Chester Perry wrote: ↑Wed Jul 29, 2020 12:11 pm
If you do not want to read the 90 plus page document from CAS on the Manchester City appeal- I empathise. However, there is some real nuggets in there that tell you quite about about Man City did and UEFA should have done - UEFA come out of it badly for not following their own rules and Manchester City appear to be every inch the nasty enterprise we suspected.
Much, though not all is summed up in threads from
@SportingIntel
https://twitter.com/sportingintel/statu ... 3694051329
and
@TariqPanja
https://twitter.com/tariqpanja/status/1 ... 1082681346
David Conn (a life long City fan) in the Guardian was particularly struck by the fact that City's nominee for the panel ended up being chair (final decision looks like a 2-1 to City) and appeared to be far from independent given his law firm has done million and millions of Euros/dollars worth of work for State owned Abu Dhabi businesses over the years
https://www.theguardian.com/football/20 ... -cas-rules
in his 2nd report he emphasises that the club still has questions hanging over them despite their claim of being exonerated
https://www.theguardian.com/football/20 ... s-judgment
The Independent chooses to focus on the complete has of things made by UEFA (Aleksander Ceferin must be furious - he is a lawyer by profession)
https://www.independent.co.uk/sport/foo ... 43511.html
I will post some legal observations from the regular sources at a later date
Finally got round to the Legal observations - now that both UEFA and Man City say it is closed and they will hold no grudges - this from LawinSport.com is pretty detailed
A full review of Man City v UEFA CAS Award – why this is not the end of FFP
A full review of Man City v UEFA CAS Award – why this is not the end of FFPPublished: Wednesday, 12 August 2020. Written by Christopher Flanagan No Comments
The dispute between UEFA and Manchester City Football Club over the latter’s compliance with the former’s Financial Fair Play (FFP) regulations has been one of the most high-profile sports law matters of the year.
On 13 June 2020, the Court of Arbitration for Sport (CAS) released a media statement under the header “MANCHESTER CITY FC DID NOT DISGUISE EQUITY FUNDING AS SPONSORSHIP CONTRIBUTIONS BUT DID FAIL TO COOPERATE WITH THE UEFA AUTHORITIES”. The CAS statement noted that “The Panel of arbitrators in charge of the matter, composed of Mr Rui Botica Santos (Portugal), President, Prof. Ulrich Haas (Germany) and Mr Andrew McDougall QC (France)” (the Panel) and concluded that “The final award with reasons will be published on the CAS website in a few days.”
Inevitably, this announcement resounded loudly around the world: Tottenham Hotspur manager Jose Mourinho said he agrees with the “concept”[1] of FFP, but called for an end to the regulatory initiative due to the “circus” that goes with it; Liverpool manager Jurgen Klopp described Manchester City’s success in the case as “not a good day for football”[2]; the BBC asked “is FFP dead?”; and the President of La Liga, Javier Tebas, was reported to have said that the result showed that “CAS is dead”[3].
On 28 July 2020, CAS 2020/A/6785 Manchester City FC v. UEFA (the Award), was published[4] (the Award being dated 13 July 2020).
This article will examine and critically analyse the Award before providing commentary on what––if anything––this means for FFP as a regulatory initiative. Specifically, it looks at:
- The factual background
- The key issues determined by the CAS Panel
- Analysis and commentary
- Whilst reports of the death of FFP and the CAS are greatly exaggerated, the Award will certainly give sports governing bodies and participants in professional football some pause for reflection.
References to ‘Paragraphs’ in this article are references to the paragraphs of the Award.
Factual Background
Main participants
Before setting out the principal facts and allegations, it is helpful to set out, and group together, the key legal persons involved in the case.
UEFA is the governing body for European football. At club level, its functions include the organisation of European club competition (presently the Champions League and the Europa League), the promulgation of rules relating to those competitions, and the obligations of clubs under its jurisdiction. Oversight and enforcement of FFP is undertaken by the Club Financial Control Body (CFCB), which is divided into two chambers; an Investigatory Chamber, responsible for monitoring and investigating FFP compliance, and an Adjudicatory Chamber, responsible for making decisions (including disciplinary decisions) on the matters referred to it by the Investigatory Chamber. The CFCB is functionally independent from UEFA.[6]
Manchester City Football Club Limited (MCFC) is a professional football club based in England. MCFC is part of a sophisticated corporate structure. MCFC is a subsidiary of Manchester City Limited. Manchester City Limited is itself a subsidiary of City Football Group Limited, which company is responsible for the operation of a portfolio of football clubs across the globe (Paragraph 7). City Football Group Limited is in the majority ownership of the Abu Dhabi United Group (ADUG),[7] the investment vehicle(s) of His Highness Sheikh Mansour bin Zayed bin Sultan bin Zayed Al Nahyan (HHSM). HHSM is the Deputy Prime Minister of the United Arab Emirates (of which Abu Dhabi is a constituent emirate).
Emirates Telecommunications Corporation PJSC (Etisalat) and Etihad Airways PJCS (Etihad) are each multinational corporations headquartered in Abu Dhabi. Etisalat is the Middle East’s largest telecommunications company and majority-owned by the sovereign wealth fund of the UAE, whilst Etihad is part of the Etihad Aviation Group and is ultimately owned by the government of Abu Dhabi. Etisalat and Etihad each have held sponsorship arrangements with MCFC commencing during the 2009/10 football season. These sponsorship arrangements were varied from time to time.
The 2014 settlement agreement
In 2014, the CFCB investigated MCFC in respect of alleged FFP breaches. On 16 May 2014, UEFA and MCFC entered into a settlement agreement (the Settlement Agreement) in respect of those alleged breaches. MCFC expressed no admission of any such breach under the Settlement Agreement (Paragraph 14). MCFC discharged its obligations under the Settlement Agreement on 20 April 2017.
Facts and allegations leading to present case
In November 2018, as a part of the ‘Football Leaks’ movement, various articles were published in various media outlets concerning MCFC. Amongst these publications were materials “acquired from MCFC’s computer systems by an illegal hack” (Paragraph 16). In an interesting flourish of advocacy rhetoric, MCFC appears to refer to the Football Leaks information throughout as the “Criminally Obtained Documents”, whereas UEFA refers to the same information as the “Leaked Documents”. The Panel prefers “Leaked Emails” (Paragraph 16). It is evident that the Leaked Emails, taken in isolation, implied to UEFA contraventions of FFP.
In the view of the CFCB, the Leaked Emails provided “compelling evidence” that the sponsorship payments received from Etisalat were “made or caused to be made by ADUG but attributed to…Etisalat”; and that the sponsorship payments received from Etihad were in part “funded or procured to be funded by or on behalf of ADUG, but paid through Etihad” (with £8m per year funded by Etihad itself) (Paragraph 29).
The CFCB Investigatory Chamber invited MCFC to comment on the Leaked Emails. Dissatisfied with MCFC’s response in correspondence, the Investigatory Chamber opened an investigation. On 28 March and 11 April 2019, hearings took place; however, as is made clear in Paragraph 317 of the Award, MCFC did not make available to the Investigatory Chamber all the persons whose attendance was requested, nor did MCFC adduce all the documents requested.
On 15 May 2019, the Investigatory Chamber referred the matter to the CFCB Adjudicatory Chamber. MCFC unsuccessfully challenged that referral before the CAS. The facts of that case are discussed here[8] and the award is available here[9]. The adjudicatory chamber rendered its decision on 14 February 2020, finding to its comfortable satisfaction (Paragraph 29) that MCFC:
- disguised equity payments by ADUG in respect of the Etisalat and Etihad sponsorship agreements;
- made false submissions in its financial statements submitted as part of the FFP process;
- made false submission in respect of its break-even compliance; and
- failed to cooperate with the CFCB.
- Specifically, the Adjudicatory Chamber found MCFC to have “contravened Article 13, 43, 47, 51, 56, 58, and 62 of the [Club Licensing and FFP Regulations]” (Paragraph 28).[10] There were no allegations or findings that the sponsorships were not for fair value (Paragraph 10).
The Adjudicatory Chamber excluded MCFC from UEFA club competitions for the seasons 2020//21 and 2021/22 and fined the club EUR30m, the severity of the sanction being warranted in the view of the Adjudicatory Chamber owing to this case being “by far the most serious breach of the Regulations to have been referred to the Adjudicatory Chamber” (Paragraph 29).
On 24 February 2020, MCFC appealed the decision of the Adjudicatory Chamber to the CAS. It was agreed by the parties that in order to “safeguard a proper running of the competitions” a reasoned CAS award should be issued no later than 10 July 2020.[11] A three-day hearing was held on 8, 9, and 10 June 2020.
Key issues determined by the CAS Panel
Based on the submissions of the parties, the key issues to be determined by the Panel were:
- The authenticity and admissibility of the Leaked Emails.
- Whether the CFCB breached its due process obligations.
- Whether the Settlement Agreement obviates any rights the CFCB may otherwise have had to prosecute the issues at hand.
- Whether the matter is time barred.
- The standard of proof.
The Panel’s findings of fact in respect of the allegations at hand:
- Did MCFC disguise equity payments?
- Did MCFC fail to cooperate with the CFCB investigation
G. The appropriate sanction, if any.
A – Authenticity and admissibility of the Leaked Emails
The Panel found it unnecessary to determine the parties’ strict legal rights in respect of the authenticity of the Leaked Emails, given original copies were disclosed by MCFC in the CAS proceedings.
Commenting on the fidelity of the Leaked Emails, however, the Panel observed that they did appear to have been amended by way of deletions of certain information, and in one case the elision of two emails, but that this “did not affect the veracity of the Leaked Emails on which UEFA primarily based its case.”
The Panel added (at Paragraph 88) that it “did not have evidence before it to establish whether the Leaked Emails are the only evidence that could support UEFA’s case…because such information was not disclosed by MCFC and – in the view of the majority of the Panel – because UEFA ultimately chose not to seek further disclosure.” It would be interesting to understand the view of the dissenting arbitrator in this regard. It is clearly true that UEFA did not pursue further disclosure during the CAS proceedings, in light of limited time available to the parties to resolve the dispute, but it appears incongruous with CFCB Investigatory Chamber’s requests for information pursuant to the Club Licensing and FFP Regulations, denied by MCFC.
This is however an issue of MCFC’s cooperation (discussed further below) rather than the authenticity of the Leaked Emails per se.
The Panel found the Leaked Emails (and, it is to be inferred, the original versions thereof) to be admissible as evidence. The Procedural Rules governing the CFCB state at Article 13(2) that “All means of evidence” may be considered; the Procedural Rules are, however, silent as to whether ‘illegally’ obtained evidence may be used. Consequently, the Panel considered position under Swiss law,[12] finding that that Article 184 of the Swiss International Private Law Act and Article 152(2) of the Swiss Code of Civil Procedure apply. This required a balancing of interests between “finding the truth” and “MCFC’s personality rights”.
Relying on the prior wide publication of the Leaked Emails and the private and public interest in FFP as a regulatory initiative (Paragraph 103 and 104), the Panel found that the balance swayed in favour of discerning the truth. The Panel’s conclusions in this regard are hard to disagree with; however, the reasoning is somewhat circular, in that the Panel relied upon the publication of the Leaked Emails in media outlets in order to find a public interest in their admissibility as evidence, which was derived from that same publication.
B – CFCB Due Process Proceedings
MCFC raised two issues in respect of the due process of the CFCB: The first related to the ‘premature’ issuance of the decision by the Investigatory Chamber to the Adjudicatory Chamber of the CFCB, which MCFC argued denied it the opportunity to make submissions concerning the relationship (or in fact the separation) of MCFC and its sponsors; the second related to the leaking of information to the press during the CFCB’s investigation, which may have implied bias.
The Panel found that MCFC was not prejudiced by the timing of the referral decision and that the de novo review of matters by first the Adjudicatory Chamber and latterly the CAS Panel had the effect of curing any defect in impartiality (if “for the sake of the argument” any were found) of the Investigatory Chamber implied by the leaking of information (Paragraphs 144 and 145).
Whilst the ultimate finding of the Panel in this aspect of the case was resolved in UEFA’s favour for present purposes, there will be cause for concern, given the Panel stated that the alleged leaking of information “is worrisome and too coincidental not to be taken seriously”. This follows similar remarks by the panel in the prior CAS case between the parties, CAS 2019/A/6298[13].
C - The 2014 Settlement Agreement
MCFC argued that the alleged breaches giving rise to this case could not be pursued by the CFCB because the matters at hand were subject to the Settlement Agreement.
The Panel found this to be incorrect. The Settlement Agreement concerned discrete matters: MCFC’s break even deficit; the fair value of certain sponsorship arrangements; and whether certain sponsorship arrangements were with related parties. The CFCB did not at the material time issue a referral decision to MCFC which were broader than the issues set out in the Settlement Agreement (Paragraph 153). The alleged breaches set out in the Settlement Agreement were not the same as the alleged breaches in the case at hand (relating to alleged disguised equity funding), notwithstanding certain overlaps in the time, persons, and issues involved.
The Panel’s conclusion makes sense to the author. The very nature of the case at hand is that it arose because of issues which were not known to the CFCB at the time the Settlement Agreement was made. The CFCB cannot be precluded from pursuing disciplinary action against a party on the basis of the resolution of other, distinct, alleged breaches by the same party at a similar time. In the words of the Panel, “The Settlement Agreement did not immunise MCFC from any possible further and different charges” (Paragraph 158).
D – Time-Barring and The Statute of Limitations
The limitation period for the ‘prosecution’ of breaches is set out in Article 37 of the Procedural Rules of the CFCB:
“Statute of limitations
Prosecution is barred after five years for all breaches…”
Limitation is therefore calculated by reference to the commencement of the prosecution. The Procedural Rules are defective in that they do not set out what it means to commence a ‘prosecution’, and MCFC and the CFCB differed in their interpretation.[14]
The Panel, by majority, agreed with neither party, finding instead that ‘prosecution’ starts at the issuance of the Referral Decision. The majority of the Panel appears to arrive at this conclusion based on a dictionary definition of ‘prosecute’, which is somewhat surprising to see, given there is no real analysis of the prevailing applicable law in relation to what it means to commence a prosecution, and given this is a critical issue to the case, with certain facts falling outside of the relevant limitation period.
As a result, the Panel found the relevant limitation period extended to 15 May 2014. Breaches before such date could not be prosecuted.
Given the multi-year assessment basis of FFP, there was also some discussion as to whether information submitted within the limitation period, but concerning ‘comparative information’ which relates to dates outside of the limitation period, can be prosecuted, given such information would previously have been submitted, but would fall outside of the limitation period if considered only on its original submission.
This question is critical in respect of the Etisalat sponsorship, as “the amounts at issue were transferred to MCFC on 13 June 2012 and 10 January 2013, i.e. outside the five-year limitation period” (Paragraph 185). The financial information submitted by MCFC in respect of the Etisalat sponsorship was thus submitted for the 2013/14 monitoring process, which falls outside of the limitation period.
UEFA argued that the resubmission of financial information for comparative assessment brought it within the limitation period. The majority of the Panel disagreed on the basis that this would “artificially” extend the limitation period (Paragraph 189). It is hard to disagree with this conclusion. For example, if clubs were required to submit financial information covering a ten year period on a rolling basis, on UEFA’s interpretation this would create a de facto limitation period of fifteen years, which surely cannot be intended. As an aside, the majority of the Panel did, however, find that this conclusion may be different in respect of break-even information, given that historic (possibly time limited) information is inherent to the correct calculation of the break-even calculation. Again, it is difficult to disagree with this conclusion.
Consequently, the Panel found the allegations in respect of the Etisalat sponsorship to fall outside of the limitation period (Paragraph 196). For the reasons expanded upon below, this is an important finding.
E - Standard of Proof
The standard of proof to be applied was that of comfortable satisfaction, with the burden of proof on UEFA.
MCFC suggested that the Adjudicatory Chamber failed to properly apply the standard of proof given the nature of the CFCB’s evidence and the severity of the allegations (“effectively being beyond reasonable doubt”, Paragraph 205); however the Panel found that the nature of the allegations, notwithstanding their severity, did not, in fact, have implications for the standard of proof.
F – Findings of Fact
I - Disguised equity funding
Limitation issues taken aside, this case was, in effect, decided on the evidence. In that regard, “Initially, UEFA’s case was entirely premised on the Leaked Emails” (Paragraph 229) and latterly certain financial information, whereas MCFC was able to rely on witness evidence of witnesses included the former President and CEO of Etihad, the Legal Advisor to the Abu Dhabi Department of Finance, the Senior Vice President in the Contracts and Administration Department of Etisalat, as well as its own officials and expert witnesses, and its own more detailed accounts.
The Panel found that whilst the Leaked Emails provided prima facie evidence of breaches by MCFC, who “clearly had a case to answer” (Paragraph 213), that case was answered by more comprehensive evidence available to the CAS Panel.
Moreover, the Panel found that Leaked Emails did not, on their own, establish a breach of the rules, as they do not establish that “the arrangements [discussed therein] were made and implemented”. The allegations brought by the CFC required a “completed act”, which was not found (Paragraphs 215 and 290). Whether or not the Leaked Emails demonstrate an intention to circumvent the rules (and it is not suggested here that such an intention was found), there was in any event no evidence that such a contravention was consummated.
The Award discussed the evidentiary aspects of the case at length (see Paragraphs 213 to 293), but the conclusions of the Award are best summarised by Paragraph 254:
“a finding that Etihad’s sponsorship contributions were funded, or procured to be funded, by HHSM and/or ADUG would require a conclusion that the evidence of several high-ranking officials of large international commercial enterprises….were false…and that at least [two persons] would be subject to criminal sanctions”.
The Leaked Emails and limited financial information available to UEFA were eviscerated by the comprehensive and credible witness evidence presented by MCFC.
However, this leaves important questions about the robustness of UEFA’s processes and of MCFC’s compliance with its regulator: Why was UEFA, and the CFCB before it, only able to obtain such limited information? As the competent regulator of European club football, acting under financial rules which give it broad audit and investigatory powers, is it proper that fuller information should transpire only on appeal to the CAS?
Even in the context of the present CAS case, UEFA made evidentiary requests in respect of contextualising information in relation to the Leaked Documents, an unredacted payment ledger, and the identity of an unnamed person who "plays a key role” and “made payments to MCFC which are at the heart of this case” (Paragraph 40). MCFC resisted this on the basis it would require “a proper determination” based on written evidence and a hearing, for which there was not time in light of the parties’ self-imposed deadline of 10 July 2020 (Paragraph 42). Instead, MCFC agreed to partly comply with UEFA’s requests (that is, provide some but not all of the material requested). UEFA acquiesced to that more limited disclosure.
This perhaps speaks to an undue confidence by UEFA in respect of the case presented. UEFA suggested that “There is no need for inferences to be drawn from the Football Leaks Documents as the true situation is set out in them” (Paragraph 63 subparagraph 648(d)) and made various references to its case being “unimpeachable” (see Paragraphs 40 and 63). With the benefit of retrospect, these proclamations look ill-advised, given the finding that the Leaked Emails were in some respects edited.
Ultimately, the Panel concludes that “Any alleged wrongdoing of MCFC with respect to the Etisalat payments is time-barred. Any alleged wrongdoing of MCFC with respect to the Etihad payments is partially time-barred and, in any event, not established to the comfortable satisfaction of the Panel” (Paragraph 324).
This leaves a somewhat open question as to whether the Panel could have reached a contrary conclusion in respect of the Etisalat payments were this element not time barred on the Panel’s interpretation of Statute of Limitations in the CFCB Procedural Rules. Based on the details of the Award, the Etisalat sponsorship does appear to raise more questions than the Etihad sponsorship. Counsel for MCFC indicates that ADUG did, as a matter of fact, make payments which were due to be paid by Etisalat, albeit that Etisalat, as the liable party under the sponsorship arrangement with MCFC, repaid ADUG on 18 March 2015 (Paragraph 61, subparagraph D.1.19 and 20). In submissions set out in the Award, MCFC put forward that “MCFC recognised in its accounts that these payments were made on behalf of Etisalat [by or at the direction of ADUG]” (Paragraph 61, subparagraph D.1.22).
This raises questions as to the proper characterisation of those payments made by ADUG. On one characterisation, these could be construed as the settlement of the liabilities of Etisalat to MCFC in accordance with the terms of their sponsorship agreement(s), albeit by a third party. An alternative characterisation would be to construe this payment as a related-party loan by ADUG to MCFC, later satisfied by the offsetting of the obligations of Etisalat to MCFC and MCFC to ADUG. Paragraph 61, subparagraph D.1.30 goes on to state that “Ernst & Young confirms that the accounting records of ADUG treated the two payments as creating a receivable from Etisalat [for ADUG]”
The proper interpretation of these payments is not examined in the Award, as the Panel found the arrangements to be time-barred, notwithstanding the repayment by ADUG to Etisalat on 18 March 2015, within the limitation period. Clearly the liabilities between ADUG and Etisalat should be properly recorded in those parties’ own accounts; however, if overall relationship of these payments were to have been recharacterised, then this may properly have entailed book entries in MCFC’s accounts within the limitation period. Paragraph 61 subparagraphs G.47 highlight the fact that under accrual accounting methods, revenue must be recognised when sponsorship services are provided, not when cash is received. Therefore MCFC had to account for the Etisalat liabilities in accordance with its invoices; but this point remains premised on the assumption that the payment by ADUG ‘on behalf of Etisalat’ is properly treated as such, and not as a loan to MCFC repayable by (in effect) by Etisalat at a future date.
However, the evidence presented does suggest that whatever the treatment of these payments ought to have been, once the inter-partes liabilities were set-off by Etisalat, that the monies were not funded by ADUG. In effect ADUG a creditor of Etisalat, not MCFC. That is to say that in the fullness of time, there was no equity provided by ADUG, because the payments were ultimately borne by Etisalat (albeit apparently not before 18 March 2015). UEFA did not, after all, base its case on related party transactions between ADUG and MCFC (if any), but on the funding of sponsorship arrangements by ADUG, which was found not to be the case.
Overall, the question of the Etisalat sponsorship arrangements is redolent of the case overall. UEFA averred that “No sensible explanation has ever been provided by MCFC as to why: i) ADUG was arranging payments on behalf of Abu Dhabi-based partners; nor ii) why ADUG needed to engage the assistance of [X] to make the payment” (Paragraph 63). It is certainly true to say that on its face, this arrangement raises questions; however, it remains somewhat based on mystery and insinuation without concrete facts buttressing the questions raised. A core question remains as to why UEFA only came to interrogate the matter in 2019 when the payments by ADUG on behalf of Etisalat came many years prior, ostensibly without interrogation by UEFA at the material time, despite the contemporaneous submission by MCFC of financial information in accordance with the FFP licensing and monitoring process.
II Failure to Co-operate
The final substantive point addressed by the Panel was whether or not MCFC failed to cooperate with the CFCB in accordance with its duties under the Club Licensing and FFP Regulations. UEFA argue that MCFC was “suddenly” able to provide witnesses for the CAS who were denied to the CFCB investigation (Paragraph 40).
Various parts of the Award make it clear that the CFCB Adjudicatory Chamber did not have the evidence available to it that the Panel did (see for example Paragraph 257). The Panel acknowledge that FFP is dependent on the cooperation of those clubs regulated by it, and that this duty of cooperation is explicitly enshrined in Article 56 of the Club Licensing and FFP Regulations (Paragraph 274). The Panel further acknowledge that the Leaked Emails gave MCFC a case to answer to the CFCB (Paragraph 213).
The Panel found that MCFC “failed to provide all but one of the witnesses requested by the CFCB Chief Investigator” (Paragraph 305) and “failed to provide the complete runs of emails of which the Leaked Emails formed part” (Paragraph 306).
On examination of the facts, the Panel found MCFC to have failed to cooperate with the CFCB’s investigation in contravention of Article 56 of the UEFA Club Licensing and FFP Regulations (Paragraph 321). A significant aspect of the section of the Award dealing with MCFC’s failure to cooperate with the CFCB is found at Paragraph 316, in which it is found that the failure to cooperate is “not repaired by the de novo nature of the CAS proceedings, because allowing clubs to hold onto relevant evidence until the proceedings before CAS would seriously risk turning the proceedings before the CFCB into a farce”. This interpretation must be correct, as any contrary finding would have conflated the failure to comply with Article 56 with the failure to comply with the CAS procedure, despite those being distinct obligations.
Yet there was still a benefit possible to MCFC in failing to comply with the CFCB, in that the Panel found that limitation is calculated by reference to the CFCB Investigatory Chamber’s Referral Notice, and thus any delay in the investigation leading to such Referral Notice could have had the effect on the events in scope of review for the CAS.
G - Sanction
The Panel was of the view that UEFA “by no means filed frivolous charges” (Paragraph 325); however, the central allegations of providing incorrect information and receiving disguised equity funding through Etisalat and Etihad were dismissed.
The Panel did, however, find MCFC to have breached the Club Licensing and FFP Regulations in respect of its cooperation with the “reasonable evidentiary requests” (Paragraph 326). The Panel agreed that “the entire FFP system depends on…complete and accurate reporting by clubs” (Paragraph 327), with MCFC’s “failure to produce original versions of the Leaked Emails…particularly serious” (Paragraph 328). The Panel goes on to state that MCFC’s failure to cooperate is aggravated by prior investigation by the CFCB for alleged breaches of FFP as resolved by the Settlement Agreement (Paragraphs 329 and 33), and concludes that MCFC, by failing to cooperate with the CFCB’s investigation, had committed a “severe breach and that MCFC is to be seriously reproached” (Paragraph 331).
However, taking view of the case overall, given that the main allegations were not established, the Panel reduced the sanction levied by the CFCB to a fine of EUR10m. The Panel did not find it appropriate to uphold the ban on participation in UEFA club competitions (Paragraphs 333 and 334).
UEFA may well have been frustrated by this outcome, and it may be construed as surprising given the seriousness the Award places on the failure to comply with the CFCB; however, as is noted in the Award at Paragraph 333, the Adjudicatory Chamber did not indicate to what degree its sanction was related to “disguised equity funding on one hand and on MCFC’s failure to cooperate…on the other hand”. Nor does UEFA’s own regulatory regime stipulate a specified punishment of a ban for breaches relating to clubs’ failures to comply with the CFCB. Thus, the punishment of a fine is within the reasonable spectrum of punishments available to the CAS Panel; it is for UEFA to clarify its rules if it has a contrary intention for future cases.
Analysis and commentary
There are a number of interesting details to this case on a granular level, but first to take a step back to look at matters in context: The origins of this dispute, which has generated significant interest in the media, and has doubtless had significant financial costs to both parties, arises because of opaque questions concerning unknown factors about the particular provenance of certain sponsorship monies paid to MCFC. The matter is unlikely to have every been pursued by UEFA but for the publication of certain limited and curated private emails into the public domain.
As is acknowledged in the Award, it would have been difficult for UEFA to have come into receipt the Leaked Emails and not to raise the matter with MCFC, not least because UEFA has an obligation to the other clubs which compete for and in UEFA competitions to ensure compliance by all clubs with its rules. In that respect, it is interesting to note at Paragraph 32 an application for intervention in these proceedings by nine Premier League clubs (in essence, those who had a prospect of taking a UEFA competition place in the event of a ban of MCFC), even though that application was ultimately moot.
As was anticipated, this case did not hinge on the underlying fundamental legality of FFP; and whilst the outcome of the matter may have reignited debate, the dispute between UEFA and MCFC was not in any real sense a referendum on the merits of FFP as a regulatory initiative, and care should be taken in drawing conclusions that imply that it was. Ultimately, this case related to an idiosyncratic set of circumstances which are unlikely to be replicable.
There are, however, clearly points to be taken away.
Timely production of documents
In particular, the entire CAS case, and indeed the initial decision of the CFCB Adjudicatory Chamber, could have been avoided had MCFC provided the timely production of the documents requested by the CFCB (Paragraph 328). In one sense, this comes as a surprise. The Club Licensing and FFP Regulations and the Procedural Rules of the CFCB bestow on the CFCB broad audit and information access rights. In another sense, it is not surprising, as those rights are only of use to the degree they are complied with and enforced. As Hessert has explained in greater detail here[15], the duty to cooperate with sports governing bodies is fraught with tension.[16]
This issue could perhaps be ameliorated with more robust audit and information rights. After all, the Award indicates that the CFCB was not wrong in its investigation or adjudication per se; it simply had a deficit of information when contrasted with the CAS (Paragraph 341). Part of the issue in this matter is that in order to properly determine the facts, the CFCB had also to consider information in the possession of parties outside of its regulatory ambit (both related parties and unrelated parties). Clearly this is problematic in relation to audit and information gathering. In other industries, this issue is addressed by a regulatory obligation for licensee to include audit rights of regulators in contracts with key counterparties.[17] Whether this is necessary or proportionate to the issues presented by the majority of FFP matters is, however, questionable. Nevertheless, a tightening of the scope of audit and information gathering rights would improve matters, as would a more clearly defined set of sanctions for failures to comply with such rights.
The split in the Panel’s views
An interesting point to note in this case is the clear split observed in the views of the Panel, with references in the decision to the views of the ‘majority’ of the Panel throughout. This indicates dissenting views.
In respect of the composition of the panel, it is noteworthy to observe that in each of the two CAS cases that were comprised in the dispute between MCFC and UEFA (i.e. CAS 2019/A/6298 and CAS 2020/A/6785), the parties nominated the same arbitrator (UEFA appointing Prof. Ulrich Haas and MCFC appointing Mr Andrew McDougall QC (Paragraphs 30 and 31)). There are, of course, legitimate reasons why the parties may have elected to nominate the same arbitrator in each case; not least their familiarity with the background in what is an incredibly complicated set of facts.
It should also be highlighted that research by Lindholm shows that CAS arbitrators tend to be selected from a narrow pool even in the context of the CAS list;[18] however, this may well reignite debate as to the independence of the CAS––which is critical to its legitimacy as a competent arbitral body (notwithstanding the elaboration on and partial foreclosure of that debate in the recent cases of Riza, Mutu and Pechstein[19]).
Much ado about nothing?
It is difficult not to conclude that aspects of this case constituted much ado about nothing. Allegations of deception, based on part truths and innuendo, which were not ultimately substantiated. FFP as a policy initiative may be refined as a result of the outcomes[20], but that was likely to happen in any event (temporary measures[21] already have been taken in response to the ongoing impact of the coronavirus), and indeed FFP has changed iteratively over the years of its existence in any event (as explained here[22]).
This Award does not, therefore, indicate the death of FFP. It may precipitate a refinement of the rules or the resources put into monitoring and compliance, but it would be disproportionate to invoke wholesale changes to the rules as a result of the specific facts of this case; particularly given the view of UEFA that, taken overall, FFP is working.[23]
Leaked information
The final point of this article is to highlight that despite the decision of the Adjudicatory Chamber of the CFCB and two CAS Awards, the matters in issue are still not altogether resolved. As it noted at Paragraph 26, MCFC filed a complaint with UEFA’s Control, Ethics, and Disciplinary Board concerning leaks of information during the CFCB investigation process. The CAS Panels in both CAS 2019/A/6298 and CAS 2020/A/6785 have expressed disquiet at these leaks. It remains to be seen how that aspect of this case will be resolved.