RWY on BFM : SPORTS LAW #1 - IMAGE RIGHTS (7 June 2016)

Jose Mourinho’s appointment as Manchester United’s manager last week was reportedly held up by negotiations over his image rights, which belongs to Chelsea Football Club since 2005. What are image rights and how does it affect an athlete or sports professional like Mourinho? Helping us to understand how income is made beyond the sports arena are lawyers Richard Wee and Lesley Lim.

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Sports, Integrity and Corrupt Practices

Last December 2015, the football federation for North America, better known as CONCACAF initiated a Court action in the United States of America, to reclaim millions of dollars purported to have lost through a “kick-back” scheme orchestrated by their former office bearers. Jeffery Webb, former president of CONCACAF was convicted for money laundering while Enrique Sanz who as of December was not charged yet, were both instrumental in the engagement of a travel agency called Cartan Tours. It was alleged that more than $40 million were steered towards Cartan Tours purportedly for travel services of CONCACAF  staffs. This suit will be closely watched as it is the first of many expected from the recent FIFA scandal.

As a matter of fact, claims by sports organisations against corrupt practices are not uncommon. For example, in Ross River Ltd v Cambridge City Football Club Ltd [2007] EWHC 2115 (Ch), the Court decided that in a situation where contract succeed based on a secret payment or bribe received by an agent or representative, the principal will have his right to rescission.

That CONCACAF expose’ is unfortunately, a series of embarrasing explosive news in the world of football. FIFA’s former President Sepp Blatter himself is facing investigations for misuse of funds. The recent news where Michel Platini was banned from all football activity for a total of eight years due to a corruption investigation highlights the need for integrity in Sports. It is reported that Platini had accepted an unauthorised payment from the-then FIFA president, Sepp Blatter who is also currently banned. The exact words used by the ethics committee are “Mr Platini failed to act with complete credibility and integrity, showing awareness of the importance of his duties and concomitant obligations and responsibilities.”

Nonetheless the efforts by CONCACAF warrants a review of the position of law in Malaysia. In the local context of Malaysia, how would such corruption cases in Sports be dealt with? Can an ala-CONCACAF kind of action be taken by a sports organisation in Malaysian Courts? What would the cause of action be?

Trust Laws is the obvious cause of action with reference to Tracing and Constructive Trust. We would however suggest that there are elements of sports law which has to be taken into account too.

In an action under the Law of Trusts, we will draw strength from the case of Attorney General of Hong Kong v Reid [1993] 3 WLR 1143. Anthony Reid was the Crown Counsel of the Hong Kong Government. Reid had taken bribes and amongst his ‘investment’ from this corrupt income, were properties purchased in New Zealand. Apart from the eight years of imprisonment imposed on him, the Court also ordered him to pay a total of HK$12.4 million, being the total value of his assets alleged to have been acquired from the bribes. Reid, holding pubic office and carrying the trust of the Government in prosecution matters, was deemed to be a fiduciary by the Court.

It is generally known that a fiduciary that receives any unauthorised profit out of his duty towards his principal would hold the property or profit on trust for the respective principal or rather, the victim. It was held that the moment Reid breach his duties in return for the bribe; he immediately owed the Government of Hong Kong a fiduciary duty.

However, the principle from the case of Lister v Stubbs (1890) 45 Ch D 1 would automatically convert Anthony Reid into a debtor to the Crown for the bribe money he obtained. Is Reid a debtor or a fiduciary?  Interestingly the Privy Council in Reid’s case, overturn Lister v Stubbs.

Briefly, Stubbs was appointed by his master, the firm Lister & Co to buy goods from Varley & Co. Stubbs subsequently accepted bribes and invested in properties apart from other investments. Alongside the bribe money, the plaintiff in that case also sought to claim for the properties in which Stubbs invested in. Unfortunately for the plaintiff in Stubb’s case, the Court was of the view that the relationship between the plaintiff and the defendant was more of a debtor and creditor relationship. The Court could not agree that trust existed in such a situation. The Court observed that the beneficiary should not be entitled to a proprietary right simply because it is not their legal right to receive more than what is necessary in trust. Most importantly, the beneficiary may not have suffered any financial loss due to the bribery.

  The Privy Council, in overturning Stubbs, applied Constructive Trusts on  Reid's properties in New Zealand and effectively permitted the AG (Hong Kong) to forfeit the assets which Reid had purchased with the bribe money mentioned above. The thrust of the Privy Council decision stems from the position it took, that Reid is in fact a fiduciary when acting for the Hong Kong government.

In Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400, Lord Justice Millett held that there are two situations that may result in constructive trust; by operation of law and in cases where the Defendant is implicated in fraud. In most cases, it would fall under the latter category. For example, constructive trust will arise where unauthorised profit is made out of the party’s fiduciary position or even, in situations where a contract has been entered into by or on behalf of the fiduciary as a consequence of fraud.

Furthermore in El Ajou v Dollar Land Holdings Plc [1994] 2 All ER 685 it was held that when a party receives money or trust property because they breached their duty towards their fiduciary, they will hold the money or property in trust.

Should the CONCACAF-like corrupt case occurs in Malaysian Sports Organisations, cases like AG (HK) v Reid would be apllicable. However, what is crucial here in terms of sports law, is the requirement of integrity in sports. Most sports organisations enforce the element of integrity very strongly. One example is the ASEAN Football Confederation (AFC) whereby a dedicated team is formed to maintain and enforce integrity in Asian football. That team oversees and investigates any suspicion of breach of integrity which includes match fixing, kickbacks and corrupt practices. A few footballers and sports officials have fallen foul of this integrity code by AFC and has either been suspended or permanently banned from football. It seems that integrity is no more a mere punch line of sports politics but it is in fact becoming essential to maintain the sanctity of sports.

If corrupt practises goes on in Sports, be it on the field or the boardroom of the organisation; the reputation of Sports would be dented. There is no doubt that integrity plays an extremely important role in sports. Participants, spectators, sponsors as well as the public and media will often judge a sports organisation based on the level of integrity they portray to have.

Therefore, if integrity in sports is constantly enforced and if corrupt practices/kickbacks are weeded out, actions taken by CONCACAF may not be necessary anymore. The sports integrity movement in recent years is a positive preventive step to prevent corrupt practices in sports.

In addition to all the above discussion, it is submitted that more steps ought to be taken in order to eliminate all possible corrupt practices. Basic steps like advertising or promoting ethics in sports, issuing anti-corruption measures, setting stricter in-house rules, getting the Governmental bodies to work closely with sports organisations or even allow media to spread awareness. Considering the fact that the media are often the “eyes and ears of the public” and with such transparency available, it would be beneficial to sportsmen, the public and the government.

The future of good clean sports should start with powerful integrity mechanism in all sports organisation. Once the mechanism is effectively enforced, sports organisations will severely minimize the CONCACAF debacle and FIFA scandal. Recourse to law and activation of cases such as Reid’s case ought to be the last resort for any sports organisation. In time, sports must learn to clean itself and develop its own internal rule of law to weed out corrupt practices.

Richard Wee

Janessa Kok

Asian Legal Business || Malaysia Law Awards 2016

RWY is pleased to announce that the firm is nominated for 2 awards by the Asian Legal Business, namely :-

1. Malaysia Boutique Law Firm of the Year.

2. Malaysia Litigation Law Firm of the Year. 

The nominations have inspired Team RWY to continue to bridge the gap between legal complications and solutions. 

Here is a link to ALB:-
http://www.legalbusinessonline.com/awards/Malaysia-law-awards-2016

RWY Newsletter 2nd Edition of 2015

Keynote Speech by YB Khairy Jamaluddin, Minister of Youth & Sports

Keynote Speech by YB Khairy Jamaluddin, Minister of Youth & Sports 

at RWY Sports Law Conference 2015

Opening Speech by the Minister of Youth and Sports

at the RWY Sports Law Conference 2015

3 December 2015

  

    1.   I would like to express my thanks to Messrs Richard Wee & Yip for inviting me to give this speech at their annual Sports Law Conference. I understand this is the third edition of this event. I recall in 2013, Messrs. Richard Wee & Yip did invite me to officiate the first ever RWY Sports Law Conference but I was unable to make it as I had a prior engagement. The Ministry was well represented by the Deputy Secretary-General, Dato’ Harun Bin Che Su. I was informed that the inaugural conference was very well received by members of industry.

    2.     I am happy to attend such a unique and timely conference. The conferences that I usually attend as Minister of Youth & Sports tend to general youth issues, or more rarely around the improvement of high-performance sports. I understand that the primary purpose of organising and hosting this Conference is to create awareness of the importance of Sports Law in the Sports industry, but that this conference in part isn’t restricted to that. With the range of matters that will be discussed today, I think that this Conference will go beyond that and try to come up with answers to some of the most pressing issues in sport, both in this country and beyond.

    3.     I understand that Sports Law isn’t restricted to the Sports Development Act, but I’ll start on that first, before moving on to touch on the policies that my Ministry have put in place for sports development and how sports law can play a role in this. The particular act that governs sports development in this country is the Sports Development Act 1997, as I’m sure all of you know. The aim of this Act is to promote and to facilitate the development and administration of sports in Malaysia. It spells out the roles of the Olympic Council of Malaysia, Sports Commissioner and the Sports Advisory Panel.  It also defines the role of the Minister, in deciding on international sports events, in the case of disputes, sports science, and a slew of other things. In 1997, the Sports Development Act was a fantastic piece of legislation in an attempt to streamline sports in Malaysia. Over the years, it has helped to put us on decent footing as we aimed to develop sports through agencies under the Ministry and sports associations through the Olympic Council of Malaysia.

    4.     However, there are parts of it that require amendments in keeping with issues we’ve identified, and how the nature of sport has changed over the years. For example, there are sports associations in this country that haven’t changed their constitution since Independence, despite being asked repeatedly to do so by the Sports Commissioner’s Office. There are associations that bid for international events, win it, and then come to the government asking for money. In many cases we are forced to help out for national interests and to ensure the country does not lose face. There are associations that can’t be investigated and enforced by us in the event of non-performance, internal problems or even corruption.

     5.     Some of the more specific issues follow. The Sports Development Act was established to take over the Registrar of Societies role on Registration and Governence of Sports Bodies in Malaysia. When sports bodies transfered their registration to the Sports Commissioner, within 6 months all Sports Bodies should have changed their old constitution to the new constitution based on the guideline issued by the Sports Commissioner. Unfortunately, this did not happen. Many sports bodies have archaic constitutions which lead to many disputes and governance issues. The Sports Development Act does not give power to the Sports Commissioner’s Office to order sports bodies to change their constitution.

    6.     The Sports Development Act does not give the Sports Commissioner’s Office the power to audit governance and financial statements of sports associations. If the office bearers of that association approve financial misconduct or malfeasance, there are no powers invested in the Commissioner to do anything about it. There have been several cases of that in just the last few years alone.

     7.     Too may sports associations are being created at the moment which hampers sports development because it stretches our limited resources with too many layers within the associations. Many associations have the National-State-District-Club-Individual structure, which in many cases infeasible because of the number of layers required. Many district associations are not active, and this hampers sports development thru associations. The Sports Development Act also currently caters for too wide a range of sports under the First Schedule of the Act; Martial Arts and ‘Recreational’ being an example.

   8.     We spoke to a range of government agencies, academic experts, sports lawyers, former athletes, sports associations and others in coming up with amendments to the Act. These are the more obvious reasons why amendments to the Act have to be made. Notwithstanding reasons above, there are few less apparent ones.

     9.     Firstly, the Paralympic Association of Malaysia is not currently given recognition under the Act. Paralympics and the development of sports for the physically challenged is an area that we’ve really looked at the last few years. One of my first acts as Minister of Youth and Sports was to ensure that physically challenged athletes got the same incentive bonus for winning medals at international events as normal athletes. We’ve also set up the Inspire programme to find and train physically challenged athletes at the grassroots level. The ASEAN Para Games starts today in Singapore, and I’ll be there over the weekend. The Paralympic Association getting equal recognition under the Act is imperative to me in moving forward.

    10.  As you know, doping is currently a hot topic, not only in Malaysian sports but all around the world. In the last year alone, we’ve seen cases involving the world number 1 in badminton, the International Association of Athletics Federation, the Champions League, the Tour de France, just to name a few. This is a worldwide issue. We’re taking this very, very seriously. We have adopted a culture of zero tolerance in this. We’re acting in a few ways. Firstly, we want to strengthen the relevant agency, ADAMAS (Anti-Doping Agency of Malaysia) to ensure that they’re able to test more athletes, when they’re training and just before they go to international competition. We will recognise ADAMAS officially as a body that is in charge of anti-doping through the Sports Development Act. We will also move towards ADAMAS having their own Parliamentary Act to strengthen it even further as an independent agency. Earlier this year, sports associations signed the Acceptance of ADAMAS Anti-Doping Rules and we want to ensure this is enforced.

    11.  It would also be amiss to not mention the Kuala Lumpur Centre for Regional Arbitration, with the Director Datuk Sundra Rajoo here. The KLRCA signed a Memorandum of Understanding with the Court of Arbitration for Sports in 2012. The Malaysian Sports Arbitration Tribunal is also to be formed, with it being an option if both parties in dispute decide to use it. We’re also in the midst of looking to form an internal tribunal for sports association disputes that will allow the Minister to send cases their way, in case the Tribunal under the KLRCA is prohibitively expensive. This tribunal will be chaired by an ex-judge, and will include two other people who are experts in their field. That proposal is currently with the Sports Advisory Panel, and we’re looking to put this in to the Sports Development Act amendments.

    12.  I also want to touch on other policies that we’re looking into, that will have further spillover effects on Sports Law. Last year, my Ministry launched a new campaign called FitMalaysia. We’ve done 15 events in that time. We've covered the length and breadth of Malaysia, and have seen hundreds of thousands of Malaysians come out to run, ride, practice martial arts, take part in our physical challenges, get nutrition advice, eat healthy food, or just dance. 
We've also seen the inaugural Hari Sukan Negara take place this year, that saw more than five million Malaysians take part in more than 17,000 activities all around the country. Malaysians of all stripes, from all walks of life. The aim of these campaigns are to create awareness for the need of a healthy lifestyle. We want Malaysians to keep fit and be active.

     13.  But there’s also a very important secondary effect to what we’re doing. More Malaysian involved in sports and physical activities means more Malaysians thinking about sports as a career. Professional sports itself is a huge industry around the world. Just look at the prices the best footballers in the world command when they’re bought. Manchester United is worth $3.5 billion. Michael Jordan is worth a billion dollars.

    14.  Our nascent sports industry is currently worth around RM5 billion, or around 0.5% of our GDP. But all you need to do is look at the number of sports shops there are around, and the number of rides and runs happening every week. I myself almost take part in some run or ride on a weekly basis. We’re seeing incredible growth here. Therefore, it is imperative that the sports industry is properly and accurately managed. This is where services such as sports marketing, auditing and a strong legal framework can be components to ensure the sports industry is transparent and accountable.

     15.  Sports Law is the term used to describe the application of law in the world of sports - a combination of corporate and contract law, tax and real estate planning, intellectual property law, insurance, labour law and alternative dispute resolution. In some occasions, the law of tort also comes into play. The ever-growing interaction between sports and the law gives rise to the need for a special and greater understanding of the sports industry and those related to it. Legal compliance with existing legislation and rules has also become more important in this day of technological advancement and commercialization in sports. Conferences like this play a role in making sure that these discussions come to the forefront. For that, I applaud Messrs Richard Wee & Yip.

     16.  I also understand that Messrs Richard Wee & Yip wish to launch a Malaysian Sports Law Association. I applaud their effort and I believe this is something the sports industry will receive warmly. With the formation of such an association, parties involved in sports and lawyers who practice sports law would have a platform to share views, collaborate and hopefully push Malaysia into becoming a sports law hub in this region. I believe we have the legal expertise to offer sports law services not only in Malaysia but also to the sporting community in ASEAN.

     17.  In 2017, Malaysia will host the SEA Games 2017 with Malaysia celebrating her 60^th year of independence. The SEA Games will be a good way to unite our people in our chase for glory. I also hope that our hosting of the SEA Games is used as an opportunity to develop sports law. Hopefully, when 2017 comes around, we will be champions of the SEA Games, and leaders in sports law in South East Asia.

      18.  I wish to congratulate Messrs Richard Wee & Yip again for successfully hosting the 3^rd Sports Law Conference. I wish all of you a good conference ahead.

Thank you.

Khairy Jamaluddin

Minister of Youth & Sports

3rd Dec 2015

Opening Speech of RWY Sports Law Conference 2015, by Richard Wee

1) Yang Berhormat Tuan Khairy Jamaluddin, Minister of Youth & Sports

2) Y.A.M Tunku Tan Sri Imran Ibni Almarhum Tunku Ja’afar, President of the Olympic Council of Malaysia

3) Datuk Dr Sundra Rajoo, Director of Kuala Lumpur Regional Centre of Arbitration

We wish to welcome each and every one of you to the third annual RWY Sports Law Conference. The main objective of this conference is to create awareness of Sports Law and to generate discussions and exchange views in this area of law. We aspire to promote, develop and expand sports law in Malaysia and  South East Asia. We are of the view that for Sports to be successful, not only efforts to improve the stakeholders of sports are relevant, but service providers such as Legal services for sports must raise their game too.

For a long time now, since we have been involved in sports law, Messrs RWY have noticed the lack of understanding about sports law. For many people, any lawyer helping a sports based company or person, is a sports lawyer. That is not accurate. A Sports Lawyer would understand the unique interpretation of for example, football rules and doping issues. A Sports Lawyer will also know that the standard of proof for sports is not “beyond reasonable doubt” (like in criminal cases) or “balance of probabilities” in civil cases. In fact, the standard of proof for sports disputes is “comfortable satisfaction”. These are just some peculiarities of the jurisprudence of sports law. It is apparent that there is much for us to understand and comprehend in sports law in order to best serve the Sports Industry.  

With that in mind, RWY decided to initiate this series of sports law conferences, in 2013. Today, we have the largest conference since. There are more speakers sharing their views in this Conference that the 2 earlier editions  and definitely a lot more delegates have registered. While Everton Football Club had made the journey to KL last year to speak in the Keynote Address about football financial fair play; this year we are extremely honoured to have with us, our Minister of Youth and Sports and the President of Olympic Counsel of Malaysia (OCM). Their presence inspires us to continue with our effort in promoting this area.

Ladies and gentleman,

In Malaysia, the Sports Development Act 1997 is a statute of parliament governing the area of sports law particularly the administration of sports. Unfortunately, this act of parliament is due for an overhaul. For example, where there is an internal dispute, Section 23 of the SDA states that the matter shall be resolved in a manner prescribed by the committee’s regulations. However, if they are unable to do so, Section 24 allows the aggrieved party to refer the matter to the Minister for further resolution. Effectively the Minister becomes an Arbitrator. Regarding this issue of dispute resolution, we are of the view that the SDA should reflect the worldwide trend of institutionalized dispute resolution agencies for sports. It is time for Malaysia to have a national sports tribunal to resolve any sports dispute.

In 2012, KLRCA executed a memorandum of understanding with the Court of Arbitration for Sports (CAS). Effectively the MOU appoints KLRCA as one of CAS’s arbitration centres. These are exciting times for sports law practitioners, particularly in Malaysia, where within our neighbourhood we now have an international court for sports. With CAS here in Kuala Lumpur, the need for a national sports tribunal becomes ever more important. I understand that there are plans to have such a tribunal and we at RWY look forward to that formation.

Ladies and gentleman,

It is our view that Malaysia and even South East Asia should have a specific platform for those interested in sports law to congregate. We are made to understand that KLRCA wish to form a sports law association. We share that sentiment and would support that idea. In fact for the last few months, Messrs RWY have actually planned to form such an association too. We have drafted a constitution for this suggested platform and even created a proposed Logo. We would suggest, that if such an association is formed, it may be called the “Malaysian Sports Law Association” (MSLA). But we will heed the leadership of KLRCA and we are willing to work together with KLRCA to form this association.

Ladies and Gentlemen:

We want fellow Malaysian and South East Asian lawyers to understand this area of law, equip yourself and give high quality service to the Sports Industry. Why cant we represent major athletes like David Beckham or Tiger Woods? Why cant we export Malaysian lawyers to attend Sports Tribunal in other countries? We have the quality, capacity and capability to do so. It is this ambition, that led us to host and organise this annual Sports Law Conferences. We believe that Malaysia can, and one day will, become the Sports Law hub in this region.

Ladies and Gentlemen:

We at Richard Wee and Yip are honoured that all of you have made time to be here where we can share our passion about sports law with you. At this juncture we with to record our thanks to :-

1) YB Khairy Jamaluddin, Minister of Youth & Sports

2) Y.A.M Tunku Tan Sri Imran Ibni Almarhum Tunku Ja’afar

3) All our speakers from Malaysia and overseas.

4) SPONSORS ;

IJM Construction Sdn Bhd , Mr Liew Hau Seng

LEXIS NEXIS

5) MEDIA PARTNERS

– CONVENTUS LAW, HONG KONG

- DOUBLE R PRODUCTION

6) Volunteers from Brickfields Asia College for granting us access to their students and sending a team of volunteers to assist in this conference.

7) And last but not least, each and every one of you who made it here today.

We hope you will enjoy this conference as much we have enjoyed organizing and hosting this event. Have a good conference. Thank you.

Richard Wee

3^rd Dec 2015