Arbitration in Sports.

At one time, the president of a lower league football club, entitled to a due receivable against a team from the Ekstraklasa, asked me whether he could file a claim for payment before a common court. The favorite answer of any lawyer to such a question is, "it depends." In this article, we will look at domestic disputes arising in connection with the professional practice of football and answer the question of what determines the jurisdiction of the court and other jurisdictional bodies.

Let's start with some basics. The provisions of generally applicable law, meaning the laws applicable in the country, specify which court has local and subject-matter jurisdiction to resolve a dispute that has arisen. The common courts are district, regional, and appellate courts.

The Supreme Court exercises control over the common courts. However, the provisions of the Code of Civil Procedure allow for the possibility of resolving disputes before arbitration courts. Arbitration courts are non-state courts, often established within chambers of commerce, but also within sports associations, including the Polish Football Association (PZPN). Importantly, for a dispute to be resolved by an arbitration court, a contract between the parties is necessary, in which the parties submit the dispute arising or potentially arising from the legal relationship to the decision of a specific arbitration court.

Generally, the submission to an arbitration court must be in writing. This requirement is also met when the submission is included in documents or statements exchanged between the parties. A specific provision on arbitration courts is included in Article 1163 of the Code of Civil Procedure, which provides that a provision in a contract (statute) of a commercial company for arbitration court concerning disputes arising from the company's relationship binds the company and its shareholders. Importantly for the purposes of this article, this provision applies mutatis mutandis to provisions for arbitration courts contained in the statutes of associations, which is significant because sports associations in Poland are organized in this form.

Arbitration in Sport - Football

In the PZPN statute, the Football Arbitration Court was established. This is the PZPN jurisdictional body responsible for resolving property and non-property disputes that may be the subject of a settlement arising from the practice of football in Poland. The regulations of the Football Arbitration Court include a catalog of example cases heard by the court, such as:

a) civil law derivative property relationships between players, clubs, sports associations, and other sports organizations,
b) determining the amount of compensation for the training or promotion of a player in connection with a change in club affiliation,
c) sponsorship and managerial agreements,
d) agreements between organizers of football events and their partners specializing in the sale of television, advertising, and promotional rights,
e) all other agreements concluded and implemented in connection with the organization of football competitions,
f) equipment agreements concluded in connection with the practice of football,
g) work or commission agreements concluded with football coaches and instructors, as well as other participants in the sports movement, including coaches conducting their own business activity,
h) insurance in football sports.

The question arises whether the quoted PZPN statute constitutes an effective submission to an arbitration court and whom it binds. Firstly, a submission to an arbitration court contained in the statute of an association (i.e., a sports association) may bind only its members. According to Article 8 of the Sports Act, only the following can be members of a sports association:

• a sports club,
• a sports association, and
• another legal person whose statute, contract, or founding act provides for conducting activities in a given sport.

In the statute itself ¹⁾in Article 15, it is indicated that the members of the PZPN are:

• sports clubs with football sections,
• voivodeship football associations,
• the Association of Football Coaches,
• the Association of Football Referees.

In this regard, the provision on an arbitration court in the PZPN statute may be binding on sports clubs, but not on players who are not members of the PZPN.

However, one more significant limitation should be noted, the provision for an arbitration court in the statute of an association is binding on its members only in the scope of disputes arising from the association's relationship. Generally speaking, a matter arising from the association's relationship is a matter arising from the fact of being a member of the association. Therefore, the Football Arbitration Court of the PZPN will not be competent to adjudicate every dispute between PZPN members, solely by virtue of the statute.

The effectiveness of the provision for the PZPN Arbitration Court was examined by, among others, the District Court in Łódź. The case indirectly concerned the football club KS Widzew Łódź S. A.

Widzew was relegated to the First League by PZPN's decision despite sporting promotion to the Ekstraklasa (season 2009/10). According to the company, this relegation was unjustified, and therefore, the company was entitled to compensation for the punitive relegation. Widzew sold its receivable due to it from this title to a debt collection company, which filed a lawsuit against PZPN in a common court.

The association's lawyers argued that this case was covered by the provision for an arbitration court, pointing to the above-mentioned provisions of the statute. Taking into account that Widzew is a PZPN member, and the circumstance (confirmed by case law) that the provision for an arbitration court also applies to the assignee (the buyer of the receivable), the court dismissed the lawsuit. It indicated that the dispute between the plaintiff and the defendant falls within the scope covered by the provision for an arbitration court included in the statute and relates to the relationships between PZPN and its members, as well as the application of internal regulations (statute and disciplinary provisions).

Apart from the provision for an arbitration court mentioned above, the PZPN statute also provides for internal jurisdictional bodies, such as the Arbitration Court and the PZPN Disciplinary Committee. The latter is competent, inter alia, to resolve disputes related to violations of the PZPN statute, regulations, and the provisions of the FIFA and UEFA statutes and regulations.

To sum up, the possibility of resolving a dispute arising from football practice before a common court depends on the legal relationship in which the dispute arose. The dispute may be subject to resolution by an arbitration court, the jurisdiction of which is specified in a contract or statute. However, it should be remembered that the submission to the arbitration court contained in the statute of an association is binding only on its members and only within the scope of disputes arising from the association's relationship.

a) civil law derivative property relationships between players, clubs, sports associations, and other sports organizations,
b) determining the amount of compensation for the training or promotion of a player in connection with a change in club affiliation,
c) sponsorship and managerial agreements,
d) agreements between organizers of football events and their partners specializing in the sale of television, advertising, and promotional rights,
e) all other agreements concluded and implemented in connection with the organization of football competitions,
f) equipment agreements concluded in connection with the practice of football,
g) work or commission agreements concluded with football coaches and instructors, as well as other participants in the sports movement, including coaches conducting their own business activity,
h) insurance in football sports.

• a sports club,
• a sports association, and
• another legal person whose statute, contract, or founding act provides for conducting activities in a given sport.

In the statute itself ¹⁾in Article 15, it is indicated that the members of the PZPN are:

• sports clubs with football sections,
• voivodeship football associations,
• Football Coaches Association,
• Football Referees Association.

Therefore, the submission to an arbitration court contained in the PZPN statute may be binding for sports clubs, but not for players who are not members of the PZPN.

However, it is important to note one more significant limitation, the submission to an arbitration court in the association's statute is binding for its members only in the scope of disputes arising from the association's relationship. In general terms, a matter arising from the association's relationship is a matter resulting from being a member of the association.

Therefore, not every dispute between PZPN members will fall under the jurisdiction of the Football Arbitration Court solely by virtue of the statute.

The effectiveness of the submission to the PZPN Football Arbitration Court was examined, among others, by the District Court in Łódź. The case indirectly concerned the football club KS Widzew Łódź S.A. Widzew was relegated to the first league by the PZPN authorities despite sporting promotion to the top division (season 2009/10). According to the company, this relegation was unjustified, and therefore the company was entitled to compensation for the punitive relegation.

Widzew sold its claim arising from this to a debt collection company, which filed a lawsuit against the PZPN in the common court. The union's lawyers argued that this case was covered by the submission to the arbitration court, referring to the aforementioned provisions of the statute. Considering that Widzew is a member of the PZPN, and the circumstance (confirmed by case law) that the submission to the arbitration court also includes the assignee (buyer of the claim), the court dismissed the lawsuit. It indicated that the dispute between the plaintiff and the defendant falls within the scope covered by the submission to the arbitration court included in the statute, relating to the relationships between the PZPN and its members, as well as the application of internal regulations (statute and disciplinary provisions).

In addition to the submission to the arbitration court mentioned above, the PZPN Statute formulates a requirement to include a clause on submission to an arbitration court in contracts related to football practice ²⁾Articles 19 and 47 of the Statute. This obligation applies not only to PZPN members but also to players and coaches. Additionally, Article 57 contains a prohibition on taking disputes to the common courts ³⁾which is in blatant contradiction with the principle of voluntary arbitration and is inadmissible.

Let us then analyze the situation when a case covered by the submission to an arbitration court, whether included directly in the contract or resulting from the content of the PZPN statute, is brought before the common court.

Filing a lawsuit or submitting an application to the common court, despite the submission to an arbitration court does not result in the dismissal of the lawsuit or application ex officio by the court. The court examines this circumstance only upon an objection raised by the defendant or participant before engaging in the dispute, as to the substance.

Therefore, if, within the specified period, the authorized party does not raise an objection, the court will issue a judgment, which will become final after exhausting the appellate process. However, the PZPN may take disciplinary action against the plaintiff or applicant and impose one of the penalties specified in the statute and disciplinary regulations. Disciplinary responsibility applies not only to PZPN members, but also to players and coaches. ⁴⁾Article 13 of the Sports Act

Let's also consider the reverse situation. What happens when an arbitration court (e.g., the PZPN Football Arbitration Court) adjudicates a case despite the lack of an effective submission to an arbitration court? Well, the annulment of such a decision is achieved through a complaint to set aside the arbitration court's ruling filed with the common court. It will be effective, among others, in a situation where there was no submission to an arbitration court, the submission to an arbitration court was invalid, ineffective, or lost its validity according to the applicable law. In jurisprudence, we find many examples of setting aside PZPN Football Arbitration Court rulings for precisely this reason.

In the judgment of October 12, 2012 ⁵⁾IV CSK 82/12, the Supreme Court held that the reservation in the contract between the coach and the football club, that all disputes related to this contract would be resolved by the common court competent due to the company's registered office, as well as the reservation that in matters not regulated by the contract, the provisions of the civil code and resolution no. III/25 of June 8, 2000, of the Polish Football Association Board - principles governing the relationship between the sports club and the football coach, does not constitute an effective submission to an arbitration court.

The Appellate Court in Poznań, in its judgment of July 3, 2006⁶⁾I ACa 46/06, held that in a contract between a club and a person entrusted with organizing the club's entire operations, provisions stating that in matters not regulated by the contract, the provisions of the civil code and other legal acts applicable to the contract and in § 12 it was provided that the court competent to resolve any disputes arising from this contract, after exhausting the possibility of amicable settlement within the framework of the applicable PZPN, FIFA, and FIFA-licensed managers regulations, is the court territorially competent for the club's registered office, do not constitute an effective submission to an arbitration court. The appellate court shared the view of the district court ruling in this case, which stated that

„the provisions therein (in the contract - ed.) do not constitute a submission to an arbitration court. The fact that the discussed contractual provision provided for the possibility of "... amicable settlement of disputes within the framework of the applicable PZPN, FIFA, as well as FIFA-licensed managers regulations..." does not mean making a submission to an arbitration court, but only provides the parties with the opportunity to conduct mediation and amicably settle disputes within the football association structures - national (PZPN), international (FIFA), and FIFA-licensed managers. Referring to the territorial jurisdiction of the court clearly indicates that the parties' intention was to resolve any dispute - in the event of the ineffectiveness of the mediation process - by the common court, specifying the local jurisdiction of that court as territorially competent for the club's registered office.”

In the judgment of April 21, 2009, the Appellate Court in Warsaw ⁷⁾VI ACa 1421/08 stated that a submission to an arbitration court in a contract between a manager and a football player, formulated as follows:

„In accordance with Article 22 of the FIFA regulations concerning a FIFA-licensed players' agent, any disputes between the parties shall be settled by the PZPN. In the absence or failure of a decision by the party within the time limit provided for in the PZPN and FIFA statutes and regulations, the dispute may be referred to the competent common court for resolution.”

stating that „If (…) the parties intended to include a submission to an arbitration court in the contract (…), they would not have included a clause simultaneously submitting the dispute to resolution by the competent common court and the principle of voluntary compliance with the PZPN decisions”.

In summary, in disputes between members of the PZPN, including football clubs, the first step is to determine whether the dispute arises from the association relationship⁸⁾for example, such a dispute could be demanding payment of compensation for the training of a player, which compensation, including its amount, has been determined in the PZPN regulations and is due exclusively to the members of the association. If the dispute does not fall into the category mentioned above, it is necessary to check whether the contract includes an appropriate clause for submission to an arbitration court.

In the absence of a clause for submission to an arbitration court, the competent court will be the common court. However, referring the matter to the common court may result in a disciplinary penalty imposed by the sports association. Therefore, both the football club and the individuals responsible for discipline before the PZPN should ensure that their contracts relating to football include an effective clause for submission to an arbitration court, specifying the Football Arbitration Court.

The Football Arbitration Court is not the only jurisdictional body of the PZPN, as some competencies have been delegated to other bodies. For example, as I mentioned in this post, to decide on the existence, validity, or termination of football contracts (having the character of an employment contract or a civil law contract), to make other decisions concerning the stability of contractual relations of players who are parties to such a contract, and in matters concerning the solidarity mechanism, the Chamber for the Resolution of Football Disputes is competent. A separate category is the disciplinary bodies, whose competencies will be discussed in an article on disciplinary proceedings.

Photo: Phil Roeder / Source / CC BY

in art. 15
art. 19 and 47 of the Statute
which is in flagrant contradiction with the principle of voluntary arbitration and is impermissible
art. 13 of the Sports Act
IV CSK 82/12
I ACa 46/06
VI ACa 1421/08
for example, such a dispute could be demanding payment of compensation for the training of a player, which compensation, including its amount, has been determined in the PZPN regulations and is due exclusively to the members of the association