Claiming compensation: Will FIFA cash out for 2022 World Cup bidders?

Following Football Federation Australia (FFA)’s statement of intent to launch legal action against FIFA should the 2022 World Cup in Qatar be moved to a winter event, sports lawyer Kevin Carpenter explores whether there is any legal basis to claim compensation.

The FFA argue there will have been a fundamental shift in the premise on which each of the other bidding nations (Australia, United States, South Korea and Japan) submitted their proposal for hosting the tournament.

None of the legal documents required to be entered to bid for or host the 2022 World Cup were publically available. However, a number of these have been leaked by various online sources. One such is the 2022 World Cup bidding agreement itself. This was sent to member associations who responded to FIFA secretary-general Jerome Valcke’s letter dated January 15, 2009, inviting countries to express their interest to bid. Nowhere in either the letter or the bidding agreement does it state that the tournament will be held during June/July.

One of the documents submitted as an annex to the bid book, pursuant to entering into the bidding agreement, is the fundamental hosting agreement. This contains the key rights and obligations of the local organising committee as regards hosting the prestigious tournament. Unfortunately, the hosting agreement for the 2022 World Cup remains confidential. 

However, the hosting agreement between FIFA and the South African Football Association for the previous World Cup in 2010 is available to view online and provides some insight as to perhaps what the actual terms of the hosting agreement for the 2022 tournament was at the time of bidding. In Part C of the 2010 hosting agreement, article 10.1.1 reads: “The matches are expected to take place during June and July 2010, which dates are subject to the prior approval of the FIFA organising committee.”

Since FFA threatened to pursue compensation, Valcke said that having the 2022 tournament in June/July was only in principle and would have to be agreed by the FIFA organising committee, reflecting the wording in the 2010 hosting agreement above. FFA has pointed out, however, that in all the bid evaluation reports produced by FIFA ahead of the vote in December 2010, temperature figures were only produced for June/July when examining the suitability of the country to host the tournament.

Therefore, there is a tension between the literal interpretation of the hosting agreement contract and the purposive interpretation that could be applied by any judge. However, it would not be a judge who would have the final say on the dispute, as article 6.11 of the bidding agreement states that all disputes must be resolved by “an arbitral tribunal consisting of three arbitrators…pursuant to, the Swiss rules of international arbitration”.

This clause is included in the document because FIFA would not want any disputes being heard in an open court, rather, arbitration is a confidential commercial dispute resolution procedure increasingly used in sport due to it being private yet binding in nature.

Any arbitral tribunal would start with what the hosting agreement contract actually says. As we have already discussed, if the hosting agreement for the 2022 tournament reflects the one signed for 2010, then there is some discretion available to FIFA as to when the tournament is to be held. In addition to that, any arbitral tribunal is likely to assess objectively the parties’ intentions. In doing so, they may give considerable weight to the history of the tournament and the fact that it was not mentioned at any stage by FIFA, or indeed ever contemplated, that the 2022 tournament would be held at any other time of the year than the traditional June/July period. 

Assuming that the 2022 tournament is to be moved from June/July, given the fallout in Australia following its failed bid for the tournament using public money, which has driven its legal threat, it is highly likely they will bring a claim against FIFA for compensation. Yet we have seen it is somewhat unclear as to how an arbitral tribunal would decide such a claim. 

As ever though, there are factors external to the legal process that are largely political. FIFA president Sepp Blatter has already admitted that should the tournament move, sponsors, broadcasters and possibly national leagues and their clubs will have to be compensated for changes to the international football calendar.

In addition, high profile politicians, including British sports minister Hugh Robertson, said other countries that bid for the tournament should be compensated in some shape or form, either financially or by hosting other FIFA tournaments. 

There is some time to wait and see what will happen, as the consultation process regarding the dates for the 2022 World Cup will not conclude prior to the 2014 Brazil World Cup next year.

Kevin Carpenter is a commercial, regulatory and sports lawyer at Hill Dickinson LLP.

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