All Things Newz
Law \ Legal

China’s Sports Arbitration System Finally In Place! – Sport



To print this article, all you need is to be registered or login on Mondaq.com.

China’s sports arbitration system was previously set out in
Article 32 of the Law of the People’s Republic of China on
Physical Culture and Sports
(the “Sports
Law
“, as amended in 2016); however, it was never put
into practice because the term was too principled in nature. With
China hosting more major international sporting events, such as the
Olympic Games and the IAAF World Championships in Athletics, there
is an urgent need for a sound arbitration system to hear, review,
and settle the ever-increasing number of disputes in this
field.

Following this trend, the fast-tracked revision to the Sports
Law commenced about a year ago to establish a more specified,
implementable sports arbitration system in China. On June 24, 2022,
the Law of the People’s Republic of China on Physical
Culture and Sports (2022 Revision)
(the “revised
Sports Law
was finally enacted, following prior release of
an initial revision draft on October 21, 2021 (the
First Revision Draft and a second revision
draft on April 20, 2022 (the “Second Revision
Draft
. The revised Sports Law will enter into force on
January 1, 2023. As revised, the law adds a new chapter that
provides the fundamental framework and principles for sports
arbitration in China. In short, pursuant to the revised Sports Law,
a sports arbitration commission will be established by the General
Administration of Sport of China to govern the arbitration of
sports disputes, and to formulate detailed arbitration rules on
arbitrators’ qualifications, composition of the arbitration
panel, and other relevant mechanisms. We look forward to observing
how this newly formed system will be implemented.

In this commentary, we give our viewpoints on building and
improving the sports arbitration system in China under the revised
Sports Law by introducing dispute resolution practices in football,
the world’s most popular sport, and referring to the
arbitration system of the Court of Arbitration for Sport
(“CAS, the world’s most established
system for sports arbitration.

The sports arbitration institution as an independent body

Our viewpoint: Pursuant to the revised
Sports Law, the sports arbitration commission is to be established
by the General Administration of Sport of China. Given the nature
of the General Administration of Sport of China as an
administrative organ, it is important to consider how to implement
the prescribed arbitration mechanisms and rules to protect them
from administrative interference and to guarantee the impartiality
and independence of sports arbitration in China.

From a global perspective, de-administration is stressed among
all international and national sports arbitral institutions,
including CAS, to protect the lawful and independent arbitration of
sports disputes from interference by local governments or
administrative organs. A typical example is CAS, which boasts the
most established sports arbitration system in the world. Since the
Swiss-headquartered CAS was originally established as part of the
International Olympic Committee (“IOC and was
financially dependent on the IOC, its impartiality and independence
were challenged by arbitration parties and questioned by the
Federal Supreme Court of Switzerland. In response, CAS underwent
significant reforms and created an International Council of
Arbitration for Sport (“ICAS to look after
the administration, running, and financing of CAS, which made
itself completely independent of the IOC and safeguarded the
impartiality and independence of its arbitration process.

In China, the Sports Law also emphasizes that “sports
arbitration shall be conducted independently in accordance with law
and shall not be interfered with by any administrative organ,
social organization, or individual”. Nevertheless, as we
notice, the organization responsible for setting up “a sports
arbitration commission”, China’s sports arbitration body,
was changed from the non-profit All-China Sports Federation in the
First Revision Draft to the administrative department for sports
under the State Council (i.e., the General Administration of Sport
of China) in the Second Revision Draft and in the adopted version
of the law. Given that the General Administration of Sport of China
is an administrative organ, it is important to consider how to
guarantee the administrative, management, and financial
independence of the sports arbitration commission that this
administrative organ establishes, so as to maintain impartiality
and independence of sports arbitration in China.

Scope of arbitrable disputes for sports arbitration

Our viewpoint: The scope of arbitrable
dispute cases before the sports arbitration commission is not
specifically defined in the revised Sports Law, leaving substantial
room for interpretation and further clarification.

According to the revised Sports Law, the parties concerned may
apply for sports arbitration for three types of disputes pursuant
to arbitration agreements, the articles of association of a sports
organization, the rules of sports events, etc.: (1) disputes out of
dissatisfaction with decisions such as disqualifications,
cancellation of competition results, and match suspensions; (2)
disputes arising from registration or interactions among athletes;
and (3) other disputes arising in competitive sporting activities.
The revised Sports Law also excludes from the scope of sports
arbitration those disputes arbitrable under the Arbitration Law of
the People’s Republic of China and labor disputes under the
Law of the People’s Republic of China on Mediation and
Arbitration of Labor Disputes.

According to the above provision, on one hand, it becomes
unclear as to which cases may be considered arbitrable under the
catch-all provision of “other disputes arising in competitive
sporting activities”; on the other hand, commercial disputes
and labor disputes are expressly excluded from the scope of sports
arbitration. This hybrid method of broad inclusion and exclusion
used in the provision does not make it easy to accurately identify
which disputes will fall within the jurisdiction of the sports
arbitration commission.

Sports disputes often contain multiple legal relations such as
property rights (e.g., salary) and personality rights (e.g., right
of publicity). It is difficult to conclude whether a sports dispute
is of a property nature subject to commercial arbitration or a
labor dispute subject to labor arbitration. For example, among
disputes within the football industry, labor issues are the most
typical and common kind of dispute between clubs and their players,
which should naturally be regarded as eligible for sports
arbitration. However, as this kind of dispute can be classed as
both a property rights case and a labor dispute, it invites
questions as to whether, under the revised Sports Law, such a
dispute would fall within the scope of sports arbitration. However,
we certainly understand that such a broad scope of arbitrable
disputes under the revised Sports Law is a legislative technique to
provide flexibility for subsequent implementation rules. Either
way, further clarification is needed, through subsequent
arbitration rules and practice to specify which types of disputes
are eligible for sports arbitration and which are not.

Linkage between sports arbitration and a sports
organization’s internal dispute resolution mechanism

Our viewpoint: So far, the revised Sports
Law appears silent as to whether submitting the dispute to a sports
organization’s internal dispute resolution mechanism is a
prerequisite before resorting to sports arbitration. While
implementing the arbitration system under the revised Sports Law,
it is worth referring to international practices and establishing
an orderly transition between the internal dispute resolution
mechanism of various professional sports organizations in China
(e.g., the Chinese Football Association) and the sports arbitration
system.

Article 95 of the revised Sports Law provides that sports
organizations are encouraged to establish an internal dispute
resolution mechanism to resolve disputes in a fair, just, and
efficient manner; where a sports organization does not have an
internal dispute resolution mechanism or the internal dispute
resolution mechanism fails to handle a dispute in a timely manner,
the parties concerned may apply for sports arbitration. Article 96
further stipulates that where a party concerned is dissatisfied
with the decision or result of dispute resolution under the
internal mechanism, it may apply for sports arbitration with the
sports arbitration institution within 21 days from the date of
receipt of such decision or result.

A further question then arises: can parties concerned directly
resort to sports arbitration without referring to an existing
internal mechanism to resolve their dispute? In other words, is
seeking recourse under an internal dispute resolution mechanism a
condition precedent to requesting sports arbitration? While the
revised Sports Law is silent on this issue, we are of the opinion
that directly requesting arbitration without first going through
the internal mechanism will not assist in the rapid resolution of
sports disputes within the relevant sports industry. Indeed, the
exact process needs to be further tested and verified in
practice.

As to sports dispute resolution in the international community,
Article R52 of the CAS Code of Sportsrelated Arbitration
requires that appellants must have exhausted all internal legal
remedies available before appealing their cases to CAS. For
example, in football-related disputes, the parties concerned may
only appeal their case to CAS if they have sought remedies from the
International Federation of Association Football
(“FIFA and are dissatisfied with the decision
made by FIFA; they are not allowed to file the dispute directly to
CAS. This is also prescribed in the FIFA Statutes.

This leads to another question. Long before the Sports Law was
revised, the Chinese Football Association
(“CFA established an arbitration commission
as its internal dispute resolution mechanism, while the charter of
the arbitration commission still stipulates that “the award
made by the Chinese Football Association arbitration commission
shall be final and binding”, which is obviously incompatible
with the revised Sports Law. Therefore, in light of the design of
jurisdictional transition between FIFA and CAS, it is advisable for
CFA to introduce a similar mechanism in its charter or arbitration
rules to follow the new arbitration system in China, including
removing the provision that the CFA award is final and binding, and
adding content such as “a party dissatisfied with the CFA
award may appeal its case to the sports arbitration commission
under the General Administration of Sport of China within 21 days
from the date of receiving such an award.”

Moreover, under the current system, an awkward dilemma may arise
where a party has received a satisfactory result from the sports
organization’s internal dispute resolution mechanism but cannot
truly enforce its rights because the internal mechanism does not
have any legal enforcement effect. For example, in a typical labor
dispute between a football club and its player, if the arbitration
commission within the CFA rules in favor of the player and requires
the club to pay salary in arrears, theoretically, the player will
not need to seek legal remedy through any other channels. However,
because the award made under the internal mechanism cannot be
legally enforced, once it is made, even if the CFA has imposed its
own penalties on the club, the club may still refuse to pay the
relevant salary and the player will in fact be unable to safeguard
his legitimate rights and interests because he is not entitled to
request a court to order compulsory enforcement. In such a
circumstance, can the player submit the same case directly to the
sports arbitration institution under the Sports Law? Does it fall
within the statutory scope of arbitration under the Sports Law
where “a party concerned is dissatisfied with the decision or
result of dispute resolution under the sports organization’s
internal mechanism”? These questions also await clearer
answers once specific arbitration rules are implemented in the
future.

The legal effect of sports arbitral awards

Our viewpoint: Although the revised Sports
Law confers final and binding force on sports arbitral awards, it
concurrently allows an award to be overturned by the people’s
court if “there are errors in the application of laws and
regulations”, which effectively threatens the final and
binding effect of sports arbitration awards and may undermine the
efficiency of dispute resolution.

According to Article 97 of the revised Sports Law, “A
sports arbitral award shall take legal effect as of the date on
which it is made. After the award is made, if either party
concerned applies for sports arbitration or lodges a lawsuit before
a people’s court in regard to the same dispute, the sports
arbitration commission or the people’s court shall reject such
lawsuit application or filing.” This provision will
effectively confer final and binding force on awards made by the
sports arbitration commission.

Surprisingly, however, Article 98 of the revised Sports Law
expressly stipulates that, “Under any of the following
circumstances, a party concerned may petition the intermediate
people’s court in the place where the sports arbitration
commission is located for overturning the award within 30 days upon
receiving the arbitral award: (1) there are indeed errors in the
application of laws and regulations; …” “Errors in
application of laws and regulations” as a statutory cause for
overturning a sports arbitration award will definitely cause the
court to conduct a substantive review of the award, which goes
beyond the mere review of non-substantive issues such as major
procedural defects, the bribery of arbitrators, etc., and will
undoubtedly pose severe challenges to the final and binding effect
of sports arbitral awards.

By comparison, as to the mechanism for overturning a CAS award,
Article 190 of the Federal Act on Private International Law of
the Swiss Confederation
provides that a CAS award is final
from the time when it is communicated, and an arbitral award may be
set aside only: (1) where the sole member of the arbitral tribunal
was improperly appointed or the arbitral tribunal improperly
constituted; (2) where the arbitral tribunal wrongly accepted or
denied jurisdiction; (3) where the arbitral tribunal ruled beyond
the claims submitted to it, or failed to decide one of the claims;
(4) where the principle of equal treatment of the parties or their
right to be heard in an adversary procedure were violated; (5)
where the award is incompatible with public policy. Thus viewed,
the statutory grounds for overturning a CAS award are essentially
procedural, meaning that the Swiss Federal Supreme Court will not
intervene in or entertain a substantive trial of the dispute. In
fact, the Swiss Federal Supreme Court has confirmed in its No.
4A_18/2008 judgement that, even an obviously wrong application of
the law or finding of facts is not a sufficient ground to overturn
an arbitral award for the reason of violating public policy.

In our opinion, “erroneous application of laws and
regulations” as a ground for overturning an arbitral award
under the revised Sports Law deviates from the general principles
that judicial review of an arbitral award should only focus on
procedural issues and the court should respect the discretionary
power of arbitral tribunals on substantive issues. On one hand,
such a basis may virtually undermine the final and binding force of
an arbitral award; on the other hand, the court’s intervention
in review of substantive issues may severely complicate and prolong
the arbitration process, which contravenes the original purpose of
establishing the arbitration system as a way to accelerate the
resolution of disputes through adjudication by professional
arbitrators who are familiar with the corresponding sport.

Sports arbitration rules

Our viewpoint: In formulating its sports
arbitration rules, China should focus on correlating the national
sports arbitration rules with the international system, so as to
advance jurisdiction of China’s sports arbitration commission
over relevant international disputes and expand China’s
influence in sports arbitration in the international
community.

The internationalization of sports is an inevitable trend. China
has affirmed its determination to follow this trend in Article 14
of the revised Sports Law, providing that “the State
encourages international exchanges in sports, promotes the Olympic
spirit, and supports participation in international sports.” A
wellestablished sports dispute resolution mechanism will
undoubtedly strengthen China’s internationalization of sports.
Therefore, under the overarching framework of China’s sports
arbitration system designed by the revised Sports Law, it is
crucial to formulate organized arbitration rules to expand
China’s jurisdiction and influence in sports arbitration in the
international community.

This acute need for organized sports arbitration rules is
exemplified in the numerous unfavorable results received by Chinese
football clubs and other parties in previous international
arbitration proceedings before FIFA and CAS, resulting from certain
partial stances taken by FIFA and CAS and China’s unfamiliarity
with the dispute resolution procedures and rules established by
these international institutions.

As China is set to build up its own sports arbitration system,
it will be helpful to study FIFA’s Circular 1010, under which
FIFA agrees to delegate its jurisdiction to relevant national-level
arbitral tribunals if they satisfy certain criteria. If the sports
arbitration commission to be established satisfies such criteria,
we reasonably anticipate that the sports arbitration commission of
China will retain jurisdiction over relevant foreign-related
disputes, and that the unfavorable situations previously facing
Chinese clubs and other parties in foreign-related disputes may
change.

Given that, while formulating China’s sports arbitration
rules, the sports arbitration commission is advised to connect the
national rules to the corresponding international standards and to
introduce detailed procedural provisions to protect the rights of
parties, so as to establish a set of sophisticated, comprehensive,
and internationalized arbitration rules.

For example, as to the appointment of arbitrators, CAS expressly
requires in its Code of Sport-related Arbitration that, in
addition to appropriate legal training and a good command of at
least one CAS working language, an eligible arbitrator should
possess a good knowledge of sport in general and recognized
competence with regard to sports law1 . A dual
background of law and sport is obviously a reasonable criterion for
selecting sports arbitrators. However, given the current sports
development reality in China, if the “law plus sport”
standard is adopted to select sports arbitrators, it is highly
likely that only a few candidates will be qualified; but overly
lenient requirements are not desirable either, which may compromise
the professionalism of sports arbitration. Thus, how to strike a
balance when setting forth the criteria for appointing arbitrators
under China’s sports arbitration system is another issue to be
considered.

With respect to publicizing arbitral awards, according to the
CAS Code of Sports-related Arbitration, the awards of appeal cases,
cases of a disciplinary nature, and some cases before the ad hoc
division for the Olympic Games will be made public, and contents to
be disclosed include basic information of the parties concerned,
the composition of the arbitral panel, basic facts and applicable
laws identified in the award, and the reasons and rationale for
making the award. Similarly, FIFA also publishes the judgments it
makes, including the redacted version of judgments that contain
confidential information. As a result of such publicity,
jurisprudence has been gradually developed for international
football dispute resolution. According to our experience in
representing parties in international football dispute cases before
FIFA and CAS, parties cite previous CAS and FIFA awards to support
their arguments. Publicizing awards will also assist in providing
parties with reasonable expectations of the results of the
disputes.

As for the sports arbitration regime in China, the revised
Sports Law does not touch on whether an arbitral award should be
made public or not, which is an issue awaiting clarification by
subsequent rules. We suggest that sports arbitration awards be made
public in China for the following reasons. Unlike the traditional
civil and commercial arbitration systems which are fully developed,
sports arbitration in China is still in its infancy. Publication of
arbitral awards will place China’s sports arbitration system in
line with the internal standard and thus at a high starting point;
it will also invite industry and public supervision to spur
prudence, impartiality, and fairness of the arbitration process.
This will enhance the credibility of sports arbitration among the
public in China, and bolster the healthy and fast development of
the national sports industry in China.

Conclusion

The revision of the Sports Law is a milestone event in the field
of sports dispute resolution in China, which signifies a major leap
in the country’s establishment of its own sports arbitration
system. We will closely monitor and look forward to the series of
subsequent rules and measures for implementing the system. We are
convinced that the ever evolving and improving sports arbitration
system in practice will provide strong legal guarantees for China
to realize its national fitness strategy while the country is
marching on the goal to become a global sporting powerhouse.

Footnote

1 Code of Sport-related Arbitration in force as from 1
July 2020, S14: The ICAS shall appoint personalities to the list of
CAS arbitrators with appropriate legal training, recognized
competence with regard to sports law and/or international
arbitration, a good knowledge of sport in general and a good
command of at least one CAS working language …

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.



Source link

Related posts

The Year In Review- An Annual Publication Of The ABA/Section Of International Law: International Tax 2021 – Tax Authorities

Fallacies in family law – Divorce

Dose Size Matters: New York Appellate Courts Apply Stringent Specific Causation Standards In Recent Asbestos Litigation – Trials & Appeals & Compensation