Saif Alrubie v Chelsea Football Club Limited & Anor

A Rule K arbitration agreement in the rules of a sporting governing body may have horizontal contractual effect between participants who have separately and expressly agreed with the governing body to be bound by those rules. The agreement applies to a dispute arising while both parties were participants, and the accrued right to arbitrate is not lost merely because one party later leaves the sport. A dispute may arise at a high level of generality, including through a demand for payment and an assertion of personal liability. Under section 9 of the Arbitration Act 1996, the court must identify the matter in the proceedings and then determine whether it falls within the arbitration agreement. A broadly worded Rule K covered a claim that one participant induced another participant’s employer to breach an alleged commission agreement.

The claimant, a football intermediary, brought proceedings against a former director and employee of Chelsea Football Club alleging that she induced Chelsea to breach an agreement to pay him commission for introducing a player transfer. Chelsea was initially a defendant but the claimant discontinued the claim against it.

The second defendant applied for a stay under section 9 of the Arbitration Act 1996, relying on Rule K of the Football Association Rules. Both parties had separately agreed with the Football Association to be bound by those rules, but the defendant had ceased to be involved in football before proceedings began. The issues were whether Rule K created an arbitration agreement between the parties, when the dispute arose, whether the claim fell within its scope, and whether any alternative case-management stay was appropriate.

1. Horizontal contractual effect. Rule K was contractually binding between the claimant and the defendant. Each had expressly acceded to the Football Association Rules as a condition of participating in regulated football activities. Rule K could not achieve its intended purpose of arbitrating disputes between participants unless it operated horizontally between participants as well as vertically between each participant and the Football Association. The implication was necessary to give business reality to the arrangement. The result was supported by The Satanita, Davies, Bony and Mercato.
2. Former participant. The words “any dispute or difference between any two or more Participants” referred to persons who were participants when the dispute arose. The right to arbitrate accrued then and was not lost when the defendant later ceased to be a participant. That conclusion was consistent with the separability of an arbitration agreement and avoided the unreasonable possibility of evading arbitration by leaving the regulated activity.
3. Accrual of the dispute. The relevant dispute was the alleged inducement of breach by the defendant, not merely the contractual dispute with Chelsea. By 22 May 2022, the claimant’s email asserted a right to commission, demanded payment from the defendant personally, and threatened legal financial consequences. That was sufficient to constitute a dispute while she remained a participant. A dispute need not await a detailed response or precise quantification.
4. Scope and section 9. Applying the two-stage approach in Republic of Mozambique, the matter in the proceedings was identified as the dispute over whether the defendant induced Chelsea to breach the alleged introduction agreement. Rule K was drafted in the widest terms. The claim arose from conduct undertaken by both parties as participants and therefore fell within its scope. The agreement was not null, void, inoperative or incapable of performance merely because the defendant denied that the underlying introduction agreement existed, since the arbitration agreement arose from the Football Association Rules.
5. The court was therefore required by section 9(4) of the Arbitration Act 1996 to grant a stay. A case-management stay would not have been granted in any event. Although parallel proceedings risked duplicated evidence and inconsistent findings, the proposed arbitration had not commenced and a stay might delay the claim without practical advantage.
6. The defendant was awarded her costs on the indemnity basis, applying A v B and Schillings International LLP v Scott, together with £150,000 on account.

First-instance decision. No prior appellate decision is stated in the judgment.