26 July 2022
Governance
Football
Sports Business
Wednesday, 19 August 2020 By Shane Wafer
In today’s world of professional football, the legal relationship between clubs and players is universally based upon contracts of employment. As with any commercial contract, such relationship may inevitably result in disputes between the parties. These disputes can range from matters of unfair dismissal, to breach of contract, failure to adhere to certain conditions or even the simple application of stipulated dispute resolution mechanism(s). In the global business of football, these disputes are principally resolved by alternative dispute resolution, via internal arbitral tribunals. In the past, stakeholders would have been compelled to litigate their disputes either internally or via the national court system, which has been found to be relatively slow and unpredictable.[1] To remedy this issue and ensure that sportspersons and bodies do not “wash their dirty sports linen in public”, but rather settle their disputes “within the family of sport”[2], there has been a major shift by litigants away from national court systems to alternative dispute resolution. In fact, FIFA as the global governing body for football, created its own dispute resolution chamber (FIFA DRC) and has also mandated the creation of equivalent national dispute resolution chambers at domestic level.
This article examines national dispute resolution chambers (NDRCs). It asks what constitutes an ‘independent and duly constituted’ arbitration panel in the eyes of FIFA. It also examines two interesting examples, one from South Africa (the author’s home) and one from Kenya that illustrate the problems NDRCs face in ensuring that their decisions are recognised by FIFA. Specifically, it looks at:
For many years, the process of resolving disputes between players and clubs was primarily dealt with internally by clubs, national federations or as a matter of last resort by national courts. However, in 2001, FIFA constituted its own dispute resolution chamber, FIFA DRC,[3] and mandated the creation of equivalent national dispute resolution chambers – NDRCs – at domestic level[4]. It required national associations to insert a clause into their regulations stating that, unless provided otherwise, it is “prohibited to take disputes in the association or disputes affecting leagues, members of leagues, clubs, members of clubs, players, officials and other association officials to ordinary courts of law….”[5]
The move signified a major effort to shift away from internal dispute resolution and ordinary courts of law, towards ‘independent arbitration’, which is now considered the principle mechanism for resolution of football related disputes. One of the principle reasons for doing this was primarily to ensure the protection and utility of the “lex sportive” – the body of sports related case law that meshes with the rules and regulations of sports governing bodies[6]. The move meant that sports related disputes are now handled with a higher level of sensitivity to and expertise in the specificity of the subject matter than would otherwise be possessed by ordinary judges. It also offers the possibility of developing a more uniform system of precedent and practice, unconstrained by jurisdictional boundaries, promising a better ‘global understanding’ which national courts cannot provide.[7] In addition, private arbitration in general offers a relatively quick and cheap resolution of disputes compared to national courts, which are often suffering from burgeoning court rolls and lengthy delays.
In terms of constitution, FIFA requires an NDRC to be “an independent and duly constituted arbitration tribunal recognised under the rules of the association or confederation”. It has also created a set of regulations (examined below) to define what this means. What is apparent when one delves a little deeper is that NDRCs are regularly affected by issues of jurisdiction, lack of competency, and a lack of recognition of their decisions by FIFA.
The fundamental principle when referring an employment dispute to FIFA’s DRC or an NDRC can be found in Article 22(b) of the FIFA Regulations on the Status and Transfer of Players (RSTP), which states:
Without prejudice to the right of any player or club to seek redress before a civil court for employment-related disputes, FIFA is competent to hear: … (b) employment-related disputes between a club and a player of an international dimension; the aforementioned parties may, however, explicitly opt in writing for such disputes to be decided by an independent arbitration tribunal that has been established at national level within the framework of the association and/or a collective bargaining agreement. …. The independent national arbitration tribunal must guarantee fair proceedings and respect the principle of equal representation of players and clubs. [8]
The FIFA DRC is, as a general rule, competent to deal with employment-related disputes of an international dimension, unless an independent arbitration tribunal guaranteeing fair proceedings and respecting the principle of equal representation of players and clubs has been established at national level, within the framework of the association and/or a collective bargaining agreement.
his is a little more nuanced than first meets the eye, so in summary:
These guiding principles are key in order to render decisions of NDRCs competent in the eyes of FIFA.
The proviso is the kicker here, as it means that parties can go through a whole dispute resolution process and have a Panel issue a decision, only for that decision not to be recognised by FIFA or CAS if the NDRC is deemed not competent (see examples below).
This leads us on to the next question:
As far back as 2005, FIFA was aware of the risks associated with the independence of NDRCs. In order to mitigate this risk, FIFA issued Circular 1010[10] to all member associations, outlining the strict conditions - a minimum procedural standard - required for a tribunal to be considered truly independent and duly constituted. The five key principles outlined were:
These five principles (the Principles) are FIFA’s yardstick to ensure NDRCs are both “independent and duly constituted”, as required by its statutes. In fact, the terms “independent” and “duly constituted” require that an arbitral tribunal meets the minimum procedural standard comprising the above principles.[11]
Further to this, FIFA also developed its NDRC Standards (Standards), which were issued to member associations and became effective on 1 January 2008. The Standards reflect the above Principles, and in-fact go further in setting out certain specific rules, obligations and competency standards for NDRCs to meet before their competency is recognised.
Despite these competency requirements being mandatory, there is no administrative process by which FIFA formally recognises an NDRC[12]. Instead the recognition of an NDRC is in practice either accepted or rejected by the FIFA DRC or CAS in two instances:
What is key to these examinations is that the party objecting to the jurisdiction of the FIFA DRC bears the onus of proving that the NDRC is independent and duly constituted in line with FIFA’s Principles and Standards, and respects the principles of parity, fair hearing and equal treatment in its constitution.[13]
Panels at FIFA and CAS have examined and ruled on the competency of NDRCs and their compliance with FIFA’s Principles and Standards on several occasions. Among the most common issues brought before them by applicants have been:
The most recent examination by CAS was in 2019 in the case of Al Sharjah Football Club v. Leonardo Lima da Silva & FIFA,[14] which related to the competency of the Dispute Resolution Chamber of the United Arab Emirates Football Association (UAE DRC). In its award, the panel ruled that the UAE DRC had no jurisdiction to hear the matter, as Al Sharjah FC had failed to demonstrate sufficient evidence to prove that it complied with FIFA’s mandatory requirements:
“the Panel finds that the UAE FA DRC cannot be qualified as a national adjudication body that respects the principle of equal representation of players and clubs. The Panel does not suggest that the proceedings before the UAE FA DRC are not fair or lack the desired quality, but rather that the appointment of the president is not in line with the minimum prescripts of FIFA.” (Paragraph 57).
As a result, the appeal filed by Al Sharjah FC was dismissed. The jurisdiction and decision of FIFA DRC was affirmed as Al Sharjah FC was unable to prove that the UAE DRC was independent and impartial.
There are two further interesting case studies that the author would like to focus on in this article, relevant to his home continent, Africa. The case studies are examined in depth; readers wanting a broader summary of issues can move straight to the Analysis section.
The case involving Kenya’s Sports Dispute Resolution Tribunal (SDT) differs slightly as it involves an administrative decision by FIFA, rather than a formal ruling from a tribunal or court of law.
In March 2020, FIFA’s Chief Officer in charge of Member Associations, Veron Mosengo-Omba, in a letter addressed to the Football Kenya Federation (FKF), rejected a land mark ruling of Kenya’s SDT which had ruled that the current FKF Executive Committee were in office illegally and had to vacate as their term had ended.[15]
Despite the FKF subjecting itself to the jurisdiction of the SDT by its own initiative, Mosengo-Omba made it clear that the FKF was not obliged to do so and furthermore that:
“…. the FKF statutes do not expressly recognize the jurisdiction of SDT as being the ultimate arbitration forum at the national level. Moreover, we note the SDT is not a national arbitration forum in the sense of FIFA circular 1010 dated December 2005.”
“This, however, does not entail that the SDT decisions are binding on FIFA when it comes to its prerogatives and remit for which the Court of Arbitration for Sports (CAS) in Lausanne, Switzerland has exclusive competence.”
“Therefore, we wish to emphasise the relevant SDT ruling has no binding legal effect on FIFA.”[16] (copy available here, and here).
What is key when considering this letter of FIFA is to acknowledge the difference between rulings made by panels of the FIFA DRC and the CAS and administrative decisions made by officials. The letter addressed to the FKF by Mr Mosengo-Omba does not represent a ruling of a judicial body, rather it should be considered an ‘administrative decision’ until such time as this is confirmed by an independent tribunal or judicial panel.
What is clear is that the absence of recognition by football’s global governing body, in whatever form, will lead to great confusion and the possible condemnation of Kenya’s NDRC.
To better understand Mosengo-Omba’s rejection of the SDT’s ruling and competency, it would be worthwhile examining how Kenya’s SDT is constituted and where it derives its jurisdiction from. The SDT is a statutory sports tribunal established under section 55 of the Sports Act No. 25 of 2013. The SDT draws its mandate from the Sports Act and under section 58 has jurisdiction to hear appeals from decisions made by national sports organizations or umbrella national sports organizations and any other “sports-related disputes” that all parties to the dispute agree to refer to the tribunal and that the tribunal agrees to hear.
In terms of the FKF accepting the jurisdiction of the SDT to determine disputes amongst its members, the FKF constitution provides at Article 69(3) that “an independent Arbitration Tribunal recognised by FKF or CAF or to the Court of Arbitration for Sport (CAS) in Lausanne, Switzerland” shall have jurisdiction.
Despite this apparent reference to the jurisdiction of the SDT in the FKF constitution, it could be argued that the absence of an express and explicit reference to the SDT in the clause as well as providing an exact choice of forum renders the clause invalid and thus the jurisdiction of the SDT incompetent.[17]
Mosengo-Omba made it clear also that “the SDT is not a national arbitration forum in the sense of FIFA circular 1010 dated December 2005” thus considering it not to be competent.
In his letter Mosengo-Omba did not provide an explanation as to why the SDT was not complaint with the FIFA Principles. However, if one examines the principle of parity when constituting the arbitral tribunalexamined above, parties must have equal influence over the appointment of arbitrators. Every party shall have the right to appoint an arbitrator and the two appointed arbitrators appoint the chairman of the arbitration tribunal.
Despite this principle, Article 55 of the Sports Act governing the establishment of the SDT provides that:
Art 55.
(a) a chairperson who shall be a person who is qualified to be appointed
as a Judge of the High Court
As ruled previously by CAS[18], this method of appointing the SDT members would not be compliant with Article 3(1) of the Standards or the Principles, as the chairman was not chosen by consensus by the player and club representatives.
In rejecting the SDT judgment, FIFA declared that the SDT is not recognised as a competent arbiter in disputes in the Kenyan sports landscape. The result of this decision is that many disputes which cannot be finalised internally and are referred to the SDT may potentially be rejected by FIFA due to the lack of adherence to its Standards and Principles. In the author’s view, this impinges on the principle of legal certainty within Kenyan football and poses a great risk to many players and officials that may be required to refer their disputes to the SDT.[19]
Whether or not the rejection of the SDT’s competence as a NDRC is to be considered legally binding, as it is only an administrative decision of FIFA, as opposed to a judicial ruling by an independent and impartial panel, is a topic for debate.
Kenya’s SDT is not the only national sports tribunal that has come under fire from FIFA in recent times for its failure to adhere to the Standards and Principles.
On 25 July 2014, Mr Jacob Nambandi, a Namibian born football player playing in South Africa lodged a claim against his club AmaZulu FC, with the FIFA Dispute Resolution Chamber (“FIFA DRC”), claiming compensation for breach of contract.
Owing to the international dimension present in the dispute, Nambandi exercised his overarching right to refer a dispute to the FIFA DRC. Despite this right, the club disputed the jurisdiction of the FIFA DRC.
The FIFA DRC dismissed the argument of the club and emphasised that it is competent to deal with a matter involving an international dimension, unless an independent arbitration tribunal guaranteeing fair proceedings and respecting the principle of equal representation of players and clubs has been established at national. Based on the documents presented to it by the parties the Chamber concluded that
“the chairperson of the [NDRC] is effectively appointed by the clubs and thus not by consensus by player and club representatives. The Chamber, therefore, was unanimous in its conclusion that the [NDRC] does not respect the principle of equal representation of players and clubs.”
The FIFA DRC in the end ruled that it was competent on the basis of Article 22 RSTP.
On 1 November 2016, AmaZulu FC lodged an Appeal with the CAS (Amazulu FC v. Jacob Pinehas Nambandi[20]), requesting the decision of the FIFA DRC be set aside and that South Africa’s National Soccer League Dispute Resolution Chamber (South African NDRC) be deemed compliant with FIFA’s Principles and Standards.
In its decision, the CAS however confirmed the assessment of the FIFA DRC and in certain instances elaborated on the failure of the South African NDRC to apply the relevant Principles of independence and fairness.
The Panel focused on five points:
In summary, the CAS panel found that among numerous failings the most important aspect was that the club was unable to discharge its burden of proof concerning the consensus between the players and clubs when it came to the appointment of the chairperson of the South African NDRC. What is known, is that the current chairperson was appointed by the Executive Committee of the League (and not by the players and clubs by way of mutual consensus), which breaches Article 3(1) of the Standards. As such, the club representatives are perceived to have an undue advantage over the players.
The panel went further at para 166[22], stating that:
“… the Panel finds that the South African NDRC cannot be qualified as a national arbitration tribunal that respects the principle of equal representation of players and clubs, as is required by article 22(b) FIFA RSTP. The Panel does not suggest that the proceedings before the South African NDRC are not fair or lack the desired quality, but rather that the appointment of the chairman of the South African NDRC was not in line with the minimum prescripts of FIFA.”
The CAS made the same remark in Al Sharjah Football Club v. Leonardo Lima da Silva & FIFA.
In the authors opinion what the CAS meant by this quoted passage in both Al Sharjah and AmaZulu, is that despite ruling that both NDRC’s were non-compliant with the mandatory Principles and Standards, and were thus not competent to rule on the matters, that it could not in good conscience rule on the inherent fairness and quality of the proceedings without first delving deeper. Determining fairness and independence is extremely difficult and it would be unfair for the CAS to remark on the fairness of decisions of the NSL DRC where it cannot examine the individual chairperson and his potential biases.
When ruling on the competence of the South African NDRC, the CAS does not mean to suggest that the NDRC is fair and impartial but for a failure to apply the box ticking exercise prescribed by the FIFA Principles and Standards; rather, it meant to suggest that the majority of procedures of the DRC on examination appear to be fair and independent and thus the NDRC is not far from compliance - it needs only to amend certain portions of its statues to render itself compliant.
After reading the decision in AmaZulu, it would appear the league was unable to extinguish its burden of proof by providing exacting evidence to the CAS that the South African NDRC and the process of appointing the chairperson was fair. Therefore, in the absence of such evidence the only thing the CAS could do was decide that the Standards had not been fully complied with and thus the NDRC was not competent. This is not to say that the chairperson was unfair or not independent.[23]
Despite the panel focusing on only one of FIFA’s Principles, namely the principle of parity when constituting the arbitral tribunal, counsel for FIFA went further and raised numerous other failings of the South African NDRC to comply with the Standards that were not addressed by the Panel in its award. The CAS elected to rely on only one of the points raised but this does not mean that the other points raised did not have merit.
At Paragraphs 129 – 130 FIFA argues that the appeal body of the South Africa Football Association (SAFA), the SAFA Arbitration Tribunal (established in terms of SAFA Statutes), did not constitute independent and impartial tribunals guaranteeing fair proceedings and respecting the principle of equal representation of players and clubs.
The following issues were identified,
And therefore, as argued by counsel for FIFA[25],
“Even if the Panel were to find that the South African NDRC complies with the relevant criteria, this would become completely irrelevant if it cannot be determined that the appeal bodies do not also constitute independent and impartial tribunals guaranteeing fair proceedings and respecting the principle of equal representation of players and clubs.”
Counsel for FIFA raised a number of other concerns including the deadline for appeals (72 hours) not being long enough and the issue of procedural costs being charged which is in contrast with the Regulations. Despite these issues being raised, the Panel chose to rely on non-compliance with only one of the Principles to determine that the South Africa NDRC was not competent in terms of FIFA’s Standards. It was therefore left open by the Panel as to whether these issues raised by FIFA would constitute non-compliance with the Regulations.
With effective from January 2020, the South African National Soccer League (NSL) amended its Constitution and regulations governing procedures before the South African NDRC. As a result of the AmaZulu decision in 2017, significant changes were made to the regulations governing the appointment of the DRC chairperson. Article 23 of the NSL Constitution now reads:
23.1.2. An equal number of panellists - including two co-chairpersons - are nominated by Member Clubs and the recognized players association – and appointed to adjudicate disputes in the event of their meeting the requirements of this Clause.
23.1.3. Panellists will be appointed for a period of 2 (two) years though their appointments may be renewed for a further similar period.
23.1.5. The Dispute Resolution Chamber will be composed of the following members, who will serve a two-year renewable mandate:–
23.1.5.1. two co-chairpersons nominated by the players’ association and Member Clubs and whose suitability will be confirmed by the President of the Bar Council for Gauteng; and
23.1.6. A Dispute Resolution Chamber tribunal will arbitrate in the presence of 3 (three) panellists, including 1 (one) of the co-chairpersons who will chair the proceedings.
Despite these amendments, which represent a major shift to compliance with FIFA’s Standards, it is the authors opinion that such amendments do not go far enough if one considers the determination made by the CAS in AmaZulu at para 163:
“...the fact remains that the player representatives had less influence on the appointment of the chairman than the club representatives and that this is not in accordance with FIFA’s requirements.”
It remains unclear under the new regulations who is responsible for electing the chairperson to chair a particular hearing despite there being two co-chairpersons nominated. If the league were to make this determination on behalf of the party referring the claim, there could be an argument that the league still exercises more influence as they would have discretion to appoint the chairperson nominated by the league whenever they see fit.
Furthermore, if one examines the NSL Handbook effective at the time of the dispute in AmaZulu, and which was effective as recently as January 2020, Article 23 paragraph 9 of the Constitution stated:
“Where a panel has arbitrated a dispute the ruling or award will be final and binding and will not be appealable to the SAFA Appeals Board but only to the SAFA Arbitration Tribunal before a Senior Counsel appointed by SAFA from its Arbitrator’s panel.”
In terms of the SAFA Statutes, Article 71 makes provision for the establishment of an Arbitration Tribunal, which shall deal with “all further appeals from the decision of the National Appeals Board and the decision of an arbitrator shall be final and binding”.
This lack of cohesion between the two regulations has been partially remedied by the 2020 amendment to the NSL Handbook, wherein Article 23 paragraph 9 has been replaced with Article 24 paragraph 1 which states that:
“Awards of the Dispute Resolution Chamber may be the subject of an appeal or a review to the SAFA Arbitration Tribunal”
However, as at the date of this article, the SAFA Statutes (2017 edition) have yet to be amended and Article 71 still restricts the SAFA Appeals Tribunal to appeals from the decisions of the National Appeals Board.[26]
Furthermore, the SAFA Council has yet to draw up special regulations regarding the composition, jurisdiction and procedural rules of the Arbitration Tribunal and therefore it is the authors opinion that the SAFA Arbitration Tribunal does not constitute an independent and duly constituted tribunal, despite the significant amendments to the 2020 NSL Handbook.
Despite the welcomed amendments to the NSL Handbook, in the absence of concomitant amendments to the SAFA Statutes that govern the procedures and composition of the Arbitration Tribunal, if a player should refer a dispute to the FIFA DRC and the league or a club challenges such jurisdiction on the basis that the new rules remedy any non-compliance, such club or the league would still need to prove that the appeal process is equally compliant. Failure to do this would lead the FIFA DRC to accept jurisdiction effectively rendering the new amendments ineffective.
The starting point when determining which tribunal will hear any football related dispute should be Article 22(b) FIFA RSTP,[27] which states FIFA DRC is competent to hear all employment-related disputes between a club and a player of an international dimension.
Despite FIFA’s automatic competence to hear employment related disputes containing an international dimension, it is important not to forget the key proviso to this general rule, namely that parties can:
In 2005, when FIFA issued its Circular 1010 to all member associations, outlining the strict conditions required for a tribunal to be considered truly independent and duly constituted (the Principles), there is in the author’s view no question that they conducted a thorough assessment of what was necessary to guarantee fair proceedings. The imposition of the Principles was not meant to be a simple box ticking exercise for national tribunals, but to have the very purpose of ensuring fairness when constituting an arbitration tribunal.
National Governing Bodies have now had the better part of two decades to implement national regulations that conform to FIFA’s Principles and Standards. Yet there have still been numerous instances in recent years where both the CAS and the FIFA DRC have been asked to rule on the fairness and independence of NDRCs, and a common thread among the decisions, especially those referred to CAS, is a failure to respect the Principles in their entirety. Failure to do this will ultimately result in the CAS or FIFA DRC denying the jurisdiction of the NDRC where there are clear violations.
Practically speaking, for an employment-related dispute between a player and a club involving an international dimension, the player will have to make the following assessments.
In recent times both the FIFA DRC and CAS have found that a number of NDRCs do not conform to the competency requirements set out by FIFA’s Principles and Standards in order to render them independent and fairly constituted. This is not the fault of the various arbitrators that preside over cases, who are on the whole more than qualified to hear and decided such cases. Rather, the problem lies in, among other things, the underlying composition of the NDRC, which must be set up in such a way as to ensure structural parity between parties and eliminate any perceived biases.
Despite the FIFA DRC and CAS having ruled that a number of NDRCs are non-compliant, there is still no formal process whereby FIFA records and recognises non-compliant national tribunals, or formally assess compliance. Instead, it remains the responsibility of a party involved in a dispute to argue the matter if it believes there is an issue. This is far from ideal as firstly the dispute must have an international dimension (otherwise there is no right of recourse to the FIFA DRC); and, secondly, it creates unnecessary wasted costs for both parties, and particularly for leagues and clubs that then seek to challenge the jurisdiction of FIFA DRC as they have to prove the NDRC is compliant.
The solution to the problem is to ensure all NDRCs comply with FIFA’s Standards and Principles. But until such time as FIFA implement a comprehensive recognition system, NDRCs must assess the matter themselves, and it will almost certainly remain a grey area with further challenges being made.
As written for LawinSport: https://www.lawinsport.com/topics/item/why-national-dispute-resolution-chambers-are-facing-recognition-problems-with-fifa
