jurisdiction is not automatically granted. Such a principle has been widely recognized by the CAS in its previous jurisprudence.

Thus, in the present situation (considering the above-mentioned principle and the scope for Manchester City to invoke the CAS’ jurisdiction via reference to FIFA statutes) it would be crucial to answer the question as to whether the arbitration clauses in the FIFA Statutes automatically lead to the jurisdiction of CAS for decisions rendered by national federations or leagues. Past CAS jurisprudence would reveal a narrow/restrictive approach that does not allow for such a global reference through FIFA Statutes to invoke its jurisdiction. This current interpretation acts as a direct stonewall against invoking CAS’ jurisdiction from any appeals arising out of national federations that do not provide for an appeal to CAS in their statutes. This would be the dominant position, despite the fact that the national federation’s statutes provide reference to FIFA statutes, which in turn gives CAS jurisdiction. On the other hand, we would aim to explore past judgements from the Swiss Federal Tribunal (SFT) that may offer an alternative route to Manchester City for invoking CAS’ jurisdiction, despite not having a specific arbitration agreement in their national league’s rules.

• The Current Position

It has been previously stated that there are two primary requirements to invoke CAS’ jurisdiction i.e., a final decision from a national federation or league, with an express reference to CAS in its statutes. In a long line of cases, the tribunal has found this requirement to be watertight, with no room for any exception. In Ashley Cole v. FAPL, the tribunal dismissed an appeal made out of the final decision of a National league, stating “in order for the CAS to have jurisdiction to hear an appeal, the statutes or regulations of the sports-related body from whose decision the appeal is being made, must expressly recognize the CAS as an arbitral body of appeal.”

Further, it has been held by the tribunal in DNN Sports Management LDA v. Baniyas Football Sports Club Company, that “FIFA Statutes do not establish a right to appeal decisions of the Member Association directly to CAS.” As per this line of reasoning, Article 67 of the FIFA statutes does not by itself provide jurisdiction to CAS, in relation to decisions rendered by national federations. It has been held that a CAS Panel cannot assert jurisdiction over judgements made by organizations other than FIFA (in particular, national federations) based only on the clause that states FIFA “recognizes” the CAS.

The tribunal in this narrow interpretation of its jurisdiction has established that it would only accept its appellate jurisdiction for cases where the national federations or league’s statutes themselves expressly provide for an appeal to the tribunal. Further, it would not be enough for aggrieved parties to make a mere reference to FIFA statutes from the national federation rules, as it would not automatically invoke CAS’ jurisdiction.

•      The Alternative View (Rerouting Through FIFA?)

FIFA is the international governing body of association football that oversees football amongst its numerous national members and is the ultimate organization for footballing activities around the world. The English Football Association is one of FIFA’s affiliated national members and must act in accordance with its various statutes and regulations. Such requirement of compliance, by necessary implication, also flows to the Premier League’s regulations.

Article B.14 of the Premier League Rules states that the membership of a club to the League is only concluded via an agreement to that effect. Such agreement must bind the parties to it and ensure their compliance, not only to the League’s Rules but also to “the statutes and regulations of FIFA”. Thus, for instance, a member club like Manchester City would not only be bound to the League’s own Rules but also to the statutory provisions of FIFA. Article 56 of the FIFA statutes, in turn, explicitly recognizes CAS as the body competent to resolve disputes between “… Leagues, (and) Clubs…”. Further, Article 57 provides that appeals against the final decisions of FIFA and its member Confederations and Leagues must only be lodged with CAS. However, Article 57(3) states that,

“CAS, however, does not deal with appeals arising from;

…

(c) decisions against which an appeal to an independent and duly constituted arbitration tribunal recognised under the rules of an association or confederation may be made.”

Thus, the applicable FIFA and Premier League Rules, read in combination with CAS’ jurisdictional requirements, would not seem to allow domestic football disputes to be adjudicated by CAS. The question here, however, is whether CAS’ jurisdictional requirements be satisfied by virtue of a reference to the FIFA statutes, and do FIFA’s statutes by themselves grant jurisdiction to CAS? While it is a well-recognized principle that CAS has the power to rule on its own jurisdiction, there is a caveat to this power. Under Article 190 (2)(b) of the PILA, a CAS award can be challenged before the Swiss Federal Tribunal (SFT) on the ground that the tribunal wrongly accepted/declined its jurisdiction. Thus, it would be prudent to examine the past jurisprudence of the SFT as well, on the issue of the jurisdiction of CAS and the validity of arbitration clauses by reference to another body’s regulations.

As stated before, the current position would prohibit Manchester City from exercising an appeal before CAS, in case an unfavorable sanction is levied upon them by the Commission appointed under the Premier League Rules. While CAS has stuck to this position in its past jurisprudence, there have also been instances where the SFT has recognized the peculiarities in the sporting world. The SFT has also recognized arbitration clauses in statutes as valid even if sport stakeholders are not parties to these agreements on the basis of the straightforward premise that since athletes are participating in sport within the organizational framework of a particular governing body, they accept the entirety of its regulations.

For instance, in A v. FIFA and WADA, the SFT ruled that, “These FIFA rules are binding for the Appellant. As a professional football player playing at the international level, he is a member of the Brazilian Football Association CBF, which for its part is a member of FIFA. Accordingly, the FIFA Rules, particularly the jurisdiction of the CAS according to Art. 61 of the FIFA Statutes, apply also to the Appellant. The CAS accurately acknowledged that…” Here, the athlete, by virtue of being a member of the CBF, is also bound by the FIFA rules. The SFT also rejected the requirement of a direct reference to CAS under R47 of the CAS Code. It instead stated that, since Article 1(2) of the CBF Statutes (like the Premier League Rules in our case) contains a “a general reference to the FIFA Rules and thus to the appeal rights of FIFA and WADA contained in the FIFA Statutes is sufficient to establish the jurisdiction of the CAS pursuant to R47 of the CAS-Code.”

However, the analysis by the SFT in this case must be distinguished from the current position of Manchester City. At the very outset the FIFA Statutes, while allowing for an appeal to CAS, disregard any possibility of an appeal in a case where an appeal may be made to an independent and duly constituted arbitration tribunal under the rules of an association. Here, the Premier League Rules provide for the appointment of Appeal Board that would be constituted for deciding the matter with finality. Further, Article 57 (5) and (6) state that only FIFA and WADA are entitled to an appeal from an internal and final decision passed on any doping related issues. The abovementioned case involved both FIFA and WADA as parties to the case against a decision passed by the Brazilian Arbitration Tribunal (Superior Tribunal de Justiça Deportiva de Futebol) which the SFT found was not an independent arbitration tribunal and was instead an organ of the Brazilian Football Association. Further, the FIFA Statutes make a clear distinction between doping and non-doping cases, wherein Article 57 allows only FIFA and WADA to prefer appeals before CAS in relation to doping cases. Unlike the case mentioned above, Manchester City’s case is not a doping matter and instead concerns breaches of financial fair play norms. In any case, FIFA and WADA are not parties to the proceedings at the national level and thus, the alternative route which makes reference to the Brazilian case would not seem to be a viable or the correct approach for the club.

The SFT ruling can also be viewed by a slightly different lens. The SFT did not confirm CAS’ view regarding the distinction between doping and non-doping matters. It simply confirmed the possibility of an appeal by FIFA/WADA in doping cases, without commenting upon the merits of an appeal in non-doping related cases. Instead of commenting upon the nature of the claim, the SFT relied upon benevolence factor in sports arbitration cases. The SFT in X. v. Y. had ruled that, the court, while assessing the validity of arbitration clauses in sport, acts with “a certain benevolence” in order to promote the “quick disposition of the dispute by specialized courts, as the CAS, which offer comprehensive guarantees of independence and objectivity.”

However, even if the distinction between the kinds of cases is ignored, the FIFA Statutes would still rule out the possibility of the Manchester club re-routing their claim through FIFA, as Article 57 requires the involvement of either FIFA or WADA preferring an appeal (directly or indirectly), and in all non-doping matters Article 57 of the FIFA Statutes does not by itself confer jurisdiction to CAS, especially when an independent arbitral institution exists at the national level, which is evidenced by the presence of an Appeal Board.

Concluding remarks

While the Premier League has levied charges and referred the matter to a Commission, it would be interesting to observe the outcome of the situation, as to whether Manchester City are able to approach CAS, via their appellate division. Nevertheless, the case has allowed for a deep dive into the jurisdictional confines of CAS and how it may deal with prospective situations arising out of disputes from national federations and leagues regulations. In any case, it has been established that national federations can deny their members a further right to appeal to the tribunal, which has been reaffirmed in several previous instances, where CAS has denied jurisdiction to applicants whose national federations do not provide an express appeal mechanism to it.

Lastly, if Manchester City are indeed imposed with unfavorable sanctions of any nature imposed by the appeal panel established by the PL, and are left with no recourse to appeal to CAS, it may set a binding precedent for other national league’s decisions, due to the scale and nature of the case. An appeal to the Swiss Federal Tribunal under the PILA against the decision of the CAS denying the club jurisdiction could be an alternative route for the club who may soon find themselves in a tricky situation.

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*For any query, feedback, or discussion, the Author can be contacted at [raghavkhetan02@gmail.com]

*NOTE- The opinions and views expressed in this article are that of the Author(s) and not of SLPRR- the expressed opinions do not, in any way whatsoever, reflect the views of any third party, including any institution/organisation that the Author(s) is/are currently associated to or was/were associated to in the past. Furthermore, the expressions are solely for informational and educational purposes, and must not be deemed to constitute any kind of advice. The hyperlinks in this blog might take you to webpages operated by third parties- SLPRR does not guarantee or endorse the accuracy or reliability of any information, data, opinions, advice, statements, etc. on these webpages.

PREFERRED CITATION: Raghav Khetan, Jurisdictional Confines of CAS’ Arbitrability – Analysing the (im)possibility of Manchester City’s Appeal before the CAS, SLPRR <https://sportslawandpolicyreviewreporter.com/?p=2929> July 11, 2023.