CAS JURISDICTION

First we should bear in mind is the jurisdiction of the CAS on its own territory, where it is domiciled, which is Switzerland. The Swiss Private International Law (Article 186) states “the arbitral tribunal shall itself decide on its own jurisdiction”. In accordance with this provision the CAS has the power to decide upon its own jurisdiction.

Now the CAS shall be satisfied that it has jurisdiction to hear the parties “on a prima facie basis” (CAS 2009/A/1917). So the parties shall fulfil several requirements relating to the CAS Procedural Rules. These rules state, taking into account the article R47 CAS Code Procedural Rules (the “Code”) that an appeal before CAS has to be filed “against the decision of a federation, association or sports-related body”. Here it is important to make a reference to what it is understood by “decision”. Several CAS decisions have named the importance of the “animus decidendi” of the statement issued by the body, which a party wants to challenge. According to the CAS 2008/A/1548 decision “is normally a communication of the association directed to a party and based on an „animus decidendi‟, i.e. an intention of a body of the association to decide on a matter […]. A simple information, which does not contain any „ruling‟, cannot be considered a decision.”

Also, this R47 is stating another requirement to file an appeal at the CAS. Necessarily it has to be recognised the CAS jurisdiction in:

And finally the Appellant has exhausted the legal remedies available to him prior to the appeal, in accordance with the statutes or regulations of that body.

In addition, the R37 of the Code regulates the “Provisional and Conservatory Measures”, and the Jurisdiction of CAS to decide on the request for the provisional measures arises from article this R37 of the CAS Code.

These provisions point directly to the body regulations where the CAS jurisdiction should be included. Or if not, an agreement between the parties, as has been stated above.

Once these requirements are met and any party does not challenge the CAS jurisdiction. Based on the foregoing, the CAS has to decide on the dispute raised by the parties.

CONDITIONS LISTED IN ART. R37 OF THE CODE

R37 of the Code: “(…) When deciding whether to award preliminary relief, the President of the Division or the Panel, as the case may be, shall consider whether the relief is necessary to protect the applicant from irreparable harm, the likelihood of success on the merits of the claim, and whether the interests of the Applicant outweigh those of the Respondent(s).”

With the purpose of illustrating how necessary are these conditions, it should be analysed the CAS 2008/A/1621 Iraqi Football Association (IFA) v. Fédération Internationale de Football Association (FIFA) & Qatar Football Association (QFA), order of 27 August 2008.

On a dispute between the IFA against FIFA and QFA related a match played in March 2008 in Doha corresponding to the qualifying tournament for the World Cup of 2010 (the “Match”). IFA claimed before FIFA that Emerson, who played for Qatar on that date, was ineligible to play the Match.

Once the appeal was filed before the CAS, according to the Appeal Brief submitted by the IFA, the legal remedy no. 6 sought by them was: “6. All the matches of the Qatari team in the fourth round of the Asia preliminary competition of the 2010 World Cup South Africa have to be suspended until a judgement of the CAS is available.”

With this statement the IFA was looking for that the CAS a provisional measure. But the problem was that this request was issued without any motivation and reasoning of any kind.

The request for provisional measures shall be found on the prerequisites above, which the CAS jurisprudence and the art. R37 have established.

The Panel, in this decision, states the following: “The jurisprudence of CAS regarding provisional measures has uniformly declared that the elements that shall be taken into account in order to determine if provisional measures are granted or not in an appeal proceeding are (i) the likelihood of success of the claim filed by the appellant, (ii) protection of the appellant from an irreparable harm and (iii) if the interest of the appellant overweighs the interest of the respondent (ad exemplum, CAS 2001/A/324, CAS 2005/A/916, or CAS 2006/A/1100). The three elements must cumulatively exist in a concrete case so that the requested provisional measures can be ordered.”

The Panel adds that these conditions must be met “cumulatively” in order to consider the possibility to decide on the terms of the Appellant.

Later the Panel continues making reference to the three requirements, stating: “In the referred Appeal Brief the Appellant indeed asks for the suspension of matches but does not justify the existence in the present case of the three elements (fumus boni iuris, periculum in mora and balance of interest) leading to the granting of provisional measures. In other words, when the IFA makes the request for provisional measures within its Appeal Brief, the IFA does not motivate or explain:

On the other side, related to the burden and explaining or proving, the Panel clearly states that it is duty of the Appellant who seek the provisional measure.  

“The burden of explaining and proving the existence of the mentioned elements is on the side of the party applying for the measures, and in the present case no proof or even plausible explanation in the referred sense has been contributed by the Appellant in its Appeal Brief”

In this regard it is also stated in the CAS 2007/A/1317 that the Panel, if the party applying for the measure does not fulfil the requirements, “is not itself obliged to search for such an eventual irreparable harm threatening the Appellants”.

Due to all of these facts, the Panel rejected the request submitted by the IFA.

MORE CAS JURISPRUDENCE

Once has been presented the conditions with this particular case, it is necessary to add some more requirements to take into account or just expand the three conditions explained above.

This decision is referring to an element to consider when a decision related a provisional measure is carried out, which is “to compare the risks incurred by the Appellants in the event of immediate execution of the decision with the disadvantages for the Respondent in being deprived such execution”. This risk test is seeking to take into account the consequences that such decision would have for the parties and outcome that could have in accordance the decision.

Furthermore, the Appellants must show to the CAS that “the facts have a certain probability, and must summarily plausible that the rights cited exist and the material conditions for a legal action are fulfilled”. With this statement this Panel invites the Appellant to prove the allegations that seek obtain that provisional measure. That is to say, a proper motivation.

In this dispute between the Brazilian player Dodo (with Superior Tribunal de Justiça Desportiva do Futebol & Confederação Brasileira de Futebol) and FIFA and the WADA. The Panel considers more CAS jurisprudence to decide whether the provisional measure should be ordered, and the factors to consider (expanding the three conditions named above):

Among these requirement, in the doping cases should be also contemplate “in weighing the balance of convenience a CAS panel must also consider the public interest of the fight against doping”.

This order had been drafted making a strong reference to the “irreparable harm” because of the particular of this case between Fenerbahçe and UEFA related a sanction imposed to the Turkish club by the European body due to some incidents occurred in a match against BATE Borisov at the Fenerbahçe stadium based on the exclusion of the club “from participating in the next UEFA club competition for which it would otherwise qualify. The sanction is deferred for a probationary period of two years”. The Deputy President of the CAS Appeals Arbitration Division states the following:

“1. A sanction that is deferred for a probationary period and that is therefore purely hypothetical cannot constitute an irreparable harm.

2. Any harm which can be financially compensated cannot be considered as an irreparable harm. A reputation or image loss can be financially compensated and cannot therefore constitute an irreparable harm.”


Luis Torres
@Luis_Torres_M

For those people who are not familiarized with the MLS and its legal nature, nor its rules and regulations, we are going to summarize them in order to understand the issue we are dealing, and it is not another than the following: Does the MLS act as a “third party” according the FIFA definition and the FIFA ban?

First, it is fair to indicate that the MLS rejects to enter into agreements with the investment funds which have interests on players with the purpose of those players play in the League. Namely, related to the most common practice that we know, they (TPOs) carry out, the MLS maintains its distance. But the question is: why are we making reference that the MLS may enter into agreements with players?

 Well, the MLS unlike the rest of the first-rate internationals leagues, works with the principle called “single-entity”. Such method of operation is based on the fact that the league acts as the parent company and the teams are subsidiaries, the MLS has the bargaining and economic power over the teams, notwithstanding they act impendent of one another, and because of this, the League’s rules constrained the players’ ability to freely market their abilities. The players negotiate their contracts and their salaries with the MLS and the latter pays them, in addition to determine the team they will play for based on the allocation ranking, there are also other ways to incorporate a player to a MLS’ team: the SuperDraft, the Re-entry Draft (for the players who were waived by a team) o simple trades.

These rules are for every player the same; except for the Designated Players (anyway there are exemptions as we can see below with the Jermain Jones case). These kinds of players are those who their salary exceeds the maximum fixed by the MLS, and that salary has to be paid by the teams. Each team has the possibility to sign three Designated Players.

The “standard” players therefore, do not have this privilege and they are assigned to different teams depending upon several factors, the reason why the freedom of choice and movement are constrained. Even though, as it stated at the 2014 MLS Roster Rules and Regulations, regulation III.B) related to the transfers and loans, these are subject to the “consent of the player”. Anyway we should bear in mind that the regulation makes explicit reference to the transfers and loans.

The players are not able to negotiate with clubs, just with the MLS, this will inevitably lead that the employer which they must enter into the agreement to play ‘soccer’ in US is the own League. This principle of single-entity allows the MLS to unilaterally implement Collective Bargaining Agreement, which the MLS agrees with the MLS Players Union (MLSPU) the terms without fear of antitrust violations[1]. In fact the North American Courts knew about this antitrust issue and the MLS as a single-entity (Fraser v. Major Soccer League, L.L.C.[2] and Brown v. Pro Football, Inc.[3]) and they held that the system used by the MLS did not contravene the ‘Sherman Antitrust Act’, specifically its Section 1. At these lawsuits the players were looking for to face the single-entity principle and implement the free agency one, which is the principle that the rest of the leagues use to grow up as a business at the highest level.

Coming back to the collective agreement, the importance of this Collective Bargaining Agreement is vital. In that agreement are stablished all the employment conditions which will regulate the relationships between the MLS (as an employer), with the player (as employees). At this moment the MLSPU and the MLS are discussing the terms of the new CBA, where, I am sure, this will be an important concern and one of the keys[4].

On the other hand, all the incomes that the teams should receive if we take the European leagues as an example, are for the MLS sometimes, for both parties (team and league) other times (the known ‘management fee’), and finally just for the team. To clarify this matter, we will put some examples:

The singularity of this last example above in relation with a possible transfer of a player, is founded on the fact that the MLS has on the one hand, the ability to veto of such transfer to an over areas club, or the ability to veto the incorporation of a player to a particular MLS team despite the player’s will to be part of another team (we will see the J. Jones example now) because they forward to their own allocation rules. On the other hand, the MLS has also the authority to force the sale of a player against the team’s will (as we have seen, with the consent of the player) because, technically, his rights are owned by the MLS, as well as his contract.

With the purpose of illustrating this situation we will expose an example which occurred with a Designated Player as Jermain Jones is[5], who moreover is a North American ‘soccer’ Team player which is coming back to US. Because of this, the franchises have the right to assign themselves the player in accordance with the position of the team at the allocation ranking, besides they should be willing to pay the salary that the player is asking for, which will be paid by the team because he is a Designated Player. Well, New England Revolution and Chicago Fire were fighting to get the services of the American player, and despite that the intention of the player was to sign for Chicago Fire, the MLS assigned the player to New England Revolution due that was what the MLS rules stated.

So, is the MLS acting as a “third party” according to the influence that the article 18bis states? The logical answer seems it could be a yes. But to dive in this topic we will analyse the FIFA definition of “third party” and the FIFA ban which will come into force on 1 May 2015, on the occasion of the Circular no. 1464[6], which modifies the FIFA Regulations on the Status and Transfer of Players.

“Definitions

(…)

14. Third party: a party other than the two clubs transferring a player from one to other, or any previous club, with which the player has been registered.”

It seems like the Major Soccer League, L.L.C. (company used by the MLS to operate in the market) fits within the given definition at the FIFA Circular. Being the MLS “a part other than two clubs” in the event a player is transferred to a MLS team, and the player should sign his employment contract with the MLS (although it is true that the most of the time they sign a player without an employment connection with another club).

“Article 18bis         Third-party influence on clubs

Also, it seems like based on the exposed by this article above, some actions involving transfers of the players and the clauses and terms unilaterally fixed at the player’s contract via CBA and Roster Rules and Regulations (named above as well) are applicable to the scenario that the 18bis raises. As far as we know, to reach an agreement to transfer a player between two clubs, you must go throw the MLS, which is the entity that engage the services of the players and then they assign the player to a team, influencing in employment and transfer matters at the moment the MLS forces a player to be part of a team (based on its allocation rules) who, we should not forget it, belongs to the MLS, and also, the power to veto when a club wants to trade with a player. It seems that the “influence” requirement is meet.

“Article 18ter         Third-party ownership of players’ economic rights

The simple fact that it is stablished that a 1/3 of the total amount paid to transfer a player over areas goes to the MLS (even though the latter could share this money between the MLS teams) allows that such fact could be framed in this recently created article. Because once the player is entering into an agreement with the MLS, the MLS system implemented and its rules state that a third part in a future transfer compensation of the player would be for the own League.

We find ourselves seeing that the MLS is managing a league under the single-entity principle and therefore it is acting as a third party in a way banned by FIFA. But, when has FIFA jurisdiction to act against one case that violates its Regulations?

The MLS is growing year by year, and the investors are betting in the league which is increasingly famous. But to carry out this pretended developing is necessary they do an international approach, the MLS should open itself to the world and show its value, because the most powerful leagues in the world are for away from US, unlike other sports as the basketball (NBA), American football (NFL), or ice hockey (NHL), where this model is suitable and effective. The MLS, to grow up, is obligated to accomplish international transactions and to operate in a global market. And for these international transactions, the mandatory regulations are the FIFA Rules and Regulations. This does not happen with local disputes where all the parties have the same nationality (US), as has been said, the single-entity system is allowed by the national law. The problem appears when given the necessity to open themselves to a global market generates international disputes, where one of the parties is not North American and where FIFA has jurisdiction, and the obligation, to act against this practice incompatible with its provisions[7].

As can be seen, the new CBA is in the negotiation phase, with the previous about to expire, I am sure that the MSLPU will use this card to press and force the MLS for the free agency system which would allow having that freedom of movement that they lack, or at least, to get some new privileges for these employees (the players). And if we talk about this freedom in football it is impossible does not make a reference the Bosman Case, where the European Court of Justice (C-415/93), summarizing a lot (it worth another post), held that the rules required the payment of a fee owed to his last team related the incorporation of a player when his employment contract was expired was illegal based on this fundamental right recognised at the articles 48, 85 and 86 Treaty on the Functioning of the European Union[8]; such judgement prohibited (in this singular case) to the sport associations or federations at the national or international level may establish at their regulations limits to the access of the professional EU players (employees) to the competitions. But the fact is that in this particular case where we are referring to such freedom and to a non-European country brings us the Peñarol v. Suarez Decision (CAS 2005/A/983 & 984), where the Court of Arbitration for Sport (CAS) applied this principle on the basis of the article 187 Swiss Private International Law Act (the “PILA”), which states that organizations incorporated under Swiss law cannot preempt Swiss legal norms if said preemption would contravene Swiss public policy, or violate a fundamental right under Swiss Law and the CAS resolved this case taking into account that the CAS and also FIFA are addressed in Switzerland (they are built and governed by the Swiss Law), in addition to the human rights recognized by the International Community. Moreover, the European Union and Switzerland signed on 1 June 2002 (post-Bosman era) an ‘Agreement on the Free Movement of Persons’, officially recognising such right[9]. The question is: If the freedom of movement is restricted by the MLS to a player to sign for another over areas team, would this legislation and the case law be of application? It seems like it could be.

In my opinion the MLS’ will in order to have a balanced competition is wise, but they should bear in mind that ‘soccer’ is just ‘soccer’ just for them and their necessity to grow up as a league makes that these restrictions that they are stablishing to themselves should be tempered with the purpose of fighting against other leagues which are on top.

SOURCES:

[1] Kicking “Single-Entity” to the Sidelines: Reevaluating the Competitive Reality of Major Soccer League after American Needle and the 2010 Collective Bargaining Agreement (By Northern Illinois University Law Review).

[2] Fraser v. Major Soccer League, L.L.C.

[3] Brown v. Pro Football, Inc.

[4] MLS' Single-Entity Structure Is the League's Biggest Obstacle (By Peter Galindo, Featured Columnist at Bleacher Report) / Jan 24, 2015

[5] TPO in America: How would FIFA's third-party ban affect USA leagues? (By Liviu Bird, SI.com) / Oct 30, 2014.

[6] Circular no. 1464 on 22 de December 2014 which modifies the FIFA Regulations on the Status and Transfer of Players.

[7] Comments of the well-learned Brazilian sports lawyer, Marcos Motta, in the SI.com article.

[8] El Caso Bosman: Sus consecuencias (By Juan de Dios Crespo Pérez).[9] The 2015 MLS CBA, how European Law Affects Free Agency in American Soccer (By Andrew Visnovsky).

THE SCOPE OF THE FA REGULATIONS

The new A1 FA Regulations on Working with Intermediaries (the “FA Regs”) states: “Only an Intermediary may be used and paid by a Player or Club in relation to any Intermediary Activity”. To establish the scope of the Regulations we should take into account the “Appendix I – Definitions”, where is defined this concept.

“Intermediary Activity” means acting in any way and at any time, either directly or indirectly, for or on behalf a Player or a Club in relation to any matter relating to a Transaction. This includes, but is not limited to, entering into a Representation Contract with a Player or a Club.

This concept begs to consider the meaning of “Transaction” in the context of these Regulations.

“Transaction” means any negotiation or other related activity, including any communication relating or preparatory to the same, the intention or effect of which is to create, terminate or vary the terms of the player’s contract of employment with a Club, to facilitate or effect the registration of a player with a Club, or the transfer of the registration of a player from a club to a club (whether on a temporary or permanent registration basis).

On the one hand, it can be seen that the field of action of an Intermediary is all the matters related to the player’s employment contract and the transfer of the player, such as negotiations to sign a new employment contract or to conclude a signing of a player or a transfer; and always respecting all the Obligatory Terms of the Standard Representation Contract (form prescribed by the FA).

The main requirements of these Regulations are stated in this point. The Intermediary must be REGISTERED at the FA as an Intermediary and must be entitled to act under a valid REPRESENTATION CONTRACT. If he does not fulfil these two basic requirements, he could not act on behalf any Club or Player in the context of the scope of the Regulations.

Also, every relevant contracts and any document must contain the name, the signature and registration number of the Intermediary. Also if the Intermediary is a legal person, in this case the natural person representing it shall sign on behalf the Organisation.

The Regulations state the written Representation Contract as an essential element to carry out Intermediary Activities.

At the Regulation B2 it is stated the minimum features of the Representation Contract, which are:

It is included the duty to lodge the Representation Contract between them with the Association by all the Parties. Time limit: 10 days of being executed. This duty shall be complied also if the Representation Contract is early terminated, novated, varied or any other event that affects its validity.

 The assignment or subcontract:

The represented Player, prior to the Transaction takes place, could not to be represented by the Intermediary in a Transaction with a Club if he provides a written request to the Club with these guidelines.

The maximum duration of the Representation Contract: 2 years.

Minors at the Representation Contract:

The Payment to the Intermediary by his Client must be made in accordance the terms of the Representation Contract.

The C11 FA Regs is directly making reference to conclude an employment contract and/or a transfer agreement. They payment should be made as follows:

Payment by the Player to the Intermediary:

Payment by the Club to the Intermediary:

If the Player and the Intermediary have agreed periodic instalments to remunerate the latter and the employment contract lasts longer than their Representation Contract, the Intermediary will be entitled to the agreed instalments after expiry the Representation Contract until the Player’s employment contract expires, unless the Players signs a new employment contract without the involvement of that Intermediary.

Except assignment or subcontracting, the Intermediary cannot pass any remuneration relating to an Intermediary Activity to any other person or third party. The same for a Club who is paying the amount related to a transfer, this payment just may pay to the other Club.

Any payment to an Intermediary concerned a Transaction with a Minor is prohibited.

This is the most controversial point is related to the 3% remuneration ‘cap’ (which is a recommendation). But, why the Intermediary and the Client could agree, in my opinion, a percentage over this recommendation?

The Association shall be entitled to publish:

An Intermediary may undertake Intermediary Activity for more than one party in relation to a Transaction. They have to comply with the following requirements in full prior to start to act on behalf his Clients:

If any party does not provide the written consent in accordance above requirements:

Restriction on Conflict of Interest

Intermediary (or Intermediary’s Organisation) shall not have interest in a Club.

Player, Club, Club Official, or Manager shall not have interest in the business or affairs of an Intermediary (or Intermediary’s Organisation).

Interest is defined on the following way:

Also includes the interest of:

It is prohibited that an Intermediary has any interest in relation to a registration right or an economic right. This includes interest in transfer compensation or future transfer value of a Player.

A Player, Club, Club Official or Manager must disclose to the FA any agreement or contractual or other arrangement between them and the Intermediary, in 10 days of the entering into such agreement/arrangement and in any event no later than at the time of the registration of a Transaction by the Association.

The Intermediary must also disclose any agreement or contractual or other arrangement between him and a Club, Club Official or Manager in respect a Club Official or Manager, in 10 days of:

The last paragraph is stating the duty as an Intermediary to disclose the agreements/arrangements in respect a Club Official or Manager; therefore we can affirm that the Intermediary is just obliged to submit the Representation Contract to the FA (Regulation B3), but not all the agreements or contractual or other arrangements named above.

All of them (Intermediaries, Players, Clubs, Club Officials and Managers) shall disclose to the FA in writing any actual or potential conflict of interest and obtain the express writing consent of all the parties involved. It should be disclosed in 10 days of being completed.

REGISTRATION

Any natural or legal person who wishes to act as an Intermediary shall register with the FA. The registration shall be valid for 1 year.

A fee will be payable on initial Registration and for any renewal of this Registration. The initial fee will be waived for FA Licensed Agents (renewal fees payable).

A Test of Good Character and Reputation for Intermediaries must be submitted to the FA by the natural person or the natural persons acting on behalf an Organisation to contrast his “impeccable reputation”.

The designation of an Intermediary to use it in business relations once he completes his Registration will be: “FA Registered Intermediary”.

REQUIEREMENTS RELATING TO MINORS

Authorisation from The FA will be necessary to work with Minors. This authorisation shall be valid for 3 years.

This can be applied for during an initial Registration or throughout the Registration period.

A legal person registering as an Intermediary cannot apply to deal with Minors.

REGULATIONS APPLICABLE TO LEGAL PERSONS REGISTERED AS INTERMEDIARIES

A legal person can only be registered as an Intermediary by a natural person already registered as an Intermediary.

Also the legal person shall declare the natural persons registered as Intermediaries who are authorised to conduct Intermediary Activity on behalf a legal person. His name, signature and registration number must appear on the relevant paperwork of the Transaction.

The natural persons carrying out Intermediary Activities on behalf the legal person must meet the requirements above.

Luis Torres

(*Translated version of "El nuevo Reglamento sobre Intermediarios de la Federaci'on Inglesa" / IUSPORT.com / 19 February 2015 / By: Luis Torres)