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Please send your questions to Legal Corner author John B. Kern
THE BAT ARBITRATION CLAUSE - Feb 14, 2012


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EUROBASKET CENTER
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Welcome to the Eurobasket Law Column. The author intends to provide basketball players, coaches, agents and clubs with insights into their legally protected rights and answer questions about the interests of those in international basketball. We recently received a good question from Marius in Lithuania:

I noticed my contract has a clause for Arbitration before the BAT. What is the BAT and what does this mean about enforcing my contract?

Good afternoon, Marius, and thank you for your question. For years, professional basketball players who ventured into the international game suffered the challenge of being completely at the mercy of their clubs GM and budget when it came to being able to collect their contracted salaries. Cases against European clubs took years to resolve. Courts often refused to protect players against politically well-connected, but unscrupulous clubs. Often clubs went bankrupt and reemerged under new corporate entities leaving no recourse to the abandoned player.

In 2006, however, FIBA organized the FIBA Arbitration Tribunal, and introduced a standard contract clause that it recommended to players, coaches, agents and clubs which moved the resolution of contract disputes from judicial courts and into a specially designed Swiss arbitration tribunal. Today, the FAT is now known as the BAT the Basketball Arbitral Tribunal and has seen over 200 cases, with most resolved within six months.

Arbitration is an alternative to litigation which has been embraced in the international arena since the late 1950s. Parties to arbitration agreements are not plaintiff and defendant, but claimant and respondent who select either an individual or a panel of three arbitrators. Unlike mediation where the parties remain in control of the settlement of their case, arbitrators are given the parties blessings to reach a binding decision for them. In other words, by incorporating an arbitration clause in a contract, you are granting a private person a lawyer or judge the authority to either grant or deny your contract claim. You are also instructing a real court of law to disregard your claims.

The rules of the BAT are designed to very efficienty resolve basketball related disputes outside the NBA. The BAT maintains a list of seven arbitrators and from this panel appoints one at the beginning of each case to decide the outcome of the case. Parties do not have a choice of the particular BAT arbitrator to be selected, or the option to appoint members of a three-person panel. Next, the BAT allows each party only one written submission to summarize the applicable law, the facts and present evidenciary submissions for the arbitrators consideration. Live hearings providing the parties the opportunity to examine the other sides witnesses in the Geneva headquarters of FIBA are permitted under the rules but are exceedingly rare. Also, all BAT arbitrations are held in the English language and all non-English documents are to be professionally translated prior to submission.

From 2006 to 2010, parties were authorized to appeal BAT awards to the Court of Arbitration for Sport in Lausanne, Switzerland for a second look. FIBA, which enforces the BAT awards, found that more often than not, appeals were being undertaken by losing parties simply as a means of stalling FIBAs enforcement, so FIBA changed the BAT Rules to disallow appeals. Today there are no appeals of final awards of the BAT.

Another unique aspect of the BAT is that pursuant to Swiss law, the arbitrators will review the contract and record of the parties conduct and rule based purely on concepts of equity often stated as what is fair and just, rather than delivering the result that the parties specific contract dictates based upon the laws of a particular jurisdiction. Consequently, a claimant from Lithuania, for example, who sues a club from Serbia in the BAT need not hire a Serbian lawyer even if the contract refers to Serbian law.

The major advantage to choosing the BAT, aside from the expertise of its cadre of arbitrators, is that FIBA has the authority to sanction the losing party in a BAT case if they fail to honor the award. At present, more than 20 clubs are being sanctioned by FIBA. Sanctions include fines (up to EUR 150,000, but in practice nearer EUR 15,000) and bans on signing new international players. Some clubs have been banned from engaging in international competitions, while at least two players who breached their contracts have seen their FIBA license suspended. Moreover, FIBA has shown signs that it will not allow clubs to recycle their corporate identities in order to avoid the consequences of BAT awards.

The BAT charges two types of fees to resolve a contract dispute. First, the tribunal charges a nonrefundable handling fee. This ranges between EUR 2,500 and EUR 7,000 depending on the value of the claim. Second, the parties are charged an equal share of an advance for the anticipated costs of the arbitrators. BAT arbitrators will typically charge about EUR 8,000 to render an award, although some decisions (without hearings and without the publication of a formal, reasoned award) will cost less thanEUR 5,000. Many players who have been deprived of their salaries and then decide to bring a case against their employer in the BAT are alarmed to find that when the club also fails to pay its share of the arbitrators costs, the BAT turns back to the player and insists that all the costs must be borne by the player before the BAT will proceed.

There are a few alternatives to the BAT when it comes to resolving contract claims. By remaining silent on arbitration, parties are instead invoking the law and jurisdiction of the courts of a country with jurisdiction over the parties and their agreement. Players and clubs can likewise choose to arbitrate disputes in other tribunals. Popular choices are in London (the London Court of Intl Arbitration), Paris (the Intl Chamber of Commerce) and in any of the Swiss business capitals according to the Swiss Rules of Intl Arbitration. These arbitrations can be overseen by a three member panel, rather than just a single individual arbitrator. Unfortunately, the only real means of enforcing an award from one of these tribunals is to commence a proceeding to enroll the final award in the courts where the clubs assets are located. The enforcement phase of an arbitration case can take years - equally as long as the original litigation that the parties were attempting to avoid.

Consequently, proceedings in the BAT are advantageous but compared to court proceedings, can also be rather expensive. Arbitrators are authorized to award the winning partys attorneys fees, but claimants should be prepared to invest EUR 3,000 to EUR 15,000 in case costs plus the costs of their counsel. Finally, should a claimant lose his or her case, the BAT can compel the claimant to pay 100% of the costs incurred by the respondent.

I trust that this backgrounder on the BAT offers some insight to your contract rights and the workings of this new dispute resolution instrument under Swiss law.


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The Eurobasket Law Column is written and produced by John B. Kern, an American lawyer with offices in the United States and San Marino, who focuses on international sports rights and arbitrations. The legal principles discussed are general in nature. Laws change and even similar circumstances may call for the application of different laws.

If you have a question for a future edition of The Eurobasket Law Column, please write to Mr. Kern at kern@jbkinternational.com.

2012 JBK Intl Cons. LLC. All rights reserved. 120201


  



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