The world of professional basketball is a universe in constant motion, and the focus of the action is not only in the playing rectangle, but also behind the desks, where strategies and contracts are produced and signed. And what happens when these agreements are broken?
Until the early 2000s, about 40 percent of basketball players’ contracts were breached by clubs, leaving athletes, coaches and their agents at an unpleasant disadvantage. The International Basketball Federation (FIBA) responded with the creation of the Basketball Arbitral Tribunal (BAT), an institution designed to restore balance and ensure justice and speed in disputes.
In this post we will explore how the BAT has transformed the international basketball landscape, offering a detailed perspective on the procedures, principles, and impact of this revolutionary arbitral institution.
Introduction
In the early 2000s, it was estimated that around 40% of all basketball players´ contracts were breached by their clubs[1] since at that time the national legal systems tended to work in favour of the clubs and in disadvantage of international players, coaches and their agents.
Both the lack of specific legal knowledge and experience of international players, coaches and agents to the national mandatory laws of the clubs´ domicile, which normally operated by default and used to prevail over contractual arrangements, as well as the practical difficulties of taking a legal action in a foreign country, with normally long-lasting and often costly legal proceedings, discouraged foreign employees to engage litigation, contributing to an unfair advantage for clubs.
Moreover, the Federation Internationale de Basketball (“FIBA”), in contrast to other sports governing bodies such as FIFA, had opted for a “stay-away” approach regarding basketball employment contracts and related disputes, thus there was no specific regulatory framework or internal judicial body to regulate these matters and safeguard the contractual stability between basketball stakeholders.
This situation made the credibility of the basketball market become questionable, as the dispute resolution mechanisms were seen as inaccessible and unsuitable for the dynamic environment of professional basketball.
As a result, FIBA stepped in and established in 2007 the Basketball Arbitral Tribunal (“BAT”),[2] with the aim at setting up an independent and innovative arbitral tribunal specialized in basketball-related disputes which could deliver decisions in a timely and cost-effective manner.[3]
The Basketball Arbitral Tribunal is an independent arbitral tribunal recognised by the Swiss Federal Tribunal (“SFT”) within the meaning of Articles 176 et seq. of the Swiss Private International Law Act (“PILA”).[4]
Due to its unique characteristics, it has become by far the most important forum for the resolution of contractual disputes in basketball, with the disputes resolved before this tribunal gradually increasing every year with more than 1904 requests for arbitration filed from 2007 until 2022.[5]
This first contribution will go through the relevant procedural aspects set in the BAT Arbitration Rules (“BAT Rules”) that facilitate simple, quick, cost-effective and fair dispute resolution.
In a subsequent contribution we will address in more detail the rule of ex aequo et bono as a default decisional standard applicable by BAT arbitrator as well as relevant BAT case law, in order to understand how arbitrators apply this concept on different scenarios.
Characteristics of the Basketball Arbitral Tribunal
Who can bring a dispute before the Basketball Arbitral Tribunal?
Even though the BAT is primarily designed to resolve disputes between clubs, players and agents,[6] the reality is that any party involved in a dispute arising in the world of basketball[7] can be heard before this tribunal, provided that FIBA and its divisions are not directly involved in the dispute.[8]
The reason of excluding FIBA and its divisions from disputes before the BAT was because in most jurisdictions, including Switzerland (where the BAT is seated),[9] a court cannot be considered as independent if one of the parties to the dispute has an influence on the appointment of its arbitrators and, in this case, FIBA holds an indirect control on the appointment of the arbitrators, and it is in charge of appointing the BAT President and Vice-President.[10]
Besides, although the BAT is designed to be self-financed, FIBA guarantees the financing of the Basketball Arbitral Tribunal to ensure its proper operation.
Then, to refer a dispute to the BAT, it is indispensable that the parties agree in writing to submit a dispute to this arbitral tribunal.
This agreement can be made in advance, by inserting an arbitration clause in favour of the BAT in their contracts, or after (even when the dispute has already arisen) by agreeing in written to submit a dispute to the BAT.[11]
Standard procedure of the BAT in a nutshell
To start the proceedings before the BAT, the claimant must file a request for arbitration (“RFA”) to the Secretary of the BAT via email, complying with some minimum content[12] and accompanied by payment of a non-reimbursable handling fee (“NRF”) whose amount depends on the value of the dispute.[13]
The value of the NRF was adjusted in the last edition of the BAT Rules,[14] seeking to lower the financial burden on the users and make the BAT even more accessible for cases of low monetary value. For instance, the NRF was reduced from EUR 1,500 to EUR 1,000 for cases with a sum in dispute of up to EUR 25,000.
The BAT Secretariat will then open the case and the BAT President will determine on a prima facie basis if the matter is arbitrable. If so, the BAT President will appoint a sole arbitrator from the BAT list.[15]
It is important to note that, unlike other sports tribunals like for instance the TAS/CAS, at BAT it is not possible for the parties to have a panel composed of more than a sole arbitrator and such judging person is only chosen from a closed list.
After that, the respondent is granted a short time limit to file its answer, which must also include some minimum content like any defence against the jurisdiction of the BAT or any counterclaim, among others.
It is worthy to outline that if the defence against the jurisdiction is not filed in the answer, the respondent would be precluded to do it afterwards as per art. 186.2 PILA.[16]
In the meanwhile, the BAT Secretariat would fix the advance of costs, which are normally equally paid by the parties, unless a party fails to pay its share which, in that case, the unpaid share must be covered by the other party for the procedure to continue.
The initial advance of costs fixed for an award without explicit reasons (whose nature is explained below) will not exceed EUR 6,000, while for disputes that do not exceed EUR 100,000 these initial costs will not exceed EUR 9,000 to ease the access to BAT arbitration.[17]
To ensure speedy and cost-effective proceedings, which are two of the main features of the Basketball Arbitral Tribunal, the proceedings are generally based on one round of written submissions and held without a hearing, unless the sole arbitrator decides the contrary after consultation with the parties.
Accordingly, arbitrators often issue procedural orders requesting the parties to produce additional evidence or to answer to specific questions to resolve any unclear matter.[18]
Moreover, in some occasions, the arbitrator may subject the holding of the hearing to the payment of an additional advance on costs by one or both parties.
During the proceedings, the parties may request a suspension and, if such request for suspension exceeds two (2) months (by itself or in combination with prior suspension/s), an abeyance fee of EUR 500 shall apply for each period of suspension of up to six months.[19]
It is also possible for the parties to reach a settlement during the proceedings, with the option to embody the settlement in the form of a Consent Award having thus the value and enforceability of an arbitral award.[20]
Interestingly, the BAT President can make suggestions to the arbitrator about the form of the award and, without affecting the arbitrator´s liberty of decision, may also draw his/her attention to points of substance.
Also, in the interest of the development of consistent BAT jurisprudence, the BAT President may consult with other arbitrators or permit them to consult among themselves on certain issues of the pending case.[21]
Finally, the award must be rendered no later than six (6) weeks after the completion of the arbitral proceedings or payment of any outstanding advance of costs (whichever comes last).[22]
The awards must be in written form and issued with reasons, with the exception of cases whose value do not exceed EUR 50,000, which are issued by default without explicit reasons unless (i) a party requests to issue an award with reasons within a certain timeframe and pays an extra sum of EUR 3,000 to the BAT, or (ii) the BAT President deems that it shall be rendered with reasons for reasons of public interest and to develop the jurisprudence of the BAT.[23]
The award will be deemed final and binding upon notification to the parties (unless appealed to the SFT or to CAS, as it will be explained in section iv.a. below) or, if the award cannot be delivered to one party, it shall be deemed final and binding for that party if and when published on the FIBA website, provided that the party was duly notified of the arbitration and of the appointment of the arbitrator.
The new POP procedure of the BAT
As a novelty, since 1st February 2024 the BAT will implement a new fast-track and (even more) cost efficient procedure called “Payment Order Procedure” (“POP”).[24]
This procedure is comparable to default judgements before state court and has been created with the purpose of setting a mechanism that provides access to the BAT for low value disputes for whom does not have financial means to afford the arbitration costs and also considering that in a significant number of BAT proceedings, the Respondent does not participate in the arbitration.
Instead of filing a RFA, the claimant may file instead a “Payment Order Request” (“POR”) via an online platform of the BAT, together with the payment of a processing fee of EUR 1,000, provided that: (i) the POP has been agreed between the parties and such agreement covers the claim in question, (ii) the respondent is a legal entity, (iii) the claim is of a monetary nature, (iv) the claim does not bundle multiple claims deriving from different legal relationships, and (v) the principal amount does not exceed EUR 15,000 (excluding penalties and interests).[25]
Upon filing the POR, if there is no objection from the respondent, the BAT will issue a final payment order which will be a final and binding title for enforcement. In case of objection (and payment by the respondent of the handling filing fee of EUR 1,000) the dispute will follow the regular BAT procedure described above.
It is interesting to note that under the POP, no advance of costs needs to be paid, and the maximum contribution to a claimant´s legal fees shall be EUR 1,000, which significantly reduces (even more) the costs required for a BAT arbitration.[26]
In turn, the burden to pay the advance of costs is shifted on the respondent, in case the latter wants to raise exceptions or legal and factual arguments against the claimant.
Which are the remedies against BAT Awards and how to enforcement them?
Remedies against BAT Awards
As we explained at the beginning of this article, since the BAT is considered as a true Swiss arbitration court under Swiss law, it has its proceedings governed by Chapter 12 of the PILA.[27]
In this sense, pursuant to article 191 PILA, any recourse of an arbitral award can only be filed before the SFT within 30 days after its notification to the parties, provided that the parties have not waived their right to appeal against the SFT as per article 192.1 PILA.[28]
It is important to note that the parties may only request the SFT to set aside an award under the very limited scenarios contemplated under article 190.2 PILA:
“2 An arbitral award may be set aside only:
a. where the sole member of the arbitral tribunal161 was im-properly appointed or the arbitral tribunal improperly constituted;
b. where the arbitral tribunal wrongly accepted or declined jurisdiction;
c. where the arbitral tribunal ruled beyond the claims submitted to it, or failed to decide one of the claims;
d. where the principle of equal treatment of the parties or their right to be heard in an adversary procedure were violated;
e. where the award is incompatible with public policy.”
In the event that the SFT upholds an appeal based on the ground that the tribunal erroneously denied or affirmed jurisdiction (Art. 192.2 PILA lit. b. above), it may issue a new decision replacing the appealed award. However, in all other cases, the SFT will refer the matter back to the BAT for reconsideration.
On the other hand, the parties to the arbitration, on the grounds of the principle of autonomy, can always expressly provide for a multi-level arbitration in their arbitration agreement. Thus, it is possible, although rare, that the parties agree to appeal a BAT award to the TAS/CAS in accordance with Article R47 CAS Code.[29]
However, considering that the BAT is not an internal judicial body of a sports governing body (such as the FIFA DRC or FIFA PSC), but a pure and independent arbitral tribunal, one may wonder if it is reasonable and worth it to set in an arbitration agreement a two-level arbitration proceeding since, by doing so, the benefits provided by the BAT Rules (simple, fast and cost-effective proceedings) would be totally lost.
Enforcement of BAT Awards
Last but not least, we must highlight the importance of having quick and effective enforcement mechanisms in case of non-compliance with an arbitral award by one of the parties.
As most international arbitral awards, the BAT Awards can be enforced via the New York Convention (“NY Convention”) provided that it falls within the jurisdiction of a contracting state.[30]
However, the enforcement of an award via this procedure is not the ideal one, since they are normally lengthy, require the assistance of a local lawyer, and many jurisdictions deem employment-related disputes non-arbitrable, thus facing the risk of having rejected the recognition and enforcement of an award dealing with such matters.
With this in mind, we can say that the most efficient and practical enforcement mechanism is via the disciplinary systems of FIBA and its national basketball federations considering that, at international level, FIBA has setup an internal mechanism to sanction those parties – only applicable to national federation, club, player, coach or agents – that do not comply with a BAT award.
Between the possible sanctions, which can be applied cumulatively and more than once, we can find monetary fines of up to CHF 150,000, withdrawals of the FIBA licenses to player´s agents or WABC membership to coaches, ban in international transfers or on participation in international competitions with his national team to players, or ban on registering of new players and/or a ban on participation in international club competitions to clubs.[31]
Any sanction may be subject to appeal to the FIBA Appeals´ Panel.[32]
Conversely, at national level, FIBA requires its member federations to actively take all the necessary measures to ensure that the breaching party of a BAT award honours it in full within the time limit given by FIBA. For such purpose, national federations generally include as well internal mechanisms with further local sanctions in order to put pressure on the relevant party to comply with the non-respected BAT award.
We have come to the conclusion of this article, in which we highlighted how the Basketball Arbitral Tribunal has led professional basketball into a new era of transparency and fairness, establishing itself as an independent and, above all, innovative arbitration tribunal. The BAT over the years has thus become a key tool for the speedy resolution of disputes, and the new Payment Order Procedure – POP will only improve the already flattering statistics.
If you would like to learn more about this topic or if you are involved in a contractual dispute in the world of professional basketball, the lawyers at Elite Law are ready to assist you with their specialized advice.
[1] See Anthony (2013) p. 37.
[2] The BAT was initially named FIBA Arbitral Tribunal (FAT), but in 2011 it was re-named to remark its independence from FIBA.
[3] Article 3-320 Book 3 of the FIBA Internal Regulations (“FIBA IR”) establishes the BAT´s mission statement: “FIBA established an independent tribunal, named the Basketball Arbitral Tribunal (BAT, formerly known as FIBA Arbitral Tribunal) for the simple, quick and inexpensive resolution of disputes arising within the world of basketball in which FIBA, its Zones, or their respective divisions are not directly involved and with respect to which the parties to the dispute have agreed in writing to submit the same to the BAT”.
[4] SFT 4A_198/2012 rendered on 14 December 2012.
[5] See: https://www.fiba.basketball/bat-statistics-2022.pdf
[6] Article 335 of the Chapter 10 of Book 3 of the FIBA IR.
[7] Article 0.1 of the BAT Rules. In fact, in some cases, parties have included image rights companies, domestic leagues or national federations.
[8] See article 1.1 of the BAT Rules.
[9] The BAT has its seat in Geneva, Switzerland.
[10] See Article 334-335 FIBA IR Book 3 and Article 0.4 BAT Rules.
[11] SFT 4A_676/2014
[12] Article 9.1 BAT Rules. Also, pursuant to article 10 BAT Rules: “Requests for provisional and/or conservatory measures can only be brought together with or after the filing of a Request for Arbitration.”
[13] Article 17.1 BAT Rules. The non-reimbursable handling fee goes from EUR 1,000 until EUR 8,000.
[14] The last edition of the BAT Rules was published on 1st February 2024.
[15] See: https://www.fiba.basketball/composition-bat-2024.pdf
[16] Article 186.2 PILA: “2. A plea of lack of jurisdiction must be raised prior to any defence on the merits.”
[17] Article 9.3.1 BAT Rules
[18] Article 12.2 BAT Rules.
[19] Article 12.4 BAT Rules.
[20] Article 16.7 BAT Rules.
[21] Article 16.1 BAT Rules.
[22] Article 16.4 BAT Rules.
[23] Article 16.3 BAT Rules.
[24] Article 19 BAT Rules.
[25] Article 19.2.1 BAT Rules.
[26] Article 19.3.1 BAT Rules.
[27] Chapter 12 of the PILA governs international arbitrations in Switzerland.
[28] Article 192.1 PILA: “1 If none of the parties has their domicile, habitual residence or seat in Switzerland, they may, by a declaration in the arbitration agreement or by subsequent agreement, wholly or partly exclude all appeals against arbitral awards; the right to a review under Article 190a paragraph 1 letter b may not be waived. The agreement re-quires the form specified in Article 178 paragraph 1.”
[29] Article R47 CAS Code: “An appeal against the decision of a federation, association or sports-related body may be filed with CAS if the statutes or regulations of the said body so provide or if the parties have concluded a specific arbitration agreement and if the Appellant has exhausted the legal remedies available to it prior to the appeal, in accordance with the statutes or regulations of that body”.
[30] Convention on the Recognition and Enforcement of Foreign Arbitral Awards. See: https://www.newyorkconvention.org/
[31] Article 336 FIBA IR Book 3
[32] Articles 336-338 FIBA IR Book 3
