Sport: The game of litigation

Most lawyers will have experience in explaining to clients that success at trial is never guaranteed and that litigation involves risk and uncertainty. Indeed, advising clients that their ‘watertight’ case has the possibility of being an expensive disappointment can be challenging.

Despite the upheaval from the covid-19 pandemic, tough commercial decisions were still being made and lawyers were still required to give advice on issues that would have lasting legal consequences.  The combined vagaries of ‘normal’ litigation risks with the uncertainty of a global pandemic naturally gave rise to different approaches; both in terms of the approach and tactics, as well as the judgments that were delivered.

We are now two years on from the start of the pandemic and we are seeing an increasing body of judgments that have been delivered by the courts reviewing the decisions made during this period. This article considers two cases that have been handed down recently that have similar factual issues but very different legal outcomes, and what we can learn from those decisions.

Premier League v PPL

In the case of Football Association Premier League Ltd (Premier League) v PPLive Sports International Ltd (PPL) [2022] EWHC 38 (Comm), the Premier League entered two contracts with PPL for rights to broadcast the Premier League in mainland China and Macau for three seasons commencing in the 2019/2020 season (the Contracts). The Contracts had a combined value of circa $710m.

The pandemic led to a hiatus in the Premier League; matches were formally suspended on 3 April 2020 and did not resume until 14 June 2020. Upon resumption, the remaining matches were compressed into five weeks and played in empty stadiums. This created obvious difficulties for the parties. A dispute arose between the parties because the Contracts provided that the Premier League competition (the Competition) would not “undergo any fundamental change”, but in the event that it did, PPL would be entitled to enter negotiations in “good faith” to address the value of the Contracts.

During the pandemic three major decisions were taken that ultimately resulted in the litigation: (1) PPL decided to not pay two instalments that fell due under the Contracts: $210.3m on 1 March 2020 and $2.67m on 1 June 2020; (2) the Premier League continued to provide PPL with the relevant feeds for the matches played in June and July 2020; and (3) the Premier League suspended the Contracts after the season ended, and subsequently terminated them on 3 September 2020. The Premier League then issued a claim and sought summary judgment for the unpaid sums.

PPL’s position was the Competition had “fundamentally changed” because: (1) the season was interrupted and no matches occurred for almost three months; and (2) when the matches returned the covid-19 measures meant the Competition was different, for example: due to the absence of fans at games; the compression of when matches were played; the modification of kick-off times; and the increase in midweek matches (rather weekend) matches. The Premier League argued there was no fundamental change to the ‘format’ of the competition as there were the same number of clubs, each club still played twice and the league table was still organised in the same way.

The judge sided with the Premier League and entered summary judgment in its favour. Although there were significant changes to how the matches were played, the format of the competition itself had not fundamentally changed. PPL’s decision not to pay the instalments as they fell due therefore had very serious and lasting consequences, whereas the response of the Premier League was legally vindicated.

EPCR v RDA

In the case of European Professional Club Rugby (EPCR) v RDA Television LLP (RDA) [2022] EWHC 50 (Comm), EPCR entered a contract with RDA whereby EPCR granted RDA media rights for two European Rugby competitions from 2018 - 2022 (the Contract). Due to the covid-19 pandemic, the season was suspended on 16 March 2020.

The decision that led to the dispute was RDA terminating the Contract relying on a force majeure clause (FM Clause). The specific sub clause used provided: “If the Force Majeure Event prevents, hinders or delays a party's performance of its obligations for a continuous period of more than 60 days, the party not affected by the Force Majeure Event may terminate this Agreement”.

EPCR claimed damages for the alleged wrongful repudiation by RDA. EPCR asserted that RDA was not entitled to rely on the FM Clause as the wording “the party not affected by the Force Majeure Event” was not applicable because both EPCR and RDA were affected by the pandemic. In addition, EPCR alleged that RDA was motivated to serve notice because it was dissatisfied with the Contract for commercial reasons and hoped to negotiate revised terms following a termination. 

In this case, the judge sided with RDA. The pandemic was an event that engaged the FM Clause because it was beyond the reasonable control of the parties and the definition in the Contract already included ‘epidemic’. The judge held RDA could rely on the FM Clause because the phrase “the party not affected by the Force Majeure Event” had to be read in context of the entire clause. This meant that the FM Clause applied to the party whom is owed the performance, even if the same force majeure event affected both parties. This meant that RDA’s decision was vindicated and they were able to exit the Contract.

Lessons from these cases

These two cases stand as a salutary reminder as two factually similar scenarios that resulted in very different outcomes. Even well-drafted contracts can suffer from ambiguity and conflicting interpretations depending on the circumstances the parties have to address. This then leads to challenges about how to respond to these in light of the parties’ commercial and legal objectives and risks.

Where the legal analysis forms an important part of the decision-making, decisions have to be made without knowing exactly how matters will pan out. Lawyers do not have a crystal ball and their advice cannot guarantee a particular outcome.  Instead, lawyers can only give a best approximation of a good answer on the basis of the information available, while anticipating and advising on the merits and risks associated with any particular approach and decision. Even when matters go to court, the parties will not know until judgment is handed down which evidence and submissions the judge has preferred.

Both cases also underline that decisions with legal consequences are not taken in a vacuum. There will be factors that go beyond the legal analysis and the likely outcome if the matter goes to trial. For example, commercial considerations may reduce the choices available to a party, make a party have a higher tolerance for legal risk, or present them with an opportunity that they feel is too good to pass up. In those cases, it will then be down to their legal teams to work out how to justify this to the court if they cannot achieve an acceptable settlement.

Emily Joss is an associate at Russell Cooke Russell-cooke.co.uk

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