Takeover – PL move to have CAT case thrown out – what does it mean?

1. What has happened?

We already knew that the next step in the CAT case was for the PL’s ‘jurisdiction application’ to be heard.’ ‘Jurisdiction’ means the authority to hear legal cases.’ The PL is challenging the CAT’s authority in this instance, and is requesting that the CAT does not proceed further (the points which are likely to be covered, at the hearing, are discussed below).

Until yesterday, we did not know the date for the hearing of the PL’s application.’ We do now ‘ it will commence on 27 September.’ Nothing has ‘changed’ as such: it is merely that we now have information (i.e. a hearing date) that we previously did not have.

Despite the inevitable frustration, the announcement of this hearing date does not signify a delay.Despite baseless assertions on social media that progress was going to be made in August, courts typically close from late July until September, and they always have done.This is the most efficient way for the system to operate ‘ indeed, schools and factories operate on a similar logic (i.e. there are terms, and pre-planned shutdowns / holidays).’ This makes it easier to schedule hearings during the term itself, knowing that key individuals will be around.’ It also allows an opportunity for time-consuming work which does not require the lawyers or judges to be physically in court (e.g.judges writing up their judgments; lawyers researching their upcoming cases) to be done.

Once this is taken into account, 27 September is ‘ in fact ‘ relatively soon.Indeed, a quick look at the CAT website shows that the hearing of the PL’s jurisdiction application is, in fact, the first item of business for the CAT following the summer vacation.

2. What does this mean for the takeover?

My personal view, which I have repeatedly expressed via True Faith articles and podcasts ‘ and shared on social media ‘ has always been that the CAT case is a complete distraction, so far as the takeover is concerned.The club needs to win the arbitration, and only the arbitration: the CAT case is best understood as a means of Ashley trying (via his company, St James’ Holdings) to secure financial compensation, in the event that the takeover does not take place.’ If that view is correct, this latest development changes nothing, so far as the proposed takeover is concerned.

However, others on social media have taken a different view, and maintain that the purpose of the CAT case (and, particularly, disclosure in the CAT case) is to put pressure on the PL to abandon its position in the arbitration, or otherwise give the green light to the takeoverin the arbitration.’ (I had set out, in my article last week, why I considered this view to be misguided ‘ in case helpful, the article is here).’ Now we know that the PL’s application is not due to be heard until 27 September, we can reasonably conclude that, even on the most optimistic timeline, disclosure in the CAT case is unlikely to happen sufficiently early to impact the arbitration (unless, of course, the arbitration is delayed even further).’ The CAT timeline is discussed further below.

3. Is the ‘jurisdiction application’ just a delaying tactic by the Premier League?

Disputes regarding jurisdiction (where they exist) mustbe resolved before anything canhappen in a case.’ Otherwise, there is a real risk of being halfway up a ladder that shouldn’t have been climbed.’ The PL knew that their application would cause a delay.’ It is also fair to say that the PL is in no rush to have the CAT claim resolved.’ In general, defendants are rarely as keen as claimants.

However, the line taken by a vocal element on social media (that the PL is delaying the CAT case because they are ‘running scared’ of what it is going to reveal), should be treated with suspicion.’ The allegations against the PL are extremely serious and ‘ if proven ‘ would constitute a scandal.’ If scandals are presumed to exist, then they aren’t scandals.’ Cartels and conspiracies would lose all ability to shock, if they were commonplace.’ While recognising that the PL has by no means covered itself in glory throughout this whole sorry saga, and without pre-judging the outcome of a trial in the CAT (if matters ever got that far), it is very unwise to automatically assume that anti-competitive behaviour has taken place and is the reason why the PL made its jurisdiction application.

The reality is that the jurisdiction application was foreseeable, and was worth making, regardless of whether the PL’s underlying position is strong or not.’ If the PL succeeds, then the CAT casedisappears.’ If the PL fails, then they will still have an opportunity to defend the claim anyway.’ As such, an application of this nature was always a ‘no lose’ proposition.’ If a defendant has a chance of getting rid of a claim at an early stage, on a technical or procedural point, the defendant will look for that shortcut, saving time and hassle.’ If you were to drive from the Silverlink to South Shields, you’d go through the Tyne Tunnel if it was open ‘ why bother with the traffic on the Coast Road, Central Motorway, Tyne Bridge and Felling Bypass? Where there are two similar legal actions, a challenge to the jurisdiction of the court or tribunal in the second action (here, the CAT case), is a typical, obvious, and frequently attempted shortcut.

The final point to be made about delay ‘ and the suggestion that the PL is looking to avoid a situation whereby the CAT case can impact the arbitration ‘ is that Ashley, as the owner of the claimant in the arbitration (NUFC) and the claimant in the CAT case (St James’ Holdings), is the person who decided that the arbitration should go first.’ The club commenced arbitration in autumn 2020, while the CAT case did not start until May 2021.’ It was entirely in Ashley’s power to do things the other way round, if he had wanted to.’ There are prominent voices on social media insisting that it is better, for the takeover cause, for the CAT to go first.’ This is complete nonsense.’ It cannot be reconciled with the way Ashley has actually conducted things.

4. What will happen at the hearing on 27 September, and what is the likely outcome?

The court will not be looking to answer the question of whether the PL has engaged in anti-competitive activity in the context of the proposed takeover.’ Rather, the focus will be on whether the CAT case should go ahead ‘ i.e. whether the CAT has ‘jurisdiction’ in the present circumstances.’ There is a conflict between two fundamental legal principles.’ On the one hand, everyone has a right to bring a case before a court.’ On the other hand, it is an abuse of the system if identical cases (or substantially similar cases) are brought on multiple occasions, particularly against the same defendant.

The barrister for St James’ Holdings, Daniel Jowell QC, will be pointing to the differences between the two cases ‘ the claimants are not the same, the specific complaint is not the same, the evidence may be different ‘ while the PL’s lawyers will be pointing to the similarities ‘ the defendant is the same, the underlying facts (as they relate to the proposed takeover) are the same, theevidence will be substantially the same.The PL’s lawyers will also most likely argue that a finding in the PL’s favour, in the arbitration, will mean that St James’ Holdings will be incapable of winning the CAT case (it is worth remembering that the CAT case is not a general investigation into alleged anti-competitive activity; it still entails St James’ Holdings needing to show that the PL arrived at a wrong decision in this particular instance) and, therefore, there is no point in allowing the CAT case to proceed, without having regard to what the outcome of the arbitration is.

Without having seen the arguments, it is not possible to reliably predict an outcome.’ However, what can be said is thatEnglish judges typically find it difficult to dismiss a case, on a jurisdictional issue.’ The effect of ruling in the PL’s favour would be that St James’ Holdings would be deprived of its ability to have its case heard.’ Access to justice is extremely precious, and is enshrined in the Human Rights Act (the right to access justice is commonly known as the ‘Article 6′ right).’ Judges ‘ rightly ‘ regard access to justice as extremely important.’ Even Mike Ashley has human rights.If the CAT judges are in doubt as to which way to go, the lower-risk approach is to rule in favour of allowing the CAT case to proceed, knowing that both sides will have the opportunity to make their substantive arguments in due course.’ It is therefore possible that Ashley ‘ or, more accurately, St James’ Holdings ‘ may win this particular skirmish.’ However, if that does happen, it will tell us very little about the strength of the CAT case itself, and even less about the direction of the takeover.

5. What happens after the verdict?

The verdict may not be available immediately.’ Sometimes, judges make their decisions on the day.’ More commonly, they take some time (sometimes a week or two, sometimes longer) to consider the arguments they have heard, and to write their judgments.

The judgment, therefore, is perhaps most likely during the course of October.’ Either party may seek permission to appeal the judgment.’ There is, however, no automatic right of appeal, so it would be unwise to assume that an appeal (which would mean a significant delay) is inevitable.

Assuming there is no appeal, the CAT case will end at that point, if the ruling on the jurisdiction application has gone in the PL’s favour.’ If the ruling has gone in Ashley’s favour, the next step is for the PL to file its defence, responding to the claim which was made by St James’ Holdings in May.’ The deadline for this will be fixed, following the CAT’s ruling on the jurisdiction application.’ It can be expected that the PL would be given around a month to file its Defence (as, if it had not been for the intervening application, this is how long they would have been given).’ Then, within 21 days of the Defence being filed, St James’ Holdings will be entitled to file a reply, which is a further document responding to the points made in the Defence. Extensions of time ‘ for a defence, and for a reply ‘ are commonly agreed (amicably) between the parties, or approved by the Court.

The dates for subsequent stages in the CAT case ‘ including disclosure, witness evidence, and the final hearing ‘ will then be set.’ Realistically, it will be the end of 2021 at the earliest, before we even have a timetable for those subsequent stages.’ They will not have taken place.’ My perspective, therefore (at the risk of repeating points made before) is that, regardless of the importance of the CAT case to the takeover (and I think it is an irrelevance), nothing is going to happen in the CAT case, early enough to impact the arbitration and therefore the takeover.

6. So, where do we go from here?

As I mentioned in my article of last week, there is a serious risk that the value of Newcastle United, as an asset, is depreciating.’ No investment is being made in a squad which battled relegation for much of last year, and no change has been made to a manager who (which acknowledging we have had worse ones) would struggle to get another top-flight job.’ If a takeover ‘ any takeover ‘ is to happen, the asset needs to be worth acquiring.’ The best thing we can do is to support the team, to keep hoping (against all likelihood) that Ashley actually administers the club properly, and to try and derive some semblance of enjoyment from following this husk of a club.’ If not the football, then at least the social aspect that goes along with it.’ This may not be music to the ears of those who would rather be involved in active protest and demonstration, but it is my view.’ I continue to respect those who want to air their grievances in other ways.

So far as the legal side is concerned, it’s all eyes on the arbitration (as it always has been) ‘ and all we know is that it’s been moved to ‘early 2022′.

A final comment.’ Legal processes are slow and frustrating.’ Often, the only winners are the lawyers.’ Unfortunately, this can adversely impact public confidence in the court system, and diminish the faith placed in it.’ I sincerely sympathise: after all, I am not only a lawyer, I am also a Newcastle fan and a private citizen.’ However, the reason why cases are slow is because it is far more important for decisions to be right, than for them to be quick.’ If they can be reached quickly, that is a bonus, but it cannot always be done.’ In our system, previous cases are also a source of law, making it even more critical that the right outcome is reached in the end.’ It is an imperfect system ‘ a blunt instrument which often does not work as parties would like it to ‘ but it is the one we have (and it also happens, believe it or not, to be the envy of the world).’ The best way to avoid the delays inherent in the legal system is to avoid legal disputes in the first place.’ Had the consortium been structured differently, or had there been advance discussions with the PL, this sorry saga could potentially have been avoided.’ As it is ‘ we are where we are.

YOUSEF HATEM -‘@yousef_1892