Legal Issues: COVID-19’s Impact on Football Contracts in Egypt

The outbreak of the COVID-19 pandemic has globally impacted the sports industry. As public events and gatherings have been strictly prohibited in many jurisdictions, and in fear of the wellbeing of athletes and workers, matches are being postponed or cancelled in the vast majority of local, regional and international tournaments.

Ayman Nour, Partner and Head of Corporate Structuring and Nour & Partners Office in collaboration with Al Tamimi & Company has gathered a series of recommendations and guidelines to address some of the key practical issues arising from the COVID-19 pandemic, especially with regard to football players’ employment contracts and transfer procedures related to football in Egypt.

1. Legal solutions on the International level

Football, like other important aspects of the sports industry, strives to find fair and equitable solutions tailored to the circumstances to achieve a fair and reasonable balance of interests between players and clubs. In this respect, on April 7, 2020 FIFA issued the FIFA COVID-19 Regulatory Issues (FIFA April Guidelines) covering certain legal and regulatory aspects of the impact of COVID-19 on existing agreements and new agreements signed between Football clubs and professional footballers. The FIFA April Guidelines aim to protect the interests of both players and clubs, and to secure contract stability between them during the pandemic.

Furthermore, on 11 June 2020, FIFA issued a new Circular (FIFA June Guidelines) endorsing certain temporary amendments to the FIFA Regulations on the Status and Transfer of Players (RSTP), permitting players to be registered with three Clubs and to play official matches for those three clubs during the same season (usually a Player is eligible to be registered with three clubs but to play official matches for only two clubs). The new Circular gives the National Associations the right to commence the “first registration period” for the 2020/21 season prior to the completion of the 2019/20 season (together – FIFA Guidelines).  

While the FIFA Guidelines may not solve each individual issue, it is expected they will bring a measure of stability to football for the foreseeable future.

2. Impact of COVID-19 on National Football Associations as a Force Majeure Event

As the FIFA Bureau officially announced that COVID-19 is a force majeure event for FIFA and Football in general, FIFA refused to determine that COVID-19 represents a force majeure in any specific country or territory of its affiliated members – including Egypt.

Rather, FIFA has identified certain steps for handling different scenarios where an employment agreement cannot be performed as originally anticipated between a Club and a football player.  These areas include, inter alia, reaching a mutual agreement, scenarios in which unilateral decisions may be made by the Club or the Player and the potential temporary suspension of employment agreements during the suspension of competitions.

In fact, FIFA confirmed that no specific employment agreements or transfer agreements were to be impacted by the concept of force majeure issued by the FIFA Bureau. In other words, neither clubs nor players can rely on the FIFA Guidelines to assert a force majeure situation (or its equivalent) in a contractual relationship. Whether or not a force majeure situation exists shall be a matter of law and fact, which must be addressed on a case-by-case basis vis-à-vis the relevant laws that are applicable to any specific employment or transfer agreement.

The Force Majeure Event issue has been raised since some parties cannot perform their contractual obligations. For example, some players refuse to train and/or play in fear of infection, also some Clubs – especially in our region – have concerns on paying salaries while they are not sure that the football season will be resumed, amongst other examples. The pandemic may also be considered a general exceptional, unforeseen event which the parties did not contribute to, or would be able to mitigate, yet impacts their contractual obligations.

It remains that the only certainty is that the COVID-19 pandemic has immensely impacted contractual obligations and relationships in football.

3. Legal solutions and the National Measures

In line with the FIFA Guidelines, National Associations – including the Egyptian Football Association (EFA) –  should follow the same model set by FIFA to find a viable solution for the Players and the clubs on the national level.

In March 2020, the EFA postponed the professional league and all other football activities in the country due to the COVID-19 outbreak. While it is confirmed that this football season 2019/2020 will not end on the expected date, discussions between the EFA, the Egyptian Olympic Committee and the Ministry of Sports have been initiated to decide whether the League for the 2019/2020 season should be resumed or cancelled.

A determination on resuming the league remains unclear and this decision will have a direct impact on both the clubs and the players – primarily on the Parties’ contractual obligations, the duration of the relevant agreement and the start date of the agreements for the new football season 2020/2021.

• Impact of COVID-19 on the Parties Contractual obligations in case of resuming or cancelling the competition.

Contrary to other National Associations in the region, the EFA has not issued any circulars or clear directions on the players’ employment agreements with their respective clubs on the national level. However, a verbal statement was made to encourage the clubs and players to work together on reaching mutual agreements and solutions regarding their employment conditions during this period. Such agreements and solutions to include, amongst other issues, temporary salary reductions.

The uncertainty as to the resumption or cancellation of this football season affects the EFA’s plan on Player registration. The fact is that resuming or cancelling this football season will – either way – lead to direct consequences on the contractual obligations of the clubs and the players. In the scenario where the season is resumed, the players whose contracts were supposed to expire by June 30, 2020 will have to – at least – extend them until the actual end of the season, whenever that may be.

If the season is cancelled, on one hand, those players whose contracts expire and have already signed new employment contracts with third parties will be eligible to proceed with their transfers. On the other hand, Clubs may have the right to terminate employment contracts of the local players at the end of the season subject to paying a specific amount to these players.

• The Terms of the Agreements

Legally speaking, the term of football players’ contracts should originally expire by the end of the football season. Usually the start date and end date of the football season are known (1^st July to 30 June of the next year is a usual football season in Egypt). Players and Clubs mutually agree on the contract duration and end date in their agreements based on the football season.

In the scenario where the league is resumed, Clubs and Players will have to initiate discussions to extended the term of the employment contracts until the end of the current football season.

4. Conclusion

The postponement of a football match caused by the outbreak of COVID-19 is likely to be an event outside the control of the parties, for which they bear no fault and is something they did not contemplate. However, as opposed to cancellation, a requirement to play a match behind closed doors is less likely to render performance of a contractual obligation impossible. The only certainty in these most uncertain times is that COVID-19 is likely to immensely affect the contractual relationships of players with their clubs, as well as sports agencies, in a way that will change the legal landscape of the Sports world.

Key Contacts:

Ayman Nour
Partner, Head of office – Egypt
a.nour@tamimi.com

Steve Bainbridge
Partner, Head of Sports & Events Management
s.bainbridge@tamimi.com