Newcastle United Club Updateclick here

What has happened?

NUFC is in arbitration with the Premier League (“PL”).  The arbitration is looking at whether the PL’s conclusion, in August 2020, that PIF was an arm of the Saudi state, was reasonable.  Arbitration is a confidential process.  One of its main features is that the parties play a role in selecting the decision-makers, the “arbitrators” (who, typically, are retired judges or other distinguished lawyers).  Usually, but not always, there are three arbitrators.  Once arbitration has been commenced, the Court merely has an oversight role, and there are very limited situations in which the parties can bring matters to Court.

One such scenario is where a party has grounds to believe that one of the arbitrators may lack independence.  That is the basis on which NUFC approached the Court.

The basic facts are these: NUFC and its lawyers (the solicitors Dentons, and the barrister team – led by Nick De Marco QC) nominated one arbitrator, Lord Neuberger.  He is a highly respected former Supreme Court judge.  The PL and its lawyers, Bird & Bird, did likewise, nominating Lord Dyson, a similarly prestigious name.  The third arbitrator, under the rules of the arbitration process, was to be nominated by the first two.

Lord Neuberger and Lord Dyson nominated Michael Beloff QC.  Beloff is widely acknowledged to be the leading sports lawyer in the UK, has over 50 years of legal experience, and was an obvious choice.

Neuberger, Dyson and Beloff all made formal declarations to the effect that they did not believe there was any reason why they would be biased, or otherwise lack independence.  Two weeks later – in October 2020 – Bird & Bird notified NUFC’s lawyers that Beloff had in fact previously given legal advice in relation to the drafting of the PL’s rules.  Neither Bird & Bird, nor Beloff, considered this to give rise to a conflict.  Matters like this are typically raised out of courtesy.  It is very common – this is a smaller world than is sometimes assumed.  Nine times out of ten, the opposing side makes no complaint, and the arbitration continues.

NUFC, however, challenged Beloff’s independence.  They have lost.  The judge concluded that there was no conflict.  Beloff’s previous legal advice related to the drafting of the PL’s rules.  This arbitration is not looking at what the rules say – rather, it is looking at whether the PL’s view, that PIF is an arm of the Saudi state, was reasonable based on the available facts.  That is a different question – therefore, no conflict.  Additionally, the judge concluded (unsurprisingly) that Beloff would not have lied about his independence, as it would have been professionally embarrassing for him to have done so.The situation is therefore that Beloff remains on the arbitration panel.

Separately, the club made an application for the judgment to be made public (normally, Court judgments relating to arbitration matters are private).  The club won that separate application, mainly on the basis that most of the background was in the public domain anyway.  This is why we can see the judgment relating to Beloff online, and it is why the club has been able to make public statements following it.

What does it mean for the arbitration, and the takeover?

After a dispute is formally referred a matter to arbitration, the first stage is always to appoint the arbitrators.  If NUFC had refrained from objecting to Beloff, then that stage would have been completed by October 2020, and a timetable for the various steps in the legal process would have been agreed shortly afterwards.  By now (March 2021), NUFC would most likely have made the formal submission setting out its case, and the PL would most likely have responded.  As it is, none of this has happened, because everything was on hold as a result of NUFC’s objection to Beloff.  Five months have therefore been wasted.  Arbitration is a long process at the best of times – it was never going to be over quickly (whatever rubbish has been written).  The club has made a long process five months longer.

As to the takeover, the arbitration is only dealing with the question of whether the PL’s view in August 2020 was reasonable.  Even if it is found that the PL was unreasonable, it does not mean the takeover will happen.  It would remove a roadblock, but the arbitrators do not have the power to force a sale.  None of this week’s developments affect that basic position.

Why did NUFC go to Court?

There are various possibilities:-

  1. NUFC genuinely considered they would win

It is very rare for an arbitrator’s independence to be successfully challenged (particularly in the case of someone as respected as Beloff).  DeMarco would almost certainly have advised NUFC they were likely to lose.  However, DeMarco – like any lawyer – acts on his client’s instructions.  NUFC may have genuinely thought there was a chance of removing Beloff.  I think this is hugely unlikely given how much of an uphill struggle it was.

  1. NUFC wanted to tactically delay matters

There is a view that a five month delay has given NUFC more time to prepare stronger legal arguments.  However, the facts will not change, and nor will the main arguments.  The additional time is not needed.  Also, delay arguably makes the takeover less likely – as PIF/Reuben/Staveley lose interest and start to look at other potential investments instead.

  1. NUFC wanted to appear aggressive and fight every point

Sometimes, parties want their lawyers to just argue every little detail, fight on every front and make life as hard as possible for the other side, to try and reach a settlement.  That is unlikely here.  There is no middle ground here – either the PL’s view will be upheld, or it won’t.

  1. NUFC wanted to keep something – anything – in the public domain

This is far more likely than any of the others – and explains why NUFC applied for the judgment itself to be made public.  Regardless of what actually happened, this subject is now back in the news.  Ashley has now got some convenient scapegoats – Beloff himself, the judge (Mark Pelling QC), and Bird & Bird – if, as seems increasingly likely, the takeover never happens.