Horizontal agreements: Is arbitration part of the rules of the game?

Introduction

The High Court granted a stay of court proceedings in favour of arbitration in a claim brought by a football agent, Mr Saif Alrubie, against a former director of Chelsea Football Club (CFC).  Although there was no direct contract between them, the court found an arbitration agreement between the parties by virtue of them independently agreeing to be bound by the rules of the English Football Association (FA). 

The dispute

Mr Alrubie claimed non-payment of a commission allegedly due to him after he acted as an intermediary for the transfer of a CFC player to another club. Mr Alrubie had communicated the other club’s offer to Ms Marina Granovskaia, a CFC director with responsibility for player contracts, and asked for a percentage of the transfer fee as commission, but when the transfer subsequently went through, he was not paid.  Mr Alrubie commenced court proceedings against CFC (though these were discontinued for undisclosed reasons) and also personally against Ms Granovskaia (though after she had left her employment at CFC) for inducing a breach of Mr Alrubie’s alleged contract with CFC.  Ms Granovskaia applied for a stay of the proceedings on the ground that the parties were bound by the arbitration agreement in the FA’s rules.

Existence of vertical and horizontal arbitration agreements

Under Rule K of the FA’s rules, disputes between “participants” regarding activities governed by the rules are to be resolved by arbitration. The “participants” were not specifically listed but instead identified through a defined term. Both Mr Alrubie and Ms Granovskaia (before she left CFC) qualified as “participants”, and each had expressly agreed with the FA to be bound by its rules – Mr Alrubie had to provide an annual declaration to that effect in order to maintain his registration as an agent, while Ms Granovskaia had to provide a similar declaration to operate as a director of a football club. It was thus a straightforward matter for the Court to hold that the FA’s rules (and therefore Rule K) had vertical binding effect between each of them and the FA. The core question in dispute, however, was whether Rule K was also horizontally binding between Mr Alrubie and Ms Granovskaia. 

As there was no express agreement between the two, a horizontal agreement would have to be implied on the basis of their independent vertical contracts with the FA. The Court emphasised that such implication depends on the facts and circumstances of each case, and is subject to a test of necessity – the implication must be necessary to give business reality to a transaction and to create enforceable obligations between parties who are dealing with each other in circumstances where they expect such enforceability.

In this case, the Court found that by separately agreeing to be bound by the FA’s rules and specifically Rule K, both parties could be assumed to have taken on the contractual obligation under Rule K towards every other “participant” who had acceded to the FA’s rules. The Court explained that this was the only way to ensure that Rule K achieved its intended purpose of “participants” resolving disputes by arbitration. The Court therefore found it necessary to imply a horizontal contract between Mr Alrubie and Ms Granovskaia to resolve disputes by arbitration.

The next question before the Court was whether this horizontal arbitration agreement was enforceable, as Ms Granovskaia ceased to be a “participant” before the court proceedings were commenced. Mr Alrubie argued that this meant Ms Granovskaia had lost her right to arbitrate under Rule K. The Court rejected this argument, finding that the correct interpretation of Rule K allowed arbitration of disputes arising while Ms Granovskaia was a “participant”. A straightforward application of the principle of separability of arbitration agreements and interpretation of Rule K meant that this right was not lost even after Ms Granovskaia left CFC.

Commentary

Agreements between the individual participants and a governing body to be bound by the ‘rules of play’ are common in a sporting context.  This case reaffirms that such an agreement can, in the right circumstances, create an implied agreement to arbitrate between those signing up to the rules.  A binding horizontal arbitration agreement has clear benefits.  It gives certainty to participants and the governing body as to the forum in which disputes will be resolved.  It also comes with the usual benefits of arbitration, such as flexibility and confidentiality.  

The Court offered little guidance on when an implied agreement might be found, focusing only on the facts of the particular case.  While the case law to date has focused on sporting institutions, requirements to sign up to and agree terms of participation are common in many other contexts.  It remains to be seen what other circumstances might satisfy the necessity test for implication of an arbitration agreement.  

Judgment: Alrubie v Chelsea Football Club and another [2025] EWHC 541 (Comm)