John B. Kern is an international business and sports lawyer with offices in Charleston, South Carolina and the Republic of San Marino. Mr. Kern has represented players, coaches, agents, clubs and national basketball federations in matters involving their contract rights under international law. Since 2005, he has acted as general counsel to one of the largest sports agencies in Europe. Mr. Kern has drafted hundreds of playing contracts, multi-party trade agreements and image rights contracts and has succeeded as lead counsel in more than a dozen international arbitrations, including before the Court of Arbitration for Sport (Lausanne), the FIBA Basketball Arbitration Tribunal (Geneva), the Chamber of Commerce of Ticino (Lugano) and the American Arbitration Association (New York). As a commercial litigator, Mr. Kern has managed complex, multistate and multinational cases in the US and abroad. He was senior litigation partner with Ten State Street, an international business boutique law firm with offices in London, England (Grays Inn) and Charleston. Mr. Kern is a Fellow of the Center for International Legal Studies in Salzburg, Austria, and was designated a qualified advisor by the Swiss government (Ministry of Economy) when assisting Swiss companies in US investments. John B. Kern is a frequent lecturer and writer on subjects of international business law, investment & immigration law, international trade and sports law. He is writing The Hardcourt Law Digest on international basketball law in conjunction with Yorkhill Publishing. He holds Juris Doctor and MBA degrees from Willamette University in Oregon. Prior to attending graduate school, Mr. Kern worked for three members of the United States Senate. Mr. Kern holds a BS in Political Science from Seattle Pacific University and studied History at Oxford University.
Prior to 2007, players, agents and coaches were on their own to litigate in civil courts against clubs that failed to pay them according to their employment contracts. All too often these claims were stifled and as a practical matter, players in Eastern Europe, the Balkans and Southern Europe had difficulty successfully suing the clubs in their home "court [read more]
Prior to 2007, players, agents and coaches were on their own to litigate in civil courts against clubs that failed to pay them according to their employment contracts. All too often these claims were stifled and as a practical matter, players in Eastern Europe, the Balkans and Southern Europe had difficulty successfully suing the clubs in their home "court."
In the last five years there have been about 250 cases taken by players, coaches and agents to FIBA's Basketball Arbitral Tribunal (BAT) which is based in Geneva, Switzerland. (There have also been cases where clubs have succeeded in defending themselves, and each case is unique and success depends on the merits of each case. We ran a primer on the workings of the BAT in the Legal Corner and please refer to that posting for more information about the process of arbitration. in fact, FIBA's BAT was recently nominated for an award as an innovator of justice by the Hague Institute on the Internationalisation of Law.
The question arises, however, "what do I do with a BAT Award?" In fact, the question of the various methods of arbitration award enforcement was posed to me recently by a reader of the Legal Corner, Takis from Greece.
Well, Takis, essentially there are three means of basketball-related arbitration award enforcement. Of course these are not mutually exclusive and arbiitration award holders are free to assert all three methods. The first is converting the slip of paper which is the arbitration award into a formal court judgment and then seeking execution against the club's property. The second is appealing to the Secretary General of FIBA to impose sanctions on the club for failing to honor the award. The third is to pursue the club through the national basketball federation in the country where the club is located.
Converting an arbitration award into a court judgment requires going back into the Lion's Den of the courts in the nation where the Club is located. A final court judgment is subject to enforcement through execution upon the debtor's assets and also presents the opportunity of placing the debtor into insolvency proceedings. The distinction, however, between litigation and arbitration enforcement is that the legal proceeding for the enrollment of the award is instead based upon a 60 year old and somewhat reliable international convention (a multinational treaty) that provides a fairly efficient means of realizing a final court order which formalizes the arbitrator's decision. The New York Convention of June 10, 1958, provides judges in the courts where the assets of clubs are located a means of adhering to a legal obligation to enforce the award so long as the arbitration process is found to be satisfactory from a perspective of the protection of the rights of the parties. Keep in mind that each judicial system has its own rules about whether appeals are allowed of a judicial decision to enroll an arbitration award. for example, I am involved in one player and agent case in Croatia that is still ongoing - this one is on its second appeal after an arbitration award was secured from another Swiss arbitration tribunal in 2005. This can take time and really requires assistance from local counsel.
FIBA's rules provide that clubs that fail to honor a BAT award are subject to three different types of sanctions. The decision to impose these sanctions - or to refrain from imposing sanctions - is left to the discretion of the Secretary General in Geneva, Mr. Bauman, who is himself trained as a Swiss lawyer. The first FIBA sanction is a monetary fine. FIBA's rules provide for fines of up to EUR150,000, which in theory is quite a threat to a club's financial condition. In reality, however, FIBA never fines clubs more than EUR15,000, and does this only as a last resort. Consequently, this works out to be sort of a slap on the wrist. Indeed, there is no formal consequence to the club failing to pay the fine to FIBA. What's more, the beneficiary of the fine is not the player who is trying to get paid, but instead FIBA itself.
The second FIBA sanction is in the form of a prohibition on the signing of new international players. The rules do not prevent a foreign player from remaining under contract to a club that has failed to pay a former player.
Finally, the third sanction on clubs is a prohibition on the club's participation in international competitions. This is a concern only to first division clubs and among those, the clubs that are in contention for EuroCup and Euroleague matches. So a second division club - or a first division club that slides down to the second division - can avoid the consequence of sanctions almost entirely. Indeed, FIBA maintains a list of the clubs that are under sanctions on its BAT website. At the moment, there are 23 men's clubs on the "blacklist" and there are four women's clubs identified by FIBA.
These sanctions can have teeth and are a source of concern for clubs. A couple of years ago the Greek national basketball federation threatened that it would not recognize contracts which contained the BAT arbitration clause and could give rise to FIBA asserting sanctions against non-paying clubs. They were trying to protect the clubs from the consequences of not paying their players. You are absolutely within your rights to demand a BAT clause in your contract, and to seek the support of FIBA in compelling the clubs to honor the outcomes of the cases.
Please note that if you proceed to an arbitration forum other than FIBA's BAT and you prevail, you will not be eligible to ask the Secretary General to impose sanctions on a club. One can make an argument that arbitration decisions from any forum which provides basic protections to the parties should be eligible for the FIBA Secretary General's imposition of sanctions, but FIBA has not reasoned in this manner as of this time.
The final means of seeking to impose a consequence on a non-award paying club is to seek reference to the rules of the national basketball federation in the jurisdiction where the club is a member. Not all federations impose consequences on member clubs for failing to pay their players, but some do. This is a question with an answer specific to the country of the club. For example, the Russian internal regulations prevent federation members from engaging in federation sponsored competitions if they have outstanding obligations to players or coaches. Italy prevents delinquent clubs from playing in the first division. Other country federations are less concerned with the rights of the players and more focused on the financial survival of the clubs. Interestingly, as you may know, FIBA itself is a federation of the national basketball federations but has not imposed a standard treatment of delinquent clubs to date.
I trust that this information will help guide your decisions about seeking enforcement. Every case is different and a qualified lawyer will help you make good decisions. If you have questions concerning the law pertaining to the law and international basketball, feel free to drop me a line at kern@jbkinternational.com. In the meantime, have a good season.
When NBA player Charles Jenkins was asked why he doesn't have any tattoos on his body unlike many of his teammates, Jenkins responded, "Have you ever seen a bumper sticker on a Maybach?"
This attitude captures the essence of FIBA's anti-doping policy. Many players are not aware that a "first offense" of FIBA's anti-doping rules leads to a two year suspension, from the time that the laboratory results are confirmed and a suspension imposed [read more]
When NBA player Charles Jenkins was asked why he doesn't have any tattoos on his body unlike many of his teammates, Jenkins responded, "Have you ever seen a bumper sticker on a Maybach?"
This attitude captures the essence of FIBA's anti-doping policy. Many players are not aware that a "first offense" of FIBA's anti-doping rules leads to a two year suspension, from the time that the laboratory results are confirmed and a suspension imposed. As employers, basketball clubs take very little time to inform their players about how they can test positively for banned substances, and this can lead to tragic results for the careers of players. Players must be vigilant about taking care of their bodies and, as a recent case underscores, players themselves are ultimately responsible for what they allow to be introduced into their bloodstreams and bodies.
Recently, a National Team player, whose country and name shall remain unstated, was sanctioned by FIBA for a total of 22 months after he failed a random drug test. This poor fellow missed the first half of the 2011-12 season due to an injury and the second half of the season due to an interim suspension. This player will miss the Olympics, the 2012-13 season and the first half of the 2013-14 season due to this transgression - his first of any kind. The player was forced to return all salaries earned from his club prior to the suspension and was ordered to pay a fine.
The offense: Accepting the medical treatment offered by the player's national team doctor for persistent pain after suffering a broken ankle.
In this case before a disciplinary panel established by FIBA, the player was not accused of intentionally taking drugs, human growth hormones or steroids. FIBA found that the only way in which the banned substance, "19-norandrosterone," a steroid, was introduced to this player was that following 40 days of physiotherapy with few signs of improvement, the national team doctor determined the player would benefit from the single injection. The player reasoned that the doctor must have known what he was doing. He did not. Consequently, in the words of FIBA, the player wrongly "delegated" the authority over the injection of the prohibited steroid into his own body and had no excuse for doing so.
FIBA found that although the player had more than a decade of professional club and national team experience, he had never been given any anti-doping education. As a result of moving from one club to another throughout his career, the player had not established a doctor-patient relationship which would have allowed him to secure a doctor of his own.
Most importantly, the doctor and the player were apparently unfamiliar with the World Anti-Doping Agency's adoption of the process of awarding special permits allowing "Therapeutic Use Exemptions" from the rigors of anti-doping testing. These TUEs are subject to be obtained from committees established by the WADA and the national sports federations in each country, often which double as the Olympic committees of nations.
Absent a TUE, FIBA's Anti-Doping Regulations are tough, to say the least. The rule provides as follows: "It is each Player's personal duty to ensure that no Prohibited Substance enters his or her body. Players are responsible for any Prohibited Substance or its Metabolites or Markers found to be present in their Samples. Accordingly, it is not necessary that intent, fault, negligence or knowing Use on the Player's part be demonstrated in order to establish an anti-doping violation under Article 2.1."
This means that there is no reuirement that the sanctioning bodies find any evidence of adverse "intent" to use the drugs. Similarly, it is of no import if the player reasons that the substances don't benefit their playing condition.
For a first violation, the presumed period of ineligibility is two years according to Article 10.2 of the FIBA Anti-Doping Regulations.
These rules led the FIBA sanctioning panel in this recent case to conclude "the Player was apparently in a desperate situation, not being able to recover from the injury and feeling considerable pain 3 months after the fracture in his [ankle]. He also submitted that he felt obliged to visit this particular doctor who collaborates with his national federation since the injury took place while playing for the national team and at a time when he was not under contract with any club." Nonetheless, FIBA concluded, that the player's delegation of authority to the national team's doctor "does not excuse the Player from his responsibility."
The lessons are clear. Players are urged to gain a complete understanding of the consequences of each item that they ingest in their diet and each dose of medication that they are prescribed and administered by their doctors.
Don't take any chances, and don't treat your body like a Subaru when God has given you a Maybach to carry you around throughout your career.
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The Eurobasket Legal Corner is written 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 Legal Corner, please write to Mr. Kern at kern@jbkinternational.com.
2012 JBK International Law LLC. All rights reserved. 120701
Powers of Attorney: A Cautionary Tale
Today I want to relate an unfortunate and cautionary tale that grew out of a professional basketball player's claim for the recovery of $2.74 million in unpaid salaries that was reported by the FIBA Basketball Arbitral Tribunal in 2011. This decision carries a series of warnings to players who have their contracts wrongly cut by clubs and offers suggestions about guiding their actions in relation to a "Power of Attorney [read more]
Powers of Attorney: A Cautionary Tale
Today I want to relate an unfortunate and cautionary tale that grew out of a professional basketball player's claim for the recovery of $2.74 million in unpaid salaries that was reported by the FIBA Basketball Arbitral Tribunal in 2011. This decision carries a series of warnings to players who have their contracts wrongly cut by clubs and offers suggestions about guiding their actions in relation to a 'Power of Attorney.'
Lawrence Roberts is a former NCAA First Team All-American and NBA player with the Memphis Grizzlies. After two years in the NBA, he signed a two year contract for the 2007-08 and 2008-09 seasons with Olympiakos in Athens. Roberts was to receive $1.5 million for the first year and $1.75 million for the second season with the Greek club.
It appears that Roberts was paid $550,000 by Olympiakos during the preseason and then, according to the BAT arbitrator, 'on about the 3rd of October 2007, the [club] decided that [Roberts] was not to continue as part of its team.' The reasons for this decision are not provided in the arbitration award, but on October 4, 2007, Euroleague.net reported that, 'Roberts failed to meet the expectations of head coach Pini Gershon, who decided to cut him and search for another player.'
Within a couple of days, a Greek agent that Roberts had included in the initial negotiations with the Club, Konstantinos Papadakis, showed up at Roberts' door and here came the player's first mistake. Roberts executed a blanket 'Power of Attorney' authorizing Papadakis to exercise all of the player's rights in seeking a settlement of his outstanding claims against the club. Now recall that as of this time, Roberts had not been paid $2.74 million of his $3.25 million contract. Consider also that Roberts had not put in place any back up contract with another team. (In fact, Roberts remained out of basketball for the remainder of the 2007-08 season.)
Incredibly, within 72 hours of receiving the 'Power of Attorney,' the Greek agent exercised the player's rights to negotiate a resolution on his $2.74 million claim against Olympiakos and reached, on Roberts behalf, a 'Termination Agreement' with Olympiakos providing Roberts with a settlement. Unfortunately for Roberts, the settlement amounted to $0.00 for the player. Zero. Niente. So in exchange for Roberts' $2.74 million in contract rights, Papadakis and Olympiakos agreed that the player would not receive a single dollar.
Moreover, not only were Roberts' rights against the club zeroed out by this 'Termination Agreement,' the arbitrator found that there was no fiduciary duty running from the agent to the player pursuant to the Olympiakos contract. This represents Roberts' second mistake. Roberts did not have prepared (or at least he did not submit) any other agreement as between himself and Papadakis establishing a duty on the agent to protect his rights, or any parameters for the eventual settlement of the Olympiakos claim, so he was unable to establish or even allege any contractual basis to recover against the agent and his claims against the agent were dismissed.
The third word of caution comes out of a legal doctrine known in Europe as venire contra factum proprium - a general principal providing that one's conduct or statements of intent concerning existing contractual rights can lead to a prohibition on the invocation of such rights. In the US and the UK, we know this as the doctrine of 'estoppel.' In the Roberts case, the application of this doctrine took two forms -- both Roberts' conduct and his statements -- which led to the dismissal of the Player's claim against Olympiakos.
First, the arbitrator noted the player's failure to undertake the prompt prosecution of the claim. The player waited nearly three years before bringing his case before the BAT, attributing the period of the delay to the need to formulate claims, gather evidence, locate witnesses, etc. His attorneys argued that the statute of limitations in Switzerland 10 years should be the BATs sole guide on the timeliness of the claim; nonetheless, the arbitrator disagreed, noting that there was no record of any written demands placed by Roberts on Olympiakos between the creation of the October 2007 Termination Agreement and the August 2010 BAT arbitration. Even though the arbitrator suggested it would have been reasonable for the player to wait until after the end of the 2008-09 season (when his duty to mitigate contract damages by securing other employment would have expired) the delay of an additional 14 months before the case was eventually filed was too much for the arbitrator.
Second, the arbitrator found that the player had given an interview to a Greek newspaper reporter in January 2010. In the interview, Roberts suggested that he was satisfied with the outcome of his contract by commenting on his season cut short by Olympiakos, 'besides I received a big part of the fees that were agreed for the first year.' Indeed, the arbitrator held, 'it seems inconceivable that [Roberts] would have made such conciliatory remarks about [Olympiakos] in January 2010 were arbitration proceedings in preparation.' This combination of the delay and this publicized remark was fatal to the player's claim which was dismissed in its entirety.
So, players, draw these lessons from Roberts v. KAE Olympiakos SPF & Papadakis (121/10 BAT):
* If forced to negotiate a settlement of your contract claims, don't hand over your rights through a 'Power of Attorney' to an agent without defining what are the limits on that agents negotiating authority.
* Always prepare a clear, written understanding of the parameters (the minimum limits) for the agent's exercise of those rights that establishes the agent's duty to you as the player.
* Don't delay in assembling the facts, witnesses (including witness statements) and theories in a contract claim and don't neglect sending the Club demands for their performance, even if you don't have all of the evidence about the case that you expect to gather from your witnesses.
* Don't talk to reporters about your contract rights.
I trust that the unfortunate experience of Mr. Roberts won't be visited upon other players in the future and that this article will help others avoid a similar fate.
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The Eurobasket Legal Corner 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 Legal Corner, please write to Mr. Kern at kern@jbkinternational.com.
2012 JBK Intl Cons. LLC. All rights reserved. 120401
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