Bavarian Legal Works: The Super League strikes back?

The abortive attempt to launch a European Super League (ESL) early this year ended in disaster for the “Dirty Dozen,” who, in a matter of days, were reduced to an Unholy Trinity consisting of FC Barcelona, Real Madrid, and Juventus under sustained public and political pressure.

Now the remnants of the Super League are crowing on social media about a ruling in their favour by a Spanish judge—who did not hear arguments from the opposing side and has now (unsurprisingly) refused to overrule himself.

The initial ruling by a politically outspoken Madrid judge is only the opening round in this battle, and despite his favouring the ESL’s shell company (it appears that FC Barcelona, Real Madrid, and Juventus have not actually stepped up to be part of the litigation but instead are running it through a Spanish shell company that appears to have no current assets), the course is far from set in this fight. Today, we will try to explain the procedural road that got us here, the next steps that can be expected, and what the legal issues are.

Ex parte: a one-sided decision

The European Super League’s shell company (we’ll call it ESL, for short) started this fight back in April, but it neglected to invite the other side, bringing their initial request for an injunction “ex parte,” meaning without notice to the other side (i.e. UEFA). This means that the judge, in a Madrid court, heard only from the ESL’s lawyer and read only materials filed by the ESL. It’s not hard to imagine how he might have issued his preliminary injunction having heard only one side of the story.

Now to be fair, there are times in which an ex parte hearing of a motion for an injunction is appropriate. These are situations where irreparable harm is about to happen and the urgency is such that it would be unjust to take the time to notify the other side of the impending hearing.

This is not that case. One is left to wonder why the judge did not delay the hearing to allow UEFA to be served with the materials and to make their own submissions. Hearing from both sides before issuing an injunction is a step on which many jurists of integrity would insist. Judge Manu Ruiz de Lara did not.

Ex parte results are not well regarded amongst experienced litigators. An anecdote may illustrate what I mean. In an exchange on a legal website, when a young lawyer was bragging about his record on “unopposed” motions, a well-respected senior trial lawyer suggested that his keeping a record of his ex parte victories was akin to notching his bed post each time he engaged in “self-pleasuring”...not much of an accomplishment.

Le droit...c’est moi

The more recent decision from the Spanish courts that the Unholy Trinity have been crowing about came about in an even more bizarre twist in the legal tale. After the shell company got around to serving the order in May, UEFA moved to have the initial injunction set aside on a number of grounds, including that it was not urgent and that the shell company did not have standing to bring the action. This decision came out on July 1 and is the one referred to in our recent article. Nobody outside narrow legal circles paid attention to it until the recent social media announcements from Real Madrid and friends leaving us to wonder just why they want the attention now. Are they about to announce a new Super League proposal? Are they seeking new financing for the project? Only time will tell.

UEFA’s appeal of the initial injunction was unsuccessful. This is not surprising, however, as the judge who heard the objections to the initial ruling of Judge Manu Ruiz de Lara was none other than esteemed jurist Judge Manu Ruiz de Lara. Yes, you are reading that right.

Through some operation of Spanish legal procedure a judge was hearing an appeal of his own decision. You don’t need to be an expert in judicial psychology to know that getting a judge to publicly declare that his own decision was wrong is pretty unlikely. I have not yet been able to determine if this practice is common in Spanish Commercial courts, but suffice to say there is a mound of legal literature (going back to the Roman Empire!) that warns against this kind of process where a person sits in judgement over himself.

In fact, it looks like if this case had taken place in, say, Munich that the result would have been different. In a case dealing with a similar issue between two wrestling federations in Germany, the initial injunction was set aside when the reviewing court determined that the initial ex parte motion was not really urgent.

Some observers believe that the European Court of Justice has already sent a preliminary signal that it is not impressed with the approach of Judge Ruiz de Lara by refusing his request that the hearing of the matter be expedited. If the matter was urgent enough to require a preliminary ex parte hearing, then why have the ECJ refused his request to fast track the case?

Where we are, where we should be

At the moment the preliminary injunction stands. It effectively prohibits UEFA from moving forward with its investigation of the Unholy Trio or from barring them from any UEFA competitions. It also purports to set aside the agreement between UEFA and the other teams who have withdrawn from the Super League project, although many feel that this provision of the judge’s order is unenforceable and ultra vires, i.e. beyond the scope of his powers. There is talk that the EPL may fine each of the English teams involved in the project one pound on an interim basis to preserve their position that the EPL is not subject in any way to the Spanish court.

For some (perhaps understandable) reason, the shell company and the unholy trio have all failed to file complaints with the European Commission for violations of the EU’s anti-trust provisions. This would be the normal procedure for a case like this and exactly the route taken by FIBA and the ECA in their long-running dispute over basketball competitions.

The case should now grind its way through the European Court of Justice, with the court asking for first appearances and positions of interested parties by mid October.

What a party

So just who will be the parties to this dispute? Obviously we start with UEFA and the ESL shell company. One should expect that eventually the Unholy Trio will belly up to the bar. Since clubs are not members of UEFA, but rather leagues are, you can expect every league in Europe to have the option of participating. The ECA will probably have standing, and considering the culturally sensitive nature of football, several countries may well participate in the hearing. Depending on how things stack up, there will be significant forces aligned against the ESL remnants. All five of Europe’s major leagues are against the ESL, as is the ECA and the governments of France, England and Germany have made clear statements that they are opposed to the ESL. FIFA will likely seek standing as well and are opposed to the ESL.

The legal question

At the heart of this dispute is the proposition put forward by the ESL shell company that the decision taken by UEFA and its member leagues to sanction teams for breaking away to form another league violates certain articles of the Treaty on Functioning of the European Union. The question for the court to decide will be whether UEFA’s response to the ESL unfairly used their dominant market position to impair competition in a way that is against the public interest.

The first thing you need to know about this issue is that European Union law does not treat sports leagues just like any other commercial entity. The European Union White Paper on Sport makes it clear that sports leagues are subject to anti-competition laws but have a special status, called the “specificity of sport”:

The Court recognised that the specificity of sport has to be taken into consideration in the sense that restrictive effects on competition that are inherent in the organisation and proper conduct of competitive sport are not in breach of EU competition rules, provided that these effects are proportionate to the legitimate genuine sporting interest pursued. The necessity of a proportionality test implies the need to take into account the individual features of each case. It does not allow for the formulation of general guidelines on the application of competition law to the sport sector.

To summarize the various decisions on this issue, there is no doubt that a sport can use disciplinary, even punitive steps to protect its legitimate interests, as long as it does so in a procedurally fair fashion and the discipline is not disproportionate to the interest and the violation. The test is often framed as follows:

(i) did the measures pursue a legitimate objective,

(ii) were they necessary to achieve the objective, and

(iii) were they proportionate?

Skating on thin ice

Some commentators suggest that the recent decision in which the General Court ruled that the International Skater’s Union could not issue a lifetime ban against skaters who participated in non-sanctioned events signals a trend that should give the ESL shell company hope. They have not read the case as closely as they should. The ISU case simply applies the traditional analysis outlined above, whereby the court concluded that a lifetime ban was disproportionate to the “objective.” The court also seemed to reject the contention that the ban would protect the sport from betting (the only objective advanced by the ISU at the hearing), and it was aghast that the ISU literally had no procedures in place to ensure that its disciplinary process was fair.

In fact, the court in the ISU case made one legal finding that I expect UEFA will put in bolded caps in every brief it files:

In addition, even if it were established that the 2016 eligibility rules also pursue an objective of protecting the applicant’s economic interests, it should be noted that the fact that a federation seeks to protect its own economic interests is not in itself anticompetitive. As the Commission acknowledged at the hearing, the pursuit of economic objectives is an inherent feature of any undertaking, including a sports federation when it carries out an economic activity.

While there is an argument that the ISU case could assist players who were banned from representing their country by playing for a ESL team (and even that seems a bit of a stretch), that does not help the ESL diehards, because they are clubs, not individuals, and the body responsible for deciding who gets to play for a national team is not UEFA. It’s not even clear whether the ESL shell company, which does not represent or even contract with players, would have standing to argue that issue.

Twists still to come

There are still at least two possible legal twists to come that could have a significant impact on the course of this matter.

The first is that the ECJ could dump the whole case based on preliminary objections sure to be filed. There are serious doubts surrounding the shell company’s standing and whether the whole case may be premature. For instance, how is the court supposed to assess whether the disciplinary measures taken by UEFA are “disproportionate” or advance the federation’s objective, when that discipline has not yet occurred? The ESL’s case is a lot like filing an appeal against your sentence on the grounds that it is excessively harsh before the sentence has even been delivered.

Also, one cannot expect UEFA to remain passive in this matter. Many experts expect UEFA or another body to file a complaint against the ESL for attempting to create a cartel, which is clearly a prohibited action. A cartel is roughly defined as follows:

Cartel is the common concept which refers to anti-competitive agreements and/or concerted practices among competitors

Creating a European Super League in which the richest, most powerful clubs no longer have to qualify and limiting the number of non-founding teams that can join the competition seems to fit the very definition of a cartel. The pronouncements of the British government already suggest that it considers the Super League a cartel and will treat it as such.

While predicting the final outcome of this legal dispute is very difficult, many neutral experts who are well regarded in the field feel that UEFA’s position is strong. One top expert was particularly bullish on UEFA’s chances:

“This is big!” tweeted Katarina Pijetlovic, a sports law researcher at the University of Manchester and an expert on closed leagues. “The judgment will have a massive impact on conceptual clarification and prior approval of alternative leagues. It will confirm that UEFA has the right to regulate access to organisational market via proportionate restrictions in public interest.”