Concerning these unprecedented circumstances created by ongoing COVID-19 pandemic, Guidelines provide feasible suggestions and principles both for parties and arbitrators to help and advise them regarding resolution of disputes that might have emerged from current COVID-19 crisis and aims to cope with uncertainty and create legal predictability once again.
The novel coronavirus Pandemic (COVID-19) continues to affect every aspect of the world including the sport industry. Governing bodies of sport has been putting great effort to minimize harm caused by COVID-19. In this respect, while many competitions and leagues has been postponed or canceled, which ultimately seems that remaining fixtures or schedules will be completed without any attendance of spectators. By the same token, Turkish Basketball Federation has announced all of the professional leagues had been postponed as of 19.03.2020.
Due to disrupted competition calendars, a pessimistic uncertainty has risen over the sports industry, especially regarding the fulfillment of contracts between clubs and athletes and coaches.
In order to deal with this critically extraordinary situation within basketball, as being a repercussion of COVID-19 pandemic, the COVID-19 Guidelines (“Guidelines”) has been published by the Basketball Arbitral Tribunal (“BAT”). BAT is an independent tribunal, officially recognized by the FIBA, provides institutional arbitration services for the disputes arising in the world of basketball between players, agents, coaches and clubs.
Concerning these unprecedented circumstances created by ongoing COVID-19 pandemic, Guidelines provide feasible suggestions and principles both for parties and arbitrators to help and advise them regarding resolution of disputes that might have emerged from current COVID-19 crisis and aims to cope with uncertainty and create legal predictability once again.
Most notably, Guidelines emphasizes importance and principle of attaining an amicable resolution. If one or both of the parties has failed to fulfill mentioned amicable resolution duty, Guideline states, the arbitrator may take into account this fact when rendering conclusion on the merits of the case and on arbitration costs, legal fees and other expenses.
Following these, it is also noteworthy that Guidelines indicates consequences of the COVID-19 crisis cannot be allocated solely on a party. Having said that certain exceptions to this principle also stated. Guidelines specifies that although obligation of clubs to pay salaries to players and coaches stands still, a reduction shall also be made to protect the clubs. It also includes provisions regarding the amenities that are provided by the clubs, bonuses, obligations of the players and other relevant issues.
Before proceeding to principles and suggestions, the Guidelines make following caveats in order to prevent any misunderstanding while interpreting Guidelines.
"- First, these Guidelines are of a temporary nature only, aiming to address the consequences of the COVID-19 crisis on contracts in basketball, in particular those consequences arising out of domestic championships being suspended or terminated early as a result of the pandemic.
- Second, these Guidelines incorporate principles only, to which there may be exceptions depending on the circumstances of the individual case (including, e.g., applicable public health guidelines).
- Third, these Guidelines merely reflect a consensus reached by the BAT President, Vice President and Arbitrators in their informal discussions on abstract legal issues. They are not binding rules of mandatory application and, as a matter of course, they do not affect each BAT Arbitrator’s liberty of decision in deciding an individual BAT case.
- Fourth, these Guidelines do not amend or substitute for the BAT Arbitration Rules or other rules of procedure governing international arbitrations.
- Fifth, these Guidelines will be constantly reviewed and may be subject to adjustments depending on relevant developments."
Following these caveats, the Guidelines provides its suggestions and principles, the most significantly important ones can be listed as follows.
I. Definition of Lockdown Period
Guideline defines “Lockdown Period”. Accordingly, the term “Lockdown Period” refers to the period starting on the date of suspension/termination of the relevant 2019/20 domestic championship and ending on the date on which the championship is resumed, or the original end date if it is not resumed.
II. Priority of Amicable Settlements
2. Amicable settlements are the preferred means of resolving disputes arising out of the COVID-19 crisis. Parties are under a duty to renegotiate in good faith the terms of their contract in order to resolve on an amicable basis contractual issues arising from the pandemic.
3. Any breach of this duty may be taken into account by the arbitrator when deciding the merits of the case and when deciding on arbitration costs, legal fees and other expenses.
4. Absent any general grounds for invalidity, amicable settlements entered into with a view to addressing the consequences of the COVID-19 crisis will be respected by the arbitrator. This is irrespective of whether the contents of the settlement are consistent with the further principles set out below.
5. Amicable Settlements entered into after the beginning of the Lockdown Period will be rebuttably presumed to have been executed by the parties with a view to addressing the consequences of the COVID-19 crisis.
IV. Allocation of risk
7. Clauses simply providing for a “fully guaranteed” or “no-cut” contract do not allocate economic risks associated with the COVID-19 crisis to any of the parties to the contract.
8. The consequences of the COVID-19 crisis cannot be allocated to one of the parties only, absent any clear contractual language stipulating otherwise for events sufficiently similar to the current pandemic and its consequences on basketball competitions. Without such clear language in the contract, the adverse consequences of the COVID-19 crisis shall be shared by both parties according to their respective circumstances. Conversely, where the contract contains clear language on how to allocate risks such as the COVID-19 pandemic, the arbitrator will only depart from such agreement, in accordance with established BAT jurisprudence, if the effects of such risk allocation would be grossly inequitable.
V. Termination and term of contracts
9. The principle of pacta sunt servanda shall be generally upheld in a manner consistent with the standing jurisprudence of the BAT in times of the COVID-19 crisis. Consequently, a contract is not automatically terminated because of the pandemic. Neither does the COVID-19 crisis give either party just cause to unilaterally terminate the contract.
12. If a domestic championship extends its 2019/20 season beyond the original end date to compensate (at least partially) for the Lockdown Period, the contracts between its participating clubs and their players and coaches will remain in force until the date of the last match of the respective club for that season, unless it is clear from the contract that the parties had intended for the contract to expire before the end of the (original) 2019/2020 season, or unless it would otherwise be grossly inequitable.
13. If, before the Lockdown Period, a player or coach has entered into a contract for the 2020/21 season with another team and the extended term (no. 12 above) of his or her contract for the 2019/20 season results in both contracts overlapping in time, the player/coach, the old club and the new club shall seek in good faith to solve the problem by amicable settlement, taking account of the interests involved in a proportionate and equitable manner.
VI.
Effects on the contractual obligations of clubs
During the Lockdown Period, a club’s contractual obligations towards its coaches/players shall be adapted as follows:
14. Amenities (such as car, housing, meals, health insurance): The Club shall continue to provide any amenities as provided for under the contract, provided that the player is making use of them in good faith, is dependent on them and to the extent they are proportionate.
15. Bonuses: Bonuses that fell due before the Lockdown Period continue to be owed, but their maturity shall be deferred to the beginning of the 2020/21 season in the relevant domestic championship. No bonuses shall accrue during the Lockdown Period. No bonuses shall accrue based on the placement of the club in its domestic and international championships for the 2019/20 season unless the relevant championship is completed after the Lockdown Period.
16. Salaries: The obligation of clubs to pay salaries to players and coaches must be adapted to take into account that
- during the Lockdown Period, the players’ and coaches’ obligation to provide services is largely suspended (see no. 18, 19 below for players) and that
- the COVID-19 crisis has disrupted the financial framework and presumptions based on which the contracts were executed between the parties.
Based on the above considerations, it is fair and just that the obligation of the club to pay salaries during the Lockdown Period be subject to a general reduction as follows:
a) The size of the salary reduction will depend on the player’s/coach’s monthly salary, with the following scale guiding the arbitrators’ assessment of the equitable reduction:
First EUR up to EUR 2,500/month
| Reduction by 0-20%
|
Every EUR exceeding EUR 2,500/month
| Reduction by 50% as a starting point, but subject to adjustment upwards or downwards (see below)
|
When deciding the precise percentages to apply in an
individual case, the arbitrator will take into account in particular the
following (non-exhaustive) criteria:
- the overall amount of the salary, keeping in mind that, in principle, lower salaries shall be submitted to a lower reduction than higher salaries;
- the financial situation of the club as a result of the COVID-19 crisis;
- the individual circumstances of the player/coach, in particular his or her reasonable living costs and the extent to which he or she is financially responsible also for others;
- whether the parties have complied with their duty pursuant to no. 2 above of these Guidelines and, more generally, have acted in good faith. A club will not have acted in good faith if it discriminates against a player/coach compared to its other similarly-situated players/coaches; and
- the principle of proportionality and reasonableness, in particular how the club will use any liquidity saved through the salary reduction.
VII.
Effects on the contractual obligations of players
18. The obligation of players to provide sporting services shall be suspended during the Lockdown Period, except and to the sole extent applicable public health guidelines so permit. Obligations in respect of non-sporting services shall not be suspended except to the extent inconsistent with applicable public health guidelines.
19. Players are under an obligation to stay fit and healthy during the Lockdown-Period (to the extent possible under the conditions prevailing in the relevant country) and to participate in any scheduled team activities that are permissible in the relevant jurisdiction, e.g. team meetings by videoconferencing or, subject to applicable public health guidelines, individual or group training sessions.
VIII. Agent Agreements
20. While these Guidelines focus on contractual relations between clubs and their players/coaches, arbitrators will seek to draw on the principles herein also for contractual relations with other actors, in particular agents, to the extent deemed appropriate.
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