Identifying a Horizontal Contract for FA Rule K Arbitration
The recent decision in Alrubie v Chelsea Football Club Limited and Granovskaia (“Alrubie”) provides a valuable reminder of the effect of the FA Rules, r. K1 and its application to ‘any dispute or difference between any two or more Participants’.
This article will, firstly, identify the relevant FA Rules and provide a summary of previous instances of the courts considering the effect of FA Rules, r. K1. Secondly, this article will explain the decision in Alrubie and consider whether the decision has developed the jurisprudence on the effect of FA Rules, r. K1 between Participants. Finally, upon consideration of the relevant authorities, this article will suggest a workable approach for considering the effect of FA Rules, r. K1.
Relevant rules and previous cases
The FA Rules, r. K1.1 states:
‘K1.1 Subject to Rule K1.2, K1.3 and K1.4 below, any dispute or difference between any two or more Participants (which shall include, for the purposes of this section of the Rules, The Association) including but not limited to a dispute arising out of or in connection with (including any question regarding the existence or validity of):
K1.1.1 the Rules and regulations of The Association which are in force from time to time;
K1.1.2 the rules and regulations of an Affiliated Association or Competition which are in force from time to time;
K1.1.3 the statutes and regulations of FIFA and UEFA which are in force from time to time; or
K1.1.4 the Laws of the Game,
Shall be referred to and finally resolved by arbitration under these Rules’ (emphasis added).
In the current version of the FA Rules, ‘Participant’ is defined in the FA Rules, r. A2.3 as:
‘an Affiliated Association, Competition, Club, Club Official (which for the avoidance of doubt shall include a Director), FA Registered Football Agent, Intermediary, Player, Official, Manager, Match Official, Match Official observer, Match Official coach, Match Official mentor, Management Committee Member, member or employee of a Club and all persons who are from time to time participating in any activity sanctioned either directly or indirectly by The Association’.
Therefore, prima facie, the position appears to be that any dispute between Participants must be dealt by way of arbitration pursuant to FA Rules, r. K1 (“a Rule K Arbitration”).
However, that position is reductive.
It is noted that in circumstances where a Participant commences a legal claim against another Participant in the courts of England and Wales, this is ostensibly done in breach of the Participant’s vertical agreement with the FA (as the sport’s governing body) to resolve any dispute by way of a Rule K Arbitration. (Such conduct would amount to Misconduct for the purposes of the FA Rules, r. E1.2, but this author is unaware of the FA ever undertaking any investigation or charging a Participant for a breach of the FA Rules, r. K1.)
Whilst that vertical agreement between Participants and the FA is readily identifiable, it is less clear whether, by way of that vertical agreement, there is also a horizontal agreement between Participants to a dispute, and whether any such horizontal agreement is enforceable to prevent (stay) a legal claim brought by one Participant against another Participant in breach of the FA Rules, r. K1. This issue arises where there is no written contract between Participants involved in a dispute, or where there is a written or oral contract that does not provide for or refer to disputes being dealt with by way of a Rule K Arbitration, and the Participants to the dispute disagree as to whether the dispute should be dealt with by way of a Rule K Arbitration (by way of being Participants for the purposes of the FA Rules) or a legal claim.
It should be noted that the FA Rules, r. K14 provides that the seat of a Rule K Arbitration is England and Wales, and that a Rule K arbitration is governed by the laws of England and Wales.
Section 5 of the Arbitration Act 1996 (“AA 1996”) states that Part 1 of the AA 1996 only applies:
‘(1) […] where the arbitration agreement is in writing, and any other agreement between the parties as to any matter is effective for the purposes of this Part only if in writing.
The expressions “agreement”, “agree” and “agreed” shall be construed accordingly.
(2) There is an agreement in writing –
(a) if the agreement is made in writing (whether or not it is signed by the parties),
(b) if the agreement is made by exchange of communications in writing, or
(c) if the agreement is evidenced in writing.
(3) Where parties agree otherwise than in writing by reference to terms which are in writing, they make an agreement in writing.
[…]’.
Where a party to an arbitration agreement commences a legal claim, the other party can apply to stay that claim under AA 1996 s. 9 (found in Part 1 of the AA 1996):
‘(1) A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter.
[…]
(4) On an application under this section the court shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed’.
Accordingly, where one Participant (“Claimant”) brings a legal claim against another Participant (“Defendant”), the Defendant can make an application under AA 1996 s. 9 for a stay of the legal claim (“s. 9 Application”).
In a s. 9 Application, the burden of proof is upon the Defendant to prove the existence of the arbitration agreement between the Defendant and the Claimant.[1] As indicated above, proving the existence of the arbitration agreement faces difficulties when there is no written contract between the Claimant and Defendant, or where there is a written or oral contract that does not provide for or refer to disputes being dealt with by way of a Rule K Arbitration.
The problem can be summarised as follows: does being a Participant (as defined in the FA Rules) create an enforceable agreement between Participants that disputes between them should be resolved by a Rule K Arbitration?
Chitty on Contracts refers to such situations as ‘multilateral contracts’:
‘[…] it has been held that the competitors enter into multilateral contracts binding each to the others to observe the rules of the competition […] Such decisions are based on the assumption that all the parties to the alleged multilateral contract were willing to agree to the same terms’.[2]
Chitty also explains that such situations are ‘best regarded as exceptions to a general requirement of offer and acceptance’.[3] Multilateral contracts are not to be confused with implied contracts.
The Court of Appeal identified such a multilateral contract in The Satanita, which concerned two participants in a regatta organised by the Mudhook Yacht Club and whose entry forms for participation in the regatta contained the following undertaking:
‘I undertake that, while sailing under this entry, I will obey and be bound by the sailing rules of the Yacht Racing Association and the by-laws of the club’.[4]
The rules of the Yacht Racing Association contained the following:
‘Rule 24 […] If a yacht, in consequence of her neglect of any of these rules, shall foul another yacht […] she shall forfeit all claim to the prize, and shall pay all damages’.[5]
‘Rule 32 […] Any yacht disobeying or infringing any of these rules, which shall apply to all yachts, whether sailing in the same or different races, shall be disqualified from receiving any prize she would otherwise have won, and her owner shall be liable for all damages arising therefrom […]’.[6]
In deciding that the entry forms and the rules of the Yacht Racing Association created a contract between the two participants, Lord Esher MR explained as follows:
‘Was there any contract between the owners of those two yachts? Or it may be put thus: Did the owner of the yacht which is sued enter into any obligation to the owner of the other yacht, that if his yacht broke the rules, and thereby injured the other yacht, he would pay damages? It seems to me clear that he did; and the way that he has undertaken that obligation is this. A certain number of gentlemen formed themselves into a committee and proposed to give prizes for matches sailed between yachts at a certain place on a certain day, and they promulgated certain rules, and said: "If you want to sail in any of our matches for our prize, you cannot do so unless you submit yourselves to the conditions which we have thus laid down. And one of the conditions is, that if you do sail for one of such prizes you must enter into an obligation with the owners of the yachts who are competing, which they at the same time enter into similarly with you, that if by a breach of any of our rules you do damage or injury to the owner of a competing yacht, you shall be liable to make good the damage which you have so done." If that is so, then when they do sail, and not till then, that relation is immediately formed between the yacht owners’.[7]
Before Alrubie, there had been three cases specifically addressing the effect of the FA Rules, r. K1.
Davies v Nottingham Forest Football Club Limited (“Davies”) concerned former manager Billy Davies’ (“BD”) claim against Nottingham Forest FC (“NFFC”) in respect of BD’s manager contract with NFFC.[8] BD and NFFC were each Participants, however BD’s manager contract with NFFC did not contain a clause requiring disputes between BD and NFFC to be determined by a Rule K Arbitration.
NFFC made a s. 9 Application seeking a stay of BD’s claim on the basis that the FA Rules, r. K1 (in its form at the time) gave rise to an arbitration agreement between NFFC and BD. In answering the problem summarised above, HHJ Bird decided as follows:
‘In the present case, [NFFC] and [BD] knew full well that each was bound to the FA to observe the rulesas published from time to time in the Handbook. Anyone who participates in the game of football (certainly at the professional level) is fully aware of the importance and the standing of the rules […]
The rules create certain liabilities (or perhaps obligations) between those who are bound by them (defined as “Participants”). The rule K obligation is to refer disputes to arbitration. In my judgment, it therefore follows, just as it is in The Satanita, that there existed at the relevant time an arbitration agreement between [NFFC] and [BD]’ (emphasis added).[9]
Seemingly, what was crucial for HHJ Bird’s judgment in Davies was the parties’ knowledge that each was bound by the FA Rules.
Bony v Kacou & ors (“Bony”), a judgment released shortly after Davies and which did not refer to Davies, produced a different outcome.[10] Bony concerned Republic of Cote d’Ivoire (“RCI”) professional footballer Wilfried Bony’s (“WB”) claim of, inter alia, secret commissions being received by the following:
Gilbert Francis Kacou (“D1”): a national of RCI registered as a football agent with the RCI Football Association but who, having never registered as a ‘Registered Overseas Agent’ with the FA, was deemed an ‘Unauthorised Agent’ under the FA Football Agent Regulations in place at the time. An Unauthorised Agent was not included in the definition of ‘Participant’ in the FA Rules in place at the time. D1 was one of WB’s former agents.[11]
Gilbert Francis Kacou Promotion SARL (“D2”): An RCI corporate vehicle controlled by D1.[12]
Dalibor Lacina (“D3”): a national of Czechia who was registered with the FA as a Registered Overseas Agent with the FA and therefore deemed an ‘Authorised Agent’ under the FA Football Regulations in place at the time, but who had ceased to be an Authorised Agent by the time WB’s dispute arose.[13] An Authorised Agent was included in the definition of ‘Participant’ in the FA Rules in place at the time. D3 was also one of WB’s former agents.
International Football Marketing & Management SRO (“D4”): A Czech corporate vehicle controlled by D3.[14]
D1-D4 made a s. 9 Application on the basis that WB’s claim should be determined by a Rule K Arbitration. D1-D4’s s. 9 Application was dismissed at first instance by District Judge Obodai, and D1-D4’s appeal against that first instance decision was also dismissed by HHJ Pelling QC.
In addition to the details of D1-D4 explained above, the following facts from HHJ Pelling QC’s judgment in Bony are significant:
There was a written representation agreement between WB and D1 for the period 1 December 2012 and 30 November 2014, albeit this did not contain a Rule K arbitration clause or otherwise. Thereafter, and with no written representation agreement between WB and D1 in place, D1 continued to act as WB’s agent (with WB’s knowledge and consent).[15]
The relevant contracts between WB and D3 were all oral, save for a written contract in force between 9 February 2013 and 8 February 2015 and which contained the following dispute resolution clauses:
‘[…] The settlement of disputes between the Player’s Agent and the Client, club or another player’s agent of whom all are registered with the same national association (national disputes) is the responsibility of the respective national association. As regards FACR, the respective arbitration committee will be in charge’.
‘[…] Any other complaint which is not subject to the preceding Paragraph hereof shall have to be transferred to the FIFA Players’ Status Committee’.[16]
In dismissing D1-D4’s appeal, and following consideration of the decision in The Satanita, HHJ Pelling QC held:
‘The key point is that the outcome [in The Satanita] was fact sensitive and arose from the fact that each party had entered the race by express reference to rules that (to their knowledge) imposed an obligation to make good loss as between those competing in a relevant race. The factual basis that underpinned [The Satanita] was that both competitors had entered into separate agreements with the club in similar terms by which each competitor undertook to make good any damage caused to the other by reason of a breach of any of the Racing Rules, each had done so to the knowledge of the other and it was necessary to imply a contract as between the competitors in order to give effect to what each had agreed to the knowledge of the other with the club.
The facts of [The Satanita] were obviously different from those of the present case – In this case there were express contracts between [WB] and each of [D1] and [D3] whereas in [The Satanita] there was no express contract between competitors. There was no relationship of any sort between [WB and each of D2 and D4]. Any contract between the claimant and the FA was implicit because there is no evidence of any express contract arising from the claimant’s registration with the FA as a Player and there was no contract at all between the FA and [D1, D2 and D4]’.[17]
HHJ Pelling QC could, and in this author’s opinion, should have finished his analysis there to dismiss D1-D4’s appeal. (Albeit it is appreciated that even in the above-stated quotation HHJ Pelling QC already falls into the trap of confusing a “multilateral contract” with an “implied contract”.)
However, and respectfully, HHJ Pelling QC then erroneously summarised D1-D4’s case as ‘[depending] upon the court implying a contract between [WB] and [D1-D4] that incorporates by reference at least section K of the FA Rules’ and that such implication can only occur where it is necessary to do so.[18] Neither Chitty nor The Satanita refer to an “implied contract”. A multilateral contract is not an implied contract – it is an exception to a general requirement of offer and acceptance – and HHJ Pelling QC’s references to an implied contract and the test of necessity potentially act as undesired restrictions to the circumstances in which a multilateral contract could be found.
Finally, Mercato Sports (UK) Ltd and McKay v Everton Football Club Company Ltd (“Mercato”) concerned a claim brought by Mercato Sports (UK) Ltd (“MSL”) and Mark McKay (“MM”) against Everton Football Club Company Ltd (“EFC”) for payment of fees following MSL’s and MM’s introduction of a football player (referred to as “AB”) to EFC, who EFC then signed.[19]
MM accepted that, as a registered intermediary under the FA Working with Intermediary Regulations (“FAWIR”) 2017-2018 in place at the time and therefore a Participant, he was bound by the FA Rules and that his claim should proceed by way of a Rule K Arbitration.[21] However, MSL did not accept that it was bound by the FA Rules and that its claim should proceed by way of a Rule K Arbitration, and EFC therefore made a s. 9 Application seeking a stay of MSL’s claim against EFC.[22]
Although initially contested by MSL, MSL was also registered as an Intermediary under the FAWIR 2017-2018.[23] Such registration occurred before MSL performed any of the activities or services involved with introducing AB to EFC.
HHJ Eyre QC approached the problem to be answered as follows:
‘The approach which I am to take as a matter of law is as follows. For there to be an arbitration agreement between two litigants there must be a contract between those persons. Such a contract can only exist if the circumstances are such as enable the court to find a contract by application of the normal rules governing the formation of contracts. An implied contract between two persons who have not engaged directly with each other (“a horizontal contract” to adopt the language used by HH Judge Pelling QC in [Bony]) can arise where each of those persons has a separate contract (“a vertical contract”) with the same third party committing them to abide by particular rules laid down by or stipulated for by that third party. Such a vertical contract can arise where a person’s actions amount to an accession to the rules laid down by the relevant third party. Whether a series of vertical contracts gives rise to a horizontal contract (or a series of such contracts) between particular persons will depend on the facts and circumstances of each alleged party’s entry into the vertical contract in question and the nature of their dealings with the other parties. A careful and fact sensitive analysis of the particular circumstances will be required. Engagement in activities related to a particular sport does not without more and inevitably amount to an agreement to be bound by the rules of the governing body of that sport let alone to horizontal contracts with all others engaged in that sport. However, accession to such rules can in appropriate circumstances give rise to such horizontal contracts with other participants in the sport’.[24]
In this author’s opinion, despite HHJ Eyre QC’s (i) erroneous references to ‘Such a contract can only exist […] by application of the normal rules governing the formation of contracts’ and that such a contract is an ‘implied contract’; and (ii) failure to use the correct terminology of a “multilateral contract”, the factors highlighted by HHJ Eyre QC align with those key factors arising from The Satanita and Davies explained above, and as explained in Chitty as quoted above. It is notable that HHJ Eyre QC omits any requirement for “necessity” in the above-quoted approach (and elsewhere in his judgment) and also does not refer to [49] of HHJ Pelling QC’s judgment in Bony that refers to the same.
In finding that there was an arbitration agreement between MSL and EFC pursuant to the FA Rules, r. K1, HHJ Eyre QC noted MSL’s registration as an Intermediary under the FAWIR 2017-2018 and that MSL’s actions relating to that registration ‘operated as an accession by [MSL] to the [FA] Rules’.[25] HHJ Eyre QC also noted that MSL’s provision of an invoice to EFC in respect of the sums claimed ‘[asserted] that [MSL] had an entitlement to payment from [EFC] and that the entitlement derived from services rendered in respect of AB’.[26] Pulling those threads together, HHJ Eyre QC held:
‘In my judgement it is highly significant that the invoice rendered to [EFC] by [MSL] bore the latter’s number as a registered intermediary. That is a powerful, indeed a compelling, indication that the claim for payment was made in that capacity. It also indicates that the services were provided in that capacity. It then follows that [MSL] was claiming for intermediary services provided to [EFC]. It follows that [MSL] was dealing with [EFC] as an intermediary an in doing so was making reference to its position as a registered intermediary. At the very least it made reference to that position as a registered intermediary when it sought payment. Thus [MSL] was invoking its capacity under the [FA] Rules in dealing with [EFC]. In those circumstances it must follow in my judgement that it was acting, and avowedly acting, on the basis that its dealings with [EFC] were subject to the [FA] Rules. Those dealings accordingly gave rise to an implied horizontal contract between [MSL] and [EFC] whereby each was bound by the [FA] Rules’ (sic).[27]
Alrubie – any developments?
Alrubie concerned Saif Alrubie’s (“SA”) claim against Marina Granovskaia (“MG”), former director at Chelsea Football Club Limited (“CFC”), in respect of an alleged commission payable by CFC to SA following SA’s introduction of West Ham United FC (“WHUFC”) to CFC for the transfer of Kurt Zouma (“KZ”) from CFC. SA’s claim focused on an alleged introduction agreement between SA and CFC whereby SA would be entitled to a commission from CFC if the transfer fee paid by WHUFC for KZ was at least €30,000,000.[28]
MG made a s. 9 Application seeking a stay of SA’s claim against her on the basis of there being an arbitration agreement between MG and SA as contained in the FA Rules, r. K1.[29]
There was little difficulty in identifying that SA and MG were each a Participant under the FA Rules. SA had been registered with the FA as an Intermediary / Football Agent in accordance with the FAWIR and FA Agent Regulations in place at the relevant time.[30] As a director of CFC, MG had submitted to the Premier League a declaration form at the relevant time, in which, inter alia, MG expressly agreed that she was a Participant and was bound by the FA Rules.[31]
Following consideration of The Satanita, Davies, Bony and Mercato, David Quest KC, sitting as a Deputy High Court Judge, came to the following understanding in his judgment:
‘The principles I take from those cases are that the court will not imply merely from the participation by persons in a sport or related activity that they are bound contractually as between each other by the rules of a governing body, that the implication of such a horizontal contract depends on all the relevant facts and circumstances (including the circumstances of the making of vertical contracts and any subsequent dealings between the parties), and that the implication must be necessary—specifically, it must be necessary “to give business reality to a transaction and to create enforceable obligations between parties who are dealing with one another in circumstances in which one would expect that business reality and those enforceable objects to exist”, per May LJ in Ilyssia Compania Naviera SA v Bamaodah [1985] 1 Lloyd’s Rep 107 at 115. For the reasons set out above, I am satisfied that [MG] has shown that she and [SA] are parties to the Rule K arbitration agreement and that the present claim for inducing breach of contract is a matter within the scope of the agreement, and that [SA] has not shown that the agreement is null, void, inoperative or incapable of being performed. I am therefore bound under section 9(4) of [AA 1996] to grant a stay of the proceedings’.[32]
Unfortunately and respectfully, David Quest KC’s understanding is another example of a multilateral contract being confused with an implied contract and erroneously introducing a requirement of “necessity” (committing the same error as HHJ Pelling QC in Bony).
Strangely, despite setting out that understanding, David Quest KC then appears to jettison the requirement for necessity:
‘By separately acceding to the FA Rules […] and just as in The Satanita, each should be taken as having assumed a contractual obligation to each other Participant making a similar accession agreement with the FA, and therefore to each other. […]
[…] the fact that [SA] and [MG] have each clearly, expressly and specifically adopted the FA Rules is sufficient in my view to make the [FA] Rules binding horizontally’.[33]
Further, “necessity” is also not mentioned when considering the dealings between SA and MG:
‘But if I am wrong, and that is not sufficient, and it is relevant also to examine the dealings between [SA] and [MG] before implying a horizontal contract, then I regard it as significant that, when [SA] approached [MG] to introduce or facilitate a transfer of [KZ], (i) he was acting in his capacity as a Participant, i.e. as a registered Intermediary, and was conducting Intermediary Activity as defined in and regulated by the FA Working With Intermediaries Regulations (which Mr Alrubie accepts in his skeleton), and (ii) [MG] was acting in her capacity as a Participant, as a director of [CFC]. It is implicit that such dealings between Participants would be conducted subject to the FA Rules’.[34]
Therefore, and as similarly seen with HHJ Eyre QC in Mercato, save for a failure to use the correct terminology of a “multilateral contract”, the factors ultimately considered and applied by David Quest KC align with those key factors arising from The Satanita, Davies and Mercato highlighted above, and as explained in Chittyquoted above.
Conclusion
In this author’s opinion, the decision in Alrubie does not offer any clarification or refinement to the factors to be considered in determining whether being a Participant creates an enforceable agreement between Participants that disputes between them should be resolved by a Rule K Arbitration. Arguably, David Quest KC’s reference to “implied contracts” and the need for “necessity” for any such agreement to arise doubles down on the uncertainty created by HHJ Pelling QC in Bony. The saving grace from Alrubie is that the test for an “implied contract”, which includes the need for “necessity”, was not ultimately applied, and the horizontal agreement between SA and MG was found to exist in accordance with the key factors arising from The Satanita, Daviesand Mercato, and as explained in Chitty.[35]
In an aim to bring clarity and simplicity to what should be a straightforward s. 9 Application, it is suggested that the following three-stage test should be applied when considering a s. 9 Application in respect of the FA Rules, r. K1:
Have each of the Participants signed and/or entered a form or agreement expressly indicating that it is bound by the FA Rules?
At the time that the Participants began their dealings with each other and/or at the time the circumstances arose which give rise to the dispute, were each of the Participants still a Participant in accordance with any such form or agreement referred to in point (1)?
At the time that the Participants began their dealings with each other and/or at the time the circumstances arose which give rise to the dispute, were each of the Participants aware that the other Participant was acting in its capacity as a Participant that was bound by the FA Rules, or is such awareness implicit?
It should also be noted that the above is unaffected by a Participant ceasing to be a Participant at some later stage after the right to have the dispute resolved by a Rule K Arbitration has accrued.[36]
Footnotes
[1] Joint Stock Company Aeroflot Russian Airlines v Berezovsky & ors [2013] EWCA Civ 784, [72]-[74] (Aikens LJ).
[2] (35th edn, Sweet & Maxwell 2024) vol 1, part 2, chapter 4, para 4-144.
[3] Ibid, para. 4-145.
[4] [1895] P. 248 (CA).
[5] Ibid, 249.
[6] Ibid.
[7] Ibid, 255; see also 260-261 (Lopes J) and 262 (Rigby LJ).
[8] [2017] EWHC 2095.
[9] Ibid, [16c].
[10] [2017] EWHC 2146 (Ch).
[11] Ibid, [3] (HHJ Pelling QC).
[12] Ibid.
[13] Ibid, [4], [6] and [18].
[14] Ibid.
[15] Ibid, [8].
[16] Ibid, [9].
[17] Ibid, [42]-[43].
[18] Ibid, [48]-[49].
[19] [2018] EWHC 1567 (Ch).
[21] Ibid, [24] (HHJ Eyre QC).
[22] Ibid, [2].
[23] Ibid, [16]-[18] and [20]-[23].
[24] Ibid, [26].
[25] Ibid, [49].
[26] Ibid, [52].
[27] Ibid.
[28] [2025] EWHC 541 (Comm), [1]-[3] and [11] (David Quest KC).
[29] Ibid, [16].
[30] Ibid, [21]-[22].
[31] Ibid, [23].
[32] Ibid, [34].
[33] Ibid, [35]-[36].
[34] Ibid, [37].
[35] For a summary of the principles applicable to finding an implied contract see Modahl v British Athletic Federation Ltd [2001] EWCA Civ 1447, [100]-[102] (Latham LJ).
[36] (n28), [40].
14 May 2025