This article is the China Chapter of Sporting Succession in Football, a publication of the Sports and Policy Centre, print copy available at: http://www.sportslawandpolicycentre.com/
A. Applicable Rules of the Member Association
The latest edition of the CFA Regulations on the Status and Transfer of Players dates from 2015, which does not contain any provisions on sports succession. Unlike the FIFA Disciplinary Code, the 2022 version of the CFA Disciplinary Code also does not touch on sports succession. Currently, there are no specific regulations on sports succession at association level. Since the CFA’s internal dispute resolution mechanism generally considers clubs that have gone out of business or been denied a license to be outside its jurisdiction, claims against such clubs fall outside the jurisdiction of the CFA. CFA can only be resolved through the Chinese court system in accordance with the laws of the People’s Republic of China. (before the formal establishment of the sports arbitration mechanism in China). In practice, recourse to the People’s Courts could be more effective than the football mechanism in certain cases due to the strong enforceability of the State compared to a sports association such as the CFA; however, taking an overdue salary claim to People’s Courts could also sometimes become a lengthy process due to the standard provision of the football contract, which prohibits taking a dispute to an ordinary domestic court as per the CFA and FCA statutes. FIFA.
B. Relevant national laws
The operating entity of each football club is a limited liability company governed by the laws of the PRC, which could be subject to bankruptcy proceedings in accordance with the Company Bankruptcy Law of the PRC. Although in practice the players’ unpaid wages have been treated by the people’s court as part of the “employees’ wages” entitled to priority compensation, it is almost unlikely to expect effective compensation from the procedure of bankruptcy because, all football clubs that have gone through bankruptcy proceedings, based on available public records, appeared to be carrying debts far exceeding any assets in their possession. As a result, employees, including football players and coaches, could hardly get anything out of the bankruptcy proceedings (of the limited liability company operating the football club concerned). There may be exceptional cases where creditors’ claims could be directed against the shareholders or the senior management of the bankrupt entity, but such a scenario remains rare and, in any event, it is unlikely that the claims are substantiated (against shareholders or senior management of the bankrupt entity) without litigation
It is therefore not recommended that football players claim unpaid wages in bankruptcy proceedings, although any creditor of the football club has the right to file for bankruptcy (against the entity club operator) under Article 7 of the PRC Enterprise Bankruptcy Law. If bankruptcy proceedings have been initiated by the people’s court against the operating entity of the football club, the unpaid wages of the employees will be verified, made public and taken into account for the distribution of assets by the bankruptcy administrator appointed by People’s Court in accordance with Article 48 of the PRC Enterprise Bankruptcy Law.
A sporting succession due to a transfer of ownership of a football club or a merger is therefore more relevant from a practical point of view. In such cases, given the silence of the association’s rules on sports succession, the general principle of law and the company law of the PRC will apply. The change of ownership will not affect the rights and obligations of the football club’s operating entity, which is an independent legal entity under PRC law. In the event of a merger, Article 174 of the Companies Law of the PRC provides that the rights and liabilities of the creditors of a limited liability company shall be borne by the company which survives the merger or the newly established company ( following the merger). In the event of a company separation, Article 176 of the Companies Law of the PRC provides that companies established as a result of a company separation are jointly and severally liable for the debts of that company (prior to the separation), unless otherwise provided otherwise in writing. agreement with creditors.
As the regulations at the CFA level have not incorporated the specific provisions on sports succession in the RSTP and the FIFA Disciplinary Code, reference should be made to the national legislation of the People’s Republic of China. As noted in section B above, the general principle of PRC law is largely in line with the FIFA Sports Succession Regulations. At the time of writing this chapter, the author is not aware of any sports succession disputes involving Chinese football clubs that have been brought before the People’s Courts, the FIFA Judicial Bodies or the CAS. As long as the operating entity of a football club still exists, which is a limited liability company under Chinese law, the PRC legal framework has provided a ready mechanism for monetary claims against such a limited liability company. operating the football club, regardless of any change in ownership or participation.
If the football club concerned is still allowed to participate in professional football, under the current model contract applicable to most cases, the Chinese national creditor is required to file outstanding salary claims with the CFA Dispute Settlement (national equivalent of the FIFA Football Tribunal). in accordance with the CFA Bylaws and the CFA RSTP; likewise, the creditor of foreign nationality will lodge outstanding salary claims with FIFA bodies. The main difference is that parties in foreign-related cases can always appeal to CAS if they are unhappy with FIFA’s decisions. But other remedies for purely national cases remain uncertain until the national sports arbitration mechanism is in place – as shown below, before the formal establishment of the national sports arbitration institution (planned in the PRC Sports Law as amended in June 2022), the People’s Courts in China can guarantee the guarantee of last resort.
If the football club fails to obtain a license to participate in professional football, which will be considered by the CFA to be within the internal dispute resolution jurisdiction of the CFA, such a scenario would be more difficult for the players and players. coaches who demand payment of overdue wages – in theory they have the right to file a civil suit in the People’s Court; however, due to FIFA/CFA’s statutory ban on bringing football-related disputes to court (with the essential exception of employment-related disputes which Chinese courts had not previously heard of), in practice, the People’s Court is often reluctant to register claims filed by professionals. footballers/coaches.
There have been conflicting court practices that vary depending on the exact forum (such as the specific city to bring the civil suit). In June 2022, the Supreme People’s Court of the People’s Republic of China ruled on a case concerning whether the People’s Court should register and exercise jurisdiction over clubs subject to dissolution or license refusal, i.e. leaving the CFA/FIFA intra-association. skill. After extensive research into the FIFA Regulations, CAS and Swiss Federal Court case law, the Supreme People’s Court of China ruled that Chinese courts should intervene in football cases either when “association autonomy” does not did not work (as in the event of a club being dissolved) or when justice requires the courts to safeguard the parties’ right to sue. The Supreme People’s Court of China based its decision primarily on its conclusion that decisions of the CFA or FIFA (or any internal body of sports associations) are not considered an “arbitral award” recognized by Chinese law. with enforceability. Decided by the highest court of Chinese jurisdiction, this case will be part of the guiding case law for Chinese football cases in the years to come.
D. Execution of final and binding decisions
Where a creditor has a final and binding decision from the CFA or CAS dispute resolution bodies and the judgment debtor does not comply with that decision, the creditor is entitled to report such non-compliance by the judgment debtor. to the CFA Disciplinary Committee indicating non-compliance with the decision.
Section 79 of the CFA Disciplinary Code (2022 ed.) sets out the consequences for a judgment debtor when he fails to comply with a decision. Possible sanctions (for non-compliance with a court order) under the CFA disciplinary code include a warning, a monetary fine, a match suspension; reduction of the transfer quota; a transfer ban; deduction of points, and possibly a refusal of license.
E. Execution in the event of sporting succession
As noted above, there are currently no national regulations on the issue of sports inheritance in China, and the author is not aware of any litigated cases on this specific issue. In the Chinese context, it is more relevant to find effective redress for claims against clubs subject to dissolution or denied a license to participate in professional football in China. The current legal framework has not allowed players and coaches to claim overdue wages from these clubs (subject to dissolution or denial of licence). Such a dire situation should find a solution, following the decision of the Supreme People’s Court mentioned in section C.
In 2020, it was reported that six football clubs opted out of Chinese football and 11 football clubs were denied a license for the 2020-2021 season due to unpaid wages. On February 28, 2021, the reigning champions of the 2020 Chinese Super League season, Jiangsu FC (formerly Jiangsu Suning FC) announced that they would cease operations. On March 29, 2021, the CFA confirmed that Jiangsu FC had been denied the license and thus the club had essentially quit professional football. As of August 2022, public records show that the operating entity of Jiangsu FC, i.e. Jiangsu FC Ltd., still existed and was not subject to any bankruptcy proceedings. The former players and coaches therefore referred their unpaid salary claims to the Nanjing People’s Court, and hearings were underway.
For more details on the difficult issues involved in reclaiming unpaid player (or coach) salaries in China, particularly against clubs that the CFA deems no longer within its jurisdiction, please see CAI Guo, Jeffrey Benz , Annual Review of Sports Dispute Resolution in China. (2020), Beijing Arbitration Commission/Beijing International Arbitration Center ed., Annual Review on Commercial Dispute Resolution in China (2020), Wolters Kluwer Hong Kong Limited, September 2020, pp. “Jurisdictional loophole over claims against clubs outside football governance and ‘arbitration’ by the ‘CFA Arbitration Commission’ is not arbitration under the New York Convention and PRC Arbitration Law”).