Source: https://www.lawinsport.com/topics/articles/item/a-review-of-the-cas-panel-s-decision-in-ac-milan-v-uefa-the-devil-is-in-the-procedural-detail
Timestamp: 2019-04-24 12:37:56+00:00

Document:
In the midst of turbulence from the recent Football Leaks1 indirectly affecting - among other issues – the Club Licensing and Financial Fair Play Regulations (CL&FFP Regulations) in European football, the Court of Arbitration for Sport (CAS) published the full award in the case AC Milan v. UEFA2.
The case relates to a sanction that was imposed by the UEFA Club Financial Control Body (UEFA CFCB). According to the first-instance decision, the Adjudicatory Chamber of the UEFA CFCB initially determined that AC Milan failed to fulfil the break-even requirement of Articles 58 through 63 of the UEFA CL&FFP Regulations, and excluded AC Milan from participating in the next UEFA club competition for which it would otherwise qualify in the next 2 seasons (i.e., in 2018/19 and 2019/20).
Back in 2017, Fininvest S.p.A. sold 99.93% of the shares held in AC Milan to Rossoneri Sport Investment Lux (hereinafter HoldCo) for EUR 740 million. The latter was then controlled by a Chinese investor, Mr. Li.13 HoldCo concluded a loan agreement with the company Redblack Sàrl for EUR 202 million with a maturity date of 15 October 2018. Redblack, a private limited liability company founded under the laws of Luxemburg, is advised by Elliott Advisors (UK) Limited (Elliott), which is indirectly controlled by Elliott Management, an American fund manager. The loan provided by Redblack to HoldCo was secured against the shares of AC Milan and Holdco.
The Shareholders’ meeting in May 2018 decided, among others, to increase the share capital of AC Milan upto EUR 49,920,000. However, after HoldCo failed to make a EUR 32 million capital contribution in June 2018, Redblack injected this amount instead of HoldCo, which in turn failed to pay the amount back to Redblack and such default entitled Redblack to enforce the relevant pledge agreement and become the new controlling shareholder of AC Milan.
AC Milan challenged the UEFA Decision on the grounds of proportionality, a principle warranted under both EU competition law and Article 28 Swiss Civil Code that protects personality rights.18 It submitted that, instead of imposing a sanction on the Appellant, the CFCB should have concluded a settlement agreement with the Club, an “obviously” less severe measure that was available. It also submitted that the UEFA Decision was based on errors of fact or that the facts were not correctly assessed.
Interestingly, the CAS Panel accepted the (late) submission of a new document by AC Milan (on July 19, 2018) in the form of an updated profit and loss comparison forecast for the season 2017/2018 notwithstanding an objection by the UEFA. The CAS Panel based its decision on Article R56 CAS Code and considered as “exceptional circumstances” the fact that the proceedings were conducted on an expedited basis and that AC Milan could not have produced such document at an earlier stage of the proceedings.26 It It must be noted that the (late) submission of a document and its acceptance by the Panel based on “exceptional circumstances”27 can be decisive for the outcome of the case.
Finally, the CAS Panel considered that the fact that the parties agreed to an expedited procedure weighed in favor of reverting the case to the previous instance (as per Article R57 CAS Code) since the Panel was “not in a position to fully investigate and assess the factual basis of the case”.28 This, however, brings us back to the more general question of suitability of expedited procedures in similar – factually and evidentiary – complex cases. Indeed, the advantages of an expedited procedure (linked to the need for an urgent and final resolution of the case) could be “diluted” in cases where the Panel opts to revert the case back to the previous instance.
In line with established CAS case law, the Panel held that whether or not a decision of a sports federation is appealable is a matter of substance and not of form, in the same way that a letter (which never contains an “operative part”) can also be an “appealable decision”.32 Furthermore, it is necessary to determine whether the decision affects the legal position of the addressee, independently of the rules of the federation and in line with the jurisprudence of the Swiss Federal Tribunal and the general principle of access to justice.
The CAS Panel proceeded to an interpretation of the UEFA Procedural Rules (in particular Article 34 thereof) and held that the latter do not provide for a separate appeal against the Referral Decision, a finding that was further confirmed by UEFA’s practice.33 Interestingly, the Panel found that the decision of the CFCB Investigatory Chamber not to conclude a settlement agreement with AC Milan would not affect the latter’s rights, since it did not predetermine the outcome of the case.34 Therefore, to the extent that the Referral Decision was not a separately appealable decision, AC Milan’s appeal to the CAS was considered as admissible in its entirety.
Even though the analysis made by the CAS Panel is based on the broad discretion of Article R57 CAS Code, one may question how an appealed decision can be found to be disproportionate if it was logically based on facts that were available at the time the decision was rendered, and not on evidence that did not previously exist. The Panel seemed to acknowledge this problem linked to the de novo hearing and lack of legal certainty in para. 132 of the award.
It noted, however, that the UEFA Procedural Rules lack a specific reference in this respect in order to delimit the point in time where the correctness of a decision must be assessed. This, in the author’s view, indirectly calls for an addition/ precision of the relevant rules in order to enhance legal certainty with respect to the relevant reference date.
The Merits of the Appeal – a Detail?
We should not forget that, within the context of international arbitration and notwithstanding the influence of lex sportiva, the findings of this CAS Panel do not have an absolute precedential value, but relate to the specific and sui generis legal framework of the UEFA CL&FPPRegulations and the even more specific circumstances surrounding the particular case.
Notwithstanding the above, the CAS Award in the case AC Milan v. UEFA is a very important ruling not necessarily because the factual issues raised that are of utmost timeliness, but because it raised important and decisive procedural matters including the depth of review by the CAS Panel and the point in time where factual and legal evidence can be adduced before CAS. In our view, and in order to enhance legal certainty as to the point in time where the factual assessment should take place, a regulatory amendment of the UEFA Procedural Rules might be advisable.
The CAS Panel concluded in its operative part that the CFCB Adjudicatory Chamber is called to issue a “a proportionate disciplinary measure”. What will be the outcome and whether the current developments surrounding other clubs will influence the decision-making process in this case, remains to be seen.
4 On July 10, 2018 Elliott Management (an American fund company) acquired AC Milan and promised a financing of EUR 50 million, see also CAS 2018/A/5808 para. 14.
5 See CAS 2016/A/4492, Galatasaray v. UEFA, award of October 3, 2016 (operative part of October 2, 2016), https://www.uefa.com/MultimediaFiles/Download/uefaorg/CASdecisions/02/42/66/95/2426695_DOWNLOAD.pdf In the Galatasaray case, the Panel rejected this criticism and found that the objectives of the CL&FPpRegulations were legitimate and the restrictions were inherent to the achievement of the objectives.
6 The only aspect of the rules challenged in the AC Milan v. UEFA case related to the legality of the « settlement agreements » and was swiftly dismissed by the Panel, see CAS 2018/A/5808, paras. 139 f.
7 See CAS 2016/A/4492, para. 79.
8 See MAVROMATI/REEB, The Code of the Court of Arbitration for Sport: Commentary, Cases and Materials, 2015, Kluwer Law International, Ad Article 57 CAS Code, pp. 506 ff.
9 See Article 2 of the UEFA CL&FFPRegulations (2015 Edition).
10 See Article 59 (a) to (c) of the UEFA CL&FFPRegulations, see also generally CAS 2018/A/5808 paras. 15 f.
11 See Article 60 (2) of the UEFA CL&FFPRegulations.
13 See CAS 2018/A/5808 paras. 6 ff.
14 See also Annex XII (A) (2) (i) of the UEFA CL&FFPREgulations.
16 See CAS 2018/A/5808 para. 39.
18 See CAS 2018/A/5808, para. 77 (d) ff.
19 See CAS 2018/A/5808 para. 101 and para. 103.
20 See also para. 101 of the CAS Award.
21 This was indirectly held in the Swiss Federal Tribunal 4A_730/2012, X. v. IAAF, Judgment of April 29, 2013, at 3.2.2.
22 See CAS 2018/A/5808, para. 107 and para. 108.
23 See CAS 2018/A/5808, para. 114.
24 The other requests related to “any business plan(s) submitted by the above-mentioned clubs during the proceedings before UEFA” and “documents establishing the assumptions on which each club’s relevant business strategy was based”, see CAS 2018/A/5808 para. 109.
25 See CAS 2018/A/5808, para. 116.
26 See CAS 2018/A/5808 para. 119. According to Article R56 CAS Code, the parties cannot produce new exhibits or specify new evidence after the submission of the appeal brief and of the answer unless the «parties agree otherwise or the President of the Panel orders otherwise on the basis of exceptional circumstances».
27 The Panel has the full discretion to accept or deny the late production of evidence based on Article R56 CAS Code and this cannot subsequently be challenged by the Swiss Federal Tribunal (unless other grounds for challenge are met), see e.g. Swiss Federal Tribunal 4A_312/2012, Judgment of 1 October 2012, X. v. Y., at 4.2.2.
28 See CAS 2018/A/5808 para. 159. Notwithstanding the above, the CAS Panel was apparently in a position to find that the previous instance «has not assessed the relevant facts correctly or that the facts have changed by the time of the Panel’s hearing (on 19 July 2018)» (ibidem, para. 157).
29 However, the UEFA Europa League 2017/2018, to which AC Milan has submitted, provides in its Article 4.02 that the parties must agree that “(…) any proceedings before the CAS concerning admission to participation in or exclusion from the competition will be held in an expedited manner in accordance with the CAS Code of Sports-related Arbitration and with the directions issued by the CAS …”.
30 All decisions provided for in Article R57 of the CAS Code (reverting the case back to the previous instance, annulling the appealed decision or rendering a new decision) are at the full discretion of the Panel.
31 See CAS 2018/A/5808, para. 91.
32 See CAS 2018/A/5808, para. 95; see also MAVROMATI/REEB, The Code of the Court of Arbitration for Sport: Commentary, Cases and Materials, 2015, Kluwer Law International, Article R47 no. 13 et seq.
33 See CAS 2018/A/5808 para. 98.
34 See CAS 2018/A/5808, para. 99.
35 Or, as the Panel put it «The Parties are in dispute with respect to certain elements of this mandate», including the «decisive reference date» and the «depth of scrutiny» (CAS 2018/A/5808, paras. 129 ff.).
36 CAS 2018/A/5808, para. 130.
37 See CAS 2018/A/5808, para. 133.
38 See CAS 2013/A/3139, Fenerbahçe Spor Kulübü v. UEFA, award of December 5, 2013, para. 114; CAS 2012/A/2762 CAS 2012/A/2762, Bayer 04 Leverkusen v. UEFA, Award of 15 March 2013, para. 122; CAS 2011/A/2645, UCI v. A. Kolobnev & RCF, Award of 29 February 2012, para. 44.
39 See CAS 2018/A/5808, para. 134.
40 See CAS 2013/A/3139, Fenerbahçe Spor Kulübü v. UEFA, award of December 5, 2013, para. 86.
41 See also CAS 2010/A/2283, P. Bucci v. FEI, award of June 23, 2011 para. 14.36. See also other references in CAS 2018/A/5808, para. 136.
42 See CAS 2018/A/5808, para. 136.
43 See CAS 2008/A/1718 to CAS 2008/A/1724, IAAF v. All Russia Athletic Federation & Yegorova et al., Award of November 18, 2009, para. 166.
44 See Article 15 (2) of the UEFA Procedural Rules, see also CAS 2018/A/5808 para. 140.
45 CAS 2018/A/5808, para. 142.
46 The facts upon which the appealed decision was based included the Club’s failure to comply with the break-even requirement; doubts concerning credibility of the business plan and the refinancing operation concerning the debts of Redblack; possible change of ownership; and doubts concerning AC Milan’s ability as a going concern (CAS 2018/A/5808, para. 145).
47 CAS 2018/A/5808, para. 151 and 153.

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