I organisation of sports clubs and sports governing bodies

The highest governing body of sport in France is the French Ministry of Sports, which is authorised to grant to the federation of any sport discipline the right to organise and regulate such sport, through a delegation of public service. This delegation of public service is granted to the federation for a period of four years and is indefinitely renewable. For instance, since 1985, the French Football Federation (FFF) has been granted such delegation by the Ministry of Sports.

A federation is authorised, but not required, to create a professional league in order to manage the professional tournaments, as well as non-professional leagues or committees to manage all the other tournaments at a local level.

Sports clubs willing to participate in competitions organised by the federation or its decentralised bodies must be affiliated to the federation overseeing these competitions.

The sports clubs, the federation and its decentralised bodies are required to be non-profit organisations governed by the French law of 1 July 19012 and its decree of 16 August 1901.

That being said, clubs that participate in events generating revenues greater than €1.2 million annually, or that employ athletes receiving a total income exceeding €800,000 are required to create, in addition to the non-profit organisation, a commercial corporation, which will manage its commercial activities.3 In accordance with Article L.122-2 of the French Sports Code, the 'sport corporation' must take one of the following legal forms: (1) Limited Liability Company with a sole member, called single owner limited liability sport company (EUSRL), (2) limited liability company with a sports object (SAOS), (3) professional sports limited company (SASP), (4) limited liability company, (5) limited company (SA) or (6) simplified joint-stock company.4

The federation and the professional league must comply with standard by-laws imposed by the lawmaker. In particular, it requires the federation and the professional leagues to adopt a set of disciplinary and anti-doping regulations.

In addition, some of the sports corporations (i.e., SAOS, EUSRL and SASP) are under the obligation to comply with standard by-laws setting out various rules regarding shareholders and corporate governance.

It must be stressed that in accordance with Article L.122-7 of the French Sports Code, an individual is prohibited from (1) managing two sports companies participating in the same discipline, and (2) controlling or having a major influence (within the meaning of the French Commercial Code) over two sports companies of the same discipline (male and female activities being construed as two different disciplines).

II THE DISPUTE RESOLUTION SYSTEM

i Access to courts

Articles R.131-3 and R.132-7 of the French Sports Code set out the disciplinary proceedings to be implemented by sports federations in order to settle disputes involving clubs and players.

Disciplinary proceedings must comply with the principle of fair trial as set out in the French Constitution and in Article 6 of the European Convention on Human Rights. Consequently, all sports federations must respect the parties' fundamental rights, and, in particular:

  1. the right to a decision in the first instance and to an appeal;
  2. the right to an impartial court (members of a disciplinary body who have a personal interest in a specific case may not take part in deliberations, and members of the disciplinary body may not try the same case in first instance and on appeal);
  3. the right to be judged within a reasonable period;
  4. the right to a public trial; and
  5. the respect of the rights of defence (providing for a reasonable amount of time to prepare the defence, right to be assisted by a lawyer, etc.).

The French Sports Code also provides for an alternative dispute resolution process before the French National Olympic and Sports Committee (CNOSF).5 This dispute resolution process is known as 'conciliation'. The use of such proceeding depends on the common will of the parties involved (except in some cases where the conciliation before the CNOSF is mandatory prior to suing before civil or administrative courts).

French civil courts remain accessible to the litigants pursuant to the traditional rules of civil procedure, and administrative courts retain jurisdiction over disputes relating to sports federations or to the application of their by-laws and regulations.

On the international level, certain international federations prohibit the right to seek remedies through state courts in the context of international disputes.

ii Sports arbitration

An Arbitration Chamber for Sports (CAS) was created in 2007 within the CNOSF. Article 2.II.B.1 of CNOSF's statutes provides that the CAS may resolve a dispute 'through conciliation or through arbitration'.

Article 19 of the internal regulation of the CNOSF sets out the conditions under which the parties can submit a case before the CAS. First, an arbitration clause may be included in the parties' agreement whereby the parties expressly consent to the submission of their dispute to the CAS. In the alternative, and once the litigation arises, the parties may subsequently agree to submit the case to the CAS, even if no arbitration clause was included in the agreement.

The jurisdiction of the CAS is, however, limited, as all disputes relating to a regulated sport and involving the exercise of public service prerogatives have to be brought before the administrative courts. The CAS therefore mainly retains jurisdiction over purely economic disputes, such as sponsoring or broadcasting agreements disputes, transfer fee disputes or disputes among athletes, clubs and sports federations.

Unlike in a conciliation proceeding, the CAS makes a final, binding and unappealable ruling, which is enforceable by law.

There are also independent institutions, such as the Court of Arbitration for Sport (TAS), which is an international arbitration body based in Lausanne with jurisdiction over disputes involving arbitration clauses calling for the TAS's jurisdiction, and over appeals of decisions issued by international sports federations.

iii Enforceability

Decisions issued by the French civil or administrative courts or arbitral rulings issued by the CAS are directly enforceable within the French jurisdiction. The parties are bound by those decisions with no need for additional formalities.

To enforce an international decision in France (i.e., a decision issued by a court from another country), the decision has to be recognised by the exequatur proceeding.6 This proceeding includes a high-level review by the French judge who will examine whether the foreign judge had jurisdiction over the matter.7 To pass this test, the dispute must present a serious link with the foreign state or must have been validly chosen by the parties. Within the exequatur proceeding, the judge also examines whether the proceedings have been conducted 'properly' (for instance, that the respect of the right of defence was insured). Finally, the judge has to verify whether the decision complies with the French international public policy rules. That said, some regulations of French federations specifically provide that international decisions with effects on national tournaments may be enforced directly without any exequatur proceedings before a French court.

III ORGANISATION OF SPORTS EVENTS

i Relationship between organiser and spectator

The organiser and the spectator are bound by a contract through the sale of a ticket.

The general terms and conditions governing the sale of tickets must comply with French consumer rules and regulations – when the buyer is considered to be a 'consumer'.

The General Direction for Fair Trading, Consumer Affairs and Fraud Control (DGCCRF) conducted a major investigation in 2016 in order to enforce the French consumer laws regarding online and in situ ticketing. The investigation revealed several significant breaches.8 Many organisers failed to provide the appropriate information to consumers, in particular, regarding the right of withdrawal. Indeed, French consumer laws impose a 'withdrawal period' for online sales during which the consumer may return the purchased item and be reimbursed. Although this withdrawal period does not apply to sport ticketing,9 the seller is nonetheless under an affirmative duty to inform buyers that they have no right of withdrawal, which the DGCCRF investigation has shown was not implemented by the sellers.

In addition, the investigation revealed clauses relating to the non-reimbursement in case of postponement of a sports event. This type of clause may be considered unfair because of the absence of compensation for the damage suffered in the event of a change of date, schedule or place.

ii Relationship between organiser and athletes or clubs

A club seeking to participate in a competition organised by the federation must be affiliated to such federation. This authorisation of affiliation granted by the federation allows the club to participate in competitions, but also imposes the obligation to comply with the federation's rules and regulations.

These regulations contain sporting rules (e.g., the rules of the game, the format and functioning of the competition) and disciplinary rules (e.g., sanctions against players or clubs), as well as rules protecting the commercial interests of the competition (e.g., sponsors' brands display obligations).

It is worth noting that the French Sports Code also requires the subscription of an insurance policy by the federation,10 which covers damage suffered by the clubs and players taking part in the competition.

iii Liability

According to French law, a person committing a 'fault' resulting in damage to another person may be held civilly liable.

With respect to an organiser, such fault may occur, for instance, in the event of:

  1. failure to keep the sports facilities safe and secure (organisers being bound by a general safety obligation);
  2. negligence of inspection or maintenance; or
  3. inappropriate or excessive risk created by the organisation.

With respect to an athlete's liability, a fault committed by a player against another player during the event is subject to a restrictive interpretation because of the inherent risk stemming from the exercise of the sport. According to this 'risk acceptance' theory, a player who wishes to be exonerated must demonstrate that the fault was committed in accordance with the spirit of the game, and that the potential injury was accepted by the injured player.

Regarding the liability to spectators, the organiser can be held liable for injuries caused during sports events owing to security and safety regulation breaches. It must also be stressed that the lawmaker created specific offences applicable to behaviour of spectators during sports events in a sports arena, such as:

  1. forcible or illegal introduction of alcoholic beverages;11
  2. encouragement of other spectators to hatred or to the commission of violence;12
  3. display of insignia, signs or symbols promoting racial or xenophobic ideology;13
  4. possession or use of rockets, artifices or projectiles;14 and
  5. disturbance of a competition or the endangerment of people's safety, by penetrating the competition area of a sports arena.15

iv Riot prevention

Under the impulse of international and European bodies, French legislation has attempted to prevent riots during sports events. Sports events organisers have the duty to provide security services and obtain if necessary the support of the state police.16 In order to avoid the introduction of dangerous objects inside the sports arena, French public authorities and organisers may perform physical pat-downs with the spectator's consent. If the spectator does not consent, the security services may deny access to the arena to such spectator.

French public authorities can also take several repressive measures against supporters, such as a temporary stadium ban or dissolution of supporters' associations in case of a risk of serious disturbance to the public order.17

Since 2007,18 persons prohibited from stadiums are listed in a National Stadium Bans Register. This register contains the identities of the persons banned by judicial or administrative decision. The data are retained for five years from the expiry of the most recent measure pronounced.

IV COMMERCIALISATION OF SPORTS EVENTS

The originality of the French system resides in Article L.333-1, Paragraph 1 of the French Sports Code, which states that 'sports federations and organisers of sports events mentioned in Article L.331-5 are the owners of the exploitation right of the sports events or competitions that they organise'. This 'organiser's right' is a sui generis right that can be compared to a copyright as the underlying concept is similar: a person creating an original work holds the rights to its creation in order to be compensated and to prevent the unauthorised use of its creation.

The French Sports Code does not provide an exhaustive list of the 'exploitation rights' that are within the organiser's portfolio. Some of the rights are specifically referred to in such Code (e.g., audiovisual rights, betting rights). The jurisprudence has then interpreted the notion of exploitation rights so as to include ticketing, photography of the competitions (including before the kick-off and after the end of the match – for example, during a moment of silence before the kick-off), the date and reference to a competition and, in a very general statement, 'any form of economic activity the aim of which is to generate a profit and that would not exist if the sports event referred to did not exist'.19

This 'organiser's right' set out by law is the most efficient legal weapon and the most commonly used before courts by organisers in order to protect their rights.

The commercialised rights by the federations are subject to limitations – mainly linked to competition law and right to information ('news access'), as set out in the European Union regulations. For instance, the French Sports Code20 provides that events of major importance listed by decree should be broadcast on national free television. In addition, radio broadcast rights cannot be marketed because of the right to information. Any radio journalist can make comments on a sports competition without having to get an approval from the organiser.

A French particularity should be underlined. Federations may assign to clubs, free of charge, the audiovisual exploitation rights related to the competitions organised by the professional league; such rights being, in such a case, marketed on an exclusive basis by the professional league on behalf of the clubs. For now, this option is only used in the football field: in 2004, the FFF granted ownership of the audiovisual exploitation rights to clubs and the French Professional Football League (LFP).21 The French specificity is that when audiovisual rights are assigned by the federation to the clubs (i.e., for now, only in football), certain rules apply. Indeed, the Sports Code provides a legal framework to the marketing of audiovisual rights by the league who markets the rights (the LFP). For instance, the audiovisual rights must be marketed through a bidding process, which shall be non-discriminatory and transparent. The LFP must provide in its offer the qualitative (television exposure, audience, etc.) and quantitative (amount offered) criteria on which it relies. The agreement between the LFP and broadcasters cannot last more than four years.

V Professional sports and labour law

i Mandatory provisions

French labour law, combined with collective bargain agreements, set forth the applicable rules to professional athletes' employment contracts.

However, a law that came into force on 27 November 201522 sets out specific mandatory provisions for employment contracts of professional athletes, coaches, judges and referees. Indeed, those professionals are solely entitled to conclude a fixed-term contract with their sports federation for a term of no less than 12 months (duration of a sports season) and no more than five years.23 An exception is allowed for employment contracts for less than 12 months in the case of replacement during an ongoing season. The maximum duration includes the renewal of the contract or the conclusion of a new contract with the same employer.

Those fixed-term contracts also have to comply with other provisions. For instance, contracts must provide all the mandatory information listed in Article L.222-2-5 of the French Sports Code and the termination clause cannot be unilateral.24

ii Free movement of athletes

Freedom of movement and of residence is a fundamental right in EU primary law, as set out in the European Union Treaty, the Treaty on the Functioning of the European Union (TFEU) and the EU Charter of Fundamental Rights. The European Union legal system is incorporated into the Member State legal system, which means that European Union laws apply and have a direct effect on Member States. Thus, Member States are not allowed to enact legislative measures restricting freedom of movement and of residence.

The EU Court of Justice applied the freedom of movement principle to an athlete in the important Bosman case.25 All regulations of sport federal entities trying to impose quotas on national teams or clubs are disputed because of such principle.

iii Employment rules of sports governing bodies

Sports governing bodies have to apply French employment rules and regulations. Because of its protective role, French employment regulations are considered public policy rules – which means that they cannot be derogated from. As a consequence, a sport federation, association or corporation may not include in their employment contracts provisions that are inconsistent with French employment regulations, except if those provisions improve the employee's rights.

Most sport federations make employment contracts templates available to their affiliates. Generally, employment contracts must be approved by the relevant governing body.

VI SPORTS AND ANTITRUST LAW

Sport is not only a game, but is also a highly profitable economic activity, which implies the application of antitrust law. Moreover, given that each professional sport is governed by a federation, the latter is naturally in a position of monopoly. Hence, several antitrust law issues are applicable to sports organisations. French legal requirements regarding competition law are set out in the French Commercial Code26 and in the TFEU.27

Two significant illustrations of application of competition law to sports should be mentioned. In the Adidas case,28 the LFP and Adidas were found liable for having entered into an exclusive agreement, owing, in particular, to the fact that the French league had not marketed the rights through a call for tender and the duration of the agreement was excessively long (five years). The court decided it was contrary to competition laws.

A recent case also illustrated the complex issue of competition law in the commercialisation of broadcasting rights29 (in such case, the French Competition Authority decided that the practices of the Professional Rugby League were not contrary to competition laws because the audiovisual rights for rugby's second division competition were not considered 'premium rights', likely to have effects on the audiovisual exploitation market). The process of sale of the rights and the duration of the broadcasting rights proposed must notably be analysed very carefully from an antitrust law perspective.

VII SPORTS AND TAXATION

For French individual residents, personal income tax is a general and progressive tax based on the tax household's overall income. The rate of income tax currently ranges from zero per cent to 45 per cent, depending on the annual income.

For non-French individual residents, personal income tax may also potentially apply. Although French tax residents are taxed on their worldwide income, non-French residents are only taxed on their French sources of income, derived from professional activities, whether salaried or not, performed in France. Two types of income could be taxable in France as a result of a professional activity of a non-resident:

  1. professional profits: profits derived from non-commercial activities carried on in France by persons not domiciled in France are taxed according to the rules laid down for profits of the same kind received by persons domiciled in France; and
  2. wages and salaries paid in France to non-residents are subject to a 15 per cent withholding tax (increased to 75 per cent if paid to an athlete domiciled in a non-cooperative state or territory).

VIII SPECIFIC SPORTS ISSUES

i Doping

In 1965, France was one of the first countries to adopt an anti-doping legislation.30 Since then, French legislation has significantly increased and most of the applicable provisions are now codified in the French Sports Code.

Through its anti-doping regulations, France has always made prevention and medical follow-up of athletes a priority. Sports federations play a major role in the application of those rules and can impose disciplinary and administrative sanctions. The French Anti-Doping Agency was created in 2006, and was given many prerogatives, especially in the field of control, analysis and disciplinary proceedings.

Prohibited substances are listed by decree, which follows a list provided by the World Anti-Doping Agency. The use, offer, provision or administration of prohibited substances can lead to administrative, disciplinary and criminal sanctions (up to seven years of imprisonment and a €150,000 fine).31 An athlete's refusal to submit to anti-doping control may also lead to criminal prosecution.32

ii Betting

The French regulatory framework on betting varies depending on whether the betting is 'online' or 'offline'.

Since 1933, the French public company La Française des Jeux has held a monopoly over the organisation and exploitation of sports betting and lotteries. This monopoly has been challenged multiple times, in particular by online betting operators.

Under the pressure of the European Commission, the French lawmaker amended its regulations with the law of 12 May 2010,33 which liberalised the online gambling market.

In accordance with this law, any operator offering online betting in France must be authorised by the French Online Gambling Regulatory Authority (ARJEL). The statute does not authorise all forms of bets – for instance, betting exchange or spread betting are prohibited. Moreover, sports bets are limited to the sports events set out in a limited list provided by ARJEL.34 Friendly national team events are excluded from this list,35 except in certain circumstances.36

In addition, according to the French Sports Code, the above-mentioned 'organiser's right' on its competition includes the right to authorise bets on its competitions.37 Consequently, once certain online operators have been approved by ARJEL, they may enter into agreements with sports event organisers for the organisation of bets on this competition. Such agreements generally include compensation provisions, in which the betting operator is compensated at approximately 1 per cent of the amount engaged in gambling.38 The agreement also provides for contractual obligations for the operator relating to anti-fraud detection and prevention. Further, in order to prevent conflicts of interest, the French Sports Code requires organisers to issue and impose regulations preventing players and related parties from betting on competitions in which they participate.

It must be stressed that the French online betting sector is highly regulated.

iii Manipulation

The French Sports Code and the French Criminal Code do not specifically address match-fixing. However, several provisions of the French Criminal Code incriminate acts of corruption committed by civil servants within their public office39 and by persons outside public functions.40

Most importantly, the law of 1 February 2012,41 codified in French Criminal Code Articles 445-1-1 et seq., created the new offence of 'betting fraud', which criminalises the act of offering donations, gifts or other advantages to a person involved in a gambling activity in order to induce a positive act or omission modifying the normal course of the sports event. Such illegal activity may lead to a sentence of up to five years' imprisonment and a fine of €500,000 (or up to twice the profits generated).42

iv Grey market sales

The law of 12 March 2012 43 created the new offence of illegal resale of tickets to cultural or sports events. The new Article 313-6-2 of the French Criminal Code criminalises the regular and permanent resale of those tickets outside the channels usually established by the sports event organiser. Moreover, pursuant to Article L.333-1 of the French Sports Code, the organiser has the right to prohibit any resale of ticket, which means that any resale of tickets without the prior approval of the organiser may also lead to civil sanctions.

For instance, in a dispute initiated by the FFF (it being noted that other organisers such as the French Rugby Federation and the LFP did the same), French courts ordered the company Viagogo to cease the illegal resale of online tickets to sports events and held it liable to pay damages to the FFF.44

IX The Year in Review

On 1 March 2017, the French parliament enacted a law regarding sports,45 which aims to preserve the ethics of sports and to strengthen the regulation and transparency of professional sport. Among its provisions, this law introduces the opportunity for clubs to be exonerated from social contributions and taxes with respect to the exploitation of the collective image of their players, under terms and conditions to be further specified by a decree. Such decree was enacted on 1 August 2018, which sets out the categories of revenues that can give rise to such an exonerated payment: sponsorship, advertising and commercialisation of derived products (to the exclusion of public subsidies, audiovisual rights and ticketing revenues).

This law also aims to promote the development and visibility of women's sports with the creation of a permanent conference whose mission is to develop women's sports practices. France's growing interest in women's sports should be underlined. It is with this goal in mind that the FFF was successful in securing the hosting of the 2019 FIFA Women's World Cup in France.

In the recent past, French lawmakers have also decided to approach the touchy subject of e-sports regulation. On 7 September 2016, the parliament first recognised the existence of such sport and started providing a framework for it by creating a decree to regulate the status of e-sports professional players. Such decree was enacted on 9 May 2017, and it aligns the tax and social security system for e-sports with that of traditional sports, in particular by creating the status of salaried professional player.

X OUTLOOK AND CONCLUSIONS

French sports law is one of the most mature and well-established sports laws in Europe and worldwide. The legal protection accorded to the rights of organisers and its extensive application by the courts have contributed to a fast-growing and quality-oriented industry.

Some questions, in particular regarding new technologies, remain unanswered. The position of French courts is most certainly moving in the right direction, but with new technologies, and, more generally, the digitalisation of the media, sports rights business models require improved legal protection.


Footnotes

1 Romain Soiron is a partner and Aude Benichou is an associate at Joffe & Associés.

2 Law of 1 July 1901 on the contract of association.

3 Articles L.122-1 and R.122-1 of the French Sports Code.

4 To our knowledge, the most common structure for sport companies used in 2017 was the SAOS.

5 Articles L.141-1 et seq. of the French Sports Code.

6 French Supreme Court, 7 January 1964.

7 French Supreme Court, 6 February 1985.

8 DGCCRF Press Release, 1 July 2016.

9 Article L.221-28 of the French Consumer Code.

10 Articles L.321-1 et seq. of the French Sports Code.

11 Article L.332-3 of the French Sports Code.

12 Article L.332-6 of the French Sports Code.

13 Article L.332-7 of the French Sports Code.

14 Article L.332-8 of the French Sports Code.

15 Article L.332-10 of the French Sports Code.

16 Article L.331-4-1 of the French Sports Code.

17 Article L.332-11 to L332-18 of the French Sports Code.

18 Decree, 28 August 2007.

19 French Supreme Court, 20 May 2014.

20 Article L.333-9 of the French Sports Code.

21 Article R.333-2 of the French Sports Code.

22 Law No. 2015-1541 (protecting high-level and professional athletes and securing their judicial and social rights).

23 Article L.222-2-4 of the French Sports Code.

24 Article L.222-2-7 of the French Sports Code.

25 EU Court of Justice, 15 December 1995, Bosman.

26 Articles L.420-1 and L.420-2 of the French Commercial Code.

27 Articles 101 and 102 of the TFEU.

28 Decision 97-D-71 of 7 October 1997 of the French Competition Authority.

29 Decision 16-D-04 of 23 March 2016 of the French Competition Authority relating to practices of Rugby Championship audiovisual rights marketing.

30 Law No. 65-412 of 1 June 1965 aiming to repress the use of stimulants during sports competitions.

31 Article L.232-26 of the French Sports Code.

32 Article L.232-25 of the French Sports Code.

33 Law No. 2010-476 of 12 May 2010 on the liberalisation of online gambling.

34 List on the website: www.arjel.fr.

35 Decision ARJEL No. 2015-043, 16 July 2015.

36 Decision ARJEL, No. 2010-050, 26 May 2011.

37 Article L.333-1-1 of the French Sports Code.

38 Dalloz, 'Dictionnaire permanent de droit du sport', Paris Sportif, No. 40.

39 Article 432-11 of the French Criminal Code.

40 Article 445-1 of the French Criminal Code.

41 Law No. 2012-158 of 1 February 2012 aiming to reinforce sports ethics and sportspeople's rights.

42 Article 445-2-1 of the French Criminal Code.

43 Law No. 2012-348 of 12 March 2012 aiming to facilitate the organisation of sport and cultural events.

44 Decision first instance court, 20 May 2014.

45 Law No. 2017-261 of 1 March 2017 aiming to preserve the ethics of sport, strengthen the regulation and transparency of professional sport and improve the competitiveness of clubs.