Challenging the right of a governing body to hear a dispute on grounds of impartiality: Smith & McDonnell

The grounds on which the decisions of sports governing bodies may be challenged in the Courts in England and Wales is often the subject of comment and discussion.

It is now widely accepted that the Court will exercise its supervisory jurisdiction in appropriate cases; the key word is here is ‘supervisory’, in the sense that the stated function is not to take the primary decision, but to ensure that the primary decision-maker has operated within lawful limits (Richards J in Bradley v The Jockey Club¹). Those limits are breached if the governing body has acted outside its powers (ultra vires), acted contrary to the tenets of natural justice, or has acted unreasonably, meaning in an irrational, perverse, arbitrary or capricious manner.

But can a governing body be prevented from hearing a dispute at the outset? In the context of the recent boxing case Paul Smith & Jamie McDonnell v British Boxing Board of Control Ltd, Frank Warren & Dennis Hobson (Smith & McDonnell),² the author examines this question in the context of a governing body that allegedly lacks impartiality under section 24 Arbitration Act 1996.

The nature of arbitration clauses

Many sports incorporate into their rules, binding on all participants, provisions for referring any dispute to an arbitration conducted under the governing body’s authority. The jurisdiction of the Courts cannot be entirely ousted but it can be substantially curtailed by a binding agreement to arbitrate (provided the process and tribunal is indeed arbitral in nature, as discussed further below). A party attempting to bypass a binding agreement to arbitrate will likely find its application to the Court stayed under section 9 of the Arbitration Act 1996.

The test for whether a sports dispute resolution procedure amounts to an arbitration provision that is binding on the parties was analysed by Thomas J in the motor-racing case Walkinshaw v Diniz.⁴ One of the main questions is whether the procedural agreement to refer the dispute to the arbitral tribunal is intended to be enforceable in law. This will often depend on the specific language used in the clause.

For example, under the Football Association’s Rule K procedure the language is clearly mandatory: “any dispute or difference…shall be referred to and finally resolved by arbitration under these Rules”.⁵ Compare that with the more permissive language of the standard form player/club contract in rugby league:

"You and the Club agree that, whilst the jurisdiction of the Courts and Tribunals are not excluded, all matters of dispute relating to the rights and obligations of the parties under this Agreement or the Regulations, including termination of this Agreement (including any termination or purported termination pursuant to Clause 23) and any compensation payable in respect of termination or breach, should ordinarily be submitted in the first instance to the League."

If there is a binding agreement to arbitrate then it is very difficult for a participant to avoid the effect of the arbitration clause. This was demonstrated by the failure of the football agent, Paul Stretford (Stretford v The Football Association⁶) to successfully argue that he had not agreed to the arbitration clause or, if he had, to enforce it would be a breach of Article 6 Convention rights.⁷

Some recent High Court litigation has, however, provided the opportunity to consider the grounds on which the arbitral panel of the governing body may be prevented from making a decision at all.

Section 24, Impartiality & Smith & McDonnell

The provisions of the Arbitration Act 1996 supervise any arbitral process stipulated under an arbitration clause (not just in sport). Section 1 makes clear that the parties have autonomy to agree almost everything about the arbitration – the way the panel is composed and chosen; the powers it will have in substance and procedurally.

Supervision resides in the Court’s power under section 24,⁸ which states:

"24 Power of court to remove arbitrator

(1) A party to arbitral proceedings may (upon notice to the other parties, to the arbitrator concerned and to any other arbitrator) apply to the court to remove an arbitrator on any of the following grounds—

(a) that circumstances exist that give rise to justifiable doubts as to his impartiality;

(b) that he does not possess the qualifications required by the arbitration agreement;

(c) that he is physically or mentally incapable of conducting the proceedings or there are justifiable doubts as to his capacity to do so;

(d) that he has refused or failed—

(i) properly to conduct the proceedings, or

(ii) to use all reasonable despatch in conducting the proceedings or making an award, and that substantial injustice has been or will be caused to the applicant.

……."

The author is not aware of a recorded instance of an application being made under section 24 in a sporting context; that is until the case of Smith & McDonnell.