Off the pitch: High Court implies horizontal arbitration agreement and stays court proceedings

In Alrubie v Chelsea Football Club and another [2025] EWHC 541 (Comm), the High Court granted a stay of proceedings, finding that the parties were each bound by the arbitration agreement in the Rules of the Football Association Ltd (the ‘FA Rules’). While there was no express bilateral arbitration agreement between the parties, the High Court implied a horizontal agreement on the basis that they each had acceded to the FA Rules and the arbitration agreement therein.

Facts

The case involved football agent Saif Alrubie who commenced High Court proceedings against Chelsea Football Club Limited (‘Chelsea’) and Marina Granovskaia, a former employee and director of Chelsea.

Mr Alrubie sought payment of a commission for the transfer of football player Kurt Zouma from Chelsea to West Ham United Football Club (‘West Ham’).

Mr Alrubie approached Ms Granovskaia offering to make introductions for Mr Zouma’s transfer from Chelsea to West Ham. Mr Alrubie claimed that he negotiated an introduction agreement with Ms Granovskai entitling him to a commission if the transfer fee for Mr Zouma was at least €30,000,000.

A dispute arose as to whether a commission was payable, which led to Mr Alrubie commencing proceedings, claiming against Chelsea for breach of contract, and against Ms Granovskaia for inducing the breach of contract. Mr Alrubie discontinued his claim against Chelsea but maintained his claim against Ms Granovskaia.

Ms Granovskaia made an application to stay the proceedings under s9 of the Arbitration Act 1996, on the basis that the dispute was subject to arbitration under Rule K of the FA Rules.  Rule K provides that any dispute or difference between two or more Participants (as defined) shall be referred to and finally resolved by arbitration under the FA Rules.

Decision

David Quest KC, sitting as Deputy High Court Judge, examined the applicability of the arbitration agreement under Rule K of the FA Rules.

He found that both Mr Alrubie and Ms Granovskaia were “Participants” for the purpose of the FA Rules. Mr Alrubie was a Participant in his capacity as registered Intermediary; Ms Granovskaia was a Participant in her capacity as director (and later only employee) of Chelsea. Although Ms Granovskaia ceased to be a Participant on 2 September 2022, when she left Chelsea’s employment, her right to arbitrate the dispute was not lost, as it accrued when the dispute arose, at which time she was still a Participant.

As Participants, Mr Alrubie and Ms Granovskaia were both required to provide an annual declaration to the Football Association agreeing to be bound by the FA Rules, including Rule K. The High Court therefore found that both Mr Alrubie and Ms Granovskaia were bound by the FA Rules. Regarding the subject matter of the dispute, the High Court held that it fell within the broad scope of Rule K, which expressly covered “[A]ny dispute or difference between any two or more Participants”.

The more nuanced question for the High Court to consider was whether the FA Rules had horizontal contractual effect between the parties, as well as vertical effect between each party and the Football Association. After analysing existing case law, David Quest KC concluded that, by submitting annual declarations agreeing to be bound by the FA Rules, Mr Alrubie and Ms Granovskaia should each be taken as having assumed a contractual obligation to every other Participant making a similar declaration to the Football Association. David Quest KC explained that whether a horizontal contract should be implied in a particular case would depend upon all the relevant facts and circumstances. If it were necessary to give business reality to a transaction and to create enforceable obligations between parties who are dealing with one another in circumstances in which one would expect that business reality and those enforceable objects to exist, a horizontal contract should be implied.  

In this case, it was necessary to imply a horizontal contract between each individual Participant as Rule K could not have achieved its intended purpose of mandating arbitration of disputes between Participants unless it had contractual effect between them.

Comment

The High Court’s interpretation of Rule K and its binding effect between Participants underscores the significance of the FA Rules in governing relationships and disputes in football. The judgment also clarifies that the right to arbitrate a dispute accrues when the dispute arises and is not affected by a person ceasing to be a Participant.

Beyond the FA Rules, the judgment provides valuable insights into the necessity of implying horizontal contracts in certain contexts. It also reinforces the role of arbitration in resolving disputes in the football industry and the need for parties to adhere to those agreed dispute resolution mechanisms.