Legal jurisdiction of sports disputes

In recent years, cases concerning “sports law” have also started to appear in Latvian courts of general jurisdiction. At a time when the International Olympic Committee’s (IOC) position in the sports hierarchy can hardly be described as stable or uncontested, discussions about the fairness, honesty, correctness and compliance with the requirements of modern good democratic governance of the IOC’s established and existing structures for the subordination of sports disputes are becoming more and more frequent.

In the past, it has been accepted in sports law that virtually all disputes are dealt with by specialized sports dispute bodies. The Court of Arbitration for Sport (“CAS”), established by the IOC, has been the most frequently involved or referred to institution, if one looks at it as a relatively universal body, without being tied to any particular sport. In particular, Olympic sports fall within the competence of the CAS. In general, it can be argued that CAS is not mandatory in non-Olympic sports, but there is still much confusion about its mandatory nature in Olympic sports. The authority of the CAS is expected to diminish, but this does not mean that the issue of the subordination of sports law disputes will become easier.

Between civil and administrative jurisdiction
In the Latvian sport sector, the influence of the former political system has played an important role, whereby a certain part of public policy is implemented through sport (e.g. to distract people from real problems, or, on the contrary, to encourage aggression, threaten sanction or exclusion). Consequently, disputes between the leading institutions of the sport sector and its participants (members – athletes, clubs) have only in recent years come to the more serious attention of the courts.

It is no longer considered that members of sports federations have to follow the dictates of the federation’s management in order to be eligible to compete in a championship at all. As public understanding of the proper dynamics of the state-individual relationship develops, so too does understanding of not only the rights but also the responsibilities of state-recognized sports federations.

Case SKA-1496/2020 on the competence of the LSFP 29 December 2020 of the Department of Administrative Cases of the Senate of the Republic of Latvia. The decision of the Supreme Court of the Republic of Latvia in Case No A420169419, SKA-1496/2020 addresses the issue of the legal status and scope of activities of sports federations. This decision contains certain theses, the generalization and extension of which are inconsistent with the purpose of the Law on Sport. Although the operative part of the decision seems correct, the reasoning in the decision is unconvincing.

Primary field of activity of federations
Paragraph 5 of the Decision states: “There is no dispute in the case, and the Senate agrees, that the Federation, as an association, is a legal person governed by private law – a voluntary association of persons involved in taekwondo – whose existence is not established by a legislative act or a public law contract but is based on a freely entered into social contract. There is therefore no doubt that the Federation operates primarily in the field of private law and is not an institution within the meaning of Article 1(1) of the Law on Administrative Procedure.
However, as the contested decision rightly points out, in certain cases, public-law relations may also exist between private parties where one of them performs a public administration task pursuant to a regulatory enactment or a public-law contract. In such cases, the private-law entity acts in the sphere of public law to the extent that it has powers conferred on it in the sphere of public administration. Accordingly, the dispute in the case is whether the State, on the basis of an external normative act – the Law on Sport – has delegated to the Federation certain public tasks which could give rise to a judicial review of the lawfulness of its decisions and actions under the Law on Administrative Procedure.”

The granting of the status of a recognized federation does not mean that its legal status as an association is excluded. This aspect has to be assessed on a case-by-case basis, taking into account the specific situation, the relevant rules and the functional context. The Decision, however, immediately draws the controversial conclusion that the Federation operates “primarily” in the field of private law. The decision does not elaborate on the precise reasoning behind this conclusion, which would necessarily require future courts to elaborate and argue this distinction further. In the author’s view, administrative courts should not refuse to hear sports disputes as a “default option”, but should instead argue why a particular private party cannot enjoy the protection of its interests that private parties normally receive in administrative proceedings. The author concludes that the decision wrongly asserts that administrative courts should not control the exercise of power by federations and that such claims can simply be dismissed. Instead, the author argues that administrative courts should examine such disputes to ensure that there is no abuse of power contrary to the terms of collective welfare. Paragraph 5 of this decision should not be seen in isolation from the other conclusions in order to be invoked as good case law. This means in particular paragraphs 6 to 8 of the decision, the meaning of which is unclear and incomplete from a purely grammatical translation.

In order to properly determine the primary scope of the federation’s activities, the court should, as a minimum, also assess its statutes. A number of federations declare being a state-recognized federation as their top priority, leaving private law issues to the background.

Classification of the sports sector in law
The last paragraph of paragraph 6 of the Decision contains a finding which is critical: ‘Consequently, given the private-law nature of the sports sector, the management and coordination of sport, including the issuing of rules and regulations for the conduct of sports and competitions, is not a matter for public administration. Accordingly, Article 10(4) of the Law on Sport does not entail a task for the State administration to issue administrative acts or to carry out other activities in the field of State administration. In light of the above, the Court in the appealed decision rightly held that the Federation is not an institution within the meaning of the Law on Administrative Procedure and that the legality of its actions in the present case cannot be assessed under the administrative procedure.”

The conclusion that federations “primarily” operate in the field of private law is categorical: the sports sector is generally private law, and the activities referred to are not at all a matter for public administration. Such reasoning is clearly inconsistent with the Sports Act. Yes, the Sports Act does not use the term “administrative acts”, but one cannot agree that such a formalistic reason should preclude the possibility for private parties to resolve a dispute with a federation before an administrative court at all.

It would also be incorrect to limit any decision or rule of a federation to the field of private law with regard to competition documentation, insofar as the federation, by hosting the competition, justifies to the State that it is worthy of enjoying the status of a recognized federation by fulfilling the requirements of Article 10.1(1)(2) of the Sport Law. If participation in a competition is subject to criteria which a reasonable private individual could not meet, or could not reasonably be expected to meet, then clearly such a matter should be dealt with under the Administrative Procedure Act.

The right outcome with the wrong arguments.
Despite the two criticized paragraphs of the decision, which in the author’s opinion should not be used as case law or good jurisprudence, the outcome of the decision is apparently correct when considering paragraph 8: “The applicant applied to the Board for a declaration that the Federation’s conduct was unlawful and for an order to register the applicant as an athlete of another association, to issue the applicant with a Federation identification card and the appropriate licence. According to the applicant, the administrative court is obliged to verify the legality of the Board’s action by failing to exercise due control over the legality of the Federation’s action and by failing to order the Federation to take the actions set out in the application.”

The question of administrative law could be that an individual has the right to obtain a licence to participate in a particular sport by fulfilling objectively necessary criteria. In itself, a request to a court or to the LSFP to register instead of the federation looks prima facie like a matter of public law. However, the jurisdictional test for such an application should be assessed on its merits, evaluating the arguments on the circumstances of such a situation. The reasons for approving or refusing registration may be based on both private law and public law grounds. It may be assumed that the applicant sought approval of the registration for a reason which was itself objectively established and necessary, and the enforcement of which was based in the private law sphere. However, if such a refusal was based on the sphere of the organization of competitions, an assessment would have to be made on the merits of the case much more broadly than that in the decision.

Part of the problem which this decision does not help to solve (and which it would be unreasonable to expect it to solve) is the private law dispute resolution procedure which is normally required in sport. That is, all disputes should be settled by arbitration. The problem of labour disputes being settled in these institutions has already been described, but it is not the only problem.

Challenging the existing international order
At the end of 2023, the Court of Justice of the European Union (CJEU) published some judgments that could play an important role in the field of sports law in Europe for a long time to come. The purpose of this article is not to assess these CJEU judgments in the context of determining jurisdiction under Latvian national law. However, it should be stressed that these cases shed excellent light on considerations which should lead to a review of the existing sports law dispute resolution.

Latvian courts should not remain indifferent to the issues highlighted in the CJEU case law both in 2023 and before (and would expect the sports sector to receive the CJEU’s attention in the future) by too easily removing the dispute from the competence of the administrative courts.

A practical problem that could be assessed in relation to access to justice is certainly the cost of CAS. The CAS being subject to Swiss law primarily means that a local legal practitioner will not always be able to help – even if in standard situations the application of Swiss law would not be necessary, the language aspect can definitely be an obstacle – Latvian is not among the official languages of the CAS and it is hard to imagine that it could ever become one.

However, if a particular sports dispute were to come to the point where the Swiss national courts would have to be involved, it is useful to bear in mind the differences in income levels between Latvia and Switzerland. The affordability of the court and the average fee requirements of Swiss lawyers may make the option of going to CAS financially unfeasible. Latvian courts should not dissociate themselves from the fact that only through administrative proceedings may individual athletes be able to defend their rights. It should be remembered that, although there are some very well paid athletes in Latvia, most are modestly remunerated. Litigation in CAS can cost tens of thousands of euros. This problem can lead to hidden challenges, undermining the ability of Latvian athletes to defend their rights, as federations are in fact more focused on their own interests than those of athletes or the wider sporting community.
There is no doubt that the Law on Sport is not only not in line with reality, but is also not actually enforced, and this is also indicated by Supreme Court rulings which the legislator has long ignored. However, it would not be right that the courts also join this “club of the indifferent” and leave the activities of the federations in the field of the recognized federation assigned to it to “those others”, because they do not want to go into the specific and casuistic rules, regulations, etc. of the sports sector.

Author: Āris Kakstāns

“Article originally published in “Jurista Vārds” on 6 August 2024 /NR. 32 (1350)”