Swansea City player Bony keeps former agents in play
In a dispute with his agents over secret commissions, Swansea City striker Wilfried Bony has succeeded in opposing a stay in English Court proceedings, which would have been implemented had the Court found he had agreed to arbitrate.
The decision is an important reminder that national courts will have jurisdiction to hear a claim if the parties have not agreed (expressly or impliedly) to resolve the dispute using arbitration.
The question in this case was: had the defendants established an implied agreement with the claimant to incorporate FA Rule K Arbitration which would have called for a stay of the English Court proceedings?
The claim is brought by Wilfried Bony against his former agents (the Agents) and Swansea City FC (Swansea) (together the Defendants). The judgment – here – sees the Agents appealing the decision of a District Court Judge who refused to stay proceedings pending FA Rule K Arbitration.
Wilfried Bony is a professional football player from the Ivory Coast. Bony moved to Swansea in July 2013 from Dutch club SBV Vitesse. In January 2015 Bony made a high profile switch to Manchester City FC (Man City) and was, at the time of the hearing, loaned from Man City to Stoke City (Stoke). In the latest transfer window, Bony has re-signed for Swansea and the club has indicated that there are no outstanding disputes between them. Since Bony joined Swansea in 2013, he has been registered as a player and falls within the definition in the FA Rules. Swansea, Man City and Stoke are all "Clubs" under the FA Rules.
The First and Third defendants are Bony's former agents. The Second and Fourth defendants are companies owned by the former agents (and incorporated in the Ivory Coast and Czech Republic respectively).
The underlying claim brought by Bony alleges that the Agents received secret commissions in excess of £8m from Swansea (the Fifth Defendant) between July 2013 and February 2015. There is a standalone allegation against the First Defendant for fraudulent and/or negligent misrepresentation concerning alleged inducement into an image rights deal.
There were various written agreements between the claimant and the Agents governing the relationship between them. None of those agreements referred to the FA Rule K Arbitration. Only one of those agreements contained an express dispute resolution procedure (DRP) – and that referred to arbitration before the Czech FA, and the FIFA Players' Status Committee (the PSC).
After the District Judge held that the proceedings should not be stayed, the Agents appealed. They submitted that the decision that there was no agreement between the parties to arbitrate was incorrect and strongly criticised the District Judge for not considering whether an implied agreement existed – this argument was scorned by the appeal judge.
If a party seeks a stay in English Court proceedings in order to arbitrate, it must be by reference to an arbitration agreement which complies with Section 5 of the Arbitration Act 1996 (the Act).
The agreement to arbitrate must be in writing. Importantly, where parties agree orally or impliedly to terms which are themselves in writing, the parties are deemed to have made an agreement in writing for the purposes of the Act (see s.5(3) of the Act).
However, the onus is on the party asserting such an oral and/or implied agreement to show that the written terms include the relevant arbitration clause relied upon.
In seeking to demonstrate an implied agreement to arbitrate (which incorporated such terms in writing), the Agents cited a train of cases which they submitted implied a contract between participants of an organised sport based on the rules that govern that sport. The Agents' aim was to show that the parties were "Participants" under the FA Rules, and that this created an implied horizontal contract between them which incorporated the terms of those FA Rules, specifically regarding FA Rule K Arbitration.
The Court found that the Agents failed to establish the existence of such implied agreements.
The Agents' case relied upon the Court implying a contract between the Claimant and each of the Agents. This was not supported by the case law and so the Court turned to general principles of contract law.
The relationship between the Claimant and each of the Agents was subject to and governed by express agreements meaning there was no basis on which it was necessary to imply another agreement. None of those express agreements contained DRPs which could be relevant.
The Court dismissed the appeal and decided that the District Judge was correct in refusing to stay these proceedings.
The landscape of disputes in sport is becoming dominated by parties from different countries engaging in disputes relating to player transfers and/or player contract negotiations. Those disputes typically involve agents/intermediaries and players, with myriads of oral and written agreements.
In the light of the greater international scope of disputes, and the differing preferences in which forum should hear the dispute (CAS, national sport specific forums, private arbitrations, national courts), determining jurisdiction is especially important.
It remains to be seen whether the FA Rules will be amended to expressly state that they are intended to apply horizontally between Participants as well as vertically between the FA and the Participant – akin to the Premier League rules which are stated to constitute an agreement between each Club and the Premier League, and between each Club directly (See Rule B.15). In such circumstances it would be easier to show the existence of an agreement to arbitrate.
This is a timely reminder of the importance for parties in the wider sporting and commercial context to carefully consider the merits and demerits of different forms of dispute resolution when entering into agreements, and to make any agreements clear.
The RPC Sports team is particularly experienced in dispute resolution within football, including advising on proceedings in arbitration and before national courts. We will be writing a more detailed analysis of this case for an upcoming edition of Sweet & Maxwell's Entertainment Law Review.
For more information please contact Josh Charalambous or Nicole Jahanshahi.