European Super League: threatened government reaction created winners and losers – international law
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The situation: The European Super League was the subject of significant criticism when it was announced on April 18, 2021. Some European governments, particularly the United Kingdom, have even threatened new laws intended to target the new league, its member clubs. and their players.
The result: Following the backlash from the public, most Super League clubs announced they had abandoned her. Had the UK taken action against the clubs in any meaningful way, it may have found itself sued by some of the club owners under international law. The owners of only a few of the clubs concerned could have initiated actions under international treaties; other club owners are unlikely to be protected by an international treaty.
Looking forward: Even in states and low-risk industries, it is prudent for companies to consider their investment structures to ensure that they provide political risk protection against regulatory changes.
The European Super League was announced on April 18, 2021. It was reported that 12 clubs from England, Italy and Spain had agreed to participate in an exclusive league which only founding members and eight other clubs would have access to. .
The Super League announcement drew immediate criticism, including from supporters, the Union of European Football Associations (“UEFA”), the Football Federation, the English Premier League, La Liga Spain, the Italian Football Federation and several European governments.
Among the many statements made against the Super League was the possibility of introducing new laws targeting it. The British Prime Minister has said he will drop a “legislative bomb” to stop the Super League. The British Culture Secretary said if UEFA and the national associations were unable to act, then “we will” and “we will put everything on the table to prevent this from happening”. The chairman of the House of Commons Digital, Culture, Media and Sports Committee said the government could restrict work visas for Super League players or introduce a one-off tax on clubs.
Within three days of his announcement, the Super League looked largely abandoned.
Protection against political risks through international treaties
When a government’s actions – even if theoretically well-intentioned – cause harm to a foreign investor or its investment, international investment law can provide protection as well as effective remedies against the state. This set of laws limits the legal means by which government actions can impact foreign investors.
There is a global network of over 3,000 international treaties that offer protection to foreign investors and their investments. These treaties usually take the form of an investment treaty between two states and provide a set of general protections, including a guarantee of fair and equitable treatment, a prohibition of discriminatory measures and an obligation to compensate an expropriation. Basically, these treaties allow investors to resort to international arbitration if these standards are violated by a state and the investors may be entitled to compensation.
This legal system has been criticized by many stakeholders and is being reformed, but a large majority of states still have these investment treaties in place.
Although the Super League no longer appears to exist, it raises the interesting question that if the government had imposed a one-off tax, visa restrictions and other measures, only some of the owners of the affected clubs could have initiated investor arbitrations. and States against the United States. Kingdom under an applicable international treaty. The success of a claim against the UK government would depend entirely on the regulatory measures ultimately adopted, but the types of measures proposed by the UK government have already given rise to claims under international treaties.
This Comment does not seek to examine the merits of a potential claim in the present circumstances; rather, this highly publicized event reminds investors of the importance of structuring investments in foreign countries in order to guard against political risks.
Why would only certain club owners benefit from this protection?
The UK has 90 treaties with other states. If it has not negotiated an investment treaty with a particular state, the protection will not exist. It is necessary to identify who would be the “investor” and the “nationality” of that investor; for this purpose, we have considered the nationality of the ultimate owners of the club. It is possible that the nationality of an intermediary company in the corporate structure may also have a right. The following provides additional details:
- The UK has a treaty with the UAE and Russia, meaning that Super League clubs owned by citizens of those countries would potentially have the ability to initiate investment treaty arbitration against the UK. United.
- The United Kingdom does not have a treaty with the United States, which means that not all the protections contained in an investment treaty would be available to owners of Super League clubs in the United States.
Two points to remember
- Investment treaties can be a useful tool to provide an additional level of protection against political risks. Investors should assess whether their foreign investments are already protected by an existing investment treaty.
- If there is no existing investment treaty that offers protection, investors may consider restructuring their investments to ensure that they are adequately protected. Restructuring should be carried out before any dispute, but may arise after the investment has been made.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought on your particular situation.
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