Freezing monies owed from UEFA to secure a debt claim: a case study
Published 17 June 2015 By: Roy Levy
This author wishes to explore ways to enforce a Court of Arbitration for Sport (CAS) award for money, with particular emphasis on the strategy of using a Swiss freezing order as a potentially novel way of securing payment if the debtor has assets or claims in Switzerland owing to it by a sports governing body.
Prior to a main article on this topic entitled, ‘Freezing monies owed from International Sports Federations – a valid alternative to enforce CAS awards?’ (due to be published shortly), the author would like to re-visit a Swiss case that provides useful learning on the scope and effects of a Swiss freezing order.
In an award of 12 October 2011,1 the CAS upheld a claim of a Portuguese football club against a Russian club (unfortunately the parties' names are not available) in the amount of CHF 2,406,916 (more than EUR 2 Mil.).
On 30 July 2012, as the debtor Russian club had not paid the awarded amount, the creditor Portuguese club sought to secure payment of the debt by applying to the attachment judge in the Swiss court in Nyon (seat of UEFA) to freeze the already accrued and the future match-premiums that the Russian club had won and could potentially win while participating in the - at the time - ongoing UEFA Europa League 2012/2013 up to the said amount awarded by the CAS.
The Portuguese club argued that the Russian club, which had reached the third round in the UEFA Europa League at the time the request was filed, had already earned CHF 200,000 and was entitled to receive more with each win.
At first instance, the judge granted the freezing order over the current and future match premiums. The Russian club then appealed the matter twice (each dismissed) before finally addressing an appeal to the Swiss Federal Supreme Court (FSC).2
The FSC were asked – in addition to deciding its validity – to determine the correct extent of the freezing order: namely weather the Portuguese club was entitled to freeze future conditional match premiums in addition to those already accrued.
The FSC upheld the freezing order and dismissed the appeal.
Concerning the extent of the freezing order, the FSC ruled that the Portuguese club was entitled to freeze not only those match premiums that had already accrued, but also future match premiums that the Russian club may receive from UEFA depending on its progression in the competition.
The FSC stated that, pursuant to case law, future conditional claims can also be frozen provided that they can be sufficiently determined and were not mere expectancies. In the case of future match premiums, it was possible to determine:
- the timeframe during which the claims will accrue;
- the match calendar, i.e. when the matches will be played,
- the amounts of match premiums which are going to be paid out by UEFA for the participation of the Europa League 2012/2013, and
- the distribution key of the total match premiums, i.e. the maximum amount which a team could receive depending on its progression in the competition.
With sufficient parameters to determine the potential future match premiums, the FSC confirmed the freezing order granted at first instance.
According to Swiss jurisprudence, a Swiss freezing order can be granted over any asset or claim situated in Switzerland if the debtor is the legal owner of the asset and if they have a value that can be realized (provided that certain legal requirements are fulfilled). Until this decision, it was debated whether or not assets that have not yet legally accrued to an entity, but that they can expect to receive in the future (subject to certain conditions) may be frozen. The new judgment puts an end to that debate.
One may assume by analogy that what applies to future match premiums that may be won in a competition, should also apply to other types of contributions and compensations that the international sport federations pay to the clubs (or national federations).
For example, FIFA pays out every year USD 250,000 under the Financial Assistance Programme (FAP) to each of its member associations (except to Saudi Arabia because they do not allow women's teams). And after each FIFA World Cup, huge sums coming from TV rights, marketing fees and match tickets are paid to the member associations. On a European level, UEFA paid a total of EUR 905 Million to the UEFA Champions League 2013/2014 contenders, and a total of EUR 209 Million for UEFA Europa League. In the UEFA Champions League each participant was entitled to a minimum payment for participation of EUR 8.6 Million plus bonuses.3 In principle, all these monies can be frozen if the legal requirements are met.
Given the number of sports federations that are domiciled in Switzerland, filing for a freezing order in a Swiss court may be a valid strategy for claimant to consider when looking to enforce a CAS debt claim - in particular if the FIFA sanctioning system cannot otherwise be applied, and/or if the claimant has jurisdictional concerns about enforcing in the debtor’s home state under the New York Convention. It also has the advantage of being an ex parte application, so only once the order is made and enforced will the defendant be notified and can file an appeal.
If you wish to know more about the legal, procedural and strategic steps involved in securing a freezing order in Switzerland, see this author’s related article coming soon: ‘Freezing monies owed from International Sports Federations – a valid alternative to enforce CAS awards?’ in which this author will discuss the principal methods of enforcing a CAS award, before drilling down into the details of a Swiss freezing order.
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- Tags: Contract Law | Court of Arbitration for Sport (CAS) | Dispute Resolution | FIFA | Football | Freezing Order | Governance | Portugal | Regulation | Russia | Swiss Federal Supreme Court (FSC) | Switzerland | UEFA
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Roy is an attorney-at-law, at Probst Partner AG, Zurich, Switzerland. He specialises in litigation and arbitration relating to sports law e.g. disciplinary and ethical matters (challenging sanctions), transfer disputes, training compensation, eligibility issues, TV rights, doping, match fixing, players/agents contracts. He regularly represents clubs, federations, players and coaches before the judicial bodies of FIFA, UEFA and the Court of Arbitration for Sport (CAS). He also has expertise in employment, intellectual property and media law.