Blurring the Line Between Sports and Employment Contracts

The story of Ugo Obi

As a young striker, Ugo Obi’s agility and impressive control over the ball on the football field quickly distinguished him from his peers. His ability to wriggle his way past energetic defenders and score from any distance was second to none. This reputation eventually earned him a five-year contract with Tutuplatu FC, a tier-1 football club playing in the Nigerian Professional Football League (NPFL).

In the first two years of his contract, all seemed well, and there was no report of a clash between Ugo and the management of his new team. By the fourth year, however, the amiable relationship between Ugo and Tutuplatu’s management turned sour. The genesis of the fallout began during Tutuplatu’s League Cup final against Shawcross FC, where Ugo sustained a hamstring injury in the early stages of the game. Tutuplatu lost the cup final, but this was only the beginning of their woes: their real nightmare came a week later, when the medical report confirmed their star athlete would be unable to play for at least eight months. The news came as a major blow and threatened Tutuplatu’s position as league leaders.

Whilst battling recovery and depression as a result of his injury, Ugo got wind of a shocking discovery: Tutuplatu intended to abruptly terminate his contract. Ugo found it difficult to come to grips with the information, considering he might have healed faster had Tutuplatu not failed to disburse his injury allowance, leaving him financially incapable of affording proper medical treatment. With this in mind, Ugo decided to take formal steps against the club for breach of the fundamental conditions of his service — namely, failure to pay his injury allowance as indicated in the terms of his contract. Ugo engaged the law firm of Smith & Rothman LP to review his options and explore available remedies.

With a clear line of action in perspective, Ugo and his lawyers were ready to initiate formal steps to address his grievances, but there was a major setback: the dispute resolution clause in Ugo’s contract provided that “if there is any dispute between the Club and the Player, the Player shall, in the first instance, give a 30 days’ notice to the Club management stating grounds of dispute and if at the expiration of the 30-day period, the dispute has not been resolved, the player may refer the matter to arbitration under the Arbitration and Conciliation Act (ACA) 2004.” As straightforward as this clause appears, it raises a number of issues, particularly as to the nature of sports contracts and the appropriate method of resolving employment disputes arising from them.

Sports contracts of employment in Nigeria

Generally, a footballer’s contract of employment carries an employer-employee flavour. Contrary to popular opinion, club managements in reality exercise a considerable measure of control over their players in terms of fitness, exclusivity, and adherence to club rules and discipline — factors that have assisted the courts, in high-profile cases like Walker v Crystal Palace Football Club Ltd and Singh v National Review Board, in reaching the conclusion that sports officials, referees, managers and players may be categorised as employees rather than independent contractors, as many presume. Due to the decisions of both local and international courts, it is now firmly established that professional sports players are employees, governed by the rules of employment law that offer statutory employment protection rights, including the right to recover unpaid emoluments.

Validity of arbitration clauses in sports employment contracts

The consequence of any sports contract with an employment flavour is that the National Industrial Court of Nigeria (NICN) has exclusive jurisdiction to hear and determine employment disputes arising from it. This authority is conferred by Section 254C of the Constitution of the Federal Republic of Nigeria (1999, as amended), and even where parties attempt to extend jurisdiction to arbitration by introducing dispute resolution arbitration clauses in the sports contract, such an attempt will fail.

A detailed analysis of the ACA also reveals that nothing in its provisions contemplates the NICN enforcing an award arising from an arbitral panel set up to determine sports-employment issues. The ACA specifically acknowledges only the High Courts (Federal and State) as the forum for recognition and enforcement of its awards, meaning that should an arbitral award be obtained in respect of a sports-employment issue, the NICN — the court with exclusive jurisdiction to hear employment matters — will lack the power to enforce it.

This position was affirmed in Giuseppe Francesco E. Ravelli v Digitsteel Integrated Services Limited, where one of the parties approached the NICN requesting that the Court exercise its discretion in appointing arbitrators to resolve the dispute. Hon. Justice Kanyip held clearly that the intention of the ACA was to resolve commercial disputes, not disputes arising from labour and employment issues — and this remains the prevailing decision in Nigeria on the incorporation of arbitration proceedings in employment disputes.

In a different dimension, and with an element of twist to the foregoing, FIFA’s June 2020 revised Regulations on the Transfer and Status of Players (RSTP), at Article 22(b), discuss the competence of FIFA to adjudicate on sports disputes, stating: “Without prejudice to the right of any player or club to seek redress before a civil court for employment-related disputes, FIFA is competent to hear…employment-related disputes between a club and a player of an international dimension…” By the same Article 22(b), parties to the employment-related dispute may choose to ventilate their dispute before an independent arbitration tribunal established at national level within the framework of the Association and/or a collective bargaining agreement, provided the arbitration clause was included directly in the contract of employment or applicable collective bargaining agreement. A combined reading of Articles 22(b) and 24 reveals that the FIFA Dispute Resolution Chamber would have jurisdiction over disputes arising from player contracts with an international dimension — a provision that came into play when FIFA placed a transfer ban on Rivers United over their breach of an employment contract with Samuel Akurugu, a Ghanaian international. Applying Articles 22(b) and 24 to Ugo’s contract, the dispute resolution clause with arbitration provisions would seem effective only if Ugo were an international player, as in Akurugu’s case.

Is Section D of the NPFL Framework & Rules legally binding?

Article 59 of the FIFA Statutes generally prohibits the commencement of sports disputes before regular courts by member associations and affiliated bodies. In a bid to comply, the NPFL Framework and Rules provide that the Arbitration Committee of the Nigeria Football Federation (NFF) shall have jurisdiction to address all trade disputes between a player and a club, with the Committee’s decisions final and binding on all parties concerned.

The Constitution, as the supreme law of the land, provides that any law inconsistent with its provisions shall be void, and Section 254C confers exclusive jurisdiction on the NICN over labour-related issues. That said, Section D of the NPFL Framework Rules, which purports to confer jurisdiction on the NFF’s arbitration committee to resolve labour issues arising from sports contracts, is clearly in contravention of the Constitution and, as such, void. In sum, the NPFL Framework Rules cannot oust the jurisdiction of the NICN over labour matters arising from a sports relationship.

Perhaps the two most important reasons emphasis is placed on arbitration as an alternative dispute resolution mechanism in sports contracts are the commendable speed at which issues are resolved and the privacy it offers, unlike the public exposure of court sittings. Although the philosophy underpinning the inclusion of arbitration clauses in sports employment contracts is understandable, the NICN has over the years displayed a great deal of efficiency and dedication in resolving labour disputes, and its ADR Centre uses mediation and/or conciliation techniques to help parties resolve disputes and arrive at a mutually acceptable agreement.

While it is comforting to know provisions are in place for ADR-assisted mechanisms, it may be more reassuring to stakeholders to know that, in addition to the NICN’s ADR mechanisms, specialised tribunals or committees with the required resources and professionally trained adjudicators exist to determine employment disputes arising from complex sports transactions requiring expert skill sets. Where parties are still unsatisfied with such a special tribunal’s decision, they may request that the dispute be transferred to the general Industrial Court for regular proceedings. The NICN is capable of creating this special branch or class of tribunal by relying on Section 254C(3) and (4) of the Constitution, which provides that the NICN may establish an ADR centre for the speedy dispensation of justice, provided that nothing prevents the NICN from exercising supervisory control over the awards, decisions and rulings made by the arbitral tribunal, commission, administrative body or designated board of inquiry.

Conclusion

In all, the following lessons may be deduced from the story of Ugo’s contract and the issues arising from it. First, professional players are not in all cases independent contractors, since sports contracts are generally drafted with the intention that the club exercises a reasonable amount of control over the player — as such, most sports contracts can largely be classified as employment contracts, and players are entitled to the statutory employment rights and protection offered by the NICN. Second, the NICN is the proper court with constitutional authority to resolve sports-employment related disputes (exempting those with statutory flavour), and even where it may be appealing at the outset of a sports contract of employment to include arbitration as the mode of resolving disputes, parties must carefully consider their choice and the possibility that such a clause may be unenforceable. Finally, it is only with expert legal advice from skilled lawyers in the areas of sports and employment law that players and their clubs can navigate the murky waters of sports employment contracts and other related agreements.