The sudden outbreak of the world pandemic coronavirus has affected the sports industry hard and fast.

Domestic, as well as international leagues, have grounded to a complete halt, training has been restricted to individual indoor training, major competitions have been either postponed or cancelled in their entirety and sport media houses have been left scrambling on what to report on and show on screens across the globe.

Like almost every other sector of the economy, sport is grappling with the unprecedented impact of the coronavirus pandemic.

Besides the consequential health impact that such pandemic is causing, serious and critical changes to the sporting world as we know it are happening as we speak.

A certain large degree of uncertainty has come about, such as what happens to contracts currently in force, when and how can leagues resume and whether fans would be allowed to attend sporting events for the foreseeable future.

One of the biggest current headaches being faced by the sports industry concerns current contracts.

These include employment, sponsorship as well as contracts concerning major competitions such as broadcasting, advertising and logistical matters.

Despite the economic and contractual uncertainty, the obligation to perform the duties outlined in such contract for both parties involved remains.

Many are asking the question on whether the legal notion of force majeure can be utilised with respect to the disruptions being caused by COVID-19.

Force majeure is an extraordinary event that triggers an exception to the principle of liability for duty to perform affecting contractual relations.

It must be something that is inevitable despite the extreme efforts of the parties concerned to comply with their contractual commitments.

The Court of Arbitration for Sport (CAS) has, on previous occasions, pronounced itself on such notion being “widely and internationally accepted and is valid and applicable under Swiss law.”

Specifically, under CAS jurisprudence, the notion of force majeure implies an objective impediment which is beyond the control of the obliged party.

Such impediment must be unforeseeable, cannot be resisted and which renders the performance of the obligation impossible.

The conditions for force majeure are to be interpreted narrowly, since such notion is an exception to the binding force of an obligation. 

The coronavirus pandemic that is currently affecting all corners of the world could be interpreted as being an example of force majeure since it satisfies all three notions of the criteria: externality, unpredictability and irresistibility.

While at first glance, it might appear that it is only the athletes or members of staff who are not able to perform their contractual duties, since there is no training or competing going on, the disruptions being caused by the coronavirus need to be looked at more broadly.

This is because the financial losses of clubs and other stakeholders is significant for the same external reason as well.

Of course, each party request making use of such notion as a defence must be evaluated on a case by case basis.

Even though the World Health Organisation declared the coronavirus to be a global pandemic on March 11, 2020, not all sports competitions or leagues were suspended on the same date.

Thus, the issue of timing might also be a relevant determining factor when it comes to considering whether the notion of force majeure can exist or not.

One must carefully scrutinise all factual and administrative circumstances, taking into account factors such as an athletes’ place of residence and competition and see how same will be applied by parties as a defence to their claims.

How CAS and other arbitral bodies will interpret such arguments as being valid ones when reaching their respective decisions on whether the notion of force majeure can be availed of or not.

In an ideal scenario the notion of force majeure should be incorporated in contracts, to avoid or reduce the potential disputes between parties.

Nonetheless, if this is not the case, a party may still claim that it was impossible to fulfil the contract without its own fault or claim fundamental change of circumstances based on the principle of rebus sic stantibus that might justify terminating or modifying a contract.

In order to avail oneself from possible lengthy legal battles, there is the need for collective bargaining to take place between both parties concerned in order to try and reach an amicable solution between them.

This has to happen since a number of sport organisations, leagues and clubs are and will be facing severe financial challenges in seeking to overcome the disruptions caused by the COVID-19 outbreak.

This is an important moment for all key stakeholders to collaborate jointly for the common benefit of restructuring the sports industry to be able to resume in the best possible manner once the pandemic ceases.

Dr. Robert Dingli is a sports lawyer and Associate at Dingli & Dingli Law Firm