By Dr Despina Mavromati


In the midst of turbulence from the recent Football Leaks[1] indirectly affecting – among other issues – the Club Licensing and Financial Fair Play Regulations (CL&FFP Regulations)[2] in European football, the CAS published the full award in the case AC Milan v. UEFA.[3] The case relates to a sanction that was imposed by the UEFA Club Financial Control Body (UEFA CFCB). According to the first-instance decision, the Adjudicatory Chamber of the UEFA CFCB initially determined that AC Milan failed to fulfil the break-even requirement of Articles 58 through 63 of the UEFA CL&FFP Regulations, and excluded AC Milan from participating in the next UEFA club competition for which it would otherwise qualify in the next 2 seasons (i.e., in 2018/19 and 2019/20).

Following an appeal to the CAS by AC Milan, the CAS Panel partially upheld AC Milan’s appeal and reverted the case back to Adjudicatory Chamber of the UEFA CFCB for a « proportionate disciplinary measure ».[4] In the Panel’s view, “certain important elements had not been properly assessed by UEFA’s Adjudicatory Chamber, or could not be properly assessed” when the UEFA Decision was rendered in June 2018 and that AC Milan’s financial position was better following the recent change in ownership.[5]

Other than in previous cases related to the UEFA CL&FPP Regulations like the Galatasaray case, where the club challenged the UEFA CL&FFP Regulations (for a second violation of the regulations) and more specifically their compatibility with EU law,[6] AC Milan directly challenged the proportionality of the sanction imposed by the UEFA CFCB.[7] In the Galatasaray case, the Panel had highlighted the existence of mitigating factors in the UEFA CL&FFP Regulations that could be taken into account by the UEFA hearing panel in order to render a proportionate decision under the individual circumstances of each case.[8]

In view of the latest developments in European and international football, the CAS Award (which was published on November 8, 2018) is very interesting and worth a closer look because it raises more general questions as to the scope and limits of the UEFA CL&FFP Regulations. More crucially, it brings to the forefront questions of procedural nature before the CAS, such as the scope of the Panel’s full power of review under Art. R57 of the CAS Code,[9] and more particularly the control of proportionality of the sanction and the production of new (factual) evidence before the CAS. Additionally, it addresses the important procedural issue of the admissibility of the appeal (or a portion of it) when a particular part of the decision was not supposed to be subject to appeal.

A summary of the background facts

The UEFA CL&FFP Regulations

The UEFA had been closely following AC Milan’s financial situation for the last years. Such financial control forms part of the obligation imposed on European clubs participating in UEFA competitions to comply with the break-even requirements of the UEFA CL&FFP Regulations. The latter aim, among other things, to « promote and continuously improve the standard of all aspects of football in Europe (…)», « to ensure that clubs have an adequate level of management and organisation »,d) to protect the integrity and smooth running of the UEFA club competitions » ; « to allow the development of benchmarking for clubs in financial, sporting, legal,  personnel, administrative and infrastructure-related criteria (…) ».

Regarding financial stability, the CL&FFP Regulations aim to « achieve financial fair play in UEFA club competitions » by improving the economic and financial capability of the clubs, by protecting creditors and by introducing rationality in club football finances and responsible spending for the long-term benefit of football.[10]

According to the break-even requirement enshrined in Art. 58-64 of the CL&FFP Regulations, clubs should have a break-even surplus in the monitoring period. The monitoring period is defined as the assessment year and the two previous years.[11] A surplus is defined as the excess of relevant income over relevant expenses.[12] In case of deficit, a deviation of €5 million is tolerated – or an excess of €30 million if a shareholder contribution covers the excess.[13]

AC Milan’s financial situation and the UEFA CFCB Decision of June 2018

Back in 2017, Fininvest S.p.A. sold 99.93% of the shares held in AC Milan to Rossoneri Sport Investment Lux (hereinafter “HoldCo”) for EUR 740 million. The latter was then controlled by a Chinese investor, Mr. Li.[14] HoldCo concluded a loan agreement with the company Redblack Sàrl for EUR 202 million with a maturity date of 15 October 2018. Redblack, a private limited liability company founded under the laws of Luxemburg, is advised by Elliott Advisors (UK) Limited (“Elliott”), which is indirectly controlled by Elliott Management, an American fund manager. The loan provided by Redblack to HoldCo was secured against the shares of AC Milan and Holdco.

The Shareholders’ meeting in May 2018 decided, among others, to increase the share capital of AC Milan up to EUR 49,920,000. However, after HoldCo failed to make a EUR 32 million capital contribution in June 2018, Redblack injected this amount instead of HoldCo, which in turn failed to pay the amount back to Redblack and such default entitled Redblack to enforce the relevant pledge agreement and become the new controlling shareholder of  Milan.

AC Milan’s financial situation was assessed by UEFA, which refused to conclude a voluntary assessment[15] with the Club back in December 2017.[16] The CFCB Investigatory Chamber further announced its decision to refer the case to the CFCB Adjudicatory Chamber (hereinafter referred to as the “Referral Decision”) and, thus, not to enter into a settlement agreement on May 22, 2018.[17] The UEFA CFCB decision was issued on June 27, 2018 (the UEFA Decision).[18]

The CAS Award and the importance of the procedural « details »

As seen above, AC Milan challenged the UEFA Decision on the grounds of proportionality, a principle warranted under both EU competition law and Art. 28 Swiss Civil Code that protects personality rights.[19] It submitted that, instead of imposing a sanction on the Appellant, the CFCB should have concluded a settlement agreement with the Club, an “obviously” less severe measure that was available. It also submitted that the UEFA Decision was based on wrong facts or that the facts were not correctly assessed.

The expedited procedure, the production of documents and the submission of new evidence by AC Milan

Following the parties’ settlement agreement, the procedure was conducted on an expedited basis (according to Art. R52(4) of the CAS Code) with an expedited calendar[20] and the Panel issued the operative part of the award already on July 20, 2018.[21] As per the Swiss Federal Tribunal, the parties who agree on an expedited procedure are presumed to have accepted the limitations that the very tight procedural calendar entails with respect to the conduct of the proceedings and the production of evidence.[22]

In this particular case, the Panel accepted (following AC Milan’s request) to order the production of the audio file of the hearing of the CFCB Adjudicatory Chamber on June 19, 2018, based on two things: first, the broad meaning given to the word “documents” in Art. R44.3 CAS Code and second, in view of the expedited proceedings, because it could not exclude the relevance of such evidence.[23]

Within the context of (and thanks to) the expedited proceedings, the CAS Panel also ordered the production of the unredacted settlement agreements for Paris Saint-German, FC Internazionale Milano and Manchester City Football Club that were in the custody of the UEFA.[24] The CAS Panel however dismissed the request for production of further evidence[25] as not being specific enough and relating to highly sensitive and confidential information.[26]

Interestingly, the CAS Panel accepted the (late) submission of a new document by AC Milan (on July 19, 2018) in the form of an updated profit and loss comparison forecast for the season 2017/2018 notwithstanding an objection by the UEFA. The CAS Panel based its decision on Article R56 CAS Code and considered as “exceptional circumstances” the fact that the proceedings were conducted on an expedited basis and that AC Milan could not have produced such document at an earlier stage of the proceedings.[27] It must be noted that the (late) submission of a document and its acceptance by the Panel based on “exceptional circumstances”[28] can be decisive for the outcome of the case.

Finally, the CAS Panel considered that the fact that the parties agreed to an expedited procedure weighed in favor of reverting the case to the previous instance (as per Art. R57 CAS Code) since the Panel was “not in a position to fully investigate and assess the factual basis of the case”.[29] This brings to the forefront the more general question of suitability of expedited procedures in similar – factually and evidentiary – complex cases. Indeed, the advantages of an expedited procedure (linked to the need for an urgent and final resolution of the case) could be “diluted” in cases where the Panel opts to revert the case back to the previous instance.

According to Art. R52.4 CAS Code, it is at the Panel’s discretion to accept or refuse to proceed in an expedited manner (“The Panel may...”).[30] The solution undertaken is also questionable since the Panel acknowledged that it was not in a position to fully investigate and assess the factual basis of the case: at the same time, however, it found that the appealed decision «has not assessed the relevant facts correctly …”) and concluded that it was not proportionate, a control that entails – or rather presupposes – an assessment to the merits and therefore also of the factual basis of the case.[31]

Is the Referral Decision of the CFCB Investigatory Chamber an “appealable decision” according to Article R47 of the CAS Code?

In this case the Panel proceeded to the determination of whether the UEFA’s Referral Decision (e.g., a decision not to conclude a settlement agreement) was an “appealable decision” according to Art. R47 of the CAS Code. In the UEFA’s view, the appeal to the CAS was “partially inadmissible”: In its view, the Referral Decision of the CFCB Investigatory Chamber, i.e., to refer the case to the CFCB Adjudicatory Chamber and not to conclude a settlement agreement had become final and binding, since it had been issued on May 22, 2018 and was not appealed by the Appellant within the deadline of Article 62(3) UEFA Statutes.[32]

In line with established CAS case law, the Panel held that whether or not a decision of a sports federation is appealable is a matter of substance and not of form, in the same way that a letter (which never contains an “operative part”) can also be an “appealable decision”.[33] Furthermore, it is necessary to determine whether the decision affects the legal position of the addressee, independently of the rules of the federation and in line with the jurisprudence of the Swiss Federal Tribunal and the general principle of access to justice.

The CAS Panel proceeded to an interpretation of the UEFA Procedural Rules Governing the CFCB (in particular Article 34 thereof) and held that the latter do not provide for a separate appeal against the Referral Decision, a finding that was further confirmed by the UEFA’s practice.[34] Interestingly, the Panel found that the decision of the CFCB Investigatory Chamber not to conclude a settlement agreement with AC Milan would not affect the latter’s rights, since it did not predetermine the outcome of the case.[35] Therefore, to the extent that the Referral Decision was not a separately appealable decision, AC Milan’s appeal to the CAS was considered as admissible in its entirety.

The many faces of the CAS Panel’s (Full) Power of Review

In our view, the most important issue – and the one that proved to be decisive in the case at hand – was the extent of the Panel’s review based on Article R57 CAS Code. Even though it was uncontested that Article R57 CAS Code applied, the parties could not reach an agreement as to the level of review of the case by the CAS Panel.[36] The latter provides in its first paragraph that “The Panel has full power to review the facts and the law. It may issue a new decision which replaces the decision challenged or annul the decision and refer the case back to the previous instance.”

On the “decisive reference date”

With respect to the “decisive reference date”, the Panel stressed the importance of the relevant reference date for the assessment of the case. While the UEFA referred to a “photo finish” for the facts assessed by the previous instance in its decision (and which could not called into question at the later stage), AC Milan set the decisive reference date as the date of the CAS hearing, since the financial situation of a club is an “ongoing process” and that it would be “wrong to ignore today’s reality”.[37]

Even though the analysis made by the CAS Panel is based on the broad discretion of Article R57 CAS Code, one may question how an appealed decision can be found to be disproportionate if it was logically based on facts that were available at the time the decision was rendered, and not on evidence that did not previously exist. The Panel itself seemed to acknowledge this problem linked to the de novo hearing and lack of legal certainty in para. 132 of the Award.

It noted, however, that the UEFA Procedural Rules Governing the CFCB lack a specific reference in this respect in order to delimit the point in time where the correctness of a decision must be assessed. This, in our view, indirectly calls for an addition/ precision of the relevant rules in order to enhance legal certainty with respect to the relevant reference date.

On the “depth of scrutiny”

The other important aspect of Article R57 of the CAS Code is the “depth of scrutiny.”[38] While AC Milan supported that the full power of review should lead the Panel to “re-hear the matter afresh, as if it had not been previously heard or decided”, UEFA seemed to favor another jurisprudential approach whereby “[t]he measure of the sanction imposed by a disciplinary body in the exercise of the discretion allowed by the relevant rule can be reviewed only when the sanction is evidently and grossly disproportionate to the offence.”[39]

The Panel left the question open as to whether there are reasons to limit the scope of review in disciplinary sanctions (apart from the field of play cases, where review is limited).[40] It held, however, that the approach to limit the review by the hearing authority does not apply to questions of law, such as whether and to what extent a federation is bound by the principle of proportionality or the principle of equal treatment when imposing a disciplinary sanction.[41]

The Panel further found that the distinction between “simple” and “gross” disproportionality appears to be “arbitrary”, even though one could argue that such difference is depicted in CAS 2010/A/2283 (cited by the CAS Panel in the AC Milan case), whereby a CAS panel “would not easily ‘tinker’ with a well-reasoned sanction, i.e. to substitute a sanction of 17 or 19 months’ suspension for one of 18. It would naturally […] pay respect to a fully reasoned and well-evidenced decision of such a Tribunal in pursuit of a legitimate and explicit policy. However, the fact that it might not lightly interfere with such a Tribunal’s decision, would not mean that there is in principle any inhibition on its power to do so”.[42]

The Panel concluded that its power of review is neither excluded nor limited.[43] The fact remains that Article R57 CAS Code gives vast power to the CAS Panel to decide on the length / scope of the review – and the CAS case law has shown different approaches, which, even though they do not favor legal certainty, fall within the broad discretion of the Panel according to the CAS Code. As such, CAS Panels have limited their review of disciplinary sanctions imposed by the previous instance to “grossly disproportionate sanctions”, while others, like the CAS Panel in the AC Milan case, have opted for a full and fresh re-hearing of the matter, « as it had not been previously heard or decided ».[44]

The Merits of the Case – a Detail?

In a relatively short section the Panel proceeded to analyze the merits of the case. In assessing the legality of the settlement agreement – challenged by AC Milan through an expert report in EU law – the Panel found that the settlement is, like the disciplinary sanction, a legal instrument for the regulation of a certain matter, “issued on a similar factual basis and with interchangeable contents”.[45]

Furthermore, the Panel held that the choice of offering a settlement agreement or not is within the discretion of the CFCB Chief Investigator according to Article 15(1) of the Procedural Rules Governing the CFCB. The question of acting in a discriminatory way by offering said solution to other licensees but not the Appellant also appeared questionable for the Panel, based on the specific circumstances surrounding the case, leaving the possibility of unequal treatment open had AC Milan adduced additional evidence in this respect. In any event, this would not invalidate the decision to the extent that the choice of the legal instrument is at the discretion of the UEFA Investigatory Chamber.[46]

The most important part of the merits lies, in our view, with the control of the factual assessment by the CFCB Adjudicatory Chamber.[47] While the breach of the break-even requirement was uncontested (EUR 121 million in excess of the maximum acceptable deviation) and confirmed in the operative part of the CAS Award, the fact that the CFCB Adjudicatory Chamber approved the factual findings at the time of the Referral Decision was not in line with the mandate of the CFCB Adjudicatory Chamber. In the Panel’s view, the Adjudicatory Chamber should have determined the relevant facts at the time of its hearing on June 19, 2018, since the situation had significantly changed.[48]

As the new controlling shareholder of AC Milan, Elliott is a well-known robust company that manages two multi-strategy funds and in both its letter dated June 19, 2018 and the press release on July 10, 2018 held that it supported AC Milan’s business plan and its strategy. Again, this brings us back to the importance of fixing a point in time where the factual assessment must be made as seen above under the Panel’s full power of review.

Concluding Remarks

We should not forget that, within the context of international arbitration and notwithstanding the influence of lex sportiva, the findings of this CAS Panel do not have an absolute precedential value, but relate to the specific and sui generis legal framework of the UEFA CL&FPP Regulations and the even more specific circumstances surrounding the particular case.

Notwithstanding the above, the CAS Award in the case AC Milan v. UEFA is a very important ruling not necessarily because the factual issues raised are of utmost timeliness, but mostly because it raised important and decisive procedural matters including the depth of review by the CAS Panel and the point in time where factual and legal evidence can be adduced before CAS. In our view, and in order to enhance legal certainty as to the point in time where the factual assessment should take place, a regulatory amendment of the UEFA Procedural Regulations might be advisable.

The CAS Panel concluded in its operative part that the CFCB Adjudicatory Chamber is called to issue a “a proportionate disciplinary measure”. What the outcome will be, and whether the current developments and revelations surrounding other clubs will influence the decision-making process in this case, remains to be seen.

[1] Football Leaks is a website that « reveals transfer fees, wages and contract information about notable footballers » (Wikipedia). It includes information on contracts, presentations, emails etc. relating to leading football clubs obtained by the German news magazine Der Spiegel, which shared access to the documents with Reuters and other media in cooperation with European Investigative Collaborations (EIC). See

[2] CAS 2018/A/5808 AC Milan v. UEFA, Award of October 1, 2018 (operative part of July 20, 2018).

[3] Idem.

[4] See the CAS Press release issued upon the notification of the operative part of the award in July 2018

[5] On July 10, 2018 Elliott Management (an American fund company) acquired AC Milan and promised a financing of EUR 50 million, see also CAS 2018/A/5808 para. 14.

[6] See CAS 2016/A/4492, Galatasaray v. UEFA, award of October 3, 2016 (operative part of October 2, 2016), In the Galatasaray case, the Panel rejected this criticism and found that the objectives of the CL&FPP Regulations were legitimate and the restrictions were inherent to the achievement of the objectives.

[7] The only aspect of the rules challenged in the AC Milan v. UEFA case related to the legality of the « settlement agreements » and was swiftly dismissed by the Panel, see CAS 2018/A/5808, paras. 139 f.

[8] See CAS 2016/A/4492, para. 79.

[9] See MAVROMATI/REEB, The Code of the Court of Arbitration for Sport: Commentary, Cases and Materials, 2015, Kluwer Law International, Ad Art. 57 CAS Code, pp. 506 ff.

[10] See Art. 2 of the UEFA CL&FFP Regulations (2015 Edition).

[11] See Art. 59 (a) to (c) of the UEFA CL&FFP Regulations, see also generally CAS 2018/A/5808 paras. 15 f.

[12] See Art. 60 (2) of the UEFA CL&FFP Regulations.

[13] See Art. 61 (2) of the UEFA CL&FFP Regulations of the UEFA CL& FFP Regulations and, generally, Art. 58 to Art. 64 of the UEFA CL&FFP Regulations. On the UEFA Decision and the changes in the UEFA CL&FFP Regulations see also Laura McCallum / Philippa Lombardi, UEFA and Financial Fair Play: A review of the AC Milan decision and 2018 changes to the regulations, published in Law In Sport, July 2018. The 2018 CL&FPP Regulations are available here.

[14] See CAS 2018/A/5808 paras. 6 ff.

[15] See also Annex XII (A) (2) (i) of the UEFA CL&FFP REgulations.

[16] See CAS 2018/A/5808 paras. 27 ff.

[17][17] See CAS 2018/A/5808 para. 39.

[18] See CAS 2018/A/5808, para. 42. The operative part of the decision read as follows : “1. AC Milan has failed to fulfill the break-even Requirement. 2. To exclude AC Milan from participating in the next UEFA club competition for which it would otherwise qualify in the next two (2) seasons (i.e. the 2018/2019 and the 2019/2020 seasons). (…)”

[19] See CAS 2018/A/5808, para. 77 (d) ff.

[20] See CAS 2018/A/5808 para. 101 and para. 103.

[21] See also para. 101 of the CAS Award.

[22] This was indirectly held in the Swiss Federal Tribunal 4A_730/2012, X. v. IAAF, Judgment of April 29, 2013, at 3.2.2.

[23] See CAS 2018/A/5808, para. 107 and para. 108.

[24] See CAS 2018/A/5808, para. 114.

[25] The other requests related to “any business plan(s) submitted by the above-mentioned clubs during the proceedings before UEFA” and “documents establishing the assumptions on which each club’s relevant business strategy was based”, see CAS 2018/A/5808 para. 109.

[26] See CAS 2018/A/5808, para. 116.

[27] See CAS 2018/A/5808 para. 119. According to Art. R56 CAS Code, the parties cannot produce new exhibits or specify new evidence after the submission of the appeal brief and of the answer unless the «parties agree otherwise or the President of the Panel orders otherwise on the basis of exceptional circumstances».

[28] The Panel has the full discretion to accept or deny the late production of evidence based on Art. R56 CAS Code and this cannot subsequently be challenged by the Swiss Federal Tribunal (unless other grounds for challenge are met), see e.g. Swiss Federal Tribunal 4A_312/2012, Judgment of 1 October 2012, X. v. Y., at 4.2.2.

[29] See CAS 2018/A/5808 para. 159. Notwithstanding the above, the CAS Panel was apparently in a position to find that the previous instance «has not assessed the relevant facts correctly or that the facts have changed by the time of the Panel’s hearing (on 19 July 2018)» (ibidem, para. 157).

[30] However, the UEFA Europa League 2017/2018, to which AC Milan has submitted, provides in its Art. 4.02 that the parties must agree that “(…) any proceedings before the CAS concerning admission to participation in or exclusion from the competition will be held in an expedited manner in accordance with the CAS Code of Sports-related Arbitration and with the directions issued by the CAS …”.

[31] All decisions provided for in Article R57 of the CAS Code (reverting the case back to the previous instance, annulling the appealed decision or rendering a new decision) are at the full discretion of the Panel.

[32] See CAS 2018/A/5808, para. 91.

[33] See CAS 2018/A/5808, para. 95; see also MAVROMATI/REEB, The Code of the Court of Arbitration for Sport: Commentary, Cases and Materials, 2015, Kluwer Law International, Art. R47 no. 13 et seq.

[34] See CAS 2018/A/5808 para. 98.

[35] See CAS 2018/A/5808, para. 99.

[36] Or, as the Panel put it «The Parties are in dispute with respect to certain elements of this mandate», including the «decisive reference date» and the «depth of scrutiny» (CAS 2018/A/5808, paras. 129 ff.).

[37] CAS 2018/A/5808, para. 130.

[38] See CAS 2018/A/5808, para. 133.

[39] See CAS 2013/A/3139, Fenerbahçe Spor Kulübü v. UEFA, award of December 5, 2013, para. 114; CAS 2012/A/2762 CAS 2012/A/2762, Bayer 04 Leverkusen v. UEFA, Award of 15 March 2013, para. 122; CAS 2011/A/2645, UCI v. A. Kolobnev & RCF, Award of 29 February 2012,  para. 44.

[40] See CAS 2018/A/5808, para. 134.

[41] See CAS 2013/A/3139, Fenerbahçe Spor Kulübü v. UEFA, award of December 5, 2013, para. 86.

[42] See also CAS 2010/A/2283, P. Bucci v. FEI, award of June 23, 2011 para. 14.36. See also other references in CAS 2018/A/5808, para. 136.

[43] See CAS 2018/A/5808, para. 136.

[44] See e.g. CAS 2012/A/2762, Bayer 04 Leverkusen v. UEFA, award of March 15, 2013, para. 122; see also CAS 2008/A/1718 to CAS 2008/A/1718-1724, IAAF v. All Russia Athletic Federation & Yegorova et al., Award of November 18, 2009, para. 166.

[45] See Art. 15 (2) of the UEFA Procedural Rules Governing the CFCB, see also CAS 2018/A/5808 para. 140.

[46] CAS 2018/A/5808, para. 142.

[47] The facts upon which the appealed decision was based included the Club’s failure to comply with the break-even requirement; doubts concerning credibility of the business plan and the refinancing operation concerning the debts of Redblack; possible change of ownership; and doubts concerning AC Milan’s ability as a going concern (CAS 2018/A/5808, para. 145).

[48] CAS 2018/A/5808, para. 151 and 153.