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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."

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 In the meantime, have a good season.   

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