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Sports Law analysis: Restraint of trade for sportspersons

The doctrine of restraint of trade in sports could potentially emerge from either a contract or a sports federation’s rules.

Essentially, this doctrine refers to situations whereby a particular term in a sportsperson’s (athlete or coaching staff) contract or a rule in the statute of a federation places certain restrictions on that individual’s ability to participate in their respective sport.

Such restriction could be interpreted by a disciplinary body or court of law as being unenforceable and subsequently deemed to be an unlawful restraint of trade.

This doctrine has been upheld by a court of law as far back as 1978, when a UK court ruled that the rules imposed by the International Cricket Council prohibiting cricket players from taking part in test matches that were organised by a rival cricket body went further than was necessary to protect its own legitimate interests and were therefore unenforceable, resulting in such rules being deemed to be an unreasonable restraint of trade.

At the same time, one cannot automatically claim that any restraint imposed on a sportsperson’s ability is automatically legally unenforceable.

Situations could arise whereby a restraint that is included in a contract or rule is necessary in order to protect a legitimate and desirable aim by the party imposing such restraint.

In order to assess whether a restraint is deemed to be unenforceable and thus found to be a restraint of trade, a two-stage process needs to be adopted.

First and foremost, it must be determined whether a restraint of trade exists in the first place.

At this stage, the onus of proof is on the individual who is alleging that the restraint imposed on him is one which prevents him from either earning a living from his profession or severally limiting his ability to earn a living.

If such restraint of trade is proven to exist, then the party that has imposed the restraint must satisfactorily demonstrate that it pursues a legitimate aim; i.e. such

restraint has been imposed in a reasonable and proportionate manner.

One could potentially argue that a disciplinary ban is in itself a restraint of trade, since as a result of such ban, the sportsperson concerned is not able to exercise their profession during the applicable period of the ban.

At the same time however, one needs to factor in the elements of reasonability and proportionality behind the disciplinary ban that has been handed out.

Without disciplinary punishments for breaches of the governing rules and regulations, the integrity of sports would be at a severe risk, leading towards a free for all scenario.

At the same time, this does not mean that disciplinary punishments can be imposed without due justification and consideration.

After receiving a four-month ban from FIFA from all football related activities, Uruguayan footballer Luiz Suarez challenged the ban from all football activities in front of the Court of Arbitration for Sport.

Suarez claimed that the four-month ban would inevitably have an effect far longer than the restricted period since he would neither be sufficiently conditioned nor integrated into his club’s team to resume his professional activities as soon as his ban ended.

Whilst the CAS confirmed the four-month domestic ban, at the same time the CAS ruled that the suspension from all football activities, including training with his domestic team and attending commercial endorsements, was disproportionate since it would have still had an impact on his professional career even after the lapse of the suspension period.

In relation to the duration of a sportsperson’s contract, mainly player deals, the doctrine of restraint of trade could also be raised in specific scenarios.

To avoid a situation wherein all contracts could potentially be found to fall within the restraint of trade doctrine, the courts have drawn a distinction between post-termination restraints, which could potentially be deemed to be subject to the doctrine, and restraints during the duration of the employment contract, which in the majority of times fall outside the doctrine.

A recent case on restraint of trade in a player contract emerged in Malta concerning Brazilian player Alex de Paixao Alves who previously played for Maltese football team Balzan FC.

His contract was unanimously terminated in order to allow him to sign for Al-Washm in Saudi Arabia. A clause was inserted in the termination agreement whereby should he sign for another Maltese team within one and a half years from date of the termination agreement, Alves would have to pay his previous employers Balzan FC €20,000.

Alves did return to Malta during such period and signed for Birkirkara FC, resulting in Balzan opening proceedings in front of the Complaints Board demanding the payment.

The Complaints Board found in favour of Balzan. An appeal was lodged in front of the Appeals Board, with the appellant alleging that the relevant clause constituted an illegal restraint on employment, even more so given that the player does not possess any confidential or sensitive business information that would harm his former employer.

The Appeals Board ultimately agreed that the clause was contrary to public policy as well as disproportionate, thus deemed to be an illegal restraint of trade.

This meant that the clause was found to be null and void.

Dr Robert Dingli is a Senior Associate at Dingli & Dingli Law Firm and specializes in sports law

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