Precautionary measures to prevent the spread of COVID-19 have necessitated restrictions against mass public gatherings. As a result of this, various sporting events around the world have been suspended or postponed; from the Summer Olympics in Tokyo and Euro 2020 to the Golf Masters Tournament and any Formula One Grand Prix races scheduled before the end of May.
Generating over US$90 billion annually sports competitions involve a complex and intricate supply chain consisting of a range of stakeholders, from athletes, media broadcasters and venue operators to governing bodies, corporate sponsors and fans. These relationships are underpinned by strict terms and schedules and consolidated by legal agreements and contracts.
Naturally, these have been severely disrupted by the outbreak of the pandemic, forcing parties to review their contracts and, in particular, whether the current circumstances absolve them from fulfilling their contractual obligations and repercussions for failing to meet the terms outlined in their agreements.
This is highly dependent on the jurisdiction under which the contract is drafted and varies between countries and legal systems. For example, under English Common Law, the doctrine of frustration is invoked when an unexpected event, which has not been specifically provided for under the contract, makes contractual obligations impossible to fulfil. This releases parties from the terms set forth in the contract and therefore, failure to meet their obligations is not considered in breach of the contract and does not incur any financial ramifications. However, this is only implemented in exceptional circumstances and requires strong proof that the events were unforeseen and out of the parties’ control and make it impossible for them to carry out their commitments.
Moreover, the Coronavirus pandemic has also drawn particular attention to force majeure clauses in contracts. An element of civil law, force majeure clauses are similar to the doctrine of frustration as they offer exceptions in the event of uncontrollable and unforeseen crises. While English Common Law does not automatically include force majeure as a doctrine, parties can include the clause when drafting contracts to excuse one another from fulfilling their obligations in extenuating circumstances. Force majeure clauses explicitly outline a range of conditions, such as war, terrorism, and natural disasters, under which the parties can be released from their contracts. The phrasing of the clause is significant as, in order to be invoked in the current circumstances, it would need to specifically account for health crises such as epidemics and pandemics. Where flexible and ambiguous provisions such as "acts of governments" or "circumstances beyond the parties' control," for example, have been made, parties will be forced to rely on interpretation and mutual agreement to decide whether Coronavirus constitutes as such.
Stakeholders have also been advised by legal firms to consult their insurance policies to gather whether any loss of revenue is covered under the schemes and they are, therefore, entitled to compensation. For example, certain insurance policies offer extensions to cover losses incurred due to "notifiable diseases". These are, however, rare and are once again dependant on whether COVID-19 is considered a notifiable disease.
Unfortunately, health professionals do not anticipate a speedy return to traditional sporting events, with some experts predicting a hiatus until 2021. Interacting in mass crowds will continue to pose a health risk until a vaccine is discovered and sports fans will continue taking safety precautions, refraining from sports competitions.
Sports leagues and governing bodies are therefore currently brainstorming innovative ways of completing their seasons such as hosting games without live audiences and broadcasting these to viewers around the globe in order to mitigate the economic losses. Nevertheless, this will continue to have severe implications for stakeholders. The pandemic will undoubtedly lead to a multitude of legal disputes and conflicts over the fulfillment of terms and obligations.