Powers of Attorney: A Cautionary Tale - Apr 12, 2012
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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.
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 firstname.lastname@example.org.
2012 JBK Intl Cons. LLC. All rights reserved. 120401
The Opening Hello My name is Coach Jose Tapias and i am the head coach of Piratas Bogata basketball team in Colombia. We are looking for a United states basketball player for the colombia -Liga Direc TV. We need tested players with good profiles. If you are interested email me back. Best Regards Coach Jose Tapias Tel : 091 222 6996 Fax : 091 271 0423 Email: email@example.com https://www.facebook.com/JoseTapiasPartidoVerde/ https://twitter.com/josetapias1 The Correspondence... [read more]
My name is Coach Jose Tapias and i am the head coach of Piratas Bogata basketball team in Colombia.
We are looking for a United states basketball player for the colombia -Liga Direc TV. We need tested players with good profiles. If you are interested email me back.
Best Regards Coach Jose Tapias
Tel : 091 222 6996 Fax : 091 271 0423
https://twitter.com/josetapias1 The Correspondence
Agents and players receive emails like this all of the time. On its face, this correspondence is not necessarily suspicious. There is indeed a Piratas club in Colombia and Jose Tapias is a famous coach. The Facebook page and Twitter accounts link to Coach's profile as well. Follow-up emails provide more credible information including a draft contract with common FIBA terms. There may even be concessions made in order to create the semblance that good faith negotiations are being conducted. Soon thereafter, a very generous offer will be made, seemingly validating the process.
The Moment of Truth
Up to this point, the sender has played the part perfectly: interested but not pushy, intrigued but not desperate. With nothing appearing to be out of the ordinary, the natural step is to process the player's paperwork which requires a payment for the work visa. Even though the club is willing to pay thousands of dollars for the player's services, the sender will be adamant that it is club policy for the player to cover the nominal cost for processing the application. Upon agreement, the player will be invoiced.
The Grand Finale
Please go to any Western union outlet near you and send off the payment to our overseas branch. See the payment instructions below
The reciever name is Obiajunwa chinagorom
The address is 799 boulevard saint michael,
City is Cotonou
The Country is Benin
Text question : for
Answer : work permit
Please ensure that you do not make any mistakes sending off the payment to the reciever name and address. email me back with the MTCN confirmation number for the payment and a mailing address and a fax number.
Regards Coach Jose
At what point did the player realize he was being tricked?
Was it right away when Coach emailed? Was it when he called Coach's phone and it didn't work? Was it when he received the email requesting that he pay for his work visa? Was it when the address for payment listed a country in Africa? Or was it when no plane ticket to Colombia was issued after payment was sent? The Lesson
Fortunately for this player there was a somewhat happy ending. No money was exchanged and apart from a bruised ego, no damage was done. However, others have not fared as well. Elaborate hoaxes like this are an everyday reality. Empowered by the anonymity of the Internet, swindlers are readily able to prey on players eager to advance their careers. Embarrassed by their naivety, most players understandably do not reveal to anyone that they were taken. As a result, the con continues.
--------------- The Eurobasket Legal Corner is written and produced by Alexander Bachuwa. Alexander is a New York attorney who focuses on sports management and arbitration. Alexander can be contacted at globallsportsmgmt.com
Let me elaborate as to the applicability of such a quote beyond basketball movie folklore. In the case of Hodge vs. Saski Baskonia S.A.D., Walter Hodge sought relief against his former club Saski Baskonia S.A.D. of Spain for failure to make timely payments after he was terminated. The club agreed to pay him $434,800 and set out an extended schedule for repayment.
Mr. Hodge alleged that the payments were untimely and filed a claim with the Basketball Arbitration Tribunal (BAT) [read more]
Let me elaborate as to the applicability of such a quote beyond basketball movie folklore. In the case of Hodge vs. Saski Baskonia S.A.D., Walter Hodge sought relief against his former club Saski Baskonia S.A.D. of Spain for failure to make timely payments after he was terminated. The club agreed to pay him $434,800 and set out an extended schedule for repayment. Mr. Hodge alleged that the payments were untimely and filed a claim with the Basketball Arbitration Tribunal (BAT). Saski Baskonia S.A.D refused to formally participate in the process. Instead it simply emailed BAT acknowledging the debt was owed, that it was working to make the payments, but it had some liquidity issues forcing the delays. It is not a bold assertion to state that within the international basketball community, the financial stability of many clubs is precarious. Economies stall, sponsors dry up, and the last obligation to be settled is payment to players. Consequently, it is understandable that Mr. Hodge filed a claim with BAT in order to secure the money that was admittedly owed to him. To do so, Mr. Hodge paid the non-reimbursable handling fee of 4,000 euros to BAT along with 12,000 euros which served as he and Saski Baskonia S.A.D's Advance on Costs. (The Advance on Costs is the tribunal's estimation of what costs may be incurred in order to reach a resolution. It is held in trust in a BAT bank account.) While I understand why Mr. Hodge lodged a claim against Saski Baskonia S.A.D, it was Mr. Hodge's original basketball contract that was more troubling. When crafting an agreement in a volatile industry such as international basketball, it is advisable for the attorney to insert an acceleration clause in the event there is a breach by the other party. Simply put, there should be something in the contract that clearly states that a delay in an installment payment plan would make the entire amount due immediately. This clause is powerful for two reasons: First, the party will face significant pressure to honor the agreement. Second, BAT will have the authority to rule for the claimant (in this case Mr. Hodge) and direct the violating party (in this case Saski Baskonia S.A.D) to pay the amount owed in full immediately. Here, the contract did not have an acceleration clause. Even if it thought it fair to do so, the tribunal could not insert one into the contract after the fact. Powerless, the tribunal could do nothing more than agree that Mr. Hodge was still owed money and that he should receive it. The tribunal refunded his Advance on Costs and billed Saski Baskonia S.A.D for the balance of the Advance as well as the non-reimbursable fee. It also gave the lawyer a couple thousand euros for his efforts. This certainly sounds like a tie to me.
Enforcement of Arbitration Awards - Where Do I Start? - Sep 26, 2012
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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 firstname.lastname@example.org. In the meantime, have a good season.
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