Yesterday, UEFA published the very much-expected settlements implementing its Financial Fair Play (FFP) regulations. Today, we address tomorrow’s challenges for FFP, we offer five, more or less realistic, scenarios sketching the (legal) future of the FFP regulations.

Scenario 1 : Happily ever after

We enter the brave new world of FFP. The settlements are not contested and Dupont’s EU law crusade sinks into oblivion. Meanwhile, the Qatari owners of PSG come up with a new marketing concept, the club recruits four locally trained players and wins the Champions league fielding the same starting team 14 times.[1] Thanks to FFP, in 2015, nobody is losing money anymore[2], Cristiano Ronaldo’s transfer to PSG for EUR 30 Mio. is by far the most expensive one and Arsenal’s coach Wenger feels rich for the first time in his career. No new FFP violation is registered, except for Shakhtar Donetsk, which messed up its financial accounts due to the move back to the rubble.

Scenario 2: Here we go again

FFP ends here for 2014, but history repeats itself in 2015. Clubs are still losing money and appear to fail to comply with the agreed settlements.[3] However, Manchester City and PSG have recourse to new innovative marketing contracts to turn their losses into profits.[4] To this end, the PSG squad members are named official ambassadors of the State of Qatar and their wages are covered by the Qatari state. The nightmare continues for Platini, who is stuck between a rock and a hard place. On one side he counts on Qatar’s vote and influence to win the FIFA presidency in June 2015, on the other he needs to defend his credibility in the eye of the German austerity hawks. The procedure is delayed until July, at which point the cases are referred to the adjudicatory chamber.[5] Both clubs are found in breach again, the chamber imposes a EUR 100 Mio. fine and Champions League squads are reduced to 18 players.[6]

Scenario 3: Settlements are not enough

Wenger is outraged! Fining PSG and Manchester City is a bit like fining a central bank: they’ll just print more money. 2014 was supposed to be the year his side would eventually get to play the Champions League without having to go through the preliminary rounds. Thus, Arsenal, backed by Everton, decides, on the 25 May 2014, to contest the settlements in front of the Adjudicatory Chamber.[7] Olympique de Marseille, always keen on fighting PSG on any turf, also appeals the settlement. However, in a final decision, the Adjudicatory Chamber dismisses the complaints. Far from abandoning their quest for justice, the clubs decide to refer the decision to CAS[8], where Everton, Arsenal and Marseille obtain a re-devaluation of the controversial sponsoring agreements. CAS hands out a two-year ban on transfers for both clubs, but comes short of kicking them out of the Champions League.[9] As usual, the final appeal to the Swiss Federal Tribunals is a waste of time: Arsenal will have to go through the preliminary round...again.

Scenario 4: My name is Dupont, Jean-Louis Dupont

All the parties agree with the settlements proposed, FFP seems to be heading for a smooth run. All, but one. Belgian lawyer Jean-Louis Dupont, secretly backed by wealthy clubs, challenged FFP in front of the Belgian Courts and the European Commission. He claims, loud and clear, that FFP is a restriction of EU Free Movement and Competition Law. In 2018, after 4 years of protracted litigation, the Court of appeal of Bruxelles finally decides to refer the matter to the Court of Justice of the EU in Luxembourg.[10] Meanwhile, the European Commission has also been enquiring on a putative infringement of EU competition law, but the new Commissioner for Competition Law, former French minister Pierre Moscovici, freezes the final decision after a phone call with Platini. On the 15 December 2020, the Court, in its instantly famous Striani judgement[11], considers FFP a clear restriction on EU free movement and competition law. In spite of the specificity of sport, its proportionality cannot be warranted. However, the judgement has no retroactive effect and both the Court and Advocate General considered that a better system could have been worked out. As soon as the ruling is known, UEFA enters in résistance: Platini calls up Sarkozy (by then old-new President of France), who, in a moment of rage, decides to leave the EU.

Scenario 5: The Reality Check

The FFP settlements will stand as they are; it is rather unlikely, though possible, that any affected party will raise an objection against them. PSG and Manchester City will not recruit any big players unless they sell big, but will most likely focus on getting decent locally-trained players on-board for the Champions League bench. The 2015 FFP edition will probably feature a replay of the current edition. We do not see, at least for PSG, any chance that it could accrue its revenues (except very creatively), in order to meet the target of a maximum EUR 30 Mio deficit. The main conundrum for the 2015 FFP process will be to design credible sanctions for a recidivist. On the EU law front, the process will take a lot of time. Regarding the Belgium Courts, any first instance decision will be appealed all the way to the highest Court and will undoubtedly end up in a very time-consuming procedural ping-pong with the Court of Justice of the EU (earliest final decision not before 2019-2020). The EU competition law complaint launched with the European Commission might be quicker to unfold, but will most likely be a forum for re-negotiating the FFP rules rather than to abolish them altogether (the transfer system overhaul at the turn of the century could serve as a model). On a final note, Wenger is surely disappointed by the apparent leniency of the sanctions, but for once he might be able to throw a bit of his weight around on the transfer market.

[1] The settlement for PSG and Manchester City include specific restrictions of the squads size for the Champions League: “[the club] accepts that for the duration of the settlement it will be subject to a limitation on the number of players that it may include on the “A” list for the purposes of participation in UEFA competitions. Specifically, for season 2014/15 PSG may only register a potential maximum of 21 players on the “A” list, instead of the potential maximum of 25 as foreseen in the relevant competition regulations.” Furthermore, pursuant to Article 18.08 of the Regulations of the UEFA Champions League: “As a minimum, eight places are reserved exclusively for “locally trained players” and no club may have more than four “association-trained players” listed on these eight places on List A.”

[2] The goals of the UEFA Club Licensing and FFP Regulations are stated at article 2.2. They affirm that FFP aims “to introduce more discipline and rationality in club football finances” and “to encourage clubs to operate on the basis of their own revenues”.

[3] The settlements read as follows: “In case [the Club] fails to comply with any of the terms of this Agreement, the  UEFA CFCB Chief Investigator shall refer the case to the Adjudicatory Chamber, as  foreseen in Art. 15 (4) of the Procedural Rules.”

[4] The reason why both clubs failed to adhere to the FFP rules is that their sponsorship contracts with related parties were deemed overvalued and therefore adjusted as required by Article 58.4 of the UEFA FFP Regulations.

[5]Article 15.4 of the Procedural rules governing the UEFA Club Financial Control Body, edition 2014, states that: “If a defendant fails to comply with the terms of a settlement agreement, the CFCB chief investigator shall refer the case to the adjudicatory chamber.”

[6] Article 29 of the Procedural rules governing the UEFA Club Financial Control Body, edition 2014 foresees that:

The following disciplinary measures may be imposed against any defendant other than an individual:

a) warning,

b) reprimand,

c) fine,

d) deduction of points,

e) withholding of revenues from a UEFA competition,

f) prohibition on registering new players in UEFA competitions,

g) restriction on the number of players that a club may register for participation in UEFA competitions, including a financial limit on the overall aggregate cost of the employee benefits expenses of players registered on the A-list for the purposes of UEFA club competitions,

h) disqualification from competitions in progress and/or exclusion from future competitions,

i) withdrawal of a title or award.

[7] Indeed, directly affected party (as Everton, Arsenal and Marseille in those case) can ask the adjudicatory chamber to review the settlements. Article 16.2. of the Procedural rules governing the UEFA Club Financial Control Body, edition 2014 foresees that: “Any decision of the CFCB chief investigator to conclude a settlement agreement or to apply disciplinary measures within the meaning of Article 14(1)(c) may be reviewed by the adjudicatory chamber at the request of a directly affected party within ten days from the date of publication of the decision.”

[8] Article 34 of the Procedural rules governing the UEFA Club Financial Control Body, edition 2014 confers to directly affected party a right to appeal final decisions to CAS.

[9] Supra, No 6

[10] Article 267 of the Treaty on the Functioning of the EU gives to national courts the possibility to refer a question concerning the interpretation of EU law to the Court of Justice of the EU.

[11] Daniel Striani is a player agent on who’s behalf the complaints by Dupont against FFP were launched.

Forget the European Championship currently held in France or the upcoming Olympic Games in Rio. Doping scandals are making the headlines more than ever in 2016. From tennis star Sharapova receiving a two-year ban for her use of the controversial ‘meldonium’, to the seemingly never-ending doping scandals in athletics. As if this was not enough, a new chapter was added on 14 June to one of the most infamous and obscure doping sagas in history: the Operación Puerto.

The special criminal appeal chamber,  the Audiencia Provincial, has held that the more than 200 blood bags of professional athletes that have been at the center of the investigations since 2006 can be delivered to the relevant sporting authorities, such as the Spanish Anti-Doping Agency (AEPSAD), WADA, the UCI and the Italian Olympic Committee (CONI). In other words, there is now a good chance that the identities of the involved athletes might eventually be revealed.

Source: http://www.telegraph.co.uk/sport/othersports/cycling/9834122/Operation-Puerto-doctor-Eufemiano-Fuentes-treated-tennis-players-athletes-footballers-and-a-boxer.html

This case note will analyze the court’s ruling and summarize its most important findings. Given the amount of time passed since the scandal first came to light (2004), the blog will commence with a short background summary of the relevant facts. 

Background

The saga can be traced back to the interview by the Spanish sports newspaper AS with the cyclist Jesus Manzano in 2004. During the interview, Manzano admitted that he, as well as other members of his team (Kelme), were involved in blood doping practices, and denounced his team doctor Eufemiano Fuentes as the mastermind behind the operations.[1] As a result of his declarations, Manzano became the victim of regular abuse by the “professional cycling world” and even received death threats. Manzano reported the death threats to the Guardia Civil (a Spanish law enforcement agency), who saw itself obliged to investigate the matter. The results of the Guardia Civil’s investigation proved that the information provided by Manzano regarding names, locations and practices were correct. However, the scope of the Guardia Civil’s investigations was limited due to the fact that, according to Spanish law in force at the time, doping was not considered a criminal offence.

On 23 May 2006, several people were arrested, including doctor Fuentes, who was accused of committing a “crime against public health” enshrined in Article 361 of the Spanish Criminal Code.[2] After his arrest, the Guardia Civil conducted domiciliary visits in the various domiciles owned by Fuentes, in which it found over 200 blood and plasma samples. The blood and plasma bags were labelled with coded names, in order not to reveal the true identity of Fuentes’ clients. Nonetheless, it was clear that Fuentes’ network was much more extensive than previously anticipated and that he had hundreds of clients, from a variety of sports and nationalities.

The relevant SGBs, such as WADA, petitioned for the blood samples to be analysed and all the identities revealed, with the aim of sanctioning the athletes involved. The Spanish public authorities, however, denied the SGBs requests[3], claiming that handing over the blood samples would breach the athletes’ right to privacy and reiterating that athletes involved in doping practices were not (at the time) committing any criminal offence according to Spanish law.

A long-awaited judgment was finally delivered[4] by the Madrid criminal court on 29 April 2013, a judgment which raised many eyebrows worldwide (see for example this critical analysis by the French newspaper Le Monde). Fuentes received a one-year prison sentence for committing a crime against public health and was suspended for four years from practicing sport medicine. More importantly, the court ordered the destruction of the blood samples, as well as other pieces of evidence, such as documents and recorded telephone conversations once the decision becomes final.[5] Given that the case was not about a doping offense but about a crime against public health, the court argued, the investigation of the blood samples would be in breach of the privacy rights of the athletes.

The judgment was appealed by several parties, including Fuentes and the SGBs (AEPSAD, WADA, UCI and CONI). Fuentes demanded to be acquitted, whereas the SGBs appealed the order to have the blood samples destroyed.  

Sentencia Nº 302/2016 of 14 June 2016

The Audiencia Provincial made its judgment public on 14 June 2016. The judgment consists of 23 different appeals by different parties. This case note, however, will only analyze section 18 (on the question whether blood is considered a medicine) and section 21 (regarding the blood and plasma samples). 

Section 18 – Is blood a medicine?

The answer to this question was highly relevant for Fuentes’ appeal against the prison sentence. Article 361 of the Spanish Criminal Code provides inter alia that a person who offers medicine in unauthorized locations[6] or does not fulfill the relevant hygiene criteria, shall be punished with an imprisonment from six months to three years.[7] Fuentes argued that blood extracted from an athlete, which is later injected back into the athlete, was legally not considered a medicine in 2006.

The court firstly established that the Criminal Code does not legally define “medicine”, meaning that the definition needed to be found in administrative laws,[8] such as the Medicine Law[9]. This law stipulates that blood derivatives could be considered medicine, but blood as a whole cannot.[10] The court also looked for a definition in EU law, more specifically EU Council Directive 98/381/CEE laying down special provisions for medicinal products derived from human blood or human plasma. Article 1, point 2, holds that whole blood, plasma or blood cells of human origin are outside the scope of the Directive. Having established that the blood and plasma samples found in Fuentes’ domiciles cannot be considered medicine, the court concluded that the doctor could subsequently not be punished for committing a crime against public health as stipulated in Article 361 of the Criminal Code. A punishment of any kind would be contrary to the “principle of legality”.[11] 

Section 21 – blood and plasma samples

The RFEC, WADA, UCI and CONI wanted to see the destruction order of the blood and plasma samples overturned and, instead, the samples delivered to them.[12]  Importantly, both the criminal court in first instance and the Audiencia Provincial recognized that a possible doping investigation by the SGBs after a handover of the blood samples would be an administrative procedure, rather than a criminal procedure such as in the case at hand.[13]

However, the first instance court had also indicated that the SGBs could not use the blood samples, because administrative sanctioning procedures do not allow this type of evidence to be used. To reach this conclusion, the court in first instance referred to an administrative law case involving disciplinary proceedings against a magistrate. In that case, recorded phone conversations were not deemed receivable evidence because of a breach of privacy, which would infringe Article 8 of the ECHR. The court transposed this reasoning to Operación Puerto and held that using the blood samples for an administrative proceeding was inadmissible.

The Audiencia Provincial did not follow this reasoning. Instead it referred to criminal case law, which established a difference between the recording of phone conversations on the one hand and domiciliary visits on the other. So-called “casual findings” during domiciliary visits of evidence for crimes that were not the ones the visits were authorized for, can still be used as evidence. In fact, the blood and plasma bags cannot be considered “casual findings”, since the public authorities were authorized to undertake the domiciliary visits to find evidence for an alleged crime against public health. Moreover, contrary to the recording of phone conversations which is only authorized in case of a penal procedure, domiciliary visits are measures that could also be authorized in administrative procedures.[14]  In other words, this type of evidence obtained in the framework of a criminal procedure can also be used in an administrative disciplinary procedure, such as doping cases.

As regards the transfer of the blood and plasma samples to an SGB, the court stated the following: In accordance with the provisions of the 2013 anti-doping laws, the samples can be handed over to the Spanish Anti-Doping Agency. The Agency would need to submit a formal request to a court, and the court would consider the request taking into account the principle of proportionality.[15]  The Audiencia Provincial considers that a transfer of the blood samples could be proportionate since it pursues the objective of fighting against doping. This is so because: doping use is contrary to the ethical values of sport, which are fair play and competition. Not allowing the transfer of the blood and plasma samples would give the impression that doping is not really a problem and might indicate that in sports the end justify the means.[16]  

Conclusion

On the day the judgment was released, AEPSAD expressed its satisfaction with the Audiencia Provincial’s decision and stated that it is studying the possible measures it can now take, either by itself or together with the other SGBs referred to in the judgment. WADA too acknowledged the court “for having reached the decision to provide anti-doping authorities with this crucial evidence”, but also stated that it is “dismayed that it took so long to receive the decision”. Finally, UCI regrets it had to wait this long for the decision, but will now partner with WADA, the RFEC, AEPSAD and CONI, to determine the legal options available with regards to analyzing the blood and plasma bags; and, where applicable, pursuing anti-doping rule violations.

In its press release, UCI points to the crucial question that will need an (un)satisfying answer: Can the SGBs still pursue anti-doping violations, or is too late? Article 17 of the 2015 WADA Code enshrines that the statute of limitations is 10 years. Coincidentally, it has been 10 years and two months since the arrests of Fuentes was made and Operación Puerto started taking shape. It is therefore unlikely that doping sanctions will be handed out on the basis of blood samples collected during the period 2002-2006. But simply discovering the identity of the doped athletes could have far-reaching consequences on its own. For example, when Bjarne Riis admitted in 2007 that he used EPO during his victorious 1996 Tour de France, the UCI was not able to sanction him anymore. However, the Tour de France organizing organization (ASO) has removed him as a past winner. Similar consequences are thinkable with the discoveries of the identities in the Operación Puerto case. Furthermore, Operación Puerto, widely recognized as the darkest chapter in the history of Spanish professional sport, can only truly be closed when the identities of the athletes are revealed. Publicly naming and shaming the athletes is an important mean to create a fairer competition and to prevent other athletes from doping themselves.  

[1] The actual interview with AS is not available anymore. A summary of the interview can be read at http://velonews.competitor.com/2004/03/news/more-from-manzano-its-like-an-open-bar_5763.

[2] Sentencia de la Audiencia Provincial de Madrid Nº 302/2016 de 10 de junio 2016, page 7. A few months later, in 2006, Article 361bis was added to the Spanish Penal Code, a provision that made doping a criminal offense.

[3] Cyclists, such as Jan Ullrich, Ivan Basso, Michele Scarponi and Óscar Sevilla were known to be among Fuentes’ clients, for the most part thanks to journalist investigations. The German cyclist Jörg Jaksche admitted voluntarily, and Spanish cyclist Alejandro Valverde received a suspension by the Italian Olympic Committee CONI in 2010.

[4] As can be seen from the 176-page judgment, the names of the suspects have been changed. For example, primary suspect Eufemanio Fuentes is called “Juan Máximo”.

[5] Sentencia del Juzgado Penal de Madrid Nº 144/203 de 29 de abril 2013, pages 175-176.

[6] A hospital, for example, would be considered an authorized location. A cycling team bus, or a hotel room, could be considered unauthorized locations for the offering of certain types of medicine.

[7] Artículo 361 Código Penal: “El que fabrique, importe, exporte, suministre, intermedie, comercialice, ofrezca o ponga en el mercado, o almacene con estas finalidades, medicamentos, incluidos los de uso humano y veterinario, así como los medicamentos en investigación, que carezcan de la necesaria autorización exigida por la ley, o productos sanitarios que no dispongan de los documentos de conformidad exigidos por las disposiciones de carácter general, o que estuvieran deteriorados, caducados o incumplieran las exigencias técnicas relativas a su composición, estabilidad y eficacia, y con ello se genere un riesgo para la vida o la salud de las personas, será castigado con una pena de prisión de seis meses a tres años, multa de seis a doce meses e inhabilitación especial para profesión u oficio de seis meses a tres años”.

[8] Sentencia de la Audiencia Provincial de Madrid Nº 302/2016 de 10 de junio 2016, page 61.

[9] Ley 25/1990, de 20 de diciembre, del Medicamento.

[10] Sentencia de la Audiencia Provincial de Madrid Nº 302/2016 de 10 de junio 2016, pages 59-61.

[11] Ibid., pages 69-73.

[12] Ibid., pages 76-77.

[13] Ibid., pages 78-79.

[14] Ibid., pages 80-81.

[15] Artículo 33(5) de la Ley Orgánica 3/2013, de 20 de junio, de protección de la salud del deportista y lucha contra el dopaje en la actividad deportiva: “La Agencia Española de Protección de la Salud en el Deporte podrá solicitar que le sean remitidas aquellas diligencias de instrucción practicadas que sean necesarias para la continuación de los procedimientos sancionadores. Dicha petición será resuelta por el Juez de instrucción, previa audiencia de los interesados, en el plazo de 20 días. En dicha audiencia los interesados podrán solicitar que sean también remitidos los documentos que les puedan beneficiar. La resolución del Juez será plenamente respetuosa con el principio de proporcionalidad, entregando a la Administración, mediante resolución motivada, únicamente las diligencias que la aplicación de tal principio autorice”.

[16] Sentencia de la Audiencia Provincial de Madrid Nº 302/2016 de 10 de junio 2016, page 83.

Editor's Note: Frans M. de Weger is legal counsel for the Federation of Dutch Professional Football Clubs (FBO) and CAS arbitrator. De Weger is author of the book “The Jurisprudence of the FIFA Dispute Resolution Chamber”, 2^nd edition, published by T.M.C. Asser Press in 2016. Frank John Vrolijk specialises in Sports, Labour and Company Law and is a former legal trainee of FBO and DRC Database.

In this first blog, we will try to answer some questions raised in relation to the Article 12bis procedure on overdue payables based on the jurisprudence of the DRC and the PSC during the last two years: from 1 April 2015 until 1 April 2017. [1] The awards of the Court of Arbitration for Sport (hereinafter: “the CAS”) in relation to Article 12bis that are published on CAS’s website will also be brought to the reader’s attention. In the second blog, we will focus specifically on the sanctions applied by FIFA under Article 12bis. In addition, explanatory guidelines will be offered covering the sanctions imposed during the period surveyed. A more extensive version of both blogs is pending for publication with the International Sports Law Journal (ISLJ). If necessary, and for a more detailed and extensive analysis at certain points, we will make reference to this more extensive article in the ISLJ.

In 2015, FIFA announced a very significant addition to the Regulations on the Status and Transfer of Players (hereinafter: “the RSTP”): the inclusion of a new provision on overdue payables by defaulting clubs towards players and other clubs. On 1 April 2015, the 2015 edition of the RSTP gave birth to a fast-track procedure to deal with overdue payables enshrined in Article 12bis (hereinafter: “the 12bis procedure”). In its Circular letter no. 1468, FIFA also strongly urged all of its member associations to make sure that their affiliated clubs were informed of this new provision immediately.

From Article 12bis, which is also laid down in the 2016 edition of the RSTP, it follows that clubs are required to comply with their financial obligations towards players and other clubs as per the terms stipulated in the contracts signed with their professional players and in the transfer agreements signed with other clubs. In accordance with Article 12bis FIFA is entitled to sanction clubs that have delayed a due payment for more than 30 days without a prima facie contractual basis.

It was a real thorn in the side of FIFA that too many clubs, on a worldwide level, did not comply with their financial contractual obligations without legitimate reasons.[2] With the introduction of this provision, it was not only FIFA’s aim to continue its process to further speed up its proceedings, but also to establish a stronger system regarding overdue payables towards players and clubs. FIFA stressed that it wanted to further improve efficiency and provide clear regulatory steps to deal with overdue payables from clubs to players and from clubs to other clubs.

As from 1 April 2015, the Dispute Resolution Chamber (hereinafter: “the DRC”) and the Players’ Status Committee (hereinafter: “the PSC”) are FIFA’s competent authorities to deal with claims on overdue payables in relation to Article 12bis. Both FIFA committees were given a wide scope of discretion to impose sanctions on defaulting clubs, such as fines and transfer bans. In fact, the possibility to impose sanctions is critical to support a stronger and more efficient dispute resolution system regarding overdue payables, as we will see in the second blog.

The introduction of FIFA’s 12bis procedure also gave rise to many (legal) questions. For example, are only clubs and players entitled to lodge a claim before respectively the PSC and the DRC? Or are other parties, such as coaches and national associations, also entitled to raise their claims under 12bis? Do claims for training compensation and solidarity contribution fall under 12bis? Can the 12bis procedures be considered as a real fast-track procedure? Under what circumstances can an offence be considered a repeated offence? And also, since the imposition of sanctions is key to the efficacy of the 12bis procedure, under what conditions will these sanctions be imposed? These are only a small sample of the questions that arose after the introduction of the 12bis procedure. In this first blog, we will try to answer the most important questions raised based on the jurisprudence of the DRC, PSC and CAS.

General preliminary observations

As a starting point, it must be noted that exactly 137 decisions by the DRC and the PSC regarding Article 12bis have been published by FIFA on its website between 1 April 2015 and 1 April 2017.[3] Of these 137 decisions, 99 decisions have been dealt with by the DRC, including 58 decisions issued by the DRC Single Judge. Additionally, 32 decisions were passed by a Chamber of three judges, whereas 24 of these decisions were passed by circulars and eight were passed by a decision of a sitting Chamber in Zürich, Switzerland. Only nine FIFA decisions were passed by a Chamber of five judges.   

From the 38 decisions of the PSC, 37 were issued by its Single Judge and only one[4] was issued by a Chamber of three judges via a circular. It can be noticed that in most “renouncement of right cases” (in which defaulting clubs have not replied to the claim of the claimant party), a Single Judge has dealt with the case.

Analysing the decisions, it is striking that all claimants in the 137 decisions won their cases. In other words, in none of the decisions of the DRC and the PSC it was found that a “prima facie contractual basis” existed for the respondent party, which would justify non-compliance with the original contract. A sanction was imposed in all decisions.

It can further be observed that in the great majority of the decisions, the respondent party did not reply to the claim. As we will see, the absence of a reply will generally result in more severe 12bis sanctions for the defaulting club.

The jurisprudence of FIFA also illustrates that the 12bis procedure are a step towards swifter proceedings. In the last years we have already noted a positive development with regard to the length of ‘regular’ proceedings before FIFA (not including the 12bis procedures). With regard to the 12bis procedure, FIFA stressed that it has shortened the timeframe for decisions taken on overdue payables, with decisions now being taken within eight weeks and claimants being notified of a decision within nine weeks of lodging their complete claim. After analysing the 12bis decisions of the DRC and the PSC, it is clear that FIFA actually lived up to these expectations. The average duration of a 12bis procedure is two months. It is only exceptionally that a 12bis decision lasted longer (four or ultimately five months) or even took less time (one or one and a half months).[5] As illustrated in Figure 1, approximately 67% of the PSC and the DRC procedures were concluded within eight weeks. Approximately 80% of both FIFA decisions were dealt with within 10 weeks.

Figure 1

The scope of Article 12bis

The two years of jurisprudence show that the personal scope of Article 12bis must be interpreted strictly. As follows from the text of Article 12bis(3), only players and clubs are entitled to lodge a claim before FIFA. Put another way, coaches, national associations and intermediaries do not have standing to sue in the 12bis procedure. This textual interpretation of the provision is confirmed by the jurisprudence of the DRC and the PSC. In fact, none of the reviewed decisions of the DRC or the PSC involved a party who was not a club or a player.

Additionally, it can be concluded that claims for training compensation or related to solidarity mechanism are also excluded from the scope of Article 12bis, as this opportunity is not provided in the provision. Moreover, the current jurisprudence does not leave room for any other interpretation. With regard to training compensation and solidarity mechanism, this means that FIFA gives to “overdue payables” a different meaning than the UEFA Club Licensing and Financial Fair Play Regulations, since outstanding amounts for training compensation and solidarity mechanism are considered by UEFA as overdue payables. The same is true for outstanding payments due by clubs to other (than player) club employees and debts by clubs to social/tax authorities; such outstanding amounts will not be considered by FIFA as ‘overdue’ under Article 12bis.

Generally, the DRC deals mainly with contracts signed by clubs with professional players. These include employment contracts but it is to be expected that separate agreements could also fall under the scope of Article 12bis as long as specific elements of that separate agreement suggest that it was in fact meant to be part of the actual employment relationship, as the DRC decided in many other cases (not being 12bis procedures). This is for example the DRC’s position with regard to image right contracts.^[6] Based on the jurisprudence reviewed, it follows that termination agreements fall under the scope of Article 12bis.[7] The PSC will only deal with transfer agreements, including both transfers on a definite[8] as well as on a temporary basis[9]. It is to be expected that agreements between clubs that do not concern the status of players, their eligibility to participate in organised football, and their transfer between clubs belonging to different associations, will most likely not fall under Article 12bis.[10]

Finally, it also follows from Article 12bis(3) that the creditor (player or club) must have put the debtor club in default in writing, granting a deadline of at least 10 days to comply with its financial obligations. Regarding this 10-days deadline, FIFA follows a strict interpretation, as we will see in the following paragraph.

The existence of an ‘overdue payable’ 

As follows from the wording of Article 12bis and the corresponding jurisprudence, two prerequisites must be met to establish that an overdue payable exists under Article 12bis. First, the club must have delayed a due payment for more than 30 days without a “prima facie contractual basis”. Second, the creditor (which is the player or club) must have put the debtor club in default in writing, granting a deadline of at least 10 days to comply with its financial obligations. In all the published decisions the FIFA committees verified that a 10-days deadline had been granted. We can therefore assume that this 10-days deadline is a prerequisite for the DRC and the PSC to proceed with the claim. Although Article 12bis is not entirely clear as regards the start of the “10-days deadline”, the jurisprudence shows that it runs as soon as the 30 days have elapsed.[11]

Disputes can arise with regard to the fulfilment of the “10-days deadline”. For example, in the CAS award of 9 May 2016, the player had filed a statement of claim before the DRC on 25 March 2015 and then sent a letter to the club on 30 March 2015 (i.e. five days after filing a claim at the DRC) putting the club in default for the overdue payment. The club however argued that this was a violation of Article 12bis(3) of the RSTP, edition 2015, as it did not make any legal sense whatsoever to address a default notice to a party after lodging a claim at FIFA. The CAS however stated that it was clear that the player had already given the club ample opportunity (the player stated that it had already provided three separate notices of default) to fulfil its obligations in conformity with Article 12bis.[12] The CAS therefore found it curious that the FIFA administration still requested the player to issue yet another default notice in such a situation when it was clear that the player had already given the club many opportunities to fulfil its obligations. This part of the award is interesting. On the one hand it shows that (the) FIFA (administration) obliges creditors to send a “10-days deadline” default letter under all circumstances, while on the other hand it is to be expected that the CAS might show more flexibility. Interestingly, in a case before the PSC, the claimant club put the respondent club in default of payment, starting the 10-days deadline on the exact same date of the submission. This practice was accepted by the PSC.[13] In other words, in order to gain time, claimants might be able to lodge a claim in front of FIFA before the “10-days deadline” of Article 12bis has passed.  

To establish whether “overdue payables” exist, it is decisive that the “overdue payables” existed after 1 April 2015 (the date on which Article 12bis came into force). This is also confirmed by the CAS. In its CAS award of 17 June 2016, the Italian club Pescara referred to the fact that the agreement between Pescara and the Belgian club Standard Liège was entered into on 10 July 2012, while Article 12bis did not take effect until 1 April 2015. Pescara stated that it had no means to know that Article 12bis would be enacted nearly three years later. The Sole Arbitrator however found it decisive and stressed that the claim made by Standard Liège was made after 1 April 2015 and that Standard Liège referred clearly to the overdue payables from Pescara. At the end, all that matters, according to the CAS, was the existence of overdue payables at the assessment date and that the assessment date was after 1 April 2015.[14]

For the sake of clarity, the fact that the DRC and the PSC have decided in 12bis procedures that a defaulting club must pay to the claimant overdue payables does not touch upon the question whether the contract has been terminated with just cause. To put it bluntly, a decision in a 12bis procedure does not justify a unilateral termination based on Article 14 of the RSTP; no legal connection exists in this regard. The jurisprudence of the DRC in relation to its ‘regular’ proceedings (not being 12bis procedures) generally shows that a valid ground for unilateral termination exists only in case there is outstanding remuneration for a period of three (or sometimes two) months.[15] This means the existence of an overdue payable under Article 12bis does not automatically give the claimant the legal right to unilaterally terminate the contract with the defaulting club. It should also be noted in this regard that it follows from Article 12bis(9) that the terms of Article 12bis are without prejudice to the application of further measures derived from Article 17 RSTP in case of a unilateral termination of the contractual relationship.

In the second blog we will focus specifically on the sanctions available to FIFA under Article 12bis and will provide explanatory guidelines covering the sanctions imposed during the period surveyed.

[1] This contribution discusses the jurisprudence of the FIFA Dispute Resolution Chamber (DRC) and the Players’ Status Committee (PSC) as published on FIFA’s website in the period between 1 April 2015 and 1 April 2017. Decisions published after the date of 1 April 2017 (even if issued before this date) will fall outside the scope of this contribution. The awards of the CAS in  relation to Article 12bis will also be discussed in this contribution. However, only the awards as published on the website of CAS before 1 April 2017 will be discussed in this contribution. As far as we know, several cases regarding art. 12bis are currently also pending before CAS.

[2] As was also introduced in FIFA Circular no. 1468, dated 23 January 2015, the new Art. 12bis is added to the list of provisions that are binding at national level and must be included in the association’s regulations (cf. Art. 1(3)(a) of the RSTP.

[3] Dispute Resolution Chamber: http://www.fifa.com/governance/disciplinary/dispute-resolution-system.html. Accessed 1 April 2017. Players’ Status Committee: http://www.fifa.com/governance/disciplinary/dispute-resolution-system.html. Accessed 1 April 2017.

[4] PSC 20 June 2016, no. op0616676.

[5] See for the shorter procedures: inter alia DRC 18 May 2016, no. op0516646, DRC 29 February 2016, no. op0216229, DRC 15 July 2016, no. op0916308 and DRC 30 November 2015, no. 11151578. See for the longer procedures: inter alia DRC 3 June 2016, no. op0616046, DRC 7 April 2016, no. op04161633, DRC 15 October 2015, no. op1015914 and DRC 1 October 2015, no. 1015648.

[6] DRC 13 December 2013, no. 12131045 and DRC 17 January 2014, no. 114396. See also DRC 30 August 2013, no. 08133402, DRC 10 February 2015, no. 02151030 and DRC 28 March 2014, no. 03141211. See also CAS 2014/A/3579 Anorthosis Famagusta FC v. Emanuel Perrone, award of 11 May 2015.

[7] See inter alia DRC 26 November 2015, no. op11151356.

[8] See inter alia PSC 13 September 2016, no. op09161090.

[9] See inter alia PSC 11 June 2015, no. op0615618 and PSC 20 February 2017, no. op02172015.

[10] Art. 1(1) RSTP, edition 2016.

[11] Moreover, parties should be aware that the 30 days deadline will start to run only after the so-called “grace periods” has passed, which also explicitly follows from the applicable jurisprudence of FIFA. A grace period can be considered as the period immediately after the deadline for an obligation during which the amount due, or other action that would have been taken as a result of failing to meet the deadline, is waived provided that the obligation is satisfied during the grace period. See DRC 14 November 2016, no. 11161545-E. Also in “regular” DRC cases so-called “grace periods” are accepted. See inter alia DRC 6 November 2014, no. 11141064.

[12] See CAS 2015/A/4153 Al-Gharafa SC v. Nicolas Fedor & FIFA, award of 9 May 2016. From this award it follows that FIFA applied the incorrect version of the RSTP in its decision of 22 June 2015 as a result of which Art. 12bis was not applicable.

[13] PSC 30 November 2015, no. 10151052.

[14] Also in its award of 17 June 2016, another Sole Arbitrator stressed that as Art. 12bis has been implemented within the 2015 edition of the RSTP, FIFA has the power to impose a sanction listed in Art. 12bis(4) RSTP in that specific case. See CAS 2015/A/4310 Al Hilal Saudi Club v. Abdou Kader Mangane, award of 17 June 2016.

[15] See inter alia DRC 7 September 2011, no. 9111901 (two months) and DRC 11 May 2011, no. 129795 (three months). See also DRC 17 December 2015, no. 12151368. Please note that CAS will hold on to a period of three months in order to establish that a just cause exists; See inter alia CAS 2015/A/4158 Qingdao Zhongneng Football Club v. Blaz Sliskovic, award of 28 April 2016.

Editor’s note: Chuck Blazer declined our official interview request but thanks to some trusted sources (the FIFA indictment and Chuck’s testimony) we have reconstructed his likely answers. This is a fictional interview. Any resemblance with real facts is purely coincidental.

Mr Blazer, thank you for agreeing to this interview, especially considering the circumstances. How are you doing?

I am facing ten charges concerning, among others, conspiracy to corrupt and money laundering. But apart from that, I am doing great (laughs)!

It is good to know that you have not lost your spirit. And since you’ve been involved in football, or as you call it soccer, for years could you please first tell us what was your career at FIFA and its affiliates like?

Let me see… Starting from the 1990s I was employed by and associated with FIFA and one of its constituent confederations, namely the Confederation of North, Central American and Caribbean Association Football (CONCACAF). At various times, I also served as a member of several FIFA standing committees, including the marketing and television committee. As CONCACAF’s general secretary, a position I proudly held for 21 years, I was responsible, among many other things, for negotiations concerning media and sponsorship rights. From 1997 to 2013 I also served at FIFA’s executive committee where I participated in the selection process of the host countries for the World Cup tournaments. Those years at the helm of world soccer were truly amazing years of travel and hard work mainly for the good of the beautiful game. I might add that I even managed to document some of my voyages on my blog. I initially called it “Travels with Chuck Blazer” but Vladimir (Putin) convinced me to change the name to “Travels with Chuck Blazer and his Friends”. You should check it out.

Sure, but you ended up facing corruption and tax fraud charges in the US. What happened?

Concerning the charges I am currently facing, I pleaded guilty to participating in a conspiracy to corrupt FIFA and its related constituent organizations through various bribery schemes. In addition, I acknowledged taking part in money laundering process, violation of certain financial reporting laws, and tax evasion. But please keep it quiet. My family was devastated when they heard about this. After all, they know me as a kind-hearted and giving type, especially if you consider that, given my appearance, I’m always Santa Claus when Christmas time is around.

Concretely, around 1992 and together with other representatives of the soccer world, I agreed to accept a bribe in connection with the selection of the host nation of the 1998 World Cup. Together with other FIFA executive committee members I also accepted illegal payments concerning the selection of South Africa as the 2010 World Cup host. Simultaneously, since approximately 1993, still with the same bunch of soccer executives, I accepted bribes connected to the award of broadcasting and other rights to the 1996, 1998, 2000, 2002 and 2003 Gold Cup, a tournament analogue to the Copa América, featuring member associations of CONCACAF.

I know it’s wrong. But at FIFA a lot of people were doing it and it was just a common practice at that time. Money was flowing in my bank accounts and it felt right. We were working so hard to organize those tournaments, you know.

How come the US authorities’ ended up investigating you and FIFA?

I am not completely sure. When I testified back in 2013 the judge indicated that FIFA and its attendant or related constituent organizations were identified as a RICO enterprise, that is, a Racketeering Influenced Corrupt Organization if I remember correctly. I was terrified, it sounded very intimidating at first. Now I guess I got used to the sound of it. I am even thinking about calling my next cat Rico (laughs). I also recall that the Department of Justice’s involvement in the case was due to the fact that we used the US financial system to funnel the money. In hindsight, it was a very bad idea.

Could you give us some more details on how the corruption mechanism actually worked in practice?

In general terms there were media and marketing rights to be sold. Those rights, and often their extensions, were awarded in exchange for bribes, sometimes via intermediaries. The sports marketing companies engaged in the schemes were then able not only to profit from the acquired rights themselves, but also to accept illegal payments for passing on some of those rights to sponsors.

(Long pause) Take for instance Copa Libertadores. The tournament developed and gained popularity which sparked sports marketing companies’ interest in acquiring marketing rights to the competition. Around 2000 an entity affiliated with one of the sports marketing companies was awarded sponsorship rights for the tournaments which took place between 2001 and 2007, with a subsequent renewal of the contract in 2007 and 2012. In the early 2000s Nicolás Leoz, acting as the president of Confederación Sudamericana de Fútbol (CONMEBOL) and a member of its executive committee, sold his support to award the rights to a specific company. What is more, not only did he receive the money, he also gave instructions to forward approximately $2 million to his personal bank accounts, a sum which was owed to CONMEBOL itself based on the awarded sponsorship rights’ contract. The Copa Libertadores was only one of the many affected soccer competitions.

And what were the other tournaments affected?

I am American so please excuse my accent, but besides Copa Libertadores, also Copa América, Copa do Brasil, Gold Cup, and the World Cup qualifiers games. I might also add that corruption affected at least the FIFA 2011 presidential elections, the voting process concerning the hosts of the 1998 and 2010 World Cups, and Brazil’s national team’s sponsorship.

Who would you identify as the main players in the corruption schemes?

Except myself you mean (laughs)? Well, definitely a number of FIFA officials that you hear a lot about in the news lately. I can easily mention a few of my colleagues, like Rafael Esquivel who served as the president of the Venezuelan soccer association and a vice president on the CONMEBOL executive committee. There was also my good friend Eugenio Figueredo, a former president of the Uruguayan soccer association who was a member of FIFA’s executive committee, a vice president at FIFA, a member of various FIFA standing committees, and a vice and then president of CONMEBOL. Surely you know of José Maria Marin and Jeffrey Webb. The former was the president of the Brazilian soccer association, and sat on several FIFA standing committees. The latter was the president of Cayman Islands Football Association and a member of the Caribbean Football Union’s (CFU) executive committee. He was also appointed as the president of CONCACAF and a FIFA vice president. The funny thing is that Webb took these positions in order to clean up after the corruption scandal which led to the resignation of Jack Warner.

Jack Warner, you mean the former president of CONCACAF and the vice president of FIFA?

Correct. But do not forget that he was also the secretary and then a special advisor to the Trinidad and Tobago Football Federation (TTFF), and the president of the CFU. Jack is probably the most corrupt soccer official I ever met.  Personally I did not like him, he just couldn’t get enough. Already in the early 1990s he began exploiting his position for personal gains. In this regard, he did not only treat the assets of the organizations he served as his own, but also actively solicited bribes in connection with for example the 1998 World Cup. Hundreds of thousands of dollars in bribes were also paid to him with regard to the award of commercial rights to several editions of the Gold Cup. Moreover, acting as the president of the CFU and a special advisor to the TTFF he orchestrated the sale of media rights to World Cup qualifying matches which the national members of the CFU decided to sale as a bundle. Following negotiations Traffic, a sports marketing company, acquired the rights to 2002, 2006, 2010, and 2014 World Cup qualifier matches. A substantial part of the value of the contracts concluded by Warner on behalf of the CFU was automatically transferred to accounts under his personal control. He was also involved in a $10 million bribe related to the award of the 2010 World Cup to South Africa. I could go on and on.

You mentioned Traffic. Could you tell us more about it?

Of course. Several of these sports marketing companies were involved, but to my knowledge Traffic was one of the biggest players. This multinational company was based in Brazil and comprised of subsidiaries operating around the globe including the US where it commenced its operations around 1990. The US branch alone was engaged in a number of bribery and fraud schemes in connection with their efforts to obtain various rights from soccer organization and federations in the region. The beneficiaries of these schemes included, among others, Jack Warner, Nicolás Leoz, and Rafael Esquivel. Traffic’s main goal was to expand its operations through developing ties with soccer governing bodies. I remember that in 1991 during Nicolás’ term as CONMEBOL’s president Traffic acquired exclusive commercial rights to three editions of Copa América. Nicolás then threatened to walk away. He claimed that Traffic was about to make a lot of money out of the deal and that it was only fair for him to get his share of the pie. With each of the new editions of the Copa América, Nicolás would demand fresh bribes, a personal business of his which, to my knowledge, went on until 2011. Additional payments were made by Traffic based on their subsequent profits. Esquivel also benefited by requesting bribes in exchange for his ongoing support for Traffic’s position. As I said, bribery at FIFA was often the result of the initiative on the part of its officials. But coming back to Traffic, their involvement is best described in numbers. Out of the twelve bribery schemes I know of, Traffic was involved in nine of them. However, if we disregard the schemes concerning FIFA elections and the voting process for the World Cup hosts the share is nine out of ten. You also need to keep in mind that a former employee of the US branch of Traffic involved in the corruption scheme went on to serve as a general secretary of CONCACAF. On a side note, I think I was a much better general secretary than he ever was. I still receive birthday cards from my former colleagues at CONCACAF.

You stated that several companies were involved. How did they share the rights acquisition between themselves?

I’m not entirely sure about the exact mechanisms involved. What I know, however, is that sometimes conflicts emerged between the different companies seeking to secure contracts for themselves. On other occasions they were able to join forces, for example with the media and marketing rights to Copa América. At first, CONMEBOL entered into a contract with Traffic on the basis of which the latter was awarded the exclusive rights to, among others, the 2015 edition of the tournament, and an option to retain those rights for the next three editions. But in 2010 CONMEBOL signed another agreement, this time with Full Play, on the basis of which Full Play was granted media and marketing rights to several editions of the tournament, including the 2015 edition already sold to Traffic. As you can imagine, Traffic was not happy. They decided to sue CONMEBOL and Full Play. In the end the companies came to an understanding and formed Datisa, a new entity which was to obtain and exploit the commercial rights to the Copa América. In return, Traffic was to shoulder a share of the bribes offered to CONMEBOL officials.

I also recall that there were tensions between Traffic and another company established by a former employee of Traffic who, after bribing Brazilian federation’s officials in order to acquire a contract for the rights to Copa do Brasil, was accused by Traffic’s owner of stealing his business. But they also managed to solve the issue by combining their “efforts” and by sharing the financial burden of the “investments” made to acquire the rights.

And what sums are we talking about?

Not so much, really (laughs). Concerning Datisa the company agreed to pay between $100 and $110 million in bribes to CONMEBOL officials all of whom worked also at FIFA. The FBI told me that they estimated that the “business” generated approximately $150 million in bribes, an amount which may increase if new information come to light. In the end, I did not get so much out of it compared to some of my dear colleagues. Sometimes I think that I should have been more firm during the “negotiations”. For a long time I have been dreaming about having an additional apartment in the Trump Tower. I remember that when I got the first one it almost seemed as it came from some divine intervention.

Wow, that’s a lot. How did they manage to conceal it?

As I already mentioned the “business” was sometimes conducted via intermediaries. Jose Margulies was one of the prominent ones. He was the brother of an old friend of the owner of Traffic, and often used accounts in the names of offshore corporations in order to makes payments on his behalf. In addition, he tried to conceal the bribes by using accounts at Swiss banks, made recourse to currency dealers, destroyed documentation, and discouraged the corrupt soccer officials from using accounts in their own name in order to avoid detection from law enforcement bodies, an advice which was not always taken seriously. People like Nicolás Leoz for example did not hesitate to have sums being paid to their personal bank accounts on the basis of “consulting contracts”. As I already mentioned, Jack (Warner), for his part, concluded a double agreement in the name of the TTFF concerning rights to World Cup qualifier games. He first sold the TTFF’s rights as part of a bundle, and later on sold them again, but this time separately. There was also the famous $10 million paid by South Africa’s authorities to the CFU in order to “support the African diaspora”, a payment which was in fact made in exchange for votes regarding the 2010 World Cup host. This money was diverted back into Jack’s pockets via a number of tricks. Using family members’ accounts was another way of deception. Lately, the business of taking bribes was getting more and more complicated, prompting officials to look for new complex schemes. In fact, the attempts to conceal illegal payments made in connection with the rights to the World Cup 2018 and 2022 qualifiers caused a lot of headache to Jeffrey Webb in his capacity as a high level CFU official. One of the companies with whom Traffic was to make payment to Webb had difficulties finding the right way to discretely transfer the money to him. This led to long negotiations between Webb’s associate and the company’s executives in order to find a clean method to make the outstanding payment.

Thank you so much Mr Blazer for your time and your invaluable insights!

You’re welcome. I am a big fan of the ASSER International Sports Law Blog so anything for you guys.

Editor's Note: Frans M. de Weger is legal counsel for the Federation of Dutch Professional Football Clubs (FBO) and CAS arbitrator. De Weger is author of the book “The Jurisprudence of the FIFA Dispute Resolution Chamber”, 2nd edition, published by T.M.C. Asser Press in 2016. Frank John Vrolijk specialises in Sports, Labour and Company Law and is a former legal trainee of FBO and DRC Database.

This second blog will focus specifically on the sanctions available for FIFA under Article 12bis. It will provide explanatory guidelines covering the sanctions imposed during the period surveyed.

Introduction

The possibility to impose sanctions under article 12bis constitutes one of the pillars of the 12bis procedure. Pursuant to Article 12bis of the RSTP, edition 2016, the DRC and the PSC may impose a sanction on a club if the club is found to have delayed a due payment for more than 30 days without a prima facie contractual basis[1] and the creditor have put the debtor club in default in writing, granting a deadline of at least 10 days.[2] The jurisprudence in relation to Article 12bis also shows that sanctions are imposed ex officio by the DRC or the PSC and not per request of the claimant.

If the basic conditions for the application of Article 12bis are fulfilled, said provision provides for the following sanctions that may be imposed on the defaulting club:

1.    a warning;

2.    a reprimand;

3.    a fine; or

4.    a ban from registering any new players, either nationally or internationally, for one or two entire and consecutive registration periods (hereinafter: “the registration ban”).[3]

Based on the wording of Article 12bis, i.e. the use of the word ‘may’, it is left to the discretionary power of the DRC and the PSC to decide whether or not to impose a sanction on the debtor club.[4] However, this discretionary power has never been used in favour of a defendant in all the published DRC or PSC decisions under review. In other words, a sanction, going from a warning to a transfer ban of two entire and consecutive periods, was imposed in all decisions. Despite the fact that it follows from Article 12bis(4) that sanctions may apply cumulatively, this option was only used once.[5] It seems that it will come into play only if the debtor club did not comply with its obligations on multiple occasions and only after the maximum sanction of a transfer ban of two entire and consecutive periods has been imposed on the debtor club. The discretionary power under Article 12bis is different from the sanction of a transfer ban as laid down in Article 17(4) of the RSTP. The latter article states that the competent body ‘shall’ sanction, as opposed to Article 12bis, which states that the competent body ‘may’ sanction.[6]

 The Warning

Out of the 99 published 12bis decisions of the DRC, 17 warnings have been imposed. Additionally, seven warnings have been imposed out of the 38 published 12bis decisions before the PSC. As follows from the jurisprudence of FIFA,[7] (only) a warning will be given by the FIFA committees in the event two conditions are cumulatively met:

1.             the club (duly) replied to the claim; and

2.             it is not a repeated offence.

It is however important to note that the height of the outstanding amount of overdue payables is not correlated with the imposition of a warning. The outstanding overdue payables in the 24 proceedings ending with a warning range from an overdue payable of 3,468 Euros (hereinafter: “EUR”) in two decisions of the DRC,[8] up to an amount of EUR 1,000,000 in a PSC decision.[9]

The jurisprudence also points out that the debtor club must reply to the claim in order to contain the possible sanction to a warning. Although several decisions refer to the fact that the club should have “duly replied to the claim”,[10] other decisions do not mention “duly” and these consider it enough that the club only “replied to the claim”.[11] Despite this difference in terminology, we conclude that almost any form of reply provided by the debtor club will be considered sufficient. In fact, no distinctive value is ascribed to the word “duly”.

The respondents gave divergent reasons for their non-compliances. One club contested the applicability of Article 12bis,[12] other clubs stated to have administrative difficulties[13] or financial difficulties,[14] whereas others claimed that they were communicating with the player’s agent to settle the matter amicably.[15] Apart from the claim related to the applicability of Article 12bis, which was rejected because the claimant lodged his claim after the entry into force of Article 12bis RSTP,[16] all the arguments raised were not considered valid reasons for non-payment of the outstanding monies. Although the jurisprudence does not give an exact answer to the question what would be considered “a prima facie contractual basis”, it can be concluded that the aforementioned circumstances did not fulfil these criteria.

Notwithstanding the above, the condition of having “(duly) replied to the claim” has recently been tackled by the DRC. In its decision of 23 May 2016, the respondent replied to the claim per e-mail.[17] The DRC considered this reply not to be sufficient to fulfil the standards of “(duly) replied to the claim” because “the Respondent only replied to the claim by e-mail and e-mail petitions shall have no legal effect in accordance with art. 16 par. 3 of the Procedural Rules.” In other words, the respondent should have replied by fax or ordinary mail.

Additionally and in line with the above, the DRC or the PSC has only imposed a warning when there was no repeated offence. In other words, the respondent in a 12bis procedure must actually be considered as a “first offender” in order to (only) get a warning. From the 24 decisions in which a warning has been imposed, there is only one not fulfilling the abovementioned two conditions.[18] In this (PSC) decision, the respondent party did not reply to the claim. However, during the course of the proceedings the respondent made a partial payment to the claimant.[19] Therefore, the PSC decided to impose a warning on the respondent, irrespective of the absence of a reply. In light of this decision, it must be kept in mind that making a partial payment during the course of the 12bis proceedings might alleviate the duty to ‘reply to the claim’.

 The Reprimand

Only two of the decisions published by FIFA contain a reprimand.[20] One decision was issued by the DRC,[21] the other one by the PSC.[22]

In the DRC decision, overdue payables of EUR 40,000 were due to the claimant based on a termination agreement.[23] In its reply to the claim, the respondent admitted that it had to pay compensation to the claimant, but only until he would have found a new club. The respondent considered that, since the claimant found a new club immediately after the agreed termination, no compensation was due.[24] Notwithstanding this, the DRC judge considered that there was no documentary evidence with regard to the argument of the respondent. Therefore, the DRC judge considered that the respondent had delayed a due payment for more than 30 days without a prima facie contractual basis. Based on the foregoing paragraph and the fact that the respondent replied to the claim, one would think that a sanction in the form of a warning should be imposed on the respondent. However, the DRC highlighted that the DRC judge had already imposed a warning on the respondent previously. Thus, it referred to Article 12bis(6), which establishes that “a repeated offence will be considered as an aggravating circumstance and lead to more severe penalty”.[25] Therefore, a reprimand was imposed.[26] In a similar decision of 26 May 2016, the PSC also imposed a reprimand.[27]

In conclusion, one could say that a reprimand is considered as a severe sanction and thus will not be imposed on a first offender. Although there have only been two (published) decisions of FIFA wherein a reprimand was actually imposed, one can expect that a reprimand will be imposed on a repeated offender who replied to the claim in his first and second 12bis procedure. The crucial advice that can be derived from the above analysis is that a respondent club should always reply in a 12bis procedure, because the warning and reprimand do not bring any financial or sportive consequences with it, contrary to the fine and the registration ban, which will be discussed hereunder.

The Fine
Introduction 

The only sanction that leads to direct financial consequences is the fine. The fine is a sanction that can be imposed in a 12bis procedure and needs to be paid by the debtor club to FIFA. As opposed to the warning and the reprimand, the jurisprudence shows that a fine will be imposed in the event that the respondent did not reply to the claim.

66 out of the 99 DRC and 29 out of the 38 PSC decisions involved a fine. After analysing the jurisprudence, we conclude that it is necessary to distinguish between a fine in a DRC procedure and a PSC procedure. In fact, the amount of the outstanding overdue payables differs considerably in both procedures.[28] Additionally, the level of the corresponding fines in DRC procedures compared to the PSC procedures are different.[29] The amounts of overdue payables in a 12bis procedure before the PSC are structurally higher than the amounts in a 12bis procedure before the DRC, while the amount of the fine is not structurally higher in a PSC procedure. Due to these differences between the DRC and the PSC, we decided to discuss the use of fines in the DRC and PSC procedures separately. Our aim was to determine how the judges define the level of the fine in a 12bis procedure. To do so, we use the so-called “category method”, which will be explained below.

Fines imposed by the DRC 

After analysing the decisions of FIFA in which fines were imposed, it seems that they do not correspond to a percentage of the outstanding overdue payables.[30] Instead, the level of a fine can be determined by means of several categories of fines. At least four general conclusions can be derived from the jurisprudence regarding the level of the fine for a defaulting club. 

Firstly, the level of the fine imposed by the DRC increases when the overdue payable is higher. Secondly, there are three categories of fines: i) a fine for the club which did not reply to the claim and is considered to be a first offender (First Category Offence);[31] ii) a fine for a club which did not reply to the claim and has been found by the DRC to have neglected its contractual obligations in the recent past (not being a 12bis procedure) (Second Category Offence) ;[32] and iii) a fine for a club which did not reply to the claim and has been sanctioned in a 12bis procedure previously (Third Category Offence).[33] Thirdly, the fine for a respondent club in a Second Category Offence is double the size of the fine for a respondent club in a First Category Offence.[34] Finally, the fine in a Third Category Offence is three times the size of the given fine in a First Category Offence.[35]

Based on our comprehensive study, we can conclude that the DRC determines the level of the fine by taking into consideration the above-mentioned three categories (First, Second and Third Category Offence) subject to an approximate range in relation to the outstanding amount due. Although the ranges are very hard to define with only 66 published DRC decisions yet, the below table sheds some light and provides for eight standard situations referring to various ranges of overdue payables: 

Fines imposed by the PSC 

With regard to the PSC decisions, the authors tried to use the same method as for the DRC procedures. At first sight, it looks as if the PSC and the DRC use the same ranges for fines. However, the PSC decisions seem more arbitrary. It is therefore more difficult to draw definitive conclusions in relation to the PSC 12bis decisions. For example, in the decision of 12 October 2015, decided by a PSC’s Single Judge, a fine of CHF 15,000 was handed out to a first offender club with an overdue payable of EUR 1 million.[39] However, one can doubt whether this fine can be considered appropriate. In fact, a first offender club in another decision received the same fine, although with smaller overdue payables of EUR 200,000.[40] Another striking decision involves a fine of CHF 7,500 based on an overdue payable of USD 50,000.[41] In a comparable situation before the DRC, also with regard to a first offender, the club was sanctioned with a fine of CHF 5,000.[42] It is also remarkable that (only) in some cases the single judges did motivate the higher fines by mentioning the criteria for a Second- or Third Category Offence. After analysing these decisions more closely, one notices that two of the three Single Judges always mention the criteria of the Second- or Third Category Offence, while one only did it once (out of his six decisions). Because of this absence of motivation, one cannot definitely conclude whether these decisions fall into the Second- and Third Category Offence as defined in the context of the DRC’s jurisprudence. However, looking past these (minor) inconsistencies, we believe that most of the PSC decisions do fall within the ranges set out in Figure 2.[43] Additionally, one starts to see emerging an additional category, which is the fine of CHF 25,000. Figure 3 provides an overview of the height of the fines in relation to the various overdue payables in PSC proceedings.

Figure 3

Transfer Ban

The toughest sanction that can be imposed by the DRC or the PSC in a 12bis procedure is the ban from registering any new players, either nationally or internationally, for one or two entire and consecutive registration periods. Contrary to the transfer ban enshrined in Article 17(4) of the RSTP, in a 12bis procedure a club can be banned from registering new players for the next one or two registration periods. This ban will be imposed if the amount due to the claimant is not paid by the respondent within 30 days as from the date of notification of an Article 12bis decision.[49]

Out of the 137 published 12bis decisions, 16 decisions (15 from the DRC, 1 from the PSC) indicated that a ban will be imposed if the amount due to the respective claimant is not paid by the respondent within 30 days as from the date of notification of the decision. Moreover, 13 decisions refer to a ban for one entire registration period. In three decisions the DRC decided to threaten a ban for the next entire two registration periods. 

What is striking is that in all decisions the respondents did not only not reply to the claim (or only after the investigation phase was closed which is equivalent to not replying)[50], but more importantly the respondents were found to have breached their financial obligations several times before. Either, the defaulting clubs were found to have delayed several outstanding payments for more than 30 days, or the respondent had (also) been found by the DRC as well as the DRC judge responsible for not complying with its financial obligations on various other recent occasions. We also encountered cases in which both conditions were met.[51]

Another striking element of the decisions in 12bis procedures is that the amount due is not deemed relevant to justify the imposition of a registration ban on the debtor club. In fact, a registration ban has been imposed with regard to an overdue payable of EUR 7,500,[52] but also regarding an overdue payable of EUR 250,000.[53]  

It seems that a ban for one entire period will be imposed in two situations:

1) the debtor club has been found by the DRC or the PSC to have delayed a due payment for more than 30 days without a prima facie contractual basis once, as a result of which a fine was imposed, and the debtor club has been found by the DRC to be responsible for not complying with its financial obligations towards players on various occasions in the recent past;[54] or

2) the debtor club has been found by the DRC or the PSC to have delayed a due payment for more than 30 days without a prima facie contractual basis twice, as a result of which a fine was imposed in at least one of the decisions.[55]

Put differently: the jurisprudence of the DRC and the PSC clearly shows a debtor club systematically receiving a registration ban for one entire period if the club had neglected its financial obligation towards players in more than one earlier decision by the DRC or the PSC, and if in these proceedings the respondent failed to reply to the claim and therefore received a fine from FIFA. What remains not entirely clear is what the DRC and PSC exactly mean by “various occasions in the recent past”. This could also refer to convictions in employment-related matters prior to the introduction of the 12bis procedure on 1 April 2015.

In the only PSC decision wherein a registration ban for one entire period was imposed, the debtor club had only once been found by the PSC to have delayed a due payment for more than 30 days without a prima facie contractual basis, as a result of which a fine was imposed.[56] The decision of the PSC did not mention that the respondent was responsible for not complying with its financial obligations towards players on various occasions in the recent past. This might suggest a differing interpretation between the DRC and the PSC.

The two years of jurisprudence further show that a registration ban for two entire and consecutive periods will be imposed when the debtor club has been found by the DRC or the PSC to have delayed a due payment for more than 30 days without a prima facie contractual basis twice, as a result of which fines (or even a registration ban of 1 period)[57] has been imposed and the debtor club has been found by the DRC to be responsible for not complying with its financial obligations towards players on various occasions in the recent past.[58]

Final Remarks 

The 12bis procedure can be considered as a powerful instrument for swift dispute resolution, which could be of great benefit to players and clubs. FIFA has put in place a fast track procedure and a strong enforcement system with respect to overdue payables by defaulting clubs towards players and clubs. So far, FIFA has contributed to the resolution of international disputes in 12bis procedures in a very efficient manner leading to a shortened timeframe for decisions, with an average duration of approximately two months.

The sanctioning power of FIFA is one of the fundamental strengths of the 12bis procedure. In all the 137 published decisions of the DRC and the PSC, a sanction was imposed on the defaulting clubs, varying from a warning to a registration ban. 

From the FIFA decisions, in which fines were imposed on defaulting clubs, it can also be derived that the level of the fine is determined by taking into consideration the earlier-mentioned three categories of wrongdoings (First, Second and Third Category Offence), subject to an approximate range in relation to the outstanding amount due. However, the 12bis decisions of the DRC so far are more systematic and predictable than the PSC’s. Finally, the heaviest sanction, the transfer ban, will only be imposed in case the defaulting club not only did not reply to the claims, but also breached its financial obligations several times in the past. Fortunately, FIFA does not shy away from using sanctions, but only clubs that went too far will face the more severe ones.

Although the conclusions drawn by the authors can help practitioners confronted to 12bis procedures, they are based only on the published jurisprudence between 1 April 2015 and 1 April 2017. It must be taken into account that FIFA committees might change their interpretation and implementation practice regarding the 12bis procedure in the future. However, the jurisprudence of FIFA committees reviewed and analysed in this article can at least shed some light on the functioning of FIFA’s 12bis procedure, and in particular on its effective sanctioning regime, over the last two years.

[1] Art. 12bis(2) RSTP, edition 2016.

[2] Art. 12bis(3) RSTP, edition 2016.

[3] Art. 12bis(4) RSTP, edition 2016.

[4] Art. 12bis(2) RSTP and Art. 12bis(4) RSTP, edition 2016.

[5] DRC 14 November 2016, no. op11161545-E. For a more detailed analysis of DRC decisions, the authors make reference to this more extensive ISLJ article.

[6] Although it follows however from a literal interpretation of Art. 17(4) RSTP that it is a duty of the competent body to impose sporting sanctions whenever a club is found to have breached an employment contract during the protected period, according to the CAS there is a well-accepted and consistent practice of the FIFA DRC not to apply automatically a sanction but to leave it to its free discretion to evaluate the particular and specific circumstances on a case by case basis. See CAS 2014/A/3765 Club X. v. D. & FIFA, award of 5 June 2015.

[7] See inter alia DRC 16 February 2016, no. op02161765.

[8] DRC 28 January 2016, no. op1501703 and DRC 28 January 2016, no. op01161539.

[9] See PSC 7 May 2015, no. op0515353. Even EUR 50,000 higher in PSC 2 June 2016, no. op0616540. The highest outstanding payable in a DRC decision is EUR 950,000. See DRC 11 September 2015, no. 09151030.

[10] See inter alia DRC 28 January 2016, no. op01161539.

[11] See inter alia DRC 13 January 2016, no. op0116826.

[12] DRC 15 October 2015, no. op1015914. See also CAS 2015/A/4153 Al-Gharafa SC v. Nicolas Fedor & FIFA, award of 9 May 2016 and CAS 2016/A/4387 Delfino Pescara 1936 v. Royal Standard Liège & FIFA, award of 8 July 2016. 

[13] PSC 9 July 2015, no. op0715599 and PSC 7 May 2015, no. op0515353.

[14] DRC 13 January 2016, no. op0116826, DRC 25 April 2016, no. op0416115, DRC 7 July 2016, no. op0716778, PSC 2 June 2016, no. op0616540 and PSC 13 September 2016, no. op09161090.

[15] DRC 16 February 2016, no. op02161765 and DRC 15 March 2016, no. op0316303.

[16] Also confirmed in CAS 2016/A/4387 Delfino Pescara 1936 v. Royal Standard Liège & FIFA, award of 8 July 2016.

[17] DRC 23 May 2016, no. op0516571. The DRC can be quite sceptical towards information that is contained in emails. See inter alia DRC 31 July 2013, no. 07133206.

[18] PSC 3 June 2015, no. op0615400.

[19] For a more detailed analysis of the DRC decision, see our pending ISLJ article.

[20] However, some decisions – wherein a heavy sanction such as a transfer ban was issued – refer to an earlier conviction of the debtor club wherein a reprimand was given. See inter alia DRC 26 October 2016, no. op10160931-E.

[21] See DRC 26 November 2015, no. op11151356.

[22] See PSC 26 May 2016, no. op05160482.

[23] DRC 26 November 2015, no. op11151356.

[24] DRC 26 November 2015, no. op11151356, paras. (II) 7 and 8.

[25] DRC 26 November 2015, no. op11151356, para. (II) 17.

[26] DRC 26 November 2015, no. op11151356, para. (II) 18.

[27] For a more detailed analysis of this decision, see our pending ISLJ article.

[28] For a more detailed analysis of DRC decisions in this regard, see our pending ISLJ article.

[29] Cf. DRC 28 January 2016, no. op01161541 and PSC 12 October 2015, no. op10151035. In the DRC decision, the debtor club had an overdue payable of USD 100,807. In this case, the DRC imposed a fine of CHF 15,000. In the PSC decision, the debtor club had an overdue payable of EUR 1 million. However, the PSC imposed the same fine of CHF 15,000.

[30] For a more detailed analysis of the “percentage method”, see our pending ISLJ article.

[31] If these criteria were cumulatively met, the jurisprudence points out that a fine was given by FIFA to a club in a 12bis procedure. A First Category Offence was also given to a debtor club who responded to the claim, but was already sanctioned with a warning and reprimand in earlier 12bis procedures. In that case, the warning and the reprimand sanctions were exhausted and, thus, a fine was ordered by the DRC.

[32] See inter alia DRC 18 May 2016, no. op0516646. For a more detailed analysis of the DRC decisions, see our pending ISLJ article.

[33] See inter alia DRC 3 July 2015, no. op0715641. For a more detailed analysis of the DRC decision, t see our pending ISLJ article.

[34] For a more detailed illustration of DRC decisions, see our pending ISLJ article.

[35] Idem.

[36] This range differs from the range the authors have set in a previous article (see Global Sports Law and Taxation Reports, ‘Overview of the jurisprudence of the FIFA DRC in 12bis procedures’, March 2017). This difference is based on recently published jurisprudence: see DRC 28 February 2017, no. op02172117-E.

[37] DRC 11 September 2015, no. 09151030.

[38] For a more detailed analysis of DRC decisions, see our pending ISLJ article.

[39] PSC 12 October 2015, no. op10151035.

[40] PSC 12 October 2015, no. op10151010. Even more striking is the fact that this decision was dealt with on the same date as the aforementioned decision in footnote 61 above, by the same Single Judge. Only two weeks later, in PSC 29 October 2015, no. op10151014, the PSC imposed a fine of CHF 25,000 with regard to an overdue payable of EUR 590,000 to a first offender club.

[41] PSC 9 July 2015, no. op0715584.

[42] DRC 5 October 2015, no. op10151049.

[43] Only PSC 12 October 2015, no. op10151035 seems to be the odd one out.

[44] See footnote  58.

[45] This border is brought to 250,000, based on PSC 16 November 2015, no. op11151300, wherein a fine based on a Third Category Offence of CHF 45,000 was imposed with an overdue payable of USD 250,000, which sets the border at approximately 250,000.

[46] This border is brought to 500,000, based on PSC 25 February 2016, no. op0216170, wherein a fine of CHF 20,000 based on a First Category Offence was imposed with an overdue payable of EUR 450,093, which sets the border at approximately 500,000.

[47] This border is brought to 750,000, based on the decision PSC 29 June 2016, no. op0616676, wherein a fine of CHF 30,000 based on a First Category Offence was imposed with an overdue payable of EUR 750,000. In a decision with an overdue payable of EUR 675,000 (PSC 24 November 2015, no. op11151385), a fine of CHF 50,000 based on a Second Category Offence was given, which sets the border at approximately 750,000.

[48] At least until an overdue payable of USD 1,367,500 falls within this category; see PSC 21 August 2015, no. op0815530.

[49] See inter alia DRC 8 September 2016, no. op0916308. However, this may differ in a situation where sanctions are imposed cumulatively.

[50] See DRC 8 September 2016, no. op0916308 and DRC 15 July 2016, no. op0716703.

[51] In the context of a retroactive application of Article 12bis, as discussed in the context of the CAS award of 17 June 2016 (see CAS 2015/A/4310 Al Hilal Saudi Club v. Abdou Kader Mangane, award of 17 June 2016), it can be questioned whether the decisions of FIFA bodies prior to the date of 1 April 2015 (which per definition were decisions in ‘regular’ FIFA proceedings) can be taken into account and held against the club in default. For a more detailed analysis of this legal issue of retro-active application, see our pending ISLJ article. See also Lombardi, P., Worlds Sports Law Report, September 2016, “Article 12bis of the FIFA Regulations: 18 months on”, p. 5.

[52] DRC 26 May 2016, no. op0516585.

[53] PSC 20 June 2016, no. op0616676.

[54] See inter alia DRC 8 September 2016, no. op0916308.

[55] See inter alia DRC 27 October 2015, no. op10151248, wherein the debtor club had received a fine in both earlier decisions. In DRC 17 October 2016, no. op10161355-E, the debtor club had only received a fine in the second decision.

[56] PSC 20 June 2016, no. op0616676.

[57] DRC 29 July 2016, no. op0716699. The previous decision, wherein a transfer ban for one entire period was imposed, is also published: DRC 4 February 2016, no. op02161733.

[58] See inter alia DRC 13 September 2016, no. op09161247.

Editor’s note: Mario Vigna is a Senior Associate at Coccia De Angelis Vecchio & Associati in Rome, Italy. His main practice areas are sports law, commercial law, and IP law. He also has extensive experience in the Anti-doping field, serving as Deputy-Chief Prosecutor of the Italian NADO and as counsel in domestic and international sports proceedings. He is a frequent speaker at various conferences and workshops. He was not involved in either of the cases discussed below.

I.               Introduction 

Gambling in football is a popular and potentially lucrative activity. It also raises numerous issues. When faced with the issue of gambling, the European Court of Justice (now Court of Justice of the EU) determined that gambling was economic activity per se, notwithstanding gambling’s vulnerability to ethical issues, and thus could not be prohibited outright.[1] With the legality of gambling established, it was left to the proper legislative bodies (national legislatures, national and international federations, etc.) to regulate gambling in order to guard against fraud and corruption. Gambling was not going to disappear; the dangers inherent to gambling would require attention. 

Given the amounts of money sometimes at stake, it is unsurprising that fraud and corruption are constant threats in football gambling. Match-fixing, i.e. wherein participants in a match deliberately attempt to secure a specific result to allow certain gamblers to obtain favorable rewards, is one prominent form of such corrupt activity. FIFA and UEFA, as well as other relevant bodies, have attempted to regulate match-fixing to protect the integrity of football competitions. After all, illicit gambling not only enables unjust enrichment on behalf of the corrupt gamblers and their accomplices; illicit gambling undermines the trust that spectators have in an activity and can lead to a decline in interest as a result.

The Italian Football Federation (FIGC) has adopted a strict liability approach to deter and punish match-fixing. Under the operative rules, clubs and federations whose agents or members engage in match-fixing activity are liable for match-mixing regardless of whether the club or federation itself knew of or condoned the conduct. Unfortunately, two relatively recent appeal decisions—Novara and Pro Patria—have handicapped this strict liability regime by allowing clubs to escape or reduce their liability on account of dubious mitigating circumstances. These decisions have undermined the efficacy of strict liability as a doctrine, and consequently diminish the efforts against match-fixing.

This blog post argues first that strict liability is effective in deterring match-fixing activity so long as adjudicatory bodies enforce it with appropriate rigidity. In fact, the doctrine of strict liability is widespread, in sports law and other fields, precisely because it can be effective. Next, this post critiques the decisions in Novara and Pro Patria, contending that both decisions misapply the principle of proportionality and erroneously recognize certain circumstances to mitigate against liability. As a corrective to these two decisions, this post concludes by outlining an effective application of strict liability and highlighting important regulatory efforts that out to be adopted. And while the discussion herein focuses on Italian football, the ideas explained are widely applicable across all sports and throughout all levels of competition. 

II.             Italian Law, Rules, and Regulations Against Match-fixing in Football

On the eve of the 2006 World Cup, which Italy won, Italian investigators uncovered efforts involving several major football clubs aimed at rigging referee selection for matches. This scandal became known as Calciopoli and implicated clubs from both Serie A and Serie B (respectively the first and second divisions in Italian football). Subsequent investigations in 2011 and 2015 led to additional scandals concerning clubs competing in Serie B and Lega Pro (the third division of Italian football), among them Scommessopoli (Bet City), Last Bet, Dirty Soccer, and Treni del Gol. Match-fixing, it was revealed, was a real problem in Italian football.

The FIGC, as the national football federation, maintains regulatory and disciplinary authority over all Italian football competitions and activity. To address the problem of match-fixing, the FIGC employs a set of regulation that deems match-fixing activity improper and sanctionable under a strict liability principle. Article 4 of the FIGC Code of Sport Justice (CSJ) states:

2. Clubs are strictly liable for disciplinary purposes for the actions of their managers, members and the individuals set forth in art. 1, par. 5

[…]

5. Clubs are presumptively liable for the wrongdoing committed for their benefit by any person. Liability is excluded when it is clearly or reasonably doubtful that the club participated in the wrongdoing or ignored it. [2]

Thus, clubs are liable for match-fixing even if they are not intimately aware of or complicit in the match-fixing efforts that benefit the club; liability is found once someone associated with the club—a player, an agent, etc.—engages via their acts or omissions in match-fixing activity. Match-fixing is explicitly prohibited in Article 7 of the CSJ[3], which also provides that strict liability applies for match-fixing and is punishable subject to the degree of fault borne by the club.[4] Here, it is important to note that under Article 7 the adjudicating body has discretion to assess a club’s degree of fault and reduce accordingly the corresponding sanction(s). This discretion is important; it is, however, in making use of this discretion that the appeal bodies erred in Novara and Pro Patria.

III.           Novara and Pro Patria: Setting the Wrong Precedent

The FIGC Code of Sport Justice applies strict liability to clubs for match-fixing but allows for consideration of mitigating circumstances to reduce the sanction(s) if appropriate. The problem is that currently there is no standard for what qualifies as appropriate mitigating circumstances. Novara and Pro Patria highlight this problem. In both cases, Italian football clubs—Novara Calcio and Aurora Pro Patria—were sanctioned for match-fixing, but later had those sanctions reduced on appeal on the basis of mitigating factors. This blog post contends that those reductions were ill-informed. If strict liability is to work as a deterrent and truly discourage match-fixing, acceptable mitigating factors against strict liability require greater scrutiny than provided in these two cases.

A.    Novara Calcio

An investigation by the Italian media, coined Scommessopoli, uncovered one of the largest match-fixing schemes in Italian footnall history. Scommessopoli was a wide-ranging, multi-dimensional enterprise; players were involved, as were Italian and foreign criminal groups—in total, the investigation alleged that at least twenty-two clubs and sixty-one people participated in match-fixing efforts. One of the individuals involved, Cristian Bertani, played for Novara Calcio, a club in the Italian Serie B. According to the findings of the National Disciplinary Commission, Bertani conspired with a foreign gambling group and a local criminal group to fix matches. Consequently, the National Disciplinary Commission sanctioned Bertani’s club Novara Calcio under the strict liability regime in effect. Novara Calcio was fined EUR 35,000 and received a four-point deduction from the league table.[5]

The club appealed the decision to the FIGC Court of Justice. On appeal, the court reduced the deduction to three points and eliminated the fine entirely:

“[The reduced sanction] leads to a more accurate assessment of the overall conduct of the Appellant of all the activity carried out by the club, whether in a preventative or subsequent manner, specifically aimed at fighting the phenomenon of illicit sports or eliminating the consequences… In this sense, recalling among others, the approval by Novara Calcio of the first organizational model of the legislative decree no. 231/2001 related to the Code of Ethics; earning the ISO 9001:2008 certification of quality, being the first football association to earn it; having contracted since February 2012 the professional services in order to study the betting quota over the matches played by the club, bringing a discipline scheme over those studies thanks to an Antifraud Code in April 2012 “[6]

In essence, the Court reduced the sanctions on account of the club’s implementation of self-protection tools in accordance with the organizational model set forth in the Legislative Decree no. 231/2001. The problem with this decision, however, is that the efforts in question were taken after the incident. The Court treated this post-incident measures as mitigating circumstances, even though these measures were not operative when Bertani attempted to fix matches.

Such allowance of post-incident mitigating factors is inappropriate and undercuts the effort to prevent match-fixing. Indeed, only the prior adoption of an adequate organizational model against match-fixing by a club should (potentially) mitigate against strict liability. Two requirements should be satisfied: (1) prior adoption, and (2) adequate measures. Legislative decree no. 231/2001 and Italian jurisprudence both distinguish between superficial adoption of an organizational model—which is insufficient by itself—and the adoption of an organizational model with demonstrated sufficient, concrete measures to prevent wrong-doing. Only the latter satisfactorily deters potential wrong-doing, and only the latter should (potentially) shield against strict liability so long as a club can prove its preventative efforts were adequately effected. With Novara Calcio, the problem was that the adoption of an organization model was merely superficial, in addition to being after-the-fact, and that the club did not have to prove that the adopted measures were or would be effective in combatting match-fixing.

B.    Aurora Pro Patria 

In 2015, the Catanzaro Police Department arrested more than forty individuals for alleged participation in match-fixing in matches of the Italian 4^th Division. Three arrestees were former members of the club Aurora Pro Patria—two players and one coach—accused of match-fixing activities while employed by Pro Patria. All three were found guilty in the ensuing proceedings. Thus, under the doctrine of strict liability, Pro Patria received a seven-point deduction as a sanction for the conduct of its employees.[7]

Pro Patria appealed the ruling and sanction. And like the Novara case, the sanction was reduced: 

Having found the defendant liable, it cannot but follow the confirmation of the strict liability held by the association (Club). As marked by the vast jurisprudence, indeed, the referred liability cannot be avoided but graduated in the presence of circumstances that would see to deserve special consideration.

… the thorough preventative activity put in action by Aurora Pro Patria, that even when they were not obliged to, they still adopted the model of conduct as set out in the rule Legislative Decree no. 231/2001, they imposed a Code of anti-fraud and have entered into a contract with Federbet [a monitoring company] by which said company will check the flux of the bets related to the activity of the club, we determine that, given the relevant circumstances, the sanction against the association (club) must be reduced…”[8]

The Court reduced the sanction to a three-point deduction. Although the appeal court affirmed strict liability, it undercut its potency by accepting as mitigating circumstances factors that were not in place when the unlawful conduct occurred. The appeal court was in some ways excusing a violation, at least partially, for efforts the responsible party undertook to not commit the same violation again in the future. The efforts had no impact on the violation that already took place.

C.    Problems Posed by the Novara and Pro Patria Rulings 

After being charged with match-fixing, both Novara and Pro Patria hired monitoring companies that supposedly help prevent, or at least detect, potential match-fixing activity. These post-facto efforts were deemed by ruling bodies compelling enough to reduce sanctions imposed for match-fixing. This precedent of reducing on account of mitigating circumstances occurring after the match-fixing activity occurred poses two issues.

First, the precedent undermines the strict liability regime by allowing the reduction of a club’s liability where it fixes the problem ex post facto, thereby providing clubs with a loophole to escape with minimal harm. Second, the precedent does not consider the actual efficacy of the hired monitoring companies or their methods. Without a regulatory framework and established standards for monitoring companies and certification of their services, i.e. no way of assessing whether the hired companies actually make any difference when it comes to the prevalence of match-fixing, nothing separates effective monitoring from the appearance or claim of monitoring.

IV.           A Better Way of Evaluating Mitigating Circumstances

An adjudicatory body rightfully must consider the particular context of each case. Accurate and fair decisions acknowledge that not all cases concerning similar issues deserve equal treatment. Mitigating circumstances are an important aspect of any fair legal system. With Novara and Pro Patria, however, the appeal bodies erred by giving weight to certain post-incident mitigating circumstances that had no bearing on the issue at hand. Further, allowing the hire of a monitoring company to mitigate a club’s liability introduces a separate issue, i.e. the efficacy of the monitoring company and its services. Both appeal decisions reduced the capacity of strict liability to deter match-fixing. If a strict liability regime is to be effective in combatting match-fixing, then clear standards for evaluating mitigating circumstances in cases like Novara and Pro Patria are necessary.

Before proposing a way forward, it is important to first try and understand why the appeal decisions reduced the sanctions in the cases at hand. Inherent to the appeals’ justification is the doctrine of proportionality, or the notion that any punishment must fit the crime and cannot be more extreme than is warranted. In Novara and Pro Patria, it seems that the appeal bodies thought that the clubs’ liability for the conduct of their employees should be limited. In other words, while the appeal bodies certainly assigned liability to the clubs, they were unwilling to allow that liability to support too onerous sanctions.

This, of course, misses the point of strict liability in the first place. Strict liability is used to assign liability notwithstanding immediate fault because the liable party is best positioned to absorb the liability and/or work to prevent the wrongful conduct. Punishments for strict liability in match-fixing, if reduced to minimal amounts, do little to nothing to promote clubs to actively prevent match-fixing. The Court of Arbitration for Sport (CAS) re-affirms this point:

With regard to the alleged disproportionality of the Decision, the Panel first of all wishes to stress that the fight against match-fixing is considered to be extremely important for the purpose of preserving confidence in and the integrity of sport.[9]

Part of the proportionality calculus must be the severity of the wrongdoing concerned. Match-fixing is, arguably, the greatest wrong in sports. Therefore, hefty punishments should not violate proportionality. 

The Novara and Pro Patria appeal decisions also over-value the post-incident preventative actions (which is an oxymoron!). The treatment of post-incident actions as mitigating circumstances suggests future offenders will be able to correct wrongful conduct after-the-fact simply by hiring a company that claims to monitor match-fixing activity. Even if a club were to hire a monitoring company prior to any wrongful conduct, the mere signing of a contract with a monitoring company is generally a questionable preventative measure. Clubs that employ monitoring companies and are then subsequently charged with liability for match-fixing should only have sanctions (and thus liability) reduced if they prove to the court that the monitoring company undertook actual and sufficient efforts to monitor and prevent match-fixing.

Merely employing a monitoring company without any regard for the efficacy of its services is an inadequate escape route from strict liability. After all, these companies are unregulated and unaccredited; there is no guarantee that the companies do any work, or that any work the company performs is effective. At a minimum, then, a club must demonstrate that in conjunction with a monitoring company it undertook significant and adequate measures to prevent match-fixing by its employees and agents.

A standard for monitoring companies is important in light of the Novara and Pro Patria rulings, which will support a booming (and unregulated) market for monitoring companies. Clubs may now look to symbolically contract with these companies to escape liability if/when they are accused of match-fixing. The football community should not allow such a deregulated and opaque market to emerge.

V.             Conclusion

Match-fixing poses one of the most elemental dangers to professional football—it damages the credibility of the sport and could potentially damage the market. The doctrine of strict liability discourages a club’s participation in match-fixing activities, and incentivizes clubs to put into place measures that ensure their employees abide by anti-match-fixing regulations. Judges and tribunals must not lose sight of the broader picture when determining sanctions in match-fixing cases. In light of the Novara and Pro Patria decisions, this blog post offers a way forward to maintain strict liability’s capacity to effectively combat match-fixing: (1) post-incident efforts should not be considered as mitigating circumstances, and (2) monitoring companies and their services must meet a certain standard if they are to absolve, partially or fully, a club from its liability.

Strict liability can be effective so long as courts and tribunals do not unduly handicap it. Match-fixing is still a prominent threat in football and in sports in general. Now is not the time to weaken the most effective tool (strict liability) available to combat match-fixing. While the preceding discussion focuses on Italian football, the lessons are universal for all sports, at all levels.

[1] Case Her Majesty's Customs and Excise v. Gerhart Schindler and Jôrg Schindler, C-275/92 Judgement of 24th March 1994 [1994] ECR 1-01039.

[2] Unofficial translation from Italian: “Responsabilità delle società 1 […]; 2. Le società rispondono oggettivamente, ai fini disciplinari, dell'operato dei dirigenti, dei tesserati e dei soggetti di cui all’art. 1 bis, comma 5; 3 […]; 4 […] 5. Le società sono presunte responsabili degli illeciti sportivi commessi a loro vantaggio da persone a esse estranee. La responsabilità è esclusa quando risulti o vi sia un ragionevole dubbio che la società non abbia partecipato all'illecito o lo abbia ignorato; 6 […].”

[3] “Committing, by any means, acts to alter the development or outcome of a match or competition or to assure any advantages in the ranking constitutes a sporting wrongdoing.” Unofficial translation from Italian: “1. Il compimento, con qualsiasi mezzo, di atti diretti ad alterare lo svolgimento o il risultato di una gara o di una competizione ovvero ad assicurare a chiunque un vantaggio in classifica costituisce illecito sportivo.”

[4] Art. 7, par. 4: It is considered the strict liability of a club in the sense of art. 4, par. 5 and the fact is punishable subject to the degree of fault, with the sanctions foreseen in art. 18, par. 1 sections (g), (h), (i), (l), and (m). Unofficial translation from Italian: “Se viene accertata la responsabilità oggettiva o presunta della società ai sensi dell'art. 4, comma 5, il fatto è punito, a seconda della sua gravità, con le sanzioni di cui alle lettere g), h), i), l), m) dell’art. 18, comma 1.” The sanctions consist, broadly speaking, in the deduction of points, to be sent to the bottom of the table, to be disqualified from the competition, to have a tittle taken away or the barred from participating in a specific competition.

[5] The sport prosecutor had sought a six-point deduction.

[6] Unofficial translation from Italian: “A ciò conduce una più attenta valutazione della complessiva condotta della reclamante, di tutta la attività da questa posta in essere, invero tanto in via preventiva che successiva ed espressamente finalizzata a combattere il fenomeno degli illeciti sportivi ovvero ad eliminarne le conseguenze… In questo ambito vanno riassuntivamente richiamati, tra gli altri interventi, l’approvazione da parte del Novara Calcio del primo modello organizzativo ex decreto legislativo n. 231/01 e relativo Codice etico; l’approvazione nel gennaio del 2012 di un nuovo modello organizzazione e di gestione; il conseguimento nel marzo ancora di quest’anno di certificazione di qualità ISO 9001:2008 come prima società calcistica in Italia; l’aver affidato nel febbraio 2012 a soggetto professionale lo studio dell’andamento delle quote di scommesse legate alle partite che avrebbe giocato il Novara da quel momento alla fine del campionato, successivamente deliberando di continuare l’opera di monitoraggio delle partite; disciplinando infine tale sistema con l’adozione di un Codice Antifrode.”

[7] The sport prosecutor sought a twenty-point reduction as an exemplary punishment and to increase its deterrent effect.

[8] Federazione Italiana Giouco Calcio; COMUNICATO UFFICIALE N. 48/TFN – Sezione Disciplinare (2015/2016), p. 81.

[9] CAS 2013/A/3297 Public Joint-Stock Company “Football Club Metalist” v. UEFA & PAOK FC, award of 29 November 2013. (Case about match-fixing and sanctions under UEFA rules.)