Labour disputes in sports arbitration

In sports law, it is common practice that virtually all disputes are dealt with by specialised sports dispute bodies. Certain sports (e.g. motorsports, basketball, volleyball, etc.) have their own specialised courts, but the Court of Arbitration for Sport (“CAS”) is a multi-sport body and could therefore be considered as one of the highest points of this system. In day-to-day matters, each sport has a number of different commissions, committees, panels, specialised tribunals and other similar bodies whose role in sports law is limited to the resolution of a particular dispute. Among these day-to-day issues, there are often cases which are essentially labour disputes. There are contradictions in terms of the law in relation to the arbitration of labour disputes.

Jurisdiction of disputes in sport
Each sport has its own system of rules, for the application of which the responsible federations maintain a large group of highly specialised [sports] referees. The competence of sports referees usually ends with the boundaries of the field of play and the specific sport, so it is less common to hear about interesting or useful developments in sports law (for a legal audience) directly from the on-field referees.

Similarly, in the system of rules of sports, there are the aforementioned commissions and committees, whose narrow specialisation is also often limited to dealing with specific situations.

The major sports federations have different practices regarding their dispute resolution policies. Arbitration is either mandatory or voluntary.

The strictest position is in football, where the International Federation of Football Associations (FIFA) has made it compulsory for its members to grant CAS exclusive competence in dispute resolution. Accordingly, the Union of European Football Associations (UEFA), as a member of FIFA, makes a similar demand on its members, which include the Latvian Football Federation (LFF).

The mandatory nature of CAS dispute resolution in the statutes of both FIFA and the LFF should be supplemented by the indication that national laws and regulations, which may be mandatory and provide for different procedures than those in the statutes of these organisations, must nevertheless be complied with.

In other sports, such as basketball and volleyball, the statutes of the nationally recognised federation do not contain such an obligation. The competence of the specialised tribunal must be agreed separately by the participants themselves (clubs and athletes).

Obligation to go only through the divorce tribunal

The international requirements of football, the world’s most lucrative sport, are teetering on the brink of being in conflict with the law. For practical reasons, even if such a contradiction would be widespread in practice, it is deeply hardened against possible attacks.
FIFA, as football’s governing body, has stipulated in its statutes that priority in dispute resolution should be given to referring cases to CAS, recognising its competence in certain cases. Article 59(2) of the FIFA Statutes contains a prohibition on recourse to the ordinary courts unless otherwise provided for in the Statutes. Article 59(3) goes on to prohibit recourse to the ordinary courts except where binding legal rules so provide.

On the one hand, the LFF Statutes explicitly recognise the primacy of national laws. Firstly, Article 16 of the LFF Statutes states: “The LFF Members shall have the following obligations: (…) to include in the Statutes a clause stating that any dispute of national importance arising out of or relating to the LFF Statutes, rules or decisions may be referred in the last instance only to an independent and impartial Court of Arbitration, which shall give a final decision, excluding Courts of General Jurisdiction, to the extent not specifically prohibited by Latvian law.” Similarly, Article 57 of the LFF Statutes contains a seemingly innocent provision, which also concludes with the primacy of national regulation: “Disputes relating to the status of Players involving the LFF, its Members, Players, Officials, intermediaries and licensed match agents shall be settled in the last instance by the Court of Arbitration in accordance with these Statutes and applicable national law.” Thirdly, Article 62(1) of the LFF Statutes specifically reiterates that the obligation to apply national law must never be forgotten: “Internal disputes of the LFF relating to Leagues, League Members, Clubs and Club Members, Players and Officials shall be settled in the last instance (i.e, after having been dealt with in accordance with all internal LFF procedures) may be referred only to an independent and impartial arbitral tribunal, which will make the final decision, excluding the jurisdiction of courts of general jurisdiction to the extent not specifically prohibited by Latvian law.” The practical problems start when a particular ruling needs to be enforced or challenged. At the same time, Article 58 of the LFF Statutes, which regulates the work of the Appeals Committee, provides that “Decisions rendered by the Appeals Committee may be appealed only to the Court of Arbitration for Sport located in Lausanne, Switzerland, or to a national independent arbitral tribunal in accordance with the provisions of these Statutes.” The Appeals Committee shall have jurisdiction to review decisions made under Article 57 when disputes relating to the status of Players are on the agenda. The difference between the regulation of these two bodies is obvious: while the former can still look at national legislation, the latter is already much more restricted.

The reference to legislation in Articles 16 and 57 of the Statutes and in Article 62(1) is completely undermined by Article 62(4) of the same Statutes, which provides that “the LFF shall ensure that it and all bodies under its jurisdiction comply fully with the final decisions of all FIFA or UEFA bodies, the independent and impartial Court of Arbitration referred to in paragraph 1 above, and the CAS.”

In practice, this provision means that access to national courts is impeded in disciplinary proceedings, regardless of whether the law permits or prohibits a particular legal construction.

Restrictions on the jurisdiction of arbitral tribunals in Latvian labour law

The above-mentioned football world order is in itself an excellent instrument to ensure order and unconditional submission to the decisions of officials. As is well known, such a system carries with it various risks.

One of such risks is related to the prohibitions set out in the Arbitration Law adopted in 2014.

Section 5(1)(7) of the Arbitration Law states: “Arbitration shall settle any civil law dispute where the parties have voluntarily agreed and concluded an arbitration agreement, except a dispute between an employee and an employer where the dispute arises from the conclusion, amendment, termination or performance of an employment contract, or the application or interpretation of legal provisions, collective agreement or work rules (individual labour law dispute).

The Labour Disputes Act provides for the same rule in Article 7(4): “An individual dispute shall not be settled by arbitration.” The second paragraph of Article 12 of this Law, however, recognises the competence of arbitration tribunals in relation to collective disputes: “If the parties so agree in writing, a collective dispute may be submitted to arbitration.” Article 20 of the same Law also provides for the possibility of arbitration of a collective interest dispute.

When the provisions of the Arbitration Act and the Labour Disputes Act are read in conjunction with the FIFA and LFF Statutes, a strict legal prohibition on the arbitration of labour disputes between certain professional football players is apparent.

Is CAS, to which the FIFA and LFF Statutes refer, recognised as an arbitral tribunal within the meaning of Latvian law? Looking at the case law and reasoning of the CAS decisions, as well as the structure of the proceedings, the answer should be positive and it should be considered an arbitral tribunal. Historically, there have been precedents where individual athletes have challenged the competence of the CAS and its eligibility to arbitrate. Such cases usually arise after a less favourable ruling for a particular person. However, in most cases, such doubts are not raised and CAS decisions are generally held to be worthy of arbitration. So, in theory, CAS decisions in labour disputes should not be enforced in Latvia.

Competition for competence

The Latvian Arbitration Law should not be considered unique in the global context. Also in the context of the situation discussed in relation to the FIFA dispute resolution system, there are theses of arbitration case law regarding the further advancement of applications filed before courts of general jurisdiction before the CAS.

The subordination of the CAS to Swiss law primarily means that the Swiss Private International Law Act (“PILA”) applies in cases of potentially conflicting proceedings. This law (Articles 9 and 186 PILA) provides for the application of the lis pendens principle in practice.

In a dispute heard by the CAS in 2020 between the football club Club Al Arabi SC and the football player Ashkan Dejagah, a situation existed where the club had already filed a claim against the player before the Qatar Civil Court, but the latter (not yet aware of the civil proceedings himself) brought an action against the club before the FIFA Dispute Resolution Centre.

The case assesses and recognises that, in accordance with Article 59(2) of the FIFA Statutes and Article 22 of the FIFA Players’ Status and Transfers Regulations, FIFA allows national courts to have jurisdiction also in football disputes, but does not allow the same dispute to be heard in two courts at the same time. The CAS decision analyses in detail the criteria which support or refute the existence of a lis pendens.

This case continues the CAS doctrine already established in a case between several parties – Turkish and Brazilian clubs and a Brazilian football player. In the 2008 case, the CAS assessed FIFA’s conclusion that recourse to the courts of general jurisdiction was not prohibited, but once that had been done, the same case could not be no longer be referred to arbitration under FIFA rules.

Author: Āris Kakstāns

First published: “Jurista Vārds”, July 2022 /NR. 28 (1242)