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Fleetwood Town 'serious irregularity' arbitration challenge upheld

The High Court has upheld a football team's challenge to an arbitrator's award on the grounds that the arbitrator's failure to hear evidence on a particular point was a "serious irregularity".13 Dec 2018

The case is a rare example of a successful challenge to an award under section 68 of the Arbitration Act, which also demonstrates the "delicate interplay" between FIFA rules and regulations and those of the Football Association (FA) in England, according to sports law experts at Pinsent Masons, the law firm behind Out-Law.com.

The arbitrator had found in favour of AFC Flyde in a dispute over the employment of footballer Dion Charles. Charles had originally been contracted by Flyde but the team had failed to register his contract with either the FA or the National League. Charles left Flyde and joined Fleetwood Town in what Flyde claimed was a repudiatory breach of contract. It sought common law damages against Fleetwood Town, along with damages under article 17 of FIFA's Regulations on the Status and Transfer of Players ('the regulations').

The dispute went to arbitration, where the sole arbitrator dismissed the common law damages claim but allowed Flyde's claim for damages under article 17 of the regulations. However, it later emerged that the arbitrator had privately contacted the FA to determine whether the FA had incorporated the regulations into its own rules. He did this without notifying either of the parties, or giving them the opportunity to make representations on the point.

Under section 68 of the 1996 Arbitration Act, a party to an arbitration can challenge the award in the courts if it can show a "serious irregularity" which leads to a "substantial injustice". Fleetwood Town's case was that by denying it the opportunity to make representations on the applicability of article 17 of the regulations, the arbitrator had breached his statutory duty to act fairly and give the parties a reasonable opportunity to argue their case. This breach was an "irregularity" which caused substantial injustice to Fleetwood, meeting the second stage of the test.

Judge Halliwell, sitting as a judge of the High Court, agreed with Fleetwood that the arbitrator's "making the relevant inquiries and eliciting information without at least sharing the information with the parties and giving them an opportunity to make representations" was an 'irregularity'.

He then went on to consider the second part of the test: whether that irregularity had caused Fleetwood substantial injustice. He considered that it had. Had Fleetwood been given the opportunity to argue its case, it was "realistically possible that information could have been adduced to persuade the arbitrator that, contrary to the conclusions implicit in the arbitrator's award, the FA had considered whether to incorporate [article 17 of the regulations] and decided not to do so".

"Moreover, had [Fleetwood] persuaded the arbitrator that this was the case, it appears, from the tenor of his inquiries, there is a real prospect that the arbitrator would ultimately have concluded that article 17 was not applicable," the judge said. "Had the arbitrator reached such a conclusion... it is reasonably arguable that this conclusion would have been correct in law."

The dispute will now be referred back to arbitration, where the arbitrator will have to properly consider whether article 17 of the regulations is incorporated into the FA rules.

Sports law expert Julian Diaz-Rainey of Pinsent Masons said: "The case demonstrates the delicate interplay between FIFA rules and regulations and those of the FA, which need specialist advice and knowledge to navigate."

"Whilst the arbitrator could approach the FA for assistance in interpreting the FA's rules, he should have given the parties the opportunity to make submissions in relation to those enquiries, providing each party a reasonable opportunity of putting its case and dealing with that of its opponent," he said.

Sports law expert Trevor Watkins of Pinsent Masons added that the case also showed that sporting regulations and processes "must be within the law and are not above it".

"Sport primarily seeks to address and resolve its disputes within its own processes and without interference from the judiciary," he said.

"This case highlights that this only goes so far. The law itself will always operate as a check and balance to any system seeking to self-determine matters. In this regard, we are seeing increasing interest in parties seeking to use the judicial system to correct errors in sporting processes, and we believe this will continue for the foreseeable future," he said.