Mercato Sports (UK) Ltd & Anor v The Everton Football Club Company Ltd

Participation in professional sport does not, without more, create an agreement to be bound by the governing body’s rules or an arbitration agreement with every other participant. The court must apply ordinary contractual principles and undertake a careful, fact-sensitive analysis.

A person may accede to the rules through a vertical contract with the governing body. That contract may, in appropriate circumstances, support an implied horizontal contract with another participant. The greater the distance between the relevant activity and the physical playing of the sport, the more carefully accession and any horizontal contract must be established.

The claimants sought payment for services said to have led a football club to engage a professional player. The defendant applied under Civil Procedure Rules Parts 11 and 62.8 for a stay under section 9 of the Arbitration Act 1996, relying on Rule K of the Football Association Rules.

The second claimant accepted that he was bound by the Rules. The first claimant disputed that it was bound, but evidence showed that it had been registered as an intermediary and had used its registration number on an invoice to the defendant. The issue was whether that conduct created a vertical contract with the Football Association and a corresponding horizontal arbitration agreement with the defendant.

1. Stay granted. The proceedings were stayed and the dispute referred to arbitration under Rule K. The second claimant was already accepted to be bound. The first claimant was also bound on the facts.
2. Under section 9 of the Arbitration Act 1996, the party seeking a stay bears the burden of establishing an arbitration agreement covering the dispute. The court applied the approach in Joint Stock Company Aeroflot Russian Airlines v Berezovsky [2013] EWCA Civ 784, [2013] 2 Lloyd's Rep 242.
3. An arbitration agreement requires a contract between the litigants. A contract may be implied between participants who have not directly contracted where each has a separate contract with the same governing body incorporating its rules. Whether that produces a horizontal contract depends on the facts, the parties’ entry into their vertical contracts and their dealings with one another.
4. Participation in professional football, or involvement in activities connected with it, does not automatically bind a person to the Football Association Rules. Nor can the Football Association impose contractual obligations on a person who has not expressly or impliedly agreed to be subject to its rules. The court approved the fact-sensitive analysis in Bony v Kacou [2017] EWHC 2146 (Ch) and found no inconsistency with Davies v Nottingham Forest Football Club [2017] EWHC 2095.
5. The first claimant’s registration, awareness of that registration, failure to challenge it and use of its registration number amounted to accession to the Rules. Its invoice indicated that it was claiming for intermediary services in that capacity. Those dealings created an implied horizontal contract with the defendant. The dispute therefore fell within Rule K, even if the claimant’s conduct had been in breach of the Rules.
6. The court rejected the argument that the claimants were “inextricably linked” so that an arbitration agreement binding the second claimant automatically bound the first.
7. On publication, the court balanced arbitral confidentiality against open justice and ordered publication with the player identified only by initials and without the amount claimed.

Not an appeal. The judgment determined the defendant’s application for a stay in the High Court.