Last year, a UK District Court refused to grant a stay on proceedings brought by Premier League footballer Wilfried Bony (the Player) regarding secret commissions allegedly earned on a transfer deal. On appeal, that refusal was upheld by the High Court of England & Wales. The Player’s case was against his former agents and companies controlled by those agents (the Agents). The Agents had sought a stay on court proceedings so that the dispute could be determined by arbitration under the Rules of the Football Association Limited (the FA Rules and the FA).
The Player is currently employed by and registered to play with football club Swansea City Association Football Club (Swansea). He first joined Swansea in 2013 before transferring to Manchester City Football Club in 2015, later going on loan to Stoke City Football Club, and eventually transferring back to Swansea. The allegations at the heart of this case relate to negotiations concerning the Player’s employment contract with Swansea during his first term at the club. The Player brought a court case alleging that, while ostensibly representing him in negotiations, his Agents had received secret commissions of over £8m from Swansea.
Did the governing body’s arbitration rules apply?
The FA is the governing body for association football in England. Section K of the FA Rules stipulates that any dispute or difference between “Participants” in the sport is to be decided by arbitration under the FA Rules. As none of the Agents were “Authorised Agents” in England at the relevant time, the Court questioned whether they could be considered to be “Participants” for purposes of the FA Rules.
Nonetheless, the Agents contended that, under the Arbitration Act 1996 (the Act), the Court should stay proceedings in favour of an arbitration under FA Rules. A stay may be obtained under the Act only if an arbitration agreement is in place between the parties. The Agents argued that Section K amounted to an arbitration agreement for the purposes of the Act. There was, however, no express agreement between the parties that incorporated Section K or the FA Rules.
The Agents’ central submission was that there is an implied contract between participants in organised sports incorporating the rules of the relevant sport, whether or not the participants are aware of those rules. They also submitted that various express agreements between the Player and the Agents incorporated Section K by implication. While the Player accepted that an implied agreement between the parties was capable of being an arbitration agreement under the Act, he maintained that no such implied agreement existed based on the facts.
The High Court did not accept that an implied contract automatically exists, in effect by operation of law, between participants in an organised sport based on the rules that govern that sport. The High Court further found that the Agents had not shown that any express or implied contract with the Player had incorporated Section K or the FA Rules. Accordingly, the Court decided that it was correct to refuse to stay the court proceedings.
While it seems appropriate that allegations as serious as secret commissions should be heard in open court, confidential arbitration is often preferable for players, agents and clubs alike. Players and agents should consider their contracts, and governing bodies their rules, to ensure that they have adequately provided for their preferred mode of dispute resolution.
The legal requirements of the sports industry are diverse and often complex. William Fry’s Sports Law Group has a wealth of experience across the broad spectrum of legal disciplines that are relevant to the industry. We advise clients from every aspect of the industry and understand the different legal challenges that they face. Our clients in this sector include governing bodies, sports clubs, corporates, stud farms, management companies and professional athletes.
Contributed by John Sugrue and Craig Sowman
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