CAS has largely adopted a civil law approach while dealing with force majeure provisions. According to CAS jurisprudence, force majeure implies an objective impediment and not a personal one that is beyond the control of the “obliged party”, that is unforeseeable, that cannot be resisted, and that renders the performance of the obligation impossible.
The Court has always adopted a narrow and stringent test in determining whether the event constitutes a force majeure event. PAOK FC v. Union des Associations Européennes de Football (UEFA)was one of the first cases that addressed the issue of force majeure. This case was related to the ban on the club by UEFA due to the delay in submission of the club license that is usually issued by the national federation. The club had argued that the delay in issuance by the national federation constituted force majeure as the same was out of the club’s control. CAS rejected this argument and held that it was due to the club’s negligence and laid down the following;
“17. Force majeure, indeed, implies an objective, rather than a personal, impediment, beyond the control of the “obliged party”, that is unforeseeable, that cannot be resisted, and that renders the performance of the obligation impossible (see CAS 2002/A/388, published in Digest of CAS Awards III 2001-2003, pp. 516 ff.) In addition, the conditions for the occurrence of force majeure are to be narrowly interpreted, since force majeure introduces an exception to the binding force of an obligation.”
Despite such enabling provisions and comments, very rarely does the defense of force majeure succeed at CAS. This shows the stringency with which the Court applies the principle. CAS had once rejected the invocation of force majeure on grounds of a “disease spreading among the team’s players” . There is a significant difference between a disease spreading among the players and an officially declared pandemic by the World Health Organization.
Alexandria Union Club v. Sanchez & Cazorla was one such case where an employment dispute had arisen between an Egyptian football club and 2 of its coaches. Their employment was unilaterally terminated following cancellation of the 2012-13 Egyptian football season because of political events in Egypt. The defense of force majeure was allowed in this case and the sole arbitrator had held that:
“80. …the Egyptian civil war is an event of force majeure, which is beyond the Parties’ control, which the Parties could not have reasonably provided against before entering into the contract, which could not reasonably have been avoided or overcome, and which is not attributable to any of the Parties. Under these circumstances, the Sole Arbitrator finds that the events which put an end to the 2012/2013 season, and which admittedly occurred on 1 April 2013, prevented the Appellant from performing all or part of its contractual obligations. As a result, and as of 1 April 2013, the Appellant must be released from further performance of the obligations concerned.”
The key factor in all these situations is the impossibility of performance. It is important to draw a distinction between impossibility and commercial difficulty. CAS relied on this factor in Fédération Royale Marocaine de Football v. Confédération Africaine de Football . It was in 2015 that the world, especially the African continent faced a similar situation with the outbreak of the Ebola virus. The Moroccan government had claimed force majeure to postpone the African Nations Cup keeping in mind the medical risks and this was rejected by Confederation of African Football. CAF argued that it was still possible to host the tournament albeit with more difficulty. Accordingly, Equatorial Guinea successfully conducted the tournament with necessary safety measures in place. CAS had held that the Ebola outbreak did not constitute a force majeure event as it did not make hosting the event impossible and fined Morocco $1 million.
ENGLAND
The default position under English law is that every party to a contract has a strict liability when it comes to the performance of their respective contractual obligations. Which means that one cannot escape liability by simply citing difficulty or expensiveness of performance. The two key exceptions recognized by the jurisprudence are force majeure and principle of frustration. Even during the outbreak of SARS and Ebola, there were no reported cases that directly dealt with the issue of force majeure as most of the long-term international contracts usually adopt arbitration as their mode of settlement. This makes the awards confidential and inaccessible.
The important thing to note is that the parties cannot rely on force majeure defense if their contract does not contain an express provision to that extent. Since there is no definition provided under the English law, parties will have to look into the exact words used in the clause to ascertain what constitutes force majeure and if a pandemic is a part of that list. The limited data available on how the judicial system has treated force majeure defenses shows that the parties have not succeeded unless the force majeure clause in their contracts is “tailor-suited” to cover instances of pandemic or epidemic. While invoking this defense, it is imperative that the obligation is impossible to perform rather than inconvenient in the existing situation. Burdensome of a particular situation is not the standard to invoke the provision.
But if there is no such express provision then the parties can rely on common law doctrines like that of frustration, impossibility and impracticability. In case these doctrines are applied, it will only lead to the extreme step of termination of the contract, unlike force majeure where a party’s performance of its obligations can be excused without terminating the contract.
Premier League’s suspension of the games until further notice from the Government has put the league and its clubs in a difficult situation. Since the duration of the lockdown remains unknown, the league like other tournaments are looking into the alternative of playing behind-closed-door games. One reason why they would want to resume the season at the earliest would be to avoid financial liabilities to broadcasters. The league follows a system where the revenue is divided between the teams depending on their appearances, final positions and fixed participation fees.
The broadcasters are said to have paid the entire amount for the 219-2020 season in 2 installments. If the broadcasters invoke force majeure and request payback, both the league and clubs will be a major chunk of their revenue which will have domino effect down the chain. The broadcasters will reportedly seek a payback of a total of £762 million (approximately $931 million) which will be a huge setback.
IMPORTANCE OF MITIGATION MEASURES
To bring in force majeure, the party must show that it has taken all possible steps to lessen the impact or that there are no alternatives available in the market to avoid such a loss. Since League is subject to English law, it would have to look into their contracts first to check whether a force majeure clause is included or not and if they do, they will then have to confirm whether the clause expressly covers pandemics and to what extent they are covered. One must also check if the clause is subject to mitigation. This is an implied duty that will be applicable in all situations even if the contract does not provide for it. This duty is also subject to a few exceptions.
In Channel Island Ferries Ltd v Sealink UK Ltd. , the Court of Appeal held that any clause which referred to events “beyond the control of the relevant party” could only be relied upon if all reasonable steps had been taken by the party to mitigate its effects. In Premier League’s case, broadcasters will demand the adoption of an alternative form of playing the games like behind-closed-door format as this could be considered as maybe the only way of mitigating the loss.
FIFA
On April 7th, 2020, the Bureau of the FIFA Council had declared that “… the COVID-19 situation is, per se, a case of force majeure for FIFA and football.” Even though this statement seems like a potential tool in escaping liability on all matters that may be brought before the FIFA Dispute Resolution Chamber (the “DRC”), the Bureau made this declaration only with regards to the status and transfer of players. If the declaration extends to other surrounding contracts such as broadcasting, and sponsorship is yet to be known. If it does, it would greatly help the sectors in reaching a more amicable settlement.
Indian Super League, a professional football league was scheduled to be played between October 2019 and March 2020. According to the directive from Ministry of Youth Affairs and Sports to the Indian Olympic Association (IOC), Board of Control for Cricket in India (BCCI) and other recognized sports bodies including the All India Football Federation (AIFF), the finals of the tournament was held behind closed doors and it was a success. This is going to be the case going forwards in other sports as well because playing the games without spectators will not only help the organizers but also the broadcasters, players, support staff and many such stakeholders.
Principle of restitution requires enrichment on one side and its direct link with the impoverishment caused on the other side. The purpose is “restoration of equilibrium which has been unjustly enriched”. It should not be allowed to operate so as to create an injustice of another kind. International Chamber of Commerce updated its force majeure clause due to the outbreak of COVID-19. The new clause takes into account the aspect of unjust enrichment and provides “that a party, which has received a benefit through the performance of the contract by the other party shall be entitled to be paid the value of that benefit.” This way if one party has fulfilled its obligations and the contract gets terminated due to force majeure, then the other party should be obligated to compensate for the same.
The pandemic is not only adversely affecting player contracts but also broadcasting contracts whereby many broadcasters are now refusing to pay their due for the rights they earned. Canal Plus and Beln Sports have reportedly suspended the payments for live TV broadcasting rights for French League 1.
Canal Plus was supposed to pay an installment on April 5th amounting to € 110 million. Since the remaining matches have been suspended, Canal Plus argues that there are no more payments that need to be made either. The league had efficaciously completed a total of 28 out of the 38 scheduled match days which amounted to 73.7% of the total product and Canal Plus is said to have only paid 67% of the value. Even if force majeure is successfully provoked in this case, it must be noted that force majeure is subject to the principle of restitution which prohibits unjust enrichment at the expense of another.
The All-England Lawn Tennis Club which oversees Wimbledon has always been precautious of events that could hinder the tournament and attract financial liabilities. The rain has always been a matter of concern when it came to Wimbledon as it has always been played during the month of June. Anticipating such an event, roofs were built over the Centre Court and Court No. 1 where top-ranked players have their matches scheduled regularly. This is one way of mitigating risks.
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