Regulatory

Governance structure

What is the regulatory governance structure in professional sport in your jurisdiction?

Professional sport in Canada is regulated by both provincial and federal legislation, with more specific rules relating to the conduct of the sport governed by the applicable sports bodies. Many professional leagues in Canada are cross-border, involving both US and Canadian teams. These professional leagues must navigate the laws of each jurisdiction in which they operate.

Protection from liability

To what extent are participants protected from liability for their on-field actions under civil and criminal law?

Sports participants are generally still responsible for their on-field actions in Canada under both civil and criminal law.

Criminal liability for on-field actions is determined by the nature of the physical contact between participants. Athletes engaged in contact sports are deemed to have impliedly consented to the ordinary risks of the game. Therefore, a physical blow that is incidental to the game will not qualify as assault. Conversely, a physical blow delivered with the intention to cause injury would typically fall outside the scope of implied consent and may qualify as assault. In the case of non-contact sports, athletes are unable to impliedly consent to physical contact.

On-field actions may also create civil liability for participants. An athlete who fails to exercise due care towards another athlete may be found liable in negligence. This liability is determined by comparing an athlete’s conduct to that of a reasonable competitor in his or her place.

Doping regulation

What is the regulatory framework for doping matters in your jurisdiction? Is there also potential secondary liability for doping offences under civil or criminal law?

In Canada, non-professional sports organisations adhere to the international anti-doping regime, the World Anti-Doping Code (the Code), which is established by the World Anti-Doping Agency. The Canadian Centre for Ethics in Sport implements the Code under the Canadian Anti-Doping Program (CADP). National Sports Organisations (NSOs), which are the governing bodies for various sports in Canada, are not required to adopt the CADP, but it must be adopted by an organisation to receive federal funding. If the CADP is adopted, it is incorporated into all of the organisation’s agreements with individual athletes, which bind the athletes to the anti-doping rules.

Professional sports organisations typically adhere to the anti-doping regimes established by their applicable sports bodies. However, if members of these leagues partake in events or tournaments under the jurisdiction of organisations that have implemented the Code (ie, National Hockey League players participating in the Olympic Games or at the World Championships) then they must comply with the Code.

While doping is not generally a criminal offence in Canada, doping offences could create secondary liability under criminal law. For example, the use, import or sale of doping substances that are illegal under Canada’s federal Controlled Drugs and Substances Act could result in criminal liability.

Financial controls

What financial controls exist for participant organisations within professional sport?

Most major professional sports leagues operating in Canada have established rules pertaining to financial controls, including the use of salary caps, debt limits, limits on losses and revenue sharing. These rules vary among each professional sports league. For example, the National Basketball Association’s soft salary cap enables teams to exceed the salary cap and pay a luxury tax to the league, while the National Hockey League’s hard salary cap requires all teams to remain below a salary cap at all times.

Dispute resolution

Jurisdiction

Who has jurisdiction over the resolution of professional sport disputes in your jurisdiction, and how is this determined?

Most major professional sports leagues operating in Canada are governed by a collective bargaining agreement (CBA). Generally, these CBAs provide for mandatory arbitration for disputes, including player contracts and grievances regarding injuries and discipline.

While parties can bring a contractual claim in one of Canada’s provincial superior courts, Canadian courts will recognise arbitration agreements and are required to stay an action where one party invokes an arbitration clause.

Provincial labour law also applies to the operation of professional sports leagues in Canada. Provincial labour relations boards have limited jurisdiction to adjudicate certain disputes involving the bargaining rights of league members, including players, referees and other unionised employees.

Enforcement

How are decisions of domestic professional sports regulatory bodies enforced?

Most CBAs provide internal enforcement mechanisms by levying fines on players or franchises for breaching the terms of the CBA. The National Hockey League CBA, for example, authorises the league to impose fines of up to C$5 million for franchises and up to C$1 million for players for non-compliance with the CBA.

Each province and territory also has its own arbitration legislation to provide for the enforcement of domestic arbitral decisions. For example, Ontario’s Arbitration Act 1991 allows persons entitled to an arbitral award to apply to the Ontario Superior Court for enforcement. The court has the same powers to enforce arbitral awards as it does to enforce its own judgments.

Court enforcement

Can the decisions of professional sports regulatory bodies be challenged or enforced in the national courts?

Judicial intervention in the arbitral process conducted by professional sports regulatory bodies is often restricted by legislation. For example, arbitration legislation in Ontario, Manitoba and Saskatchewan prohibits courts from interfering with arbitrations except to enforce awards, assist in conducting of arbitrations or prevent unfair treatment.

Canadian courts generally show deference to sports association decisions and will not consider the merits of a decision. This is because private sports associations are voluntary bodies deriving authority from an internal constitution or by-laws.

In limited circumstances, courts will review a sports association’s decision, such as where an association exceeded its powers, shirked its own procedures or dealt with a member unfairly. Decisions of private clubs and associations have been challenged through civil claims and applications for judicial review, but availability will depend on the laws of the particular province. In Canada, however, decisions of sports associations are given substantial deference due to the expertise the decision makers have in relation to the sports association’s internal constitution or by-laws.

Sponsorship and image rights

Concept of image rights

Is the concept of an individual’s image right legally recognised in your jurisdiction?

The concept of an individual’s image right is legally recognised in Canada in a quasi-trademark sense. Well-known athletes have a unique and valuable commercial asset in their right of self-promotion and authorising the use of their image. This right exists in the common law and has been codified in some provincial legislation.

Image rights are not the subject of registrations in Canada.

Commercialisation and protection

What are the key legal considerations for the commercialisation and protection of individuals’ image rights?

The cause of action of ‘appropriation of personality’ is recognised in Canada. In order to succeed, the athlete must establish that the defendant intentionally appropriated his or her persona for gain.

How are image rights used commercially by professional organisations within sport?

The commercial use of image rights by professional organisations within sport is relatively standardised across sports organisations. The standard player’s contracts for most professional sports leagues provide that the club to which a player signs has the right to take and make use of photographs, motion pictures or electronic images of the player for promotional purposes. Further, through these contracts, players agree not to make public appearances, give interviews or endorse commercial products without the club’s written consent, which is not to be unreasonably withheld.

Morality clauses

How can morality clauses be drafted, and are they enforceable?

Morality clauses are enforceable, but inconsistently across provinces. Generally,to be enforceable, the terms of the clause must stipulate the conduct to which it applies. Some clauses only apply to future conduct, while others require what amounts to a warranty of past good conduct. Some clauses enumerate a closed set of specific conduct that will violate the clause, others are vaguer and are drafted in terms of conduct that would bring the counterparty’s reputation into disrepute or harm the goodwill associated with them.

Restrictions

Are there any restrictions on sponsorship or marketing in professional sport?

There are both contractual and governmental regulatory restrictions on sponsorship and marketing in professional sport. Contractually, where an individual or organisation is engaged in multiple sponsorship agreements, they must watch for conflicting endorsements.

With regard to regulation, there are limitations imposed on the tobacco, cannabis and alcohol industries that prevent them from promoting or advertising their products in relation to sport.

The Canadian Code of Advertising Standards provides an additional layer of consumer protection against misleading advertisements and disingenuous testimonials.

Brand management

Protecting brands

How can sports organisations protect their brand value?

Sports organisations can protect their brand value by registering their trademarks and enforcing infringement thereof. When permitting their trademarks to be used by others in Canada, sports organisations should ensure that they have written trademark licence agreements through which they maintain quality control.

How can individuals protect their brands?

Individuals can protect their brands much in the same way as sports organisations by registering their trademarks and enforcing actions against infringements thereof. Similarly, when permitting their trademarks to be used by others in Canada, individuals should ensure that they have written trademark licence agreements through which they maintain quality control. Individuals can also license the use of their likeness, image and other personal indicia.

Cybersquatting

How can sports brands and individuals prevent cybersquatting?

The best defence against cybersquatting is to register domain names in the most popular top-level domains (including .ca in Canada) and, where necessary, to bring dispute resolution proceedings. The registration of a trademark in Canada is not mandatory, but very helpful in prevailing in dispute resolution proceedings in the .ca top-level domain.

Media coverage

How can individuals and organisations protect against adverse media coverage?

One must carefully monitor media coverage to ensure that the goodwill of the individual athlete or sports organisation is maintained. The retention of a media consultant or publicist can be helpful in this regard. Employment of legal remedies, such as those to sue for libel or slander, is generally to be seen as a last resort, to be used only in the most extreme circumstances.

Broadcasting

Regulations

Which broadcasting regulations are particularly relevant to professional sports?

The regulations promulgated under the Broadcasting Act govern the broadcasting of sporting events within Canada. These regulations are expansive and include both licensing and distribution-related requirements and are administered by the Canadian Radio-television and Telecommunications Commission (CRTC). In recent years, the CRTC has increased its regulatory practices and expanded the scope of a number of regulations with a view to modernising such rules with the advent of online media platforms.

Restriction of illegal broadcasting

What means are available to restrict illegal broadcasting of professional sports events?

In Canada, broadcasters must purchase the rights to televise professional sports events. If broadcasters do not own the rights to an event, the relevant team or league may require the broadcaster to block delivery of the game in a particular area - a practice otherwise known as a ‘blackout’.

Regional rights can be used as a means to restrict illegal broadcasting. Most professional sports leagues in Canada operate under regional rights, which entitle one team to broadcasting rights in a territory. The team with broadcasting rights can prevent other teams from broadcasting in their area. For example, the National Hockey League prohibits the broad distribution of one team’s games in another team’s market area by imposing regional blackouts.

To enforce restrictions against illegal broadcasting, sports broadcasters and leagues can seek injunctions from a court and may also pursue a claim for damages caused by any illegal broadcasting.

Event organisation

Regulation

What are the key regulatory issues for venue hire and event organisation?

Applicable regulations and jurisprudence pertaining to venue hire and event organisation focus on the safety and security of spectators and athletes. Generally, an event organiser will have a duty pursuant to provincial legislation to ensure that persons and property entering the premises are reasonably safe for their contemplated use. If an event organiser fails to exercise reasonable care in organising and overseeing an event, it may also be liable under civil law for negligence. To minimise the risks associated with organising an event, an event organiser should provide necessary warning pertaining to the event (including through the use of signs and waivers), prevent overcrowding and ensure that the conditions of the venue are not hazardous.

Ambush marketing

What protections exist against ambush marketing for events?

In Canada, the issue of ambush marketing has been infrequently litigated and legal protections are limited. If the instance of ambush marketing involves trademark infringement, then intellectual property law rules can provide recourse to the injured party. However, ambush marketing practices do not usually involve trademark infringement.

Canada’s first ambush marketing legislation, the Olympic and Paralympic Marks Act (OMPA), was enacted prior to the 2010 Vancouver Winter Olympic Games. The OMPA established legal recourse for ambush marketing in the context of the Olympic and Paralympic Games. Additionally, the covenant regarding Vancouver’s candidacy for the 2010 Olympic Games stated that if ambush marketing includes false or misleading public representations, then the provisions contained in the Competition Act on misleading representations or deceptive marketing may apply. Aside from these instances, Canadian legislation has not addressed the issue of ambush marketing.

Ticket sale and resale

Can restrictions be imposed on ticket sale and resale?

Restrictions on ticket sale and resale may be imposed by provincial legislation. Currently, each of Saskatchewan, Ontario, Quebec, Manitoba, Alberta and British Columbia has some form of legislation imposing restrictions on ticket sale and resale. Such restrictions vary by province and include limits on when tickets may be resold or the pricing of such tickets.

Immigration

Work permits and visas

What is the process for clubs to obtain work permits or visas for foreign professional athletes, and coaching and administrative staff?

Foreign professional athletes, coaching and essential staff who wish to work in Canada must apply for an employer-specific work permit through Immigration, Refugee and Citizenship Canada. The permit will set limits on which employer the applicant can work for, how long the applicant can work for and in which location this work is to take place. An applicant who holds this type of permit can only work for an employer for the length of time and at the location prescribed.

To be eligible for this work permit, an individual must be a professional athlete or coach for a Canadian team and meet the general eligibility requirements for a work permit, which include proving, among other things, that the applicant will leave Canada when the work permit expires; is not a danger to Canada’s security; will obey the law and does not have a criminal record; is in good health and will undergo a medical exam if necessary; and is not planning to work for an ineligible employer.

Pursuant to the Immigration and Refugee Protection Regulations, coaches, trainers, professional and semi-professional athletes who work for Canadian-based teams can obtain work permits without testing the labour market (advertising the position in Canada) based on similar reciprocal opportunities for Canadian athletes in the foreign applicant’s home country.

Depending on citizenship, the foreign athletes may also need to obtain an eTA (Electronic Travel Authorization) or a temporary resident visa in addition to the work permit. If the foreign athlete has a criminal record, a temporary resident permit may also be required.

What is the position regarding work permits or visas for foreign professional athletes, and coaching and administrative staff, temporarily competing in your jurisdiction?

Foreign professional or amateur athletes may participate in sporting activities in Canada, either as individual participants or as members of a foreign-based team, without obtaining a work permit. As mentioned above, depending on citizenship, the athletes may need to obtain an eTA, a temporary resident visa or a temporary resident permit before their arrival in Canada.

Residency requirements

What residency requirements must foreign professional athletes, and coaching and administrative staff, satisfy to remain in your jurisdiction long term or permanently?

Immigration matters are legislated under the Immigration and Refugee Protection Act and related regulations. To remain in Canada long-term or permanently, individuals must apply for permanent resident status. Permanent residents have the right to receive most social benefits; live, work or study anywhere in Canada; apply for Canadian citizenship; and enjoy the protection of the Canadian Charter of Rights and Freedoms.

Professional athletes and coaches can apply for permanent resident status as ‘self-employed’ persons under the general economic class. A self-employed person is a ‘foreign national who has relevant experience and has the intention and ability to be self-employed in Canada and to make a significant contribution to specified economic activities in Canada’. Specified economic activities include athletics. Administrative staff would not fit into this category but rather the ‘skilled workers’ category of the general economic class.

The Immigration and Refugee Protection Act governs residency requirements of permanent residents. To maintain permanent residency status, an individual must live in Canada for at least two years within a five-year period. In certain circumstances, time spent outside Canada may also count towards the required two years.

Do the family members of foreign professional athletes, and coaching and administrative staff, legally resident in your jurisdiction have the same residency rights?

Spouses of foreign athletes on Canadian work permits are eligible for ‘open’ work permits in Canada. Children under 22 are eligible for study permits. These documents are issued for the same duration as the athlete’s work permit.

Family members (spouses and children under 22) of the foreign professional athletes can apply for permanent resident status at the same time as the foreign athlete. They would be subject to the same residency rights once they become permanent residents.

Sports unions

Incorporation and regulation

How are professional sporting unions incorporated and regulated?

Canadian provinces have constitutional jurisdiction over non-federal sector labour relations matters and so provincial labour laws apply. In Ontario, for example, the Labour Relations Act, 1995 (LRA) will apply. The LRA addresses, among other things, the establishment of bargaining rights; the negotiation, contents, and operation of collective agreements; the termination of bargaining rights; successor rights; and unfair labour practices.

Membership

Can professional sports bodies and clubs restrict union membership?

Labour relations legislation across Canada recognises the importance of freedom of association and collective bargaining. For example, in Ontario, the LRA provides that every person is free to join a trade union and interference with the formation, selection or administration of a union, or the representation of employees by a union, constitutes an unfair labour practice.

Strike action

Are there any restrictions on professional sports unions taking strike action?

While Canadian courts recognise the importance of the right to strike, there are some legislative restrictions on its exercise. For example, in Ontario, strikes are unlawful during the term of a CBA. There are also legislative timelines that must be followed before a union can be in a strike position. The terms of a CBA may also limit a union’s ability to strike.

Employment

Transfers

What is the legal framework for individual transfers? What restrictions can be placed on individuals moving between clubs?

League regulations, CBAs, individual player contracts and the common law create the legal framework for individual transfers.

Common contractual terms that may affect the transfer of individual players include:

  • an employer’s right to assign a contract;
  • an employer’s option to renew a contract for a specified term; and
  • ‘no move’ or ‘no trade’ clauses.

League regulations or contractual terms that hinder freedom of employment may be challenged under the common law restraint of trade doctrine. The Competition Act also contains provisions specific to professional sports.

Ending contractual obligations

Can individuals buy their way out of their contractual obligations to professional sports clubs?

General principles of contract law apply to individuals looking to buy their way out of their contractual obligations to professional sports clubs. A contract may contain an express provision that affords one or both parties the power to cancel the agreement, in some cases subject to certain conditions. For example, certain contracts may allow players to cancel their contract for a predetermined price that the team seeking to acquire the player would pay. This commonly occurs in European football (soccer) leagues. In North America, league regulations may make it difficult for teams to buy and sell contracts on the open market. Trading, rather than buying or selling, of players is more common. Players may request release during the employer ‘buy-out period’ in each season to become unrestricted free agents, but employers may not be obligated to comply with such a request.

Welfare obligations

What are the key athlete welfare obligations for employers?

Athlete welfare obligations in Canada stem from both legislation and the common law. Provincial occupational health and safety legislation applies to virtually all employers in Canada. In Ontario, the Occupational Health and Safety Act outlines the duties of employers. These duties include providing appropriate protective equipment, identifying relevant hazards, appointing competent supervisors and developing corporate policies.

Where injury occurs through regular professional play, a player contract may require a team to pay for lost salary and medical expenses. However, where injury occurs because of a club’s negligence, a player may be able to successfully claim tort damages on the basis of the employer’s breach of the duty to exercise reasonable care. In Ontario, workers’ compensation policy is that coverage will not be provided for any teams or individuals competing in sports.

Canada’s Minister of Sport and Persons with Disabilities recently announced various initiatives aimed at eliminating the presence of harassment, abuse and discrimination in sport. In addition to developing a model Code of Conduct, these initiatives include withholding funding from federally funded NSOs unless anti-harassment, abuse and discrimination policies and practices are strengthened.

Young athletes

Are there restrictions on the employment and transfer of young athletes?

Restrictions on the employment and transfer of young athletes are found in legislation, league regulations and the common law.

Provincial employment legislation limits youth employment. In the context of high-level sports, education legislation may also affect youth employment by requiring school enrolment. An example of this is British Columbia’s School Act.

Professional sports leagues may regulate age eligibility requirements as well, both with respect to the minimum draft age or in connection with player transfers.

Lastly, minors generally lack capacity under the common law, resulting in contracts they enter into being either void or voidable. However, an employment contract may be enforceable by a minor if it is beneficial to his or her interests.

What are the key child protection rules and safeguarding considerations?

Various provincial legislation in Canada includes protections for children engaged in sporting activities. For example, in Ontario, the Child, Youth and Family Services Act, 2017 imposes a duty to report when there are reasonable grounds to suspect that a child has suffered, or is likely to suffer, harm. Ontario’s Ministry of Tourism, Culture and Sport has explained that this duty applies not only to harm or risk of harm when participating in a sports organisation, but also when the harm or risk thereof arises outside the sports organisation.

Also in Ontario, Rowan’s Law (Concussion Safety) 2018 was recently enacted and imposes various duties on sports organisations, coaches, participants, parents and guardians relating, for example, to the review of concussion awareness resources and the establishment of removal and return-from-sport protocols if a concussion is suspected.

Club and country representation

What employment relationship issues arise when athletes represent both club and country?

Various employment issues can arise when club athletes also wish to represent their country at international athletic events, such as the Olympics. These issues can include the breach of player contracts that require exclusive service and the allocation of risk relating to player injuries. These issues can be dealt with in the CBA between the Players’ Association and the league, or in player contracts.

Selection and eligibility

How are selection and eligibility disputes dealt with by national bodies?

Eligibility disputes relate to qualifications for admission to a particular level of competition, while selection disputes usually involve the choice of athletes for teams. These disputes typically involve NSOs, which are the governing bodies for various sports in Canada. In order to be funded by Sport Canada, NSOs must have an internal appeal process and allow disputes to be referred to the Sport Dispute Resolution Centre of Canada (SDRCC). The SDRCC offers mediation and arbitration services through its Dispute Resolution Tribunal. The Canadian Sport Dispute Resolution Code provides rules of procedure for the Tribunal. Parties to arbitration under the Code waive their right to seek alternate relief from other judicial bodies.

What are the key taxation issues for foreign athletes competing in your jurisdiction to be aware of?

Generally, subject to the application of a tax treaty (as discussed below), a non-resident athlete who competes in Canada is subject to Canadian income tax on income earned from activities performed in Canada and is required to file a Canadian income tax return to report that income. The athlete may also be subject to withholding at source on payments made to the athlete in respect of activities performed in Canada. The portion of an athlete’s income that is earned from activities performed in Canada will depend on his or her personal circumstances, but may include some of his or her signing bonus or other lump-sum payments.

Foreign athletes competing in Canada should determine whether Canada has a tax treaty with their country of residence. Most of Canada’s tax treaties generally follow the OECD Model Convention with respect to the taxation of athletes, such that Canada is generally permitted to tax athletes on their income from activities in Canada. However, there are important variations among Canada’s tax treaties, including in some treaties exemptions for athletes earning only small amounts in Canada. Because of the significant integration of the Canadian and US sports industries, the Canada-US Tax Convention provides a unique exemption from Canadian taxation for a US athlete employed by a team that plays regularly scheduled games in Canada and the US.

Update and trends

Key developments of the past year

Are there any emerging trends or hot topics in your jurisdiction?

Hot topics37 Are there any emerging trends or hot topics in your jurisdiction?

On 17 October 2018, marijuana became legal in Canada. However, marijuana has remained a prohibited substance under most anti-doping rules and sports leagues’ CBAs, meaning any athlete who utilises marijuana may be found in violation of these rules. In addition, the possession or distribution of marijuana is expected to remain illegal in most US states. Given that most professional sports leagues in Canada involve a significant number of US clubs and participants, athletes who utilise marijuana will have to be mindful of the legal status of marijuana in the states in which they are travelling. There have already been incidents of US customs and border officers denying entry to travellers from Canada who admit to utilising marijuana. As the marijuana industry grows in Canada, we expect these issues to continue to develop.

On 11 April 2019, the government of Ontario released its 2019 budget (the 2019 Budget), which reaffirmed its commitment to making single-event sports wagering in Ontario a reality. The 2019 Budget notes that single-event sports wagering is legal in the United States and is supported by major professional sports leagues in North America, including the National Hockey League, National Basketball Association, Canadian Football League and Major League Soccer. Any change to the sports betting regime cannot be implemented by Ontario alone and will require the Canadian federal government to amend existing restrictions on single-event sports wagering in the Criminal Code. The 2019 Budget states that Ontario’s government will continue to lobby the federal government to implement the necessary legislative changes.

In May 2019, the Alcohol and Gaming Commission of Ontario began accepting permit applications for tailgate events. These events are held outdoors in connection with a professional, semi-professional or post-secondary sporting event. Permit holders may serve alcohol and attendees 19 years of age or older may bring and consume their own liquor within designated permitted areas. As tailgate events are a new phenomenon in Canada, event organisers should be aware of the uncertainties surrounding organiser liability before applying for a permit. As Ontario is the first province in Canada to issue permits for tailgate events, we expect that other provinces will monitor developments to determine whether they want to regulate the practice as well.