Previous case law
Supreme Court decision
Disputes arising from contractual and other relations in the world of sport are generally highly specific to the sector and are normally settled by specialised sports arbitration bodies. In order for an arbitral award to be enforceable in Lithuania, it must be recognised by the national courts. It is rare for a court - in Lithuania or elsewhere - to refuse to recognise a foreign arbitral award, but a Court of Appeal decision recently raised the prospect that arbitration awards to settle disputes between professional sportspeople and their clubs might be ineligible for recognition and enforcement.
In the case in question,(1) the Court of Appeal ruled that a dispute which arose from a claim for remuneration brought by a basketball player against a sports club should be considered a labour dispute. According to the Law on Commercial Arbitration, labour-related disputes cannot be resolved by arbitration. The court applied the clause in the New York Convention 1958 that allows recognition of an arbitral award to be refused if the dispute is not arbitrable under the national law in question.
The court's view was unexpected in light of previous Lithuanian case law. In 2000 the Supreme Court ruled that relations between a sportsperson and a sports club do not constitute labour relations because professional sports are regulated by specific laws. Thus, if a contract has been concluded on the basis of such law, the rules governing labour relations do not apply. More recently, the Court of Appeal considered the nature of such relations in a 2009 decision, ruling that although a contract for sporting activity shares some features with an employment relationship, it constitutes a separate form of legal relations. The court's more recent decision contradicted not only Lithuanian case law, but also the international practice of settling disputes that arise from sporting activity contracts before arbitral tribunals.
On February 21 2011 the Supreme Court issued a decision(2) that resolved the controversy created by the Court of Appeal decision. The Supreme Court stated that the principle of freedom of contract predominates in professional sports relations, distinguishing them from labour relations. Moreover, professional relations in the sports sector do not share other typical characteristics of labour relations, such as subordination, restrictions on discontinuation of the contract, guarantees of employment or holiday rights. In the field of professional sport, these issues are matters of agreement between the parties. Such a contract cannot be said to create labour relations unless the contracting parties so agree or the content of a contractual clause obviously creates such relations.
Therefore, the Supreme Court overruled the Court of Appeal decision that disputes arising out of contracts for sports activities are not arbitrable.
It is reassuring that the Lithuanian courts will recognise the legal validity of international sports arbitration awards, thus guaranteeing effective rights protection for professional sportspeople and their clubs.
For further information on this topic please contact Jurgita Petkute at Lideika, Petrauskas Valiunas ir partneriai LAWIN by telephone (+370 5 268 1888), fax (+370 5 212 5591) or email ([email protected]).