Inner House refuses appeal by Scottish Football Association in Rangers sponsorship dispute

Park’s of Hamilton (Holdings) Ltd, a sponsor of Rangers since 2015, raised a petition for judicial review on the basis that the SFA was in breach of its own Articles of Association in seeking to appoint a tribunal in a dispute between Rangers and the SPFL. They argued that they were an interested party in the dispute and therefore notice of the appointment of a tribunal should have been sent to them.

The reclaiming motion was heard by the Lord President, Lord Carloway, sitting with Lord Woolman and Lord Pentland. The petitioners and respondents were represented by MacColl QC and the defenders and reclaimers by Borland QC. Rangers appeared as an interested party, represented by DM Thomson QC.

Conflicting contracts

Under the SFA’s Articles of Association, parties subject to its jurisdiction are required to settle certain disputes by arbitration, including disputes relating to association football. Under Article 99.16, a Notice to Refer must be lodged with the SFA and intimated to other parties to the dispute where a party wishes to refer a Football Dispute. The SFA is obliged in turn to send a Secretary’s Notice to the referring party and any party with an interest in the dispute.

The petitioners, who specialised in the sale of new and used cars, had a longstanding commercial relationship with Rangers that was last renewed in May 2021. In June 2021, the SPFL entered into a contract with Cinch, a business concerned in the sale of second-hand cars. Rangers had expressed a concern that these two contracts might conflict with each other, and refused to provide the SPFL with the rights, facilities, and properties required under its contract with Cinch.

The dispute was referred to arbitration by the SPFL. A Secretary’s Notice intimating the arbitration was issued on 9 August 2021 but was not sent to the petitioners. They maintained that, as a party with an interest in the dispute, they ought to have received such a Notice, a proposition which the SFA did not accept.

It was held by the Lord Ordinary that the petitioners had a prima facie case as they had a direct patrimonial interest in the outcome of the dispute. It accorded with common sense that they were entitled to be heard, and to allow this would not be prejudicial to the other parties. The SFA challenged this conclusion, as the petitioners were not subject to SFA jurisdiction or parties in the contract between the SPFL and SPFL clubs.

It was submitted by the petitioners and by Rangers that the Articles of the SFA did not restrict those who could have an interest in disputes to members of the SFA, as contented for by the reclaimers. The dispute was best resolved by binding all relevant parties to the outcome of the arbitration, including both the petitioners and Cinch.

Common sense

Delivering the opinion of the court, Lord Carloway noted: “It is, of course, correct to describe arbitration as a private process. A standard arbitration clause in a commercial contract is unlikely to permit intervention by a third party. Whether it does must depend on the particular wording of the clause. If it does permit a third party to intervene, they will become a party to the arbitration and will be bound by its decree.”

Scrutinising the terms of the SFA’s Articles of Association, he said: “Article 99.1 refers to ‘parties who are subject to the jurisdiction of the Scottish FA’. That is in relation to the power to refer disputes to arbitration, which only a member of the SFA or an associate has. The petitioners are not attempting to refer the dispute to arbitration. They wish to participate in a prospective arbitration process. It is in relation to that process that the phrase a ‘party … with an interest in the Dispute’ appears relative to the potential participants.”

He continued: “Article 99.19(a) does not restrict intimation of the Secretary’s Notice to parties who are subject to the SFA’s jurisdiction. The words of Article 99.19(a) should be given their ordinary meaning in the context in which they occur, having regard to the Article’s purpose and common sense. Applying that meaning, both the petitioners and Cinch have an interest in the dispute between Rangers and the SPFL.”

Noting the purpose of the arbitration clause was to prevent the public airing of disputes and avoid reputational damage, Lord Carloway concluded: “A clause which permits third parties with an interest to enter the arbitration process, and thereby be bound by it, accords with common sense. It carries with it the prospect of the whole dispute being resolved in one process rather than being partially settled but with satellite litigation to follow. The third parties cannot be compelled to agree to arbitration, but they may be anxious to do so.”

For these reasons, the court agreed that the petitioner had a prima facie case, and thus refused the reclaiming motion.