Headline International Basketball Sports Law

The Unappealable BAT Arbitration Award And Its Effectiveness Under FIBA

The following is a guest contribution from Charles Bennett J.D.

Basketball Arbitral Tribunal (“BAT”) awards are essentially unappealable. That, along with the Arbitrator’s ex aequo et bono power, which is already a very subjective standard based on the Arbitrator’s determination of fairness for the parties, has created an almost uninhibited decisional power for the arbitrator. The lack of appeals also prohibits teams from using the appeals process to postpone payment, delay sanctions, or force players and agents to spend more money to pursue what they are owed.

Nearly all arbitration awards are appealable by some process––through the arbitral tribunal itself, the administering body, or the courts in the jurisdiction of the seat of the award. Some arbitration tribunals include a provision in the award detailing an appeals process. Many arbitration provisions themselves provide for appeals in the original contract between the parties. These provisions give the parties the power to appeal according to the terms of the provisions.

For example, from its inception in 2007 until 2010, the BAT included in every award a section titled “Appeal,” under which the following paragraph was included:

Awards of the FAT can only be appealed to the Court of Arbitration for Sport (CAS), Lausanne, Switzerland and any such appeal must be lodged with CAS within 21 days from the communication of the award. The CAS shall decide the appeal ex aequo et bono and in accordance with the Code of Sports-related Arbitration, in particular the Special Provisions Applicable to the Appeal Arbitration Procedure.

Also, prior to 2010, the BAT standard arbitration clause contained similar language outlining an appeal process. These provisions gave the parties to the arbitration the power to appeal to the Court of Arbitration for Sport (“CAS”).

In 2010 the BAT removed the appeal language from the awards and the standard arbitration clause. CAS rules grant the CAS jurisdiction to hear disputes only in limited circumstances:

R27     Application of the Rules

These Procedural Rules apply whenever the parties have agreed to refer a sports-related dispute to CAS. Such reference may arise out of an arbitration clause contained in a contract or regulations or by reason of a later arbitration agreement (ordinary arbitration proceedings) or may involve an appeal against a decision rendered by a federation, association or sports-related body where the statutes or regulations of such bodies, or a specific agreement provide for an appeal to CAS (appeal arbitration proceedings).

Thus, by removing the language in the FIBA awards and in the BAT standard arbitration clause, FIBA effectively removed BAT awards from the jurisdiction of the CAS.

BAT awards may still be appealed in Switzerland as provided in the Swiss Public International Law Act of 1987 (“PILA”). An English translation of the PILA can be found here. Specifically, Chapter 12 covers International Arbitration. Article 167(1) states:

The provisions of this chapter shall apply to arbitrations if the seat of the arbitral tribunal is in Switzerland and if at least one of the parties at the time the arbitration agreement was concluded was neither domiciled nor habitually resident in Switzerland.

So most BAT awards should be appealable under this provision because the BAT seats their awards in Switzerland. However, the scope of the appeal is extremely limited. BAT awards can only be challenged in the five ways enumerated by Article 190(2):

[An arbitration award] can be challenged only:

a. If a sole arbitrator was designated irregularly or the arbitral tribunal was constituted irregularly;

b. If the arbitral tribunal erroneously held that it had or did not have jurisdiction;

c. If the arbitral tribunal ruled on matters beyond the claims submitted to it or if it failed to rule on one of the claims;

d. If the equality of the parties or their right to be heard in an adversarial proceeding was not respected;

e. If the award is incompatible with Swiss public policy (ordre public).

Thus, by removing the appeals language from the BAT awards and the BAT arbitration provision, FIBA effectively eliminated any meaningful opportunity for appeals of BAT awards.

The lack of an effective appeal sounds great if you are on the side of players and agents. The BAT was created by FIBA to limit the number of teams breaching contracts. According to one source 40% of all contracts were breached prior to the creation of the BAT. The BAT has issued over 300 awards since 2007, the vast majority of which have been in favor of players and agents against teams.

For the first few years of the BAT, teams used the appeals process to their advantage. According to BAT statistics, 20% of BAT awards were appealed in 2008 and 15% were appealed in 2009. By appealing a BAT award, teams could challenge the award in front of a different tribunal––essentially getting a second bite from the apple. But teams could also postpone payment to the players and agents and force them to spend more money to collect the what they are owed. An appeal to CAS meant the player or agent had to pay more costs and more attorney’s fees. One can imagine many players and agents would settle for less than the face value of the BAT award rather than spend more money on attorney’s fees and wait another year or more for a CAS decision. Appealing awards also prevented FIBA from sanctioning the teams and preventing them from hiring foreign players.

After the elimination of the appeals language from the BAT awards and the arbitration provision, the number of appeals dropped to 0 in 2013. During that same time period, the number of arbitrations rose 568% (from 25 in 2008 to 142 in 2013).

However, the BAT system that evolved from the elimination of the appeals process is a system of unchecked and unharnessed power by the arbitrator. As I wrote in a previous post, several federations across Europe have enacted regulations that attempt to eliminate the BAT as an option for players and agents to use against teams. This is likely a response to teams complaining to their federations that they are losing too many BAT arbitrations and cannot appeal the decisions. In the near future, FIBA will likely have to step in to make clear that the federations cannot eliminate the BAT as an option for players and agents against teams.

Charles Bennett is the CEO and Executive Director of the IBPA and currently clerks at BFSN Law while awaiting his results from taking the Texas Bar in July 2014. Mr. Bennett played professional basketball in Europe from 2001–2008 and graduated cum laude from SMU Dedman School of Law in May 2014.

Email him at [email protected], find him on LinkedIn, follow him on Twitter at @IBPA_Basketball, and follow IBPA on Facebook.

By Darren Heitner

Darren Heitner created Sports Agent Blog as a New Year's Resolution on December 31, 2005. Originally titled, "I Want To Be A Sports Agent," the website was founded with the intention of causing Heitner to learn more about the profession that he wanted to join, meet reputable individuals in the space and force himself to stay on top of the latest news and trends.

Heitner now runs Heitner Legal, P.L.L.C., which is a law firm with many practice areas, including sports law and contract law. Heitner has represented numerous athletes and sports agents as legal counsel. He has also served as an Adjunct Professor at Indiana University Bloomington from 2011-2014, where he created and taught a course titled, Sport Agency Management, which included subjects ranging from NCAA regulations to athlete agent certification and the rules governing the profession. Heitner serves as an Adjunct Professor at the University of Florida Levin College of Law, where he teaches a Sports Law class that includes case law surrounding athlete agents and the NCAA rules.