Enhancing The Respect Of Decisions Rendered By The Court Of Arbitration For Sport
Dr. Ahmed Abouzeid, Partner & Head of Sports and Education Practice at ALC – Alieldean Weshahi & Partners
Assisted by Nour Sabry, Junior Associate at ALC – Alieldean Weshahi & Partners
As of February 1, 2023, two important amendments to the FIFA regulations have come into force. These two amendments relate to the FIFA Disciplinary Code of 2019 and the FIFA Code of Ethics of 2020.
We will analyze the amendment to the first paragraph of Article 21 of the FIFA Disciplinary Code, which provides the following:
“1- Anyone who fails to pay another person (such as a player, a coach or a club) or FIFA a sum of money in full or part, even though instructed to do so by a body, a committee, a subsidiary or an instance of FIFA or a CAS decision (financial decision), or anyone who fails to comply with another final decision (non-financial decision) passed by a body, a committee, a subsidiary or an instance of FIFA, or by CAS: ….. c) may be ordered to pay an interest rate of 18% p.a. to the creditor as from the date of the decision of the Disciplinary Committee rendered in connection to a CAS decision on an appeal against a (financial) decision passed by a body, a committee, a subsidiary or an instance of FIFA;”
This amendment adds a new interest rate of 18% per annum to be ordered by the FIFA Disciplinary Committee to creditors under strict conditions. This new interest rate will be the main topic of this article.
Deterrance For Debotors Is The Purpose Of The Amendment
In accordance with the FIFA Circular No. 1833, dated January 31, 2023, the main purpose of the amendment, in combination with other modifications, is to “improve the proceedings related to the failure to comply with a decision in line with FIFA’s commitment to achieving (financial) justice”. Moreover, the same Circular includes a more specific explanation as to the purpose of this amendment. FIFA makes it clear that this is an “additional deterrent for the debtor to avoid delaying the payment of the amounts due to the creditor…”
Accordingly, the aim of the amendment is to ensure the full respect of Court of Arbitration for Sport (CAS) decisions, and to protect the creditors from delayed payments by the debtors. To understand how this amendment is important, one needs to have an overview of the existing law and practice.
How Does The Amendment Change Existing Regulations?
According to the amendment, the FIFA Disciplinary Committee has now a broad authority to impose the necessary financial sanctions on the defaulting party to further guarantee the respect of the financial decisions rendered by CAS.
Previously, and in accordance with Article 15 of the FIFA Disciplinary Code of 2019, the Disciplinary Committee could not order debtors to pay any additional interest to the creditors as a consequence of their disrespect to CAS decisions. Prior to these amendments, the Disciplinary Committee’s authority to impose fines was limited to ordering the debtors to pay fines for disrespecting CAS decisions. The fines were to be paid to FIFA, not to creditors.
Therefore, it was possible the debtors might misuse Article 15 of the old FIFA Disciplinary Code of 2019 and attempt to delay payment as much as they could, as there were no monetary sanctions (other than the FIFA fines). The amendments provide further protection for the creditors by granting them the right to receive an additional interest of 18% p.a. According to the amendment, the FIFA Disciplinary Committee is now able to impose additional financial sanctions on the debtors to guarantee the respect of decisions rendered by CAS. The new interest sanctions (i.e. the additional interest of 18% p.a.) are to be paid to the creditors.
Therefore, in application of the amendment, creditors in a dispute may request the Disciplinary Committee to order the debtors to pay them the additional interest of 18% p.a. Therefore, the amendment would further guarantee their rights in addition to protecting their interests. In contrast, debtors may face additional sanctions in the event that they do not respect the obligations set out in CAS decisions, as they could be faced with the application of the new interest of 18% p.a. keeping in mind that such interest is additional to any interest that might ordered by CAS.
The Scope Of Applicability Of The Amendment
The amendment provides a narrow scope of applicability in which the new interest only applies to defaulting parties who have been ordered to pay an amount of money through a CAS decision on an appeal against a (financial) decision passed by a body, a committee, a subsidiary or an instance of FIFA. Hence, final decision of FIFA bodies that are not appealed before CAS shall not benefit from this amendment, the criteria being the existence of a CAS decision rendered by way of an appeal.
In direct consequence of the above, this additional interest rate of 18% p.a. shall not be applicable in several cases, including for example: a defaulting party that has been ordered to pay the sum of money by a final decision of a body, a committee, a subsidiary, or an instance of FIFA. In the event that a debtor does not appeal the respective decision before CAS, and therefore the decision becoming binding, the new interest rate shall not apply since the text requires there to be an appeal before CAS, and consequently a CAS decision.
The Impact Of The Amendment On The Sports Community In Egypt
As it is the aim of FIFA, this amendment adds a new layer of consequences to defaulting parties by acting as a deterrent and guaranteeing financial justice for all parties. However, as mentioned above, the scope of applicability of this interest rate is extremely limited. The amendment shall have a key role in encouraging Egyptian clubs to respect their obligations, particularly financial obligations and, more precisely, those set out in their contracts with foreign players, or those with non-Egyptian clubs in connection with international transfers of players.
In a recent statement made by Fédération Internationale des Associations de Footballeurs Professionnels (FIFPro) on June 7, 2023, players were advised against signing with clubs in Egypt. FIFPro’s advice highlighted the non-payment of salaries. Thus, the amendment in question shall be applicable to such actions and we hope it will deliver its intended results. In the future, Egyptian Sports clubs should take into consideration the financial risks that might result from their disrespect to CAS decisions, in addition to the consequences of the application of the amendment at hand on their disputes with foreign players.
Challenges And Difficulties
The amendment has specified the date on which the additional interest shall be applied, that being the date of the FIFA Disciplinary Committee decision. However, it does not specify the basis of calculation of the interest. The question that arises is which amount shall be subject to this new interest: will it only be the due amount or will the interest rate also be applicable to contractual penalties or default interest?
It is possible that there will be potential challenges before CAS regarding the basis of calculation of the additional interest of 18% p.a, since there are several amounts that might be relied on for calculating the new additional interest of 18% (such as principal debt, default interest, contract penalties, etc.).
Additionally, it should also be noted that there seems to be a discrepancy between the text of the Article in the FIFA Disciplinary Code and the FIFA Circular. The text of the Article indicates that the interest rate is 18% p.a., however the Circular provides that the Disciplinary Committee shall apply an interest rate up to 18%. This may cause problems with regards to the applicability of the text. Firstly, will the Disciplinary Committee apply the 18% interest directly, or will it follow the text of the Circular and tailor the interest on a case-by-case basis? Additionally, this lack of clarity could also lead to possible appeals before the CAS in order to clarify the application of the interest, and the amount of the interest.
ABOUT THE AUTHORS:
Dr. Ahmed Abouzeid is a highly accomplished lawyer, serving as Partner & Head of Sports and Education Practice at ALC- Alieldean Weshahi & Partners. With a PhD in Commercial Law, Abouzeid brings extensive expertise in civil and commercial law to his clients. His diverse range of skills includes advising on real estate and education projects, particularly in the establishment and governance of private universities in Egypt. He has also gained substantial experience in commercial litigations and arbitrations, specializing in sports, commercial, and joint investment disputes. Abouzeid has a deep passion for sports law and in-depth understanding of the regulations set by the Egyptian Football Association, Fédération Internationale De Football Association, and Confédération Africaine de Football, he regularly advises stakeholders in the Egyptian sports community on disputes within the realm of sports law. He acquired considerable experience in advising and representing clients in connection with their disputes before CAS/TAS, CRCICA, DIFC-LCIA and DIAC.
Nour Sabry is a Junior Associate with a bachelor’s degree in law from Cairo University and a Licence de Droit from Paris I- Panthéon Sorbonne (IDAI) specializing in Sports Law at ALC Alieldean Weshahi & Partners. Nour joined the firm in 2022 after receiving her master’s degree in International European Business Law with a specialty in Arbitration in 2021 from Paris I- Panthéon Sorbonne- Institut de Droit des Affaires Internationales. Nour’s role encompasses a range of legal and administrative tasks including representing parties in disputes before CAS, FIFA and EFA. Nour also participates in providing representation to clients in both national and international disputes before national federations such as EFA, or international sports bodies such as FIFA and its internal bodies, CAF, and CAS. In addition, Nour participates in providing clients with representation in arbitration disputes before CRCICA.