An arbitral tribunal, in an award published today, has upheld the jurisdiction of the Premier League to investigate and refer Leicester City FC (LCFC) to an independent commission for alleged breach of the English Football League’s Profitability and Sustainability Rules for the 2023/24 season.
The Tribunal (consisting of Michael Crane KC, Lord Neuberger and Lord Mance) held that the EFL validly transferred responsibility for its investigation to the Premier League in June 2024, when the club was promoted from the Championship.
The arbitration also considered a further issue as to whether the Premier League had jurisdiction to investigate LCFC for alleged breach of the Premier League’s own Profitability and Sustainability Rules for the 2022/23 season. LCFC was a member of the Premier League during that season, but was relegated at the end of it. Initially, a Commission held that it did have jurisdiction, but this was overturned by an Appeal Board. The Appeal Board considered that, because the relegation had taken effect prior to LCFC’s accounting year-end date in 2023, LCFC was no longer a “Club” to which the relevant rules could apply. The Premier League challenged the Appeal Board’s decision in the arbitration. The Tribunal has decided that the Appeal Board’s decision was wrong. However, the test to overturn the decision was whether it was the result of a “perverse interpretation of the law”, which the Tribunal did not find it to be. Accordingly, the Premier League’s challenge in respect of 2022/23 was dismissed.
A point of wider interest in the award concerns the principles of contractual construction, discussed at paragraphs 52-83. The Appeal Board had held that a club should be able to determine its conduct and liabilities “from the words of the Rules” and, unless the words were “truly ambiguous or nonsensical”, should not have to consider the “unwritten intentions” of the parties. The Tribunal, however, held that it was “not just permissible but obligatory” to have regard to the context in which an agreement was made, in deciding what a reasonable person in the position of the parties at the time of the agreement would have understood it to mean. The Appeal Board had therefore erred by adopting the approach rejected the Supreme Court in Rainy Sky v Kookmin Bank. The Tribunal also endorsed the approach of Popplewell J in Europa Plus SCA IF v Anthracite [2016] EWHC 437 (Comm) regarding the weight to be afforded to defined terms in the process of contractual construction; this may lead to the conclusion that the parties did not intend the defined term to bear the defined meaning in the provision in question.
The Tribunal’s award can be found here.
Conall Patton KC acted for the Premier League, instructed by Linklaters LLP.