How Sports Arbitration Is Evolving In China

On June 24, 2022, the 35th Session of the Standing Committee of the Thirteenth National People's Congress adopted the newly revised Law of the People's Republic of China on Sports (hereinafter referred to as the “Sports Law”).
In the newly revised Sports Law, the sports arbitration system was officially established in the form of law in China. This article briefly introduces and comments on the sports arbitration chapter of the Sports Law, which will be officially implemented on January 1, 2023. It looks at
Background To Sports Arbitration In China
The Formal Establishment Of China's Sports Arbitration System
Commentary On The New Arbitration System
Background To Sports Arbitration In China
As early as 1995, when the Sports Law was first promulgated, Article 33 of the Sports Law clearly states that,
"Disputes arising from competitive sports activities shall be mediated and arbitrated by the sports arbitration institution. Measures for the establishment of sports arbitration institution and the scope of arbitration shall be prescribed separately by the State Council."
Unfortunately, the State Council has not promulgated regulations for the establishment of the sports arbitration institution and the scope of arbitration, and the formal establishment of a sports arbitration system in China has been put on hold until now, resulting in parties to sports disputes in China being unable to seek effective relief from sports arbitration.
In addition, since the Sports Law stipulates that disputes arising from competitive sports activities are to be mediated and arbitrated by sports arbitration bodies, some cases involving the sports industry - especially cases where athletes claim unpaid wages - have been dismissed by the courts on the grounds that "sports disputes shall be decided by the sports arbitration institution" when they are brought to the court.
For example, on February 23, 2021, the Liaoning High Court issued a ruling[1] in the case of a dispute between professional soccer players and Dalian Transcendental Football Club Co. regarding their employment contract, pointing out that the dispute in this case “belongs to the Disputes arising from competitive sports activities” and the resolution method excludes the jurisdiction of the people’s court. In addition, the labor relationship between the football players and the club was regarded as a ‘special labor relationship.’ According to the principle that a special rule is superior to a general rule, the dispute should not be resolved by reference to the Labor Contract Law of the People's Republic of China, but rather the provisions of the Sports Law should be applied. In Chinese judicial practice, this type of dispute abounds, and some athletes who are owed wages face the dilemma of having no recourse in the current sports dispute resolution system.
Although so-called “arbitration committees” have been established within some domestic sports associations in China, they are internal dispute resolution bodies, not arbitration bodies in the legal sense, and their awards are not legally enforceable. They cannot be enforced by the people's courts. Therefore, even if the aforementioned “arbitration committee” decides on the dispute between the parties after the hearing, when the losing party fails to implement the decision, the association which made the decision can only urge the losing party by imposing internal penalties (such as suspension and relegation) on the members of the association who fails to implement the decision. However, the premise for the association to impose penalties on the losing party is that the party is a member of such association. Once the losing party is no longer a member of the association after the decision is made, the association's decision would be wholly unenforceable.
The need for change
In May 2020, the Beijing Chaoyang District People's Court sent judicial recommendations to the General Administration of Sport of China and the Chinese Football Association, making suggestions that included a recommendation to accelerate the establishment of a sports arbitration system. The long-term absence of a sports arbitration system in China has a negative impact on judicial trials in China.
In addition, with the further development of China's sports industry and the increasing internationalization of sports, there will be a large number of sports disputes. Furthermore, sports disputes have their unique characteristics compared to civil and commercial disputes; for example, the resolution of sports disputes requires professional and special knowledge of sports, and sports disputes are usually more urgent than other kinds. Therefore, some sports disputes cannot be resolved through ordinary commercial arbitration or litigation procedures. Thus, it is necessary for China to establish its own sports arbitration system to meet the actual needs to resolve sports-related disputes in China.
In addition, the lack of a sports arbitration system in China has resulted in many Chinese domestic parties being unable to resolve their sports disputes domestically and having to incur more time and money costs of going to an international sports dispute resolution body to resolve their disputes. Under Article 13.2.2 of the 2021 edition of the World Anti-Doping Code (WADA Code), doping cases that do not involve international-level athletes or international events may be appealed to an appellate body in accordance with rules established by the National Anti-Doping Organization. In the absence of a sports arbitration body in China, parties are unable to choose a domestic dispute resolution body in China that satisfies the above provision. Consequently they cannot resolve the relevant sports dispute domestically.
The Formal Establishment Of China's Sports Arbitration System
Chapter 9 of the newly revised Sports Law provides a chapter on sports arbitration, consisting of ten articles, which marks the formal establishment of the sports arbitration system in China. The following is a brief overview of the Chinese sports arbitration system:
Independence of arbitration
Article 91 of the revised Sports Law states that sports arbitration shall be conducted independently in accordance with the law and shall not be interfered with by any administrative organ, social organization, or individual. This demonstrates the independence of Chinese sports arbitration. Independence of sports arbitration is an important guarantee to ensure the fairness and impartiality of the results of sports arbitration and to protect the parties' legitimate rights and interests.
Basis of sports arbitration in China
Article 92 of the revised Sports Law specifies the basis and scope of sports arbitration. According to Article 92, parties may apply for sports arbitration in accordance with the arbitration agreement, the statutes of the sports organizations, and the rules of sports events, etc. Therefore, the basis of sports arbitration in China is based on the principle of the free will of the parties.
There is no doubt that an arbitration agreement is a sufficient indication of the parties' choice to arbitrate and to select a particular arbitration committee. The autonomy of the parties is also reflected in the use of the statutes of sports organizations and the relevant rules of sports events as the basis for sports arbitration since athletes, for example, should read the statutes of such sports organizations or rules of sports events and agree to them when joining a sports organization or participating in a sporting event.
The scope of arbitration
According to Article 92 of the revised Sports Law, the scope of Chinese sports arbitration includes:
i. Disputes arising from dissatisfaction with the handling of decisions by sports organizations, athlete management entities, or sports event and activity organizers in relation to disqualification, annulment of match results, or suspension in accordance with doping administration provisions or other administrative provisions;
ii. Disputes arising from the registration or exchange of athletes;
iii. Other disputes arising from competitive sports activities.
The arbitrable disputes stipulated in the Arbitration Law are contractual disputes and other disputes over rights and interests in property between citizens, legal persons, and other organizations with equal status. It is worth noting that (i) arbitrable disputes stipulated by the Arbitration Law of the People’s Republic of China and (ii) labor disputes stipulated by the Labor Dispute Mediation and Arbitration Law of the People’s Republic of China do not fall within the scope of arbitration for sports. Labor disputes stipulated in the Labor Dispute Mediation and Arbitration Law refer to the following labor disputes between an employer and an employee:
1. a dispute arising from the confirmation of a labor relationship;
2. a dispute arising from the conclusion, performance, modification, rescission, or termination of a labor contract;
3. a dispute arising from the removal or layoff of an employee or the resignation or retirement of an employee;
4. a dispute arising from the working hours, rest and leave, social insurance, benefits, training, or labor safety;
5. a dispute arising from the labor remunerations, medical expenses for a work-related injury, economic indemnity, compensation, etc.; or
6. any other labor dispute as provided for by law or administrative regulations.
The scope of sports arbitration specified in items 1, 2 and 3 of Article 92 of Sports Law needs to be further clarified by the arbitration rules of the Sports Arbitration Commission which will be released in the future. In general, although the scope of sports arbitration as mentioned above is narrower than what we anticipated, and there is still ambiguity in terms of the boundary of the scope of sports arbitration, at least disputes outlined in Article 92 could be resolved by sports arbitration, and the situation of no dispute resolution channel for these disputes which has long existed before the implementation of the revised Sports Law has been avoided.
The composition of China's sports arbitration commission and the arbitral tribunal
Article 93 and Article 94 of the revised Sports Law stipulate the composition of the Chinese sports arbitration commission and the arbitral tribunal. That is, the Sports Arbitration Commission shall be composed of representatives of the administrative departments for sports, sports organizations, athletes, coaches, referees, sports experts, and legal experts. The number of its members shall be an odd number, and the number of members of the arbitral tribunal shall also be an odd number. The specific conditions for the arbitrators of the Sports Arbitration Commission and the specific composition of the arbitration tribunal will be stipulated by the arbitration rules of the Sports Arbitration Commission. Therefore, we expect that measures for the constitution of the Sports Arbitration Commission and the arbitral tribunal can fully reflect the independence of sports arbitration in order to better align with international practice.
Encouraging Chinese sports organizations to establish internal dispute resolution mechanisms
Article 95 of the revised Sports Law clearly states that sports organizations are encouraged to establish internal dispute resolution mechanisms and to resolve disputes. If there is no internal dispute resolution mechanism or the internal dispute resolution body fails to handle disputes in a timely manner, the parties concerned may apply for sports arbitration.
It can be seen that when sports organizations have an internal dispute resolution mechanism, the parties shall first attempt to deal with disputes through the internal dispute resolution mechanism and may only apply for sports arbitration when there is no internal dispute resolution mechanism or the internal dispute resolution mechanism fails to deal with the disputes in a timely manner. The revised Sports Law intends to make the internal relief of sports organizations to be the pre-procedure of sports arbitration.
Currently, the proportion of sports organizations with internal dispute resolution mechanisms is not high in all Chinese sports organizations. Encouraging the pre-procedural use of internal dispute resolution mechanisms to resolve sports disputes demonstrates respect for the autonomy of sports organizations while also effectively alleviating the pressure onthe sports arbitration institution and more efficiently allocating judicial resources.
Time limit for application
Article 96 of the revised Sports Law states that a party who is dissatisfied with a handling decision of a public sports organization, an athlete management entity, or a sports event and activity organizer or the handling result of the internal dispute resolution mechanism shall apply for sports arbitration within 21 days upon receipt of the handling decision or the dispute handling result. This time limit requirement reflects the urgency of sports dispute resolution and the need for efficiency.
The single and final award rule
Article 97 of the revised Sports Law stipulates that
“A sports arbitration award shall be legally effective as of the date on which it is issued. If a party applies for sports arbitration or institutes an action in a people's court regarding the same dispute after an arbitration award has been made, the Sports Arbitration Commission or the people's court shall not accept the case.”
Thus, the single and final award rule is clearly applied in Chinese sports arbitration. Given the short cycle of sports events and the relatively short career of athletes, the settlement of sports disputes is of some urgency. Therefore, there is a higher demand for the effectiveness of the sports dispute resolution process. Compared to litigation procedures, the single and final award of sports arbitration is conducive to ensuring the efficiency of sports dispute resolution and is in line with the requirements of sports dispute resolution.
Circumstances under which a sports arbitration award may be set aside
According to Article 98 of the revised Sports Law, in case of any of the circumstances specified in this Article, such as,
i. there is definite erroneous in the application of laws and regulations;
ii. the matters decided in the award do not fall within the scope of acceptance for sports arbitration;
iii. the formation of the arbitration tribunal or the arbitration procedure is not in conformity with the relevant provisions, which is sufficient to affect the impartiality of the award;
iv. the evidence on which the award is based is forged;
v. the other party concerned has withheld the evidence which is sufficient to affect the impartiality of arbitration; or
vi. the arbitrator has solicited or accepted bribes, practiced favoritism, or rendered a ruling by twisting the law when arbitrating a case, the party concerned may apply for setting aside the award to the intermediate people's court in the place where the Sports Arbitration Commission is located within 30 days from the date it receives the arbitration award.
Enforcement of awards
According to Article 99 of the revised Sports Law, the parties shall perform the sports arbitration award. If one party fails to perform the arbitration award, the other party may apply to the people's court for enforcement in accordance with the Civil Procedure Law of the People's Republic of China.
This Article clarifies that the awards made by the sports arbitration institution are enforceable and that the sports awards shall be enforced in accordance with the provisions of the Civil Procedure Law of the People's Republic of China by submitting an application to the People's Court. Granting enforceability to sports arbitration awards ensures that sports arbitration is an effective form of dispute resolution, fully guarantees the effectiveness of sports arbitration, and saves the sports arbitration from the situation in which the awards or decisions of the relevant sports associations, etc., cannot be enforced by people's courts.
Special procedures for sports arbitration
According to Article 99 of the revised Sports Law, disputes over sports events and activities that need to be handled immediately shall be subject to special procedures for sports arbitration. Special procedures shall be stipulated by the arbitration rules of the Sports Arbitration Commission. This is made to accommodate the need for immediate dispute resolution in some sports events and activities, reflecting the efficient nature of the sports arbitration system and in line with international sports arbitration practice.
Commentary On The New Arbitration System
Significance of establishment
The establishment of the Chinese sports arbitration system has solved the problem that there has been no sports arbitration system in China for a long time. The development of the new system not only addresses many disputes in the field of sports that could not be settled properly before, but also provides China with the institutional guarantee to resolve sports disputes. Therefore, in the authors’ view, its establishment is a significant breakthrough and improvement for this revision of the Sports Law and lays a certain foundation for further improvement of the sports arbitration in the future.
According to the revised Sports Law, disputes arising from
dissatisfaction with the handling of decisions by sports organizations, athlete management entities, or sports event and activity organizers in relation to disqualification, annulment of match results, or suspension in accordance with doping administration provisions or other administration provisions, and
disputes arising from the registration or exchange of athletes,
can all be handled by the sports arbitration institution, and parties can apply for sports arbitration in China after its establishment.
Besides, except for the arbitrable disputes stipulated by the Arbitration Law of the People's Republic of China and the labor disputes stipulated by the Labor Dispute Mediation and Arbitration Law of the People's Republic of China, Chinese sports arbitration institution is also authorized to accept “other disputes arising from competitive sports activities.”
The specific scope of disputes included under this category is to be clarified by forthcoming arbitration rules of Sports Arbitration Commission and sports arbitration practice.
Ideas to further improve the system
The scope of sports arbitration should be further expanded, and the boundaries of the scope of cases should be clarified in practice.
As mentioned above, the scope of sports arbitration is still relatively narrow, as stipulated in Article 92 of the revised Sports Law.
From the perspective of international sports arbitration practice, the exclusion of arbitrable disputes under the Arbitration Law is inconsistent with the general circumstances of international sports arbitration.
Sports disputes include sports sponsorship and sports event hosting disputes, which are not subject to sports arbitration under the revised Sports Law. Meanwhile, sports sponsorship and sports event hosting disputes have their unique characteristics compared to the general commercial disputes that are arbitrable under the Arbitration Law. If the arbitrator does not have sufficient understanding of the unique characteristics of sports events and sports intangibles etc., in the sports industry, the arbitration awards may deviate from the actual situation. In addition, consideration could be given to granting parties a certain degree of choice, allowing them to choose whether to resolve their disputes through commercial arbitration or sports arbitration, depending on whether the structure of their transaction falls more in the realm of commercial arbitration or sports arbitration.
Moreover, currently Chinese laws and regulations and judicial practice, do not provide a clear definition of the legal nature of employment disputes between professional athletes/coaches and clubs, athletes transfer disputes, and other disputes involving the registration or exchange of athletes. On one hand, such disputes have distinctive characteristics of the sports industry. On the other hand, they have characteristics of labor disputes but differ from labor relations. Thus there are certain difficulties in resolving them through the existing judicial system in China. For example, when it comes to employment contracts involving players or coaches (including foreign players or foreign coaches), the disputes are impossible to be subject to labor contracts without a fixed term and the restrictions of termination of the contract by the employer as stipulated by the Labor Law of the People's Republic of China or the Labor Contract Law of the People's Republic of China.
Issues regarding
a. whether disputes over contracts signed between athletes/coaches (especially foreign athletes/coaches) and professional clubs are labor disputes or to be included in the scope of sports arbitration,
b. what disputes are exactly the disputes arising from the registration and exchange of athletes,
c. whether disputes over contracts for sports event hosting can be applied for sports arbitration, and
d. other issues that are not clearly addressed in the revised Sports Law,
are to be clarified by further relevant regulations or legal practice.
The provisions on the internal dispute resolution mechanism still need to be clarified.
The provisions of Article 96 of the revised Sports Law only consider the situation of an application for arbitration against a decision made by a sports organization or a sports organization that has established an internal dispute resolution mechanism and that internal dispute resolution mechanism has dealt with the dispute in a timely manner and the party is dissatisfied with the results. However, there is no clear rule on when a party can apply for arbitration if a sports organization does not make a decision or if the internal dispute resolution mechanism of the sports organization does not deal with the dispute in a timely manner and does not make a decision on the dispute.
The enforcement provisions of sports arbitration awards need to be improved.
Article 99 of the revised Sports Law specifies that awards made by the sports arbitration institution are enforceable, but this article lacks consideration for the situation that some of the subject matter of enforcement of sports disputes are not suitable to be enforced by the people's courts.
The award of monetary payment can be enforced by applying to the People's Court for enforcement. But the unique feature of sports disputes is that they involve doping-related disputes, disciplinary disputes, and eligibility issues; the enforcement content of sports arbitration awards involves not only monetary interests but also non-monetary interests such as disqualification, suspension, withdrawal of medals, annulment of results and club relegation.
The disqualification, suspension, relegation which involve non-monetary claims, should be mainly enforced by the approval of the industry associations, the Chinese Olympic Committee, and other sports industry groups . Regarding the non-monetary claims mentioned above of the decisions, there is a lack of operability of taking the People's Court as the enforcement body.
Conclusion
This revision of the Sports Law shows us China's confidence and determination to vigorously develop the sports and sports industry. This revision of the Sports Law has brought the sports arbitration system in China from scratch and achieved a major legislative breakthrough in sports dispute resolution.
Although there are still some regrets about the provisions of the revised Sports Law on sports arbitration, the establishment and improvement of the Chinese sports system cannot be achieved overnight, nor can the new Chinese sports arbitration system be perfect at the beginning of its establishment. China is still in the process of developing a sports arbitration system that can be adapted to its conditions and development needs in practice.
[1] Liaoning High Court ruling is available to access here: https://law.wkinfo.com.cn/judgment-documents/detail/MjAzNDIxMjE2NjU%3D?searchId=84e8f339493448f79dba377c772ce320&index=1&q=(2021)%E8%BE%BD%E6%B0%91%E7%94%B3538%E5%8F%B7&module=