An overview of Egypt’s new Sports Law

Published 09 June 2017 By: Laila El Shentenawi, Farah Ramzy, Youssef Salam

Egyptian flag on compass pointing towards sports

On 31 May 2017, law number 71 for the year 2017 promulgating the Egyptian Sports Law was issued in the Egyptian Gazette, Vol. 21 bis (b) (the “Law”).  This long awaited Law was unanimously approved by the House of Representatives. It is the first of its kind to regulate all sports related matters in Egypt, removing significant discretionary power from the Ministry of Youth and Sports (the “Ministry”) and repealing the sports related section in Law number 77 for the year 1975 and all other contradictory provisions.

This article highlights some key points introduced by the Law. Specifically, it looks at:

  • The scope of the law

  • Sports dispute resolution

  • Investing in sports services

  • Fan conduct

  • Revisions and general provisions

  • Comment

 

OVERVIEW

The Law is comprised of 95 articles regulating sports entities, including companies working in the field of sports as well as all other activities relating to sports. It is divided into 10 Chapters addressing inter alia the following:

  • Sports institutions;

  • Sports activities;

  • Sports at companies and factories;

  • Sports at schools, educational institutes and universities;

  • Sports dispute resolution; and

  • Investment in the field of sports

The Law introduces several new concepts and fills several existing gaps in the regulation of sports in Egypt.  First, it fills the legal vacuum in matters concerning companies which operate sports facilities, including private clubs by regulating private companies.  Second, it establishes an arbitration centre specialised in sports disputes.  Third, the Law acknowledges the authority of international codes and statutes such as the World Anti-Doping Agency (WADA) and the Olympics Statute.  Finally, it refers relevant matters to the Egyptian Olympic Committee and the Egyptian Paralympics Committee.

The enactment of this law raises the question of why sports matters previously lacked comprehensive regulation and steps were not taken to regulate sports until now. It could be that some entities prevented comprehensive laws from being enacted because they benefited from the lack of regulation. As a result, the Ministry was the competent authority to oversee many public sports organizations and has been left largely to its own devices, save for the minor regulations set by existing laws. This allowed the Ministry to exercise a significant amount of discretion in promulgating and enforcing its decrees. In essence, the Ministry was seen as both a legislative and executive authority in matters relating to sports.

 

SPORTS DISPUTE RESOLUTION

The last law concerning Youth and Sports organizations was issued and amended over 40 years ago. That law had become extremely outdated in terms of the types of transactions taking place and the types of entities it covered. The previous law failed to provide a particular way in which sports disputes are resolved.  The new law filled this gap by providing in article 66 for the establishment of an independent Egyptian Sports Arbitration Centre, residing in the Egyptian Olympic Committee (the “Centre”).

The Centre enjoys jurisdiction over disputes in which one of its parties is an entity, a person, or an organisation regulated in accordance with the Law.

Article 66 further provides that the dispute resolution mechanisms applied at the Centre shall be mediation, conciliation, and arbitration. Whilst the Law provides for such dispute resolution mechanisms, it does not establish appeal procedures.

Article 67 of the Law provides that agreements referring disputes to the Centre are to be concluded in arbitration agreements, submission agreements or stated in a sports related statute.  It further states that disputes referred to the Centre may relate to among other things

  1. disputes arising out of the application of the Law or the statutes of the Egyptian Olympics and Paralympics Committees,
  2. disputes arising out of TV rights and broadcasting agreements, sponsorship agreements, intellectual property rights used during sports competitions, coaches contracts, athletes’ contracts, sports agents/intermediary agreements and other sports related disputes.

It is predicted that, given the preference for sports arbitration over the conventional court system, arbitration will be favourable. Moreover, the Law does not make arbitration compulsory, so parties retain the option of resorting to the regular court system which is consistent with the Egyptian Constitution.

According to Article 68 of the Law, the board of directors of the Centre shall be chaired by the chairperson of the Egyptian Olympic Committee and shall consist of

  1. a representative from individual sports,

  2. a representative from team sports,

  3. a representative from the Ministry of Sports, and

  4. three individuals of legal and technical backgrounds.

It is worth highlighting that the Centre shall be particularly preferable for disputes relating to administrative law, as disputes arising from this difficult and inaccessible branch of law fall within the jurisdiction of the Centre. The jurisdiction extends to all matters relating to public organizations, authorities, and establishments that deal with public goods. This can include sports federations, sporting clubs, and other authorities and committees charged with some kind of public good.  Accordingly, this jurisdiction will provide a compromise in matters where administrative law is somewhat biased towards the public authority (which receives certain privileges based on the service it provides). This makes it far more difficult for private parties to, among other things, enter into an agreement with the public authority as the law may not give the parties equal weight. An arbitration clause in an agreement or executive regulation would spare the legal woes of dealing with administrative courts.

Article 69 Law provides that the board of the Egyptian Olympic Committee shall issue a decision in compliance with the bylaws of the Centre and the specified rules for the type of procedure (arbitration, mediation, or conciliation). 

Although the Centre will be established as an independent entity, it will be seated in the Egyptian Olympic Committee, its board of directors will be chaired by said committee’s president and its bylaws and rules will be drafted by the aforementioned committee. This may raise concerns as to the impartiality and independence of the Centre, specifically when one of the parties involved in a dispute is the Egyptian Olympic Committee itself.

 

INVESTING IN SPORT SERVICES

Under the previous laws there were practically no regulation or distinction between quasi-public entities, such as sporting clubs, and private entities that establish a sporting club, health club, gym or other type of sports services. Private companies that established clubs or similar facilities found themselves in legal limbo. They were unaware of whether they were subject solely to laws regarding companies conducting regular activities or whether they were part of the legal framework of “sports entities.

Sports entities fell within a particular framework that was heavily regulated by the Ministry and were governed by very particular rules, whereas private companies functioned according to the relevant companies’ laws in Egypt and the civil and commercial laws.

The legal uncertainty was most apparent in cases where private companies owned and operated a facility, such as a health club. Health clubs could reasonably be within the paradigm of sport, nonetheless do not quite conform to the framework of sports entities. This problem was exacerbated and made ubiquitous by the increase in diversity of sports enterprises, such as football academies as well as health and fitness clubs. Thankfully, Articles 71 to 78 of the Law were able to clear up some of the confusion by distinguishing between sports entities and companies that conduct sports services and setting a guiding framework under which such companies can operate.

All companies that conduct sports services must be joint stock companies. Sports services are not defined in the law and may include managing, marketing, or operating private clubs and academies, health clubs, and fitness centres. Accordingly, small sports-related businesses (such as spas and gyms) may be obligated to abide by this legal structure.

These companies, under the Law, are entitled to issue their shares through a public offering and list themselves on the Egyptian Stock Exchange Market, if such action does not affect its sports services.  The Law does not define the issues that are considered to affect the companies’ sports services. An individual interpreter may have discretionary power to determine whether or not a company may issue its shares through a public offering or be listed.

Additionally, sports entities may form joint stock companies with investors and members or set up branches established by joint stock companies.  All such companies are, of course, subject to approval by the competent authorities in terms of activities while remaining compliant to the provisions of this Law. They are also subject to financial oversight, including submitting their financial statements to the competent authorities and minimum and maximum fees for the provision of their services by the Minister of Youth and Sports.

Upon issuing the rules governing the status reconciliation by the Minister of Youth and Sports, the aforementioned companies will have to reconcile their status within two years in order to ensure their compliance with the Law.

 

FAN CONDUCT

The Law establishes sanctions and fines for different actions, including actions of fans, unless the penal code or another law provides for tougher sanctions. Actions sanctioned by the Law may include establishing or managing sports groups. This may be interpreted as a provision criminalising the “Ultras groups” (i.e. dedicated supporters of football teams) who, in accordance with Article 90, will be subject to imprisonment and fines (with a minimum of EGP 50,000 and a maximum of EGP 200,000).

Although Ultras groups will be subject to stringent fines and imprisonment, regulation of and sanctions relating to executive management of sports legal entities (as stated in Article 93) remain vague.

 

REVISIONS AND GENERAL PROVISIONS

The Law changed the framework governing other sports entities. The most important of these changes is the increased role of general assemblies in governing such entities. Previously the Ministry held this power. Prior to the enactment of this law, sports entities were governed by by-laws uniformly issued by the Ministry. The Law enables such entities to draft and enforce their own by-laws, with the approval of their general assemblies. The Law will also give general assemblies plenary power to remove or change the board of directions without fear of Ministry intervention. The Olympic Committee will be charged with providing sample by-laws for reference.

The Law includes provisions regulating previously unregulated areas of sports. For example, it stipulates that athletes representing Egypt in competitions at home or abroad may not be penalized for absence from work or school during the time of the competition.

The Law brings the Egyptian Organization for Anti-doping, an organization previously untethered by local regulation, under legal framework.

The current Law, then, covers far more areas than those covered by the laws preceding it while amending and expanding various areas already in existence.

 

COMMENT

The promulgation of the Law is an important step in the evolution of the sports sector in Egypt. Its enactment was necessary following the series of unfortunate events relating to sports that have occurred in recent years. The application and interpretation of the Law, however, remains ambiguous and requires a watchful eye.

This Law will hopefully be the breath of fresh air the industry needs to grow with confidence. The surge in sports promotion in society and the boom of the global sports market (PWC has predicted the market exceeded $145 Billion in 2015[1]) creates a need for rule of law that enables growth, rather than hinders it.

Related Articles

Author

Laila El Shentenawi

Laila El Shentenawi is a qualified Lawyer in Egypt and a Senior Associate at Al Tamimi in the Arbitration & Dispute Resolution team. Laila's practice focuses on international commercial arbitration, investment arbitration, mediation and sports dispute resolution. Her clients include governments, regional organisations, international organisations, multi-national companies, banks, investors, international athletes and sports bodies.

  • This email address is being protected from spambots. You need JavaScript enabled to view it.
Farah Ramzy

Farah Ramzy

Farah Ramzy is an Associate at Al Tamimi & Company in Egypt with their Corporate Structuring Practice and a member of Al Tamimi’s dedicated Sports & Events Management practice. Farah has experience in inland companies and partnerships, advising clients on matters of incorporation, structuring, maintenance, and liquidation . Along with her legal career, Farah is also professional volleyball player who recently took her team to the African Championship finals.

  • This email address is being protected from spambots. You need JavaScript enabled to view it.
Youssef Sallam

Youssef Salam

Youssef Sallam is a paralegal at Al Tamimi & Company in Egypt with their Corporate Structuring Practice. Youssef focuses on incorporations onshore and offshore, company maintenance, and legal research. He also occasionally assists the Arbitration Practice as well as the Corporate Commercial Practice.

  • This email address is being protected from spambots. You need JavaScript enabled to view it.