1ST INTRA UNIVERSITY MEDIATION

TOURNAMENT CUM POOL SELECTIONS

Fair is Foul
&
Foul is Fair
FINAL ROUND
PROBLEM
ORAL ROUNDS:
21-23 AUGUST, 2020

CREATED BY:
SOHAIL HAFESJEE & KEVIN JOSEPH
 BACKGROUND TO THE DISPUTE:

Football. They say it’s akin to a religion. Some would disagree. It’s more

than that, they would assert.

Ever since the fall in oil prices and the efforts by the western world in adopting sustainable sources

of energy, OPEC Nations have enacted a long-term vision to diversify their economies and

improve their image around the world. To implement this vision, OPEC Nations have established

Wealth Sovereign Funds tasked with investing petro-dollar reserves into industries, with the

following objective:

a) To ensure that OPEC Nations can reduce their dependency on oil exports, in an increasingly

carbon-conscious world; and

b) to improve their reputation and public image in the global narrative.

The Republic of Wadiya has been the most active OPEC Nation in this regard. Its leader, General

Haffaz Aladin has ruled Wadiya for several decades and has ushered in an era of prosperity for

most of its citizens. However, he is extremely conscious of the dependency of Wadiya’s economy

on oil. While efforts are underway to diversify the Wadiyan economy, countries around the world

are reluctant to openly embrace Wadiya into their economies. This reluctance stems from, among

other things, constant reports of Wadiya’s abysmal human rights record and discrimination against

minorities and women.

In 2009, the Wadiya Wealth Sovereign Fund (“WWSF”) acquired full ownership of the football

club, Man Sheety FC, a largely popular, but recently flailing football club in England. Ever since

WWSF’s acquisition and subsequent funding, Man Sheety has grown amongst the ranks of

European football clubs. With a dazzling array of trophies and achievements, Man Sheety has risen

to become one of the top football clubs in the world. This investment by the WWSF has paid off,

since Wadiya has received positive publicity for its role in changing the fortunes of a beloved

football club. Man Sheety is a prized possession of General Aladin and a symbol of Wadiya’s

commitment to integrate with the rest of the world.

The Union of European Soccer Association (“UESA”) is the private governing body of all

football clubs in Europe. Their mandate stems from the UESA Statute which all football clubs in

Europe are a signatory to. In addition to their administrative duties, they also host the UESA Club

Competitions, the most prestigious competitions for football clubs to participate in. In recent years

however, UESA has been marred by allegations of corruption and embezzlement. Many

commentators have reported on UESA’s lack of efforts in supporting the development of football,

particularly women’s football, in poorer regions of the world and have accused UESA of peddling

in political and monetary influence.  

UEFA has recently been plagued with the public perception that it is an old white man’s country

club, without adequate representation of people of colour or female members, it is a perception that

they wish to change to keep up with the current times.

REGULATORY FRAMEWORK:
Article 50(1) of the UESA Statute empowers UESA to draw up regulations governing the

conditions of participation in, and the staging of UESA competitions. Based on Article 50(1) of the

UESA Statute, the UESA has enacted the UESA Club Licensing and Financial Fair Play

Regulations (“CL&FFP Regulations”). The purpose of the CL&FFP Regulation is to promote

financial fair play in UESA club competitions by improving the economic and financial capability

of the football clubs, ensuring sustainable spending, preventing unfair competition and generally

introducing more discipline into football club finances.

 

The CL&FFP Regulations are enforced by the UESA Club Financial Control Body (“CFCB”).

The CFCB consists of an Investigatory Chamber (“IC”) responsible for the investigation phase of

the proceedings (headed by the CFCB Chief Investigator) and the Adjudicatory Chamber (“AC”)

responsible for deciding the cases brought before it by the IC (headed by the President of UESA).
 

The CL&FFP Regulations provide for the monitoring of the clubs eligible to play in UESA club

competitions. One of the criteria to be examined in this monitoring process is the so-called “break-

even requirement”. This criteria aims at preventing clubs from building up unacceptable levels of

financial losses and excessive spending. The break-even result is calculated for a monitoring period

comprising of 3 years. No football club’s operational expenses may exceed its operational revenue

in any single monitoring period. If any club’s break- even result is negative, the AC is empowered

to impose a wide range of sanctions which include fines for non-cooperation with the IC,

temporary suspension from participation in UESA Club Competitions, ban on acquiring/employing

new players etc. The AC is also empowered to grant relief from sanctions or enter into settlements

with football clubs, if it deems fit. All decisions of the AC can be appealed to and enforced by

Tribunal for Arbitration in Sport (“TAS”) whose award is final and binding.

As per the CL&FFP Regulations, the following constitutes Operational Revenue:

 

a) Ticket Sales

b) Player Sales

c) Sponsorship Fees

d) Broadcasting Revenues

The following is considered as Operational Expenses:

a) Player Purchases

b) Wages of Players and Supporting Staff

c) Travel Expenses
Equity injections by owners of football clubs are not considered as Operational Revenue for the

purposes of the CL&FFP Regulations. For instance, in a relevant monitoring period, if a football

club spends more money on buying players than it earns through Operational Revenue, its owner

may not inject more money into the club to cover up the deficit. Further, investments in stadiums,

training facilities, youth development and women's football are not included in the break-even

calculations and do not form part of Operational Expenses.

Rules relating to Related-Sponsor Revenue

 

In order to prevent football clubs from circumventing the break-even requirement by showing

inflated sponsorship revenues earned through sponsors related to the owners of the club, Article 87

of the CL&FFP Regulations states the following:

 

“If a club's owner injects money into the club through a sponsorship deal with a company to which

it is related, then UESA's competent bodies will investigate and, if necessary, adapt the

calculations of the break-even result for the sponsorship revenues to the level which is appropriate

('fair value') according to "market prices.”

 

While the wordings of the above provisions is vague, legal practitioners and jurists have construed

the above to mean that sponsorship revenue from sponsor which is directly or indirectly related to

the club’s owner, must be valued in accordance with the prevailing market prices. The prevailing

market prices depend upon the stature of the football club in question. For instance, sponsorship of

a famous and well-known club would be priced higher and vice versa.

BACKGROUND OF THE DISPUTE:

In the monitoring period between 2009-11, Man Shitty reported a negative break-even of Euros 5

Million. Since Man Shitty had just emerged from an acquisition by the WSF, CFCB decided to

waive off sanctions and allowed Man Shitty to continue to participate in UESA Club Competitions,

with a strict stipulation that any deviation from the break-even requirement in the next monitoring

period would result in an immediate two (02) year suspension from UESA Club Competitions and

a ban on purchasing new players for a period of one (01) year.

In the monitoring periods between 2012-14, Man Shitty reported a break-even surplus of Euros 10

Million. Man Sheety was largely able to achieve this through sponsorship revenue earned from its

new sponsor, Wadiyaad Airways, signed in 2013. Wadiyaad Airways is a private airline operating

out of the Republic of Wadiya partly owned by several prominent state actors including General

Aladin himself. Wadiyaad Airways and Man Sheety had entered into a ten (10) year Sponsorship

Agreement whereby Man Sheety would display the Wadiyaad Airways logo on their jerseys in

exchange for Euros 60 Million per year.

Since the prevailing market rate for jersey sponsorships of a club similar to the size and reputation

of Man Sheety was only Euros 30 Million per year, the Investigatory Chamber of CFCB initiated

inquisitions as to whether Man Sheety had priced their sponsorship fee fairly. The Investigatory

Chamber concluded that Man Sheety should have priced their sponsorship at no more than Euros

40 Million per year from Wadiyaad Airways. If the Investigatory Chamber’s Report had been

accepted by the CFCB, it would mean that Man Sheety had overcharged Wadiyaad by Euros 20

Million, which would result in a break-even deficit of Euros 10 Million.

 

However, the AC concluded that Man Sheety’s valuation of their Sponsorship Agreement with

Wadiyaad Airlines was fair and decided to take no further action against them. This decision by the

AC was met with widespread criticism. Many investigative journalists reported that General Aladin

had allegedly promised Mr. Surgen Flopp, the then President of UESA, to fund his re-election

campaign, in exchange for Mr. Flopp pressurizing the AC to not accept the Investigatory

Chamber’s Report. 
 

In 2020, fresh allegations of collusion and corruption by UESA arose. Additionally, "Wir haben

dich", a German Media House leaked a series of emails exchanged between the Boards of WWSF

and Wadiyaad Airlines. These emails dated back to 2013 and revealed that Wadiyaad Airlines was

reluctant to sponsor Man Sheety for Euros 60 Million per year as they felt that a valuation of Euros

30 Million per year was more appropriate. However, Wadiyaad Airlines only agreed to the

sponsorship fee of Euros 60 Million because WWSF had promised to kick back Euros 30 Million

per year. This kick back would be funded by General Aladin himself.

The leaked emails shook the footballing world, and the pressure mounted on UESA and the CFCB

to take strict action against Man Sheety. The new President of UESA and the AC, Mr. Jose

Sourinho was determined to rid the UESA of the reputational damage it had suffered in the regime

of its previous President and publicly vowed to not let Man Sheety escape from the consequences

of its indiscretions, if they were found guilty of circumventing the CL&FFP Regulations.

The Investigatory Chamber initiated its investigation on the basis of the leaked emails. However,

Man Sheety refused to cooperate or provide them with any access to the servers. Since UESA is

only a private administrative body without any judicial powers, the IC was unable to compel Man

Sheety to cooperate with its investigation.

The IC, in its report to the AC recommended an:

a)     imposition of a fine of Euros 50 Million for not cooperation by Man Sheety; and

b)     a ban from participating in UESA Club Competitions for a period of (02) years.

As per protocol, the IC’s report was provided to Man Sheety, while the AC was deliberating upon

it. 
 NEGOTIATIONS:
The proposed fine of Euros 50 Million has not irked Man Sheety. However, since the next UESA

Club Competition is scheduled to begin on 30/09/2020, they were determined to try and reach a

negotiated settlement with AC prior to its decision. Further, General Aladin is extremely concerned

by the negative publicity Man Sheety has received due to the alleged scandal which couldn’t have

come at a worse time, since it was imperative to improve Wadiya’s reputation if it had any chance

of surviving in a post oil world. To this end, Man Sheety approached the AC to organize a private

discussion with Mr. Sourinho.

Mr. Sourinho, while being mindful of the growing calls for action to be taken against Man Sheety,

decided to acquiesce to Man Sheety’s request. While the AC was determined to accept the IC’s

recommendations, Mr. Sourinho was only happy to speak to Man Sheety before the AC rendered

its decision since he feared that TAS may refuse to accept leaked emails as valid evidence and

overturn the AC’s verdict. This was further, in light of the directive of the "Board of UESA" for a

"no controversy season" with any violation raising an alarm for tenure in the future.

In case the verdict of the Investigative Chamber adversely damages Sheety’s public perception, a

lot of key players and their superstar manager Kepa Fraudioula might wish to depart from the club

to other famous clubs like Moneychester United, Ronventus and Barcleoneila. 

The negotiation was scheduled for 18/08/2020 and it was decided that the session would be

administered by a third-party mediator to ensure decorum in the process.

Man Sheety will be represented by its CEO, H.R.H Al-Chishaan opra-bin Mubarak and its legal

counsel while UESA will be represented by Sourinho and its legal counsel.
GUIDELINES FOR THE PROBLEM
[not part of the dispute]

1. The factual matrix and regulatory framework stated in the Final Problem has been inspired by

the negotiations that took place between the Union of European Football Association (“UEFA”)

with AC Milan and Man City respectively. Participants are welcome to read into the background of

these negotiations. However, knowledge of the same, or indeed of football, confers no advantage.

Participants are strongly discouraged from approaching the Final Rounds with any pre-conceived

notions founded on the knowledge of the aforementioned real-life negotiations or the sport in

general.

2.  The facts, persons and events depicted in the Problem, although inspired, are fictional and are

prepared solely for the educational exercise being conducted in the competition. Any resemblance

to actual persons is unintentional and purely coincidental.

3.  Participants are encouraged to develop solutions that are grounded in commercial and social

realities wherein each party looks at securing larger interests, even at the cost of smaller

concessions.

4.  Each team shall be allowed to submit two (02) clarification questions on the Final Problem and

those questions may not contain sub-parts. All questions must be submitted to the ADRC by 17th

August, 2020. The ADRC retains full discretion to refuse to answer any question, if answering the

same would compromise the integrity and spirit of the competition itself. All questions and their

answers shall be published to all Participants by 18th August 2020.

5. Teams are strictly forbidden from communicating their Confidential Information to each other

in any way, from the moment the same is distributed to the conclusion of the final round. Strict

action shall be taken against any participant who sends or solicits the Confidential Information

from any other team.