We have received an increasing number of instructions from FA Registered Intermediaries (Football Agents) who have experienced difficulty in obtaining payment from clubs for monies due to them under representation contracts.
Litigation is a problem that intermediaries and clubs can do without at the best of times. It can be an expensive, time consuming and stressful, distracting attention away from everyday duties and impacting productivity.
As a result of the financial implications that COVID-19 has placed on the football market, some clubs will continue to struggle with their cash flows and we expect that in turn, intermediaries will be impacted by it too. In such circumstances there are steps both intermediaries and clubs can take to resolve the dispute.
Statutory demands
Intermediaries often favour the use of a statutory demand (a formal way of asking for a debt to be paid) as the method of debt recovery action. However, at the outbreak of the pandemic, the Government imposed a moratorium on statutory demands to temporarily restrict their use during the Coronavirus pandemic. The measures have been introduced with the aim of helping struggling businesses by temporarily removing the threat of winding-up proceedings where unpaid debt is due to COVID-19.
On 9 December 2020, the Government announced it intends to extend the temporary suspension of statutory demands and winding-up petitions until 31 March 2021. In practice, a creditor can only present a petition to wind up a company during this period where they have reasonable grounds for believing that COVID-19 has not had a financial impact on the company or that the company would have been unable to meet the demand even if coronavirus had not had a financial effect on it.
FA Rule K proceedings
Alternatively, if intermediaries are unable to obtain payment from clubs, they may decide to issue FA Rule K proceedings. This is a much more informal and less expensive process than court proceedings that would otherwise be required to pursue clubs for non-payment. There is no fee to issue FA Rule K proceedings, meaning that it is still cost effective for intermediaries to pursue clubs for relatively small amounts with a lower cost risk.
The FA Rule K proceedings can be issued provided that The FA has jurisdiction to hear the dispute and that the relevant representation contract does not expressly exclude Rule K arbitration. Rule K arbitration is a dispute resolution process set out in the Rules of The FA to resolve disputes between ‘Participants’. The definition of ‘Participants’ is extensive and includes intermediaries and clubs, amongst others.
It is commercially prudent for parties to a dispute, especially the debtor clubs, to engage in sensible discussions as soon as a problem arises in order to avoid being dragged into time consuming formal proceedings. We have been instructed at different stages of disputes but we always recommend that intermediaries attempt to contact the club and request payment as per the terms of their contract. We usually find that when attempts to resolve the dispute amicably have reached a dead end that intermediaries seek our expertise and support in procuring payment.
Once Rule K proceedings have been commenced with the FA, an arbitrator is appointed and a timetable is set for the parties to set out their cases for determination by the arbitrator.
The ideal outcome
One of the reasons that we recommend the FA Rule K arbitration process to intermediaries is the fact that there is no issue fee. Due to our experience in pursuing these claims we are able to offer intermediaries a fixed fee for pursuing an undisputed debt owed to them by a club under a representation contract. In most of the cases we have acted on so far, we have successfully recovered these fees from the club as part of a settlement agreement and therefore there is no cost to the intermediary. As with any dispute there are always a number of ways parties can approach the situation. We are always happy to discuss the best way for you to achieve a swift, commercially sensible resolution to matters, whether by way of FA Rule K Arbitration or the other means available.
If you have outstanding monies due to you by a club or would like to understand if we can help you with any other disputes you may have, please contact our Sport Team.
