Sports Legal Blog

IMPACT OF COVID-19 TO SPORTING CONTRACTS (FORCE MAJEURE)

Covid-19 brought about implications that went beyond what anyone could possibly foresee or plan for. Especially in the sporting arena, the widespread nature of the virus led to cancellation and postponement of the sporting calendar to contain the spread of the virus. Some of the most globally awaited sporting programs like the 2020 Olympics to the UEFA Euro were postponed to 2021. The chronology of events led to frustration of contracts and the principle of Force Majeure being invoked. This research article seeks to shed the light on the global impact of Covid-19 to sports as well as the Global stand sporting organizations and tribunal have when it comes to their interpretation of the Force Majeure principle.

June 13, 2020

Steven Chiuri

Written by Steven Chiuri and edited by Khayran Noor  

INTRODUCTION

The world has been at a standstill due to a new strand of virus called the COVID-19 that has ravaged mercilessly around the world. On December 31 of 2019, The Chinese authorities alerted the World Health Organization of an outbreak of a novel strain of Corona virus causing severe illness, which was subsequently name d SARS-CoV-2. 1 The World Health Organization proceeded to declare the new COVID-19 outbreak which originated from Wuhan, China, a global pandemic.2 At the beginning of writing of this article on March 31, it was estimated at least 37,000 people died from the disease and there have been more than 780,000 confirmed cases globally, with more than 166,000 people recovering from the Covid-19 according to data collected by the Johns Hopkins University in the United States .3 As of June 2020, the global number of infection of Covid-19 was reported to be at least 6,400,000 with over 377,000 people estimated to have died resulting from infections caused by the virus with more than 2,900,000 people having recovered from Covid-19.4 The Corona virus family is responsible for illnesses ranging from the common cold to more severe diseases such as severe acute respiratory syndrome (SARS) and Middle East respiratory syndrome (MERS), according to the WHO.5They are usually predominant in animals and some can be transmitted between animals and humans. This article seeks to investigate the resulting impact COVID-19 has had globally- at the beginning of the COVID-19 pandemic and the current situation. It will also discuss the impact COVID-19 has had to the sporting programs and the principle of Force Majeure to sporting contracts in relation to COVID-19.  

EFFECTS OF COVID-19 TO THE GLOBAL ECONOMY (AS OF END OF MARCH 2020)

The Covid-19 pandemic has had a far-reaching consequence beyond the spread of the disease despite the efforts to quarantine and contain it. As the pandemic spreads around the globe, concerns have shifted from supply-side manufacturing issues to decreased business in the services sector.6 The supply shortage is expected to affect a great deal of sectors due to panic buying experienced globally, increased demand of goods to fight the COVID-19 pandemic and the disruption to factories and logistics in mainland China. There have been widespread reports of supply shortages of pharmaceuticals,7 with many areas seeing panic buying and consequent shortages of food and other essential grocery items.8 Particularly the technology industry, in particular, has been warning about delays to shipments of electronic goods. The United Nations warns that the protectionist measures by national governments during the COVID-19 crisis could provoke food shortages around the world.9 The current lockdown by states is going to have significant ramifications in the food and agricultural sector. The food sector comes under the critical infrastructure sector, along with healthcare and emergency services. As governments impose lockdowns in their countries across the world, recruitment of seasonal workers will become impossible unless measures are taken to ensure vital workers can still move around, while preventing the virus from spreading further.10 Hence there will be a shortage of field workers brought on by the virus and a move towards protectionism – tariffs and export bans – means more problems could quickly appear in the coming weeks. As seen so far already,11 Kazakhstan, according to a report from Bloomberg, has banned exports of wheat flour, of which it is one of the world’s biggest sources, as well as restrictions on buckwheat and vegetables including onions, carrots and potatoes. Vietnam, the world’s third biggest rice exporter, has suspended rice export contracts. Russia, the world’s biggest wheat exporter, may also threaten to restrict exports, as it has done before, and the position of the US is in doubt given the US President Donald Trump’s eagerness for a trade war in other commodities. On 25th February, it was expected that Australia, mainland China, and Hong Kong would have the most direct economic impacts from the disruption,12 with Hong Kong already in a recession at the time after a long period of ongoing protests since 201913and Australia widely expected to be in a recession with its GDP contracting by 0.2% to 0.5% for 2020,14 . Morgan Stanley expects the economy of China to grow by between 5.6% (worst-case scenario) to 5.9% for 2020.15 Dr. Panos Kouvelis, director of “The Boeing Center” at Washington University in St. Louis, estimates a $300+ billion impact on world’s supply chain that could last up to two years.16 The Organization of the Petroleum Exporting Countries reportedly “scrambled” after a steep decline in oil prices due to lower demand from China.17The Global stock markets fell on 24 February 2020 due to a significant rise in the number of COVID-19 cases outside mainland China.18 By 28 February 2020, stock markets worldwide saw their largest single-week decline since the 2008 financial crisis.19 The Global stock markets crashed in March 2020, with falls of several percent in the world’s major indices. As the pandemic spreads, global conferences and events across technology, fashion, and sports are being cancelled or postponed. The monetary impact on the travel and trade industry is yet to be estimated, it is likely to be in the billions and increasing.

THE EFFECT OF GLOBAL ECONOMY (AS OF JUNE 2020)

The rapid geographical spread of the COVID-19 and the high infection rates has resulted into disruption of global economic activities and it is profoundly impacting all types of businesses. With temporary cessation of some businesses and activities slowing down for many, the consequences of the pandemic are even worse for the global economy than the ones that resulted from the Financial Crisis in 2007-2008. The first country to suffer from the impact of Covid-19 is China, with the second largest economy worldwide. The lockdown which required a number of significant manufacturing companies and retail businesses to close or reduce their activities, has dreadfully slowed down the Chinese economy.20 According to the report by the China Enterprise Confederation (CEC) on March 6th, over 95 percent of the 299 large manufacturers surveyed have seen a revenue drop. In terms of consumption, compared to 2019, retail sales in January and February went down 20.5 per cent. Even though the consumption started to be impacted by the pandemic in January, all retail sales apart from necessities were frozen as of February for almost the full month. China has been able to stop the spread of the virus and has already opened up their economy with manufacturers having returned to full capacity. However, with the rest of the world going through a similar form of lockdown, the country’s economy is undergoing a second hit with the overseas market shutting down. 21Based on a paper from IMF economists, China will suffer from the cutback in global demand which accounts for 20 percent of the Chinese’s economy.22 In the United States for instance, the economists of Morgan Stanley have predicted a drop of 30 per cent in consumption and a level of unemployment reaching approximately 12.8 per cent in the second quarter.23 Indeed, the impact of the pandemic cannot be taken lightly as it affects everyone. The travel industry is among the sectors suffering the hardest risks due to the travel restrictions implemented by governments worldwide with the aviation industry in the throes of an unprecedented crisis. Air travel companies especially have been forced by the current air travel collapse due to COVID-19 to find ways to survive as businesses. With companies like Air Canada having to lay off 38,000 people, Emirates Group laying off 30,000 of its employees, British Airways laying off also 12,000 people and airplane manufacturer company Boeing laying off 6700 of its workforce.24 With the uncertainty lying beyond COVID-19, we can expect the global market to be quite volatile with no global growth this year. According to the Organization for Economic Cooperation and Development (OECD), 2020 can see an estimated 2.4 per cent decline for the global economy before a growth of 3.3 per cent next year. Tom Rafferty, main economist for China at The Economist Intelligence Unit, suggests that, by next year, the global demand and supply should be back to normality. To get to normalcy, policymakers have been obliged and encouraged to review policies in order to mitigate the severity of the impact, but the virus remains the last factor which will decide when each country can get back to its ordinariness.25

IMPACT OF COVID 19 TO THE SPORTS INDUSTRY

In recent weeks, various sports organizations around the world have been forced to confront the reality that the Covid-19 is likely to have a significant impact on the industry – not just in the short term, but also the long term.26As the virus began to spread, an increasing number of matches and sporting events were either staged behind closed doors, postponed or, increasingly, cancelled outright. The impact of the COVID-19 crisis is diverse depending on the area that we analyze. In professional sports, where we can talk about large stadiums, television rights, sponsors and where there really is a significant volume of business in terms of income and a diversification of this income by different agents, the impact is going to be important, but it may be bearable up to a certain point.27 The professional sport is usually dependent on revenue from television rights, which are based on a contract with strong legal conditions carefully reviewed by specialists. Therefore, an insurance clause covering a force majeure, such as the COVID-19, is included in this contract and may possibly safeguard a good part of the forecast or estimate of income that the clubs have had, in this case.28 The full assessment of the impact cannot be foreseen right now because, logically, it is still unsure if sports competitions, in the rest of the world, are going to take place and with the structure and forecast that existed when the calendar was prepared at the beginning of the season. 29But, if they can be carried out, the impact is obviously going to be from an economic aspect. The COVID-19 outbreak has decimated the sporting schedule and affected some of 2020’s biggest events. One of the biggest headlining events in 2020 have been either cancelled or postponed while others simply called off. A range of sports have had to take action to prevent the spread of the virus, with Euro 2020 and the Olympics being put on hold for 12 months and whilst postponements of almost every sporting fixture is being considered.

The following are Sporting events that have been affected by the pandemic:30 (AS OF END OF MARCH 2020)

Football
  1. Football in Russia has been The Russian league was the best-attended sports competition still operating in Europe last weekend, with more than 33,000 fans at one of its games, but the Russian Football Union agreed to immediately suspend all competitions at a meeting on March 17.
  2. The African Nations Championship 2020 soccer tournament scheduled for April in Cameroon has been postponed indefinitely, the African Football Federation said in a statement on March.
  3. This year’s Copa America has been postponed until 2021, the South American Football Confederation (CONMEBOL) said on March The 12-team tournament had originally been scheduled to take place from June 12 to July 12 in Colombia and Argentina.
  4. The Euro 2020 tournament has been postponed until 2021, European football’s governing body UEFA said in a statement on March UEFA said that the 24-team tournament, which was due to be staged in 12 nations across the continent from June 12 to July 12 this year, would now take place from June 11 to July 11 2021.
  5. In England, all elite football has been suspended until at least April
  6. Ligue 1 and Ligue 2, the top two divisions in France, are suspended until further
  7. The German Football League suspended games in the Bundesliga and Bundesliga until at least April 3, with a review to be undertaken on March 30.
  8. Major League Soccer announced the suspension of matches for 30 days with immediate effect
  9. UEFA on April 1 suspended all Champions League and Europa League matches “until further notice”.
  10. All national team games scheduled for June have also been
  11. FIFA and the Asian Football Confederation have agreed to postpone the Asian World Cup qualifying matches in March andAll Scottish football was suspended with immediate effect and the Irish Football Association suspended the current season in Northern Ireland until at least April The Football Association of Ireland announced all football activity under its jurisdiction was suspended until March 29.
  12. Domestic sporting action in Italy – including Serie A matches – was suspended until April
  13. New seasons in the Chinese, Japanese and South Korean professional leagues have been
  14. Asian Champions League matches involving Chinese clubs Guangzhou Evergrande, Shanghai Shenhua and Shanghai SIPG have been The start of the knockout rounds has been moved back to September.
  15. The Confederation of African Football has postponed two rounds of the 2021 Africa Cup of Nations qualifiers scheduled for March 25-31.
  16. An exhibition match between Mexico and Colombia on May 30 at Denver has been
    1. Both events were to take place inThe three divisions of England’s National League have also been suspended
      Athletics
        Marathons  
      1. The London Marathon, which was scheduled to take place on April 26, has been postponed until October
      2. Boston Marathon, originally scheduled for April 4, is now expected to take place on September
      3. Amsterdam, Paris and Barcelona marathons have also been
      4. In Japan on March 1, the Tokyo Marathon, which usually attracts 300,000 participants, was restricted to only 200 elite
      5. Runners start at the Tokyo Marathon in Tokyo,
        Olympic Games   The International Olympic Committee and Japan’s Prime Minister Shinzo Abe have concluded the Tokyo 2020 Olympics must be postponed. The decision was made after holding out for weeks as local organizers and the IOC came under increasing pressure from athletes, national Olympic bodies and sports federations. The event will now take place from July 23 to August 8, 2021. The World Athletics Indoor Championships, scheduled for Nanjing from March 13 to 15, have been postponed until next year.
      Formula 1
      The Azerbaijan Grand Prix became the latest postponement in the calendar, meaning there will be no Formula One races until the middle of June at the earliest. The race at the Baku City Circuit was scheduled for June 7. Formula 1 has cancelled the season-opening Australian GP after a McLaren team member contracted the COVID-19. The race was scheduled to take place on March 15. The Bahrain Grand Prix and the Vietnam Grand Prix have been postponed. Those events were first scheduled to take place on March 20-22 and April 3-5 respective. The Bahrain Grand Prix in Manama was due to be held without fans before organizers decided to postpone the race The Chinese Grand Prix in Shanghai, which was scheduled to take place on April 19, was also called off. Races in the Netherlands, Spain and Monaco in May have all been postponed, the governing motorsport body FIA said on March 19.
      Racing
      The Indianapolis 500 scheduled for May 24 has been postponed until August 23 and will not run on Memorial Day weekend for the first time since 1946.The French MotoGP initially scheduled for May 15-17 in Le Mans, was postponed because of the “ongoing COVID-19 outbreak”, organizers announced on April 2.
      Tennis
      The professional tennis tour – men’s and women’s – has been suspended until June 7, with all clay-court tournaments in Europe cancelled. ATP and WTA rankings have been frozen until further notice. All ATP and WTA tournaments in the Spring clay court swing will not be held as scheduled. The professional tennis season is now suspended through June 7, 2020. The French Open has been postponed until September 20 – October 4, organizers said on March 17. The clay-court major was originally scheduled to be played from May 24-June 7. French Open postponed due to COVID-19 pandemic The Fed Cup tennis finals in Budapest has been postponed. The revamped 12-team women’s competition scheduled for April 14-19 as well as a series of play-off ties were called off “in response to COVID-19 health concerns”, the ITF said in a statement. New dates have yet to be announced. There was also disappointment for tennis fans in California as the BNP Paribas Open in Indian Wells was cancelled. Also cancelled were the Xi’an Open, scheduled for April 13 to 19, and Kunming Open, penciled for April 27 to May In the United Kingdom, the Main Board of the All England Club (AELTC) and the Committee of Management of The Championships on April 1 decided to cancel the Wimbledon grass court Grand Slam, formally known as The Championships 2020. The 134thChampionships will instead be staged from 28 June to 11 July 2021.
  17. In South Korea, the football league season restarted on May 8 after several weeks of
  18. In Germany, the top-flight Bundesliga resumed its season on May 16 behind closed doors after a two-month
  19. The English Premier League, Italy’s Serie A and Spain La-Liga are set to resume in June after a near three-month
  20. Formula One plans to start its season behind closed doors in Austria from July 3-5, followed by the British Grand Prix at Silverstone under similar
  21. In rugby, The National Rugby League (NRL) of Australia became the first major rugby sporting event to resume as of May
  22. The rest of the Dutch football league as well as French Professional leagues has remainder of their season was cancelled with leading team Ajax (Dutch) not declared champion, while PSG declared the French
  23. In Africa, most of the nations have cancelled their respective national leagues following their laid down Federation’s Force-Majeure protocols (where the champions and relegation of each league will be decided by the standings at mid-season) while other Federation choose not to have champions declared, promotion or 32
  24. Basketball, Europe’s top two club basketball competitions have terminated the current season without naming any winners due to the COVID-19 pandemic with the new 2020-21 Euro League and Euro Cup seasons to start on October 1 and September 30
 

THE CONTRACTUAL SITUATION CREATED BY COVID19 IN SPORTS (FORCE MAJEURE)

The attempts being made to combat the spread of COVID-19 has led to cancellation of a number of major events as evidenced above with more likely to follow. The likelihood of suspension or cancellation of such events is likely to activate the contract clause of ‘Force Majeure’ leading to review of contracts. Force Majeure is ‘an event or effect that can be neither anticipated nor controlled. It is a contractual provision allocating the risk of loss if performance becomes impossible or impracticable, especially as a result of an event that the parties could not have anticipated or controlled.’ 33 Force majeure clauses alter parties’ obligations and/or liabilities under a contract when an extraordinary event or circumstance beyond their control prevents one or all of them from fulfilling those obligations. Force majeure clauses sometimes provide for extension of time, suspension of time, or termination in the event of continued delay or non-performance.34 The cancellation of sporting events has had a wide-ranging impact for those who would have attended or participated in the events, sponsored, hosted or organized the event, supplied products and services or indeed the vast audiences across media, broadcasting and digital outlets who would have witnessed the events from afar.35 For all, however, the cancellation creates the potential unraveling of the carefully pieced together framework of financial certainty that is underpinned by the commercial contribution of them all – whether by ticket or hospitality payments, for media rights, sponsorship or simply for all those businesses who would have relied on such events for income this year.36 Federations as well as event organizers and participants are confronted with a number of sporting and financial challenges, as they will not be able to meet the legal obligations set forth in various sponsorship, broadcasting or other contracts.37 TV right holders are suspending the payment of the amounts due for broadcasting competitions that are no longer taking place. On reflection, we can see the costs and losses behind the suspension of sporting events. However, the conditions of force majeure are to be narrowly interpreted since it introduces an exception to the binding force of an obligation and only when it is considered impossible for a party to fulfill its obligations. 38Disputes will undoubtedly arise with respect to whether compensation is due and who is to be held liable. The principle of force majeure is generally used for unexpected circumstances outside a contracting party’s reasonable control that, having arisen, prevent it from performing its contractual obligations.39The position regarding force majeure differs across jurisdictions. Basically a force majeure clause might set out a list of specific events, such as an epidemic, or set out broad criteria for determining whether the event constitutes activation of force majeure clause or not. If the event invokes the Force Majeure clause, the party will be excused from its obligations under the contract, without any damages being payable. Thus, in considering invocations of force majeure clauses in contracts on account of the COVID-19 pandemic, care must be taken to check:40
  1. which event hinders performance, the pandemic itself or any consequential actions, like travel curbs, curfew orders or lock-down orders, taken on account of the pandemic;
  2. what covenant and element of performance is directly inhibited by the event;
  3. does the event make impossible or seriously hinder the performance of the covenant, or does it make it inconvenient or commercially onerous;
  4. what is the term of the event that directly impacts covenant performance;
  5. Non-performance by a party is excused if that party proves that the non- performance was due to an impediment beyond its control and that it could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its
  6. When the impediment is only temporary, the excuse shall have effect for such period as is reasonable having regard to the effect of the impediment on the performance of the
  7. The party who fails to perform must give notice to the other party of the impediment and its effect on its ability to If the notice is not received by the other party within a reasonable time after the party who fails to perform knew or ought to have known of the impediment, it is liable for damages resulting from such non-receipt.
  8. Nothing in this article prevents a party from exercising a right to terminate the contract or to withhold performance or request interest on money
    1. Whether the parties attempted to reach a mutual agreement;whether the force majeure clause excuses consequential actions of non or delayed performance; and
      1. what remedies are provided for in the force majeure clause in case of continued non- performance due to the force majeure

      Legal Framework in Relation of Force Majeure

        The Principle of Force Majeure is covered by various International statutes such as, The Principles of European Contract Law; PECL Article 8:108: Excuse Non-Performance of a contract Due to an Impediment41
      • A party’s non-performance is excused if it proves that it is due to an impediment beyond its control and that it could not reasonably have been expected to take the impediment into account at the time of the conclusion of the contract, or to have avoided or overcome the impediment or its consequences.
      • Where the impediment is only temporary the excuse provided by this article has effect for the period during which the impediment However, if the delay amounts to a fundamental non-performance, the obliged may treat it as such.
      • The non-performing party must ensure that notice of the impediment and of its effect on its ability to perform is received by the other party within a reasonable time after the non-performing party knew or ought to have known of these The other party is entitled to damages for any loss resulting from the non-receipt of such notice.
      The UNIDROIT Principles of International Commercial Contracts provides for Force Majeure in (Art. 7.1.7):42
      • Non-performance by a party is excused if that party proves that the non- performance was due to an impediment beyond its control and that it could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its
      • When the impediment is only temporary, the excuse shall have effect for such period as is reasonable having regard to the effect of the impediment on the performance of the
      • The party who fails to perform must give notice to the other party of the impediment and its effect on its ability to If the notice is not received by the other party within a reasonable time after the party who fails to perform knew or ought to have known of the impediment, it is liable for damages resulting from such non-receipt.
      • Nothing in this article prevents a party from exercising a right to terminate the contract or to withhold performance or request interest on money
      Force majeure clauses sometimes provide for an extension of time, suspension of time, or termination in the event of continued delay or non-performance. Swiss law does not contain a general force majeure defense, but the notion of “force majeure” is recognized by the Swiss courts. 43In addition, Swiss law sets forth related defenses such as Article 119 of the Swiss Code of Obligations which provides that “[a]n obligation is deemed extinguished where its performance is made impossible by circumstances not attributable to the obligor.” Also related to the notion of “force majeure” is the concept of “undue hardship” (or clausula rebus sic stantibus) which allows a party to the contract to invoke a change in circumstances that is so as to make performance become excessively burdensome and obtain a modification of the contract or its termination.44 This notion of “undue hardship” is recognized in Swiss Law and Swiss law tend to govern most contracts concluded by many international sports federations based in Switzerland.45 The Swiss Federal Tribunal defines force majeure as being an event that is unpredictable, extraordinary and that occurs with a force that is irresistible. 46International law provides that the force majeure can excuse a party to a contract from its obligations when certain circumstances arise beyond the party’s control making performance impossible. In principle, three cumulative requirements are necessary for the application of the principle of force majeure: 47
      • performance under the contract must be rendered
       
      • the event giving rise to the impossibility of performance must be unforeseeable; and
       
      • the situation must not be attributable to the party seeking to invoke the The mere fact that meeting the obligations has become more difficult, financially, or otherwise does not suffice.

      CASE LAW

      While the COVID-19 pandemic is likely to meet the conditions of unpredictability and non- attribution, the material impossibility of performing the obligation will have to be determined on a case-by-case basis.48 An in-depth, situation-specific analysis of the rights and obligations under the relevant contract and in the context of the specific jurisdiction in question will be required. What is the experience of sports tribunals with cases of force majeure?49
      • In Court of Arbitration for Sport (CAS) case Alexandria Union Club Juan José Sánchez Maqueda & Antonio Cazorla Reche, the panel stated that the Egyptian civil war which put an end to the 2012-13 football season and which admittedly occurred on 1 April 2013 constituted force majeure.
      • A similar approach was adopted by the Basketball Arbitral Tribunal (BAT) in its case Anis Georges Feghali Cercle sportif maristes, Champville club. According to BAT, the club established the existence of a type of force majeure ˝[…] having disrupted and negatively affected its organization and activities during at least the first half of the 2013-2014 season, i.e. from August to December 2013, since the Club had no responsibility for and no control over the postponement of the Lebanese first division
      basketball championship during that period.” Furthermore, BAT added that ˝disruption [had] complicated the Club’s financial situation due to absence of official games and the requirements of sponsors˝. Other cases, however, reflect extremely different views:50
      • After Togo’s withdrawal from the 2010 African Cup of Nations 2010 due to a terrorist attack that killed two team members, the African Football Federation (CAF) imposed on the Togo Football Federation (TFF) a ban on playing qualifiers for the next two African Cup of Nations competitions and a 50,000 USD The decision was based on a provision of Art. 78 of the Regulations of the Orange Africa Cup of Nations ANGOLA 2010 (Rules); CAF did not consider the terrorist attack to be a force majeure event, which, according to Art. 80 of the Rules leave the non-appearance of the team without sanctions. CAF justified the decision by noting that some Togo players publicly expressed they were ready to compete, but were discouraged by the Togo government. However, TFF’s appeal to CAS was successful in the mediation process.
       
      In 2015, Morocco cancelled the hosting of the African Cup of Nations tournament due to the danger of Ebola spread after WHO had declared the epidemic. In its award Court of Arbitration for Sport (CAS)) Panel found that the Royal Moroccan Federation of Football (FRMF) was not entitled to postpone the tournament due to concerns about the Ebola virus. The Panel reasoned that Ebola was not a force majeure event because it did not make the organizing of the tournament impossible; it only made it difficult. The decision and its reasons were taken with extreme caution. Very specific circumstances were pointed out, as was the highly fact-specific nature of the case: Indeed, the decision was partially dependent on expert evidence suggesting that, at the time, Ebola was transmitted by direct contact with bodily fluids and there was no proof it could be transmitted through the air or from touch.If a force majeure clause is included in the contracts, the implications of invoking a force majeure clause will depend on its specific wording and the devil will be in the details. It may well be that the force majeure relieves the parties of the obligations under the contract going forward but that liabilities remain in terms of the services already rendered even if they cannot be continued in the future.51This may also require the re-negotiation of a contract going forward or still require some form of compensation/restitution. A Player’s right to be compensated for performing his services under an employment contract (or any other type, e.g., service contract) commenced between a player and a club is undisputable.52 Should a club fail to respect its contractually-agreed financial obligations towards a player, a question of wrongdoing arises. Consequences of a non-fulfilment of a contractual obligation is very much dependent on the applicable law and sports regulations as well as its construction. The Interpretation will be by applying general considerations of justice, fairness and equity (i.e. ex aequo et bono), or the provisions of Swiss law (SCO) which – in the absence of a specific law chosen by the parties – subsidiarity applies before the CAS.53 The provisions of R45 of the CAS Code reads as follows: “[T]he Panel shall decide the dispute according to the rules of law chosen by the parties or, in the absence of such a choice, according to Swiss law. The parties may authorize the Panel to decide ex aequo et bono.”54 As the majority of the leagues are in hiatus, clubs have chosen to suspend their activities. Clubs that do not suspend their sporting activities and request their players to continue with team practices cannot invoke a force majeure exception to justify their potential non- fulfilment of their contractual financial obligations. To do so would be against principles of justice and fairness. It is well established CAS case-law that lack of financial means to satisfy an obligation of payment can generally not be invoked as a justification for the non-compliance with the club’s financial obligation.55However, the above-stated CAS view shall not be applied to the situation at hand, where leagues are suspended due to an objective impediment beyond the control of the obliged party, that is unforeseeable, that cannot be resisted, i.e. force majeure.56In the above-quoted force majeure case of Alexandria Union Club57The Panel reiterated that the club was prevented from performing all or part of its contractual obligations and should thus be released from further performance of the obligations concerned. Similarly, the Basket Ball Arbitral Tribunal (BAT)Arbitrator Anis Georges Feghali called it “fair and just” to split the financial burden of force majeure consequences between the club and the player.58 Accordingly, where an arbitration body acknowledges force majeure, clubs may not be obliged to fully fulfil their financial obligations during the period of hiatus. It should be kept in mind that these deductions do not apply to situations where a club was already in breach of contract due to outstanding payments prior to the occurrence of force majeure. Such payments are considered compensation for players’ previously rendered services and shall not be excused due to a club’s financial difficulties caused by force majeure. FIFA as the football governing body establishes fundamental principles and basic rules that regulate the relationships that arise from football. Hence, FIFA’s Regulations on the Status and Transfer of Players (RSTP) provide “global and binding rules concerning the status of players, their eligibility to participate in organized football, and their transfer between clubs belonging to different associations.” 59. The RSTP governs vital aspects of football law by regulating player and coach employment contracts and transfer agreements on an international scale.60 The RSTP requires compliance of football clubs with their financial obligations towards players, coaches and other clubs. It also establishes that employment contracts may only be terminated upon expiry of the contractual term or by mutual agreement, unless either party has “just cause” to terminate a contract.61 In the event of a breach of these provisions, the RSTP set out the sanctions that may be imposed by FIFA’s decision-making bodies, namely the Players’ Status Committee (PSC) and the Dispute Resolution Chamber (DRC), within their respective scopes of jurisdiction. (Articles 23-24).62FIFA through the Bureau of the FIFA Council approved certain guidelines that provides some factors to be taken into account when assessing the merits of an argument based on force majeure:63
    1. The economic situation of the relevant parties;
    1. The proportionality of any contractual amendments addressing remuneration and other benefits; and
    2. Whether the decision in question was applied generally (all the players and/or coaches), or only to specific
    These FIFA guidelines are intended to address circumstances in which agreements cannot be performed as originally agreed by the parties due to frustrations caused by Covid-19.

    CONCLUSION

    The applicability and definition of the concept of force majeure varies significantly across jurisdictions within their legal systems. In some jurisdictions, force majeure applies even if a contract does not contain a clause to be implied under the terms of the contract. Whereas, in English/Common Law, the doctrine can only be relied upon by the parties to a contract where and only if, it is expressly provided for under the contract. This is to say that, specific national laws, and/or relevant contractual provisions, including sporting rules and regulations will therefore determine if force majeure can be relied upon to avoid and address a contractual obligation. Sport Governing Bodies (SGBs) recognize CAS as the relevant sports arbitral body to resolve disputes relating to international sports disputes between the SGBs, its member associations, national confederations/bodies, clubs, players, officials, agents and therefore, require CAS to apply the relevant sporting rules and regulations in the development of the jurisprudence on force majeure. Ultimately, all stakeholders in the sporting ecosystem globally have been and continue to be considerably affected by the postponement and/or cancellation of events scheduled to take place during this period. The effects of COVID-19 on the sporting industry has made emphasis on the concept of force majeure to indefinitely take center stage as stakeholders are faced with legal and financial loss and costs brought upon them due to the virus. However, parties affected by the COVID-19 should take appropriate steps to record and document the steps it is taking to prevent or mitigate the impact of the pandemic on its ability to perform its obligations under the contract in question. It is therefore crucial to seek legal counsel to review, re-evaluate and re-negotiate contracts, and to adopt a crisis management system to cater for different scenarios and repercussions that shall need to be addressed such as legal obligations, insurance policies covers on refunds and costs already incurred, employees alternative rights and media response. Lastly, stakeholders should keep abreast and informed on future governmental actions, announcements and restrictions related to the outbreak and after the situation has been maintained, as these will determine whether parties can rely on the force majeure. It is with great hope that we will soon beat COVID-19, but the legal battle will prevail for a long time after with no winners at the end of the race. However, what is certain is that the concept of force majeure and the clause which is usually inserted as a ‘boilerplate’ clause, will receive greater attention and importance when negotiating and drafting contracts.  

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Force Majeure. [online] Academic Dictionaries and Encyclopedias. Available at: https://blacks_law.enacademic.com/11167/force_majeure [Accessed 2 June 2020]. 34Rainey, J., 2020. [online] Pinsentmasons.com. Available at: https://www.pinsentmasons.com/out- law/analysis/coronavirus-force-majeure-sport-entertainment [Accessed 6 April 2020]. 35 Ibid, (n34). 36 Ibid, (n26) 37Whitecase.com. 2020. COVID-19 And Cancellations Of Sports Events: A Story Of Force Majeure And The Search For Compensation | White & Case LLP. [online] Available at: https://www.whitecase.com/publications/alert/covid- 19-and-cancellations-sports-events-story-force-majeure-and-search [Accessed 6 April 2020]. 38 (Pinsentmasons.com, 2020) https://www.pinsentmasons.com/out-law/guides/covid-19-force-majeure-clause accessed 14 April 2020. 39Nortonrosefulbright.com. 2020. Force Majeure/Hardship Clauses and Frustration In English Law Contracts Amid COVID-19. [online] Availableat:https://www.nortonrosefulbright.com/en/knowledge/publications/b54cf723/force- majeure-hardship-clauses-and-frustration-in-english-law-contracts-amid-covid-19 [Accessed 6 April 2020]. 40 Lexology.com. 2020. Force Majeure Impact On Sports Events | Lexology. [online] Available at: https://www.lexology.com/library/detail.aspx?g=bf67fbeb-b810-479f-83a7-2b6a6072eb13 [Accessed 10th June 2020]. 41Berger, K., 2020. Principles of European Contract Law – PECL | Trans-Lex.Org. [online] Trans-lex.org. Available at: https://www.trans-lex.org/400200/_/pecl/ [Accessed 6 April 2020]. 42Unidroit.org. 2020. Article 7.1.7 (Force Majeure). [online] Available at: https://www.unidroit.org/instruments/commercial-contracts/unidroit-principles-2010/404-chapter-7-non- performance-section-1-non-performance-in-general/1050-article-7-1-7-force-majeure [Accessed 6 April 2020]. 43 Ibid, (n28) 44 Ibid, (n28) 45 Ibid, (n28) 46Ibid, (n27) 47Force majeure is defined in Art. 23 (1) of the International Law Commission (ILC) Articles as “the occurrence of an irresistible force or of an unforeseen event, beyond the control of the State, making it materially impossible in the circumstances to perform the obligation”. See, e.g. Rainbow Warrior (New Zealand v France) France–New Zealand Arbitration Tribunal (1990) 20 RIAA 215, p. 253. See also e.g. KarahaBodas Award, ICC Case No. 2508, Award of 1976. para. 197: “There is not force majeure if the relevant event is not insurmountable. 48 Ibid, (n28) 49Luka Milanovi, D., 2020. COVID-19: The Impact On Players’ Contractual Rights & Obligations (Key Principles From Case Law) – Lawinsport. [online] Lawinsport.com. Available at: https://www.lawinsport.com/topics/item/covid-19- the-impact-on-players-contractual-rights-obligations-key-principles-from-case-law [Accessed 6 April 2020]. 50 Ibid, (n37) 51 Ibid, (n28) 52 Ibid, (n37) 53 Ibid, (n37) 54Tas-cas.org. 2020. Code: Procedural Rules. [online] Available at: https://www.tas-cas.org/en/arbitration/code- procedural-rules.html [Accessed 6 April 2020]. 55FK Olimpik Sarajevo v. FIFA, the Football Association of Bosnia and Herzegovina, Jurisprudence.tas-cas.org. 2020. [online] Available at: https://jurisprudence.tas-cas.org/Shared%20Documents/5496.pdf [Accessed 6 April 2020].  56 Ibid, (n37) 57Alexandria Union Club v. Juan José Sánchez Maqueda & Antonio Cazorla Reche, award of 26 August 2014, para. https://jurisprudence.tas-cas.org/Shared%20Documents/3463,%203464.pdf, last accessed 6th April 2020, 58BAT 0529/14, Anis Georges Feghali v. Cercle sportif maristes, Champville club, award of 31 July 2014, paras. 50 et seq, https://www.fiba.basketball/en/Module/85132837-66aa-4ff3-a063-8cdfe44ea14d/0ada486c-0343-423f-9c18- 58e83fe4ea8a last accessed 6th April 2020 59 (Resources.fifa.com, 2020) https://resources.fifa.com/image/upload/regulations-on-the-status-and-transfer-of- players-march-2020.pdf?cloudid=pljykaliyao8b1hv3mnp accessed 10 June 2020 60 Allan, F., 2020. Force Majeure In The Case Law Of International Sports Tribunals | ICLG.Com Briefing. [online] ICLG.com/briefing. Available at: https://iclg.com/briefing/12424-force-majeure-in-the-case-law-of-international- sports-tribunals [Accessed 10 June 2020]. 61 Ibid, (n60) 62 Ibid,(n60) 63 Ibid,(n60)