Football Stars’ Trouble

Maggie Jia

Maggie Jia is a partner and heads the firm’s Employment & Compliance practice.

Football players have always shown a popular image of a well-paid career. However, behind the spotlight, they may also have the same troubles as normal employees. On May 2020, Liaoning Hongyun Football Team, despite its 67-year history, had its license and registration revoked by the Chinese Football Association (“CFA”) and then officially announced dissolution. Since then, the players have been struggling to obtain back pay.

Several issues are at play: because the membership of Liaoning Hongyun Football Team has been cancelled, the Arbitration Committee of CFA won’t accept the dispute; the Labor Arbitration Committee also refused to accept; and Shenyang Heping District People’s Court dismissed the action, stating that “the mediation and arbitration of this dispute shall be conducted by a sports arbitration institution”. Shirking of jurisdiction created a circular loop. Below, we offer some analysis on the legal issues.

1.Football players are employees protected by labor laws.

This dispute involves following three parties: CFA, Liaoning Hongyun Football Club and players. In accordance with Articles of Association of CFA, CFA is a non-profit corporation responsible for registration and management of clubs and players; clubs are organizations registered through the CFA with independent legal personalities; players are athletes registered in CFA or CFA members. In practice, players play in the name of the club and accept the daily management together with the arrangement of the club; the club pays the players.

Accordingly, the relationship between the club and the players meets the requirements to be deemed a labor relationship, and shall be regarded as labor relationship. So, in accordance with the instructions of the relevant authorities, the club should abide by their labor contracts and make a prompt full payment to them in accordance with the labor contracts.

2.Chinese law provides for resolution of these labor disputes.

The current Sports Law and the Working Rules of the Arbitration Committee of the CFA grant specific jurisdiction to deal with football-related disputes to the Arbitration Committee of CFA.

While there is some dispute about this, it holds up in practice. The main reasons are: 1. There is a labor relationship between the club and the players, so the Labor Law, Labor Contract Law and other provisions shall be applied to judge the disputes between two parties; 2. Although the sports industry is unique in many ways, the differences are not enough to preclude this jurisdiction.

3.The trend of dispute resolution in the football industry.

Liaoning Hongyun Football Team’s predicament can be at least partially attributed to a perceived grey area between the dispute resolution mechanism of the sports industry and Chinese Court jurisdiction.

With this in mind, perhaps the dispute resolution mechanisms of foreign competitive sports activities is worthy of reference. Article 54 (2) of Articles of Association of CFA clarifies the jurisdiction of FIFA over the foreign football activities. If the player is not satisfied with the result of FIFA, he/she can appeal to the Court of Arbitration for Sport (CAS). CAS is the foremost authority for disputes resolution in the international sport world. The salary arrear dispute between Drogba and Shanghai Shenhua in 2013 was appealed to CAS through this process.

In May 2020, Beijing Chaoyang District People’s Court sent a judicial advisement to the General Administration of Sport and CFA requesting the acceleration of establishment of a specialized sports arbitration system, and suggesting that sports associations should not restrict the rights of their member units and the players to sue to the courts for sports disputes. In this regard, CFA agreed to consider and vote to delete “no dispute to the court” in the next general assembly. The proposal of deleting “arbitration award shall be final and binding” will be further discussed.

If you are interested in or have any questions about the legal issues in this article, please feel free to contact us.