On 11 April 2019, the Brussels Court of Appeal dismissed an action lodged by a number of players' agents and club supporters challenging the validity of UEFA's Financial Fair Play rules, which prohibit clubs participating in UEFA competitions from overspending. In a judgment that echoes an earlier decision of the Paris Court of Appeal in relation to similar actions brought before it, the Brussels Court of Appeal found that it lacked the competence to rule on the merits of the case, as the damage alleged by the claimants was too indirect to establish the jurisdiction of the Belgian courts.
Ashurst acted as co-counsel in this litigation both before the Belgian and the French courts.
| what you need to know - key takeaways |
- Under the rules of jurisdiction set out in the Lugano Convention, it is possible for claimants to bring damages actions in the jurisdiction where the harmful event occurred (e.g. where cartel agreements were concluded) and/or where the damage was suffered.
- Indirect damages (i.e. damages that are not the direct and immediate consequence of the alleged competition infringement) are not sufficient to establish the jurisdiction of the courts of the Member State in which the claimants have their registered office/domicile.
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Background
UEFA's Financial Fair Play ("FFP") rules were introduced in 2010 to improve financial discipline and ensure the long-term viability of European football clubs. FFP's main pillar is the "break-even" rule which requires clubs participating in UEFA competitions to balance their books (broadly meaning that their 'core' expenses cannot exceed their 'core' revenues). Since its entry into force, FFP has been the object of lengthy litigation in various fora, as a number of claimants (players' agents and club supporters) filed complaints with the EU Commission and brought proceedings before the French and Belgian courts claiming that FFP was restrictive of competition and also impeded the free movement of capital and players by constraining clubs' recruitment policies. These claimants also sought damages for the harm allegedly suffered by them as a result of FPP (i.e. a loss of revenues for players' agents, and an increase in ticket prices and/or a decrease in the quality of games for supporters).
In the context of proceedings in Belgium, the Brussels Court of First Instance ("CFI") had rendered a judgment on 29 May 2015. In its judgment, the CFI had concluded that it had no jurisdiction to rule on the case. Notwithstanding that lack of jurisdiction, the CFI granted the interim measures sought by the claimants and also made a preliminary reference to the European Court of Justice ("ECJ") seeking a ruling on the compatibility of FFP with EU law. The CFI's judgment granting interim measures was appealed by UEFA. A cross-appeal on jurisdiction was brought by the claimants. On 16 July 2015, the ECJ dismissed the preliminary reference as "manifestly inadmissible" on the ground that it originated in a court with no competence to rule on the merits and also lacked the necessary precision to allow it to give a preliminary ruling on the questions referred.
Brussels Court of Appeal judgment
On 11 April 2019, the Brussels Court of Appeal upheld UEFA's appeal finding that the CFI should not have granted interim measures after finding itself incompetent to rule on the case.
On the cross-appeal lodged by the claimants, the Court sided with the CFI in finding that the Belgian courts had no competence to consider the claims against UEFA. In particular, the damages alleged by the claimants, on the assumption they could be established, were not sufficiently direct and immediate to establish the jurisdiction of the Belgian courts on the basis of Article 5(3) of the Lugano Convention (giving competence to the courts of the state in which the harmful event occurred and/or where the damage was suffered). This judgment echoes the position taken by the Paris Court of Appeal in respect of similar actions in 2016. In that instance, the Paris Court of Appeal had also declined jurisdiction on the basis that the damage alleged by the claimants was too "indirect and uncertain".
The Brussels Court of Appeal therefore dismissed the action against UEFA without considering the merits.
Finally, the claim had also been brought against the Belgian football union (URBSFA). That part of the claim was also dismissed on the grounds that URBSFA was in no way involved in the adoption or enforcement of FFP, so that any possible fault would not be attributable to it.
With thanks to Antoine Accarain of Ashurst for his contribution.
