France: Law relating to sports agents by Delphine Verheyden

France:

Law relating to sports agents

 

by Delphine Verheyden[1]

 

 Article L.222-7 of the Code of Sport of 2011 defines the activity of sports agents as:

 

consisting of putting in relation, for payment, the parties to a contract relating to either remunerated sports or training activity, or to the conclusion of an employment contract whose object is the practice of a sport or training activity.

 

The profession appeared quite late in France, which is to say in the 70’s. Naturally, it has first and foremost developed around sports whose practitioners were mostly professional, such as football or basketball.

 

However, the French lawmaker had not sought to lay the framework of the profession before 1992, when Law no. 92-652 was passed on 13 July. This law was meant, on the one hand, to legalize the existing practice and, on the other hand, to put an end to the actual abuses (conflicts of interests, hidden commissions, etc.).

 

This law went through a first reform in 2000 (Law no. 2000-627, 6 July), with a view to enhancing the control over the profession through the implementation of a regime of prior permission, and, more precisely, by the creation of a license which all sports agents are required to hold.

 

A second reform occurred in 2010 (Law no. 2010-626, 9 June) in order to lay down:

 

–    the conditions of access to the profession;

–    the conditions for the pursuit of the profession; and

–    the conditions for the control of the profession.

 

Before studying today’s positive law governing the conditions of access, for the pursuit and the control of the sports agents’ business, it is necessary to define the scope of the French law relating to sports agents.

 

The scope of the French law

 

The French law relating to sports agents displays all the features of mandatory rules (“loi de police et de sûreté“)[2] or those of public order laws (“lois d’ordre public“)[3]. In both cases, it must necessarily apply as soon as an element of a legal operation involving an agent is likely to be linked to the French territory and jurisdiction, whether the agent or the player is based in France, or the club concerned is French[4].

 

Moreover, the French legislation is relevant and exclusive of regulations relating to sports agents[5] which are enacted by the international sports federations.

The condition of access to the profession

 

For the people willing to become an agent and to settle in France

 

The profession can be exercised by natural persons only, on the condition that they hold the proper license, which is delivered, according to the sport in question, by the appropriate federation (Code of Sport, art. L.222-7).

 

In this respect, each federation must institute an agents’ commission (Code of Sport, art. R.222-1) which can require the candidates to follow a preliminary training (Code of Sport, art. R.222-19), and contributes to organizing the legal test (Code of Sport, art. R.222-16) held for the delivery of the license.

 

The successful applicants are then delivered the license, provided that:

 

–    they are not concerned by the following cases of legal incompatibility or incapacity (Code of Sport, art. L.222-9 and L.222-11):

 

•    holding, directly or indirectly, in fact or law, for payment or for free, an executive or training position either in an association or a company employing athletes in return for remuneration or organizing sporting competitions, or in a sports federation or any of its constituted bodies, or having held such positions in the previous year[6];

 

•    having been, in the previous year, a partner of a company employing athletes in return for remuneration or organizing sporting events;

 

•    having suffered any disciplinary sanction at least equivalent to a suspension by the relevant sports federation, on the ground of breaching ethical, morality and sports specific rules;

 

•    being in office in an association or company employing athletes in return for remuneration or organizing sporting events, or in a sports federation or any of its constituted bodies;

 

•    having been criminally convicted as a perpetrator of deeds contrary to the highest standards of honour, probity or ethics;

 

•    having been personally bankrupted or subject to any of the procedures of interdiction or disqualification referred in Book VI of the Commercial Code.

 

–    they comply with the following provisions (Code of Sport, arts. L.222-12 to L.222-14):

 

•    their employees, the executive officers and associates of their company, if any, must not be affected by any of the cases of incompatibility or incapacity mentioned above;

 

•     the associates of their company, if any, cannot be:

*     associations or companies employing athletes in return for remuneration or organizing sporting events;

*     a sports federation or any of its constituted bodies;

 

•    the executive officers and associates of their company, if any, cannot be athletes or trainers.

Since Law no. 2011-331 of 28 March 2011, lawyers may exercise this profession, providing that they fulfil the conditions mentioned above (Law no. 71-1130, 31 December 1971, art. 6 ter).

 

For nationals of a member State of the European Union (EU) or of a State party to the Agreement on the European Economic Area (EEA)[7]

 

Nationals of a member State of the EU or of a State party to the Agreement on the EEA may establish themselves, as sports agents, on the territory of France if they satisfy one of these conditions (Code of Sport, art. L.222-15, paragraph 1 to 3):

 

–    holding the proper qualification required in order to exercise this profession in one of the member States of the EU or party States to the EEA where the profession of agent or its necessary prior education is regulated;

 

–    having had a full-time position of sports agent for two years in the past decade in one of these States where neither the profession of agent, nor its prior education are regulated and holding an attestation of competence or evidence of qualification issued by the competent authority of this State.

 

Nationals of a member State of the EU or of a State party to the Agreement on the EEA can exercise the activity of agent temporarily or occasionally on the French territory if they fulfil one of the following two conditions (Code of Sport, art. L.222-15, paragraph 5):

 

–    being legally established in their original State;

 

–    having had a full-time position of sports agent for two years in the past decade in one of these States where neither the profession nor the education of agent are regulated.

 

In all cases (establishment or service provision), these people must issue a statement to the agents’ commission of the sports federation concerned in order to justify that one or the other condition of access to the exercise of the activity in France is fulfilled (Code of Sport, art. R.222-23). They must also prove their knowledge of French (Code of Sport, art. R.222-21).

 

As for people willing to settle down in France, if the competent sports agents’ commission considers that there is a substantial gap between the level of qualification attested by the certification mentioned in article R.222-23 and the level actually required in order to exercise the activity of sports agent in France, it may recognise the qualification, should this gap be entirely covered by the experience acquired by the person concerned. Otherwise, the commission determines the conditions for compensation, which may consist of either an aptitude test or an adaptation traineeship (Code of Sport, art. R.222-26).

 

Once the qualification is obtained, an agent’s license is delivered to the people wishing to settle in France in order to do their business (Code of Sport, art. R.222-27).

 

As for the people who wish to perform services in France, if the commission considers that the provided certification ascertains the fulfilment of the conditions set in article L.222-15, paragraph 5 of the Code of Sport, it delivers to the agent a certificate mentioning the temporary or occasional nature of the activity on the French territory (Code of Sport, art. R.222-30).

 

For the people based outside France who are not nationals of a member State of the EU or of a State party to the EEA

 

In accordance with article L.222-16 of the Code of Sport, these people must enter into an athlete agency agreement with a sports agent based in France. This agreement is submitted to the competent federation within the month following its conclusion.

 

Nevertheless, agents based in States or Territories which are considered as non-cooperative within the meaning of article 238-0 A of the General Tax Code[8] cannot exercise their activity in France, in any form. Any agency agreement made with such an agent is void.

 

The conditions for the practise of the profession

 

The prohibition on getting paid by a minor

 

The conclusion of an agency contract between a sports agent and an underage athlete cannot result in any remuneration or compensation or in the granting of any advantage whatsoever to the benefit of the agent. This prohibition must be explicitly mentioned in the minor’s agency contract. Any agreement to the contrary is void (Code of Sport, art. L.222-5).

 

The prohibition on dual warrants

 

The sports agent must be warranted by either the athlete or his club, but not by both (Code of Sport, art. L.222-17). In the latter instance, the agency contract is void and, subsequently, the sports agent’s request for payment of his fees must be rejected.[9]

 

The remuneration of sports agents

 

The agency contract between an agent, on the one hand, and an athlete or a club, on the other hand, must specify, under pain of nullity (Code of Sport, art. L.222-17, paragraphs. 2, 3, 4 and 7):

 

–    the amount of the agent’s remuneration, which cannot exceed 10% of the whole amount of the contract between the parties;

 

–    the party in charge of his remuneration; as for lawyers, they are inevitably remunerated by their mandates (Law no. 71-1130, 31 December 31 1971, art. 10, par. 4).

 

The nullity of the agency contracts compels the agent to return the sums improperly received.[10]

 

When several sports agents are involved in order to conclude an athlete’s employment contract, the total amount of their remuneration cannot exceed 10% of the whole amount of the contract (Code of Sport, art. L.222-7, par. 5).

 

The remuneration of the sports agent appointed by an athlete may be paid by the club which the former has put the latter in relation with (Code of Sport, art. L.222-7, al. 6). Nevertheless, in this case, the sum paid by the club on behalf of the athlete is held for an advantage in cash for the latter, in addition to wages, fees and compensations. As such, it is encompassed in the income tax paid by the athlete. Therefore, the athlete finds no interest in having his agent remunerated by his club rather than paying the agent’s fees himself.

 

To claim payment of his fees, the sports agent, even holding an exclusive warrant, must bring evidence for his active part in the activities with which he was entrusted.[11]

 

The exercise of the activity through a company

 

In order to exercise his profession, a sports agent may set up or be hired by a company (Code of Sport, art. L.222-8). According to a law passed on 9 June 2010, legal persons thus constituted cannot themselves hold the license, which is granted only to natural persons.

 

Duration and termination of the agency contract

 

Unilateral termination of an agency contract with a definite period by an athlete is wrongful in the absence of any breach of contract by the sports agent.[12] If the athlete is unable to invoke a legitimate reason for his decision to withdraw from the contract, the agent is liable for payment of damages corresponding to the harm caused by the breach.[13]

 

The conditions for the control of the profession

 

Federal regulations and document disclosure

 

The delegated federations and, if any, the professional leagues instituted by them, are responsible for ensuring that all agency and employment contracts safeguard the interests of the athletes and trainers and of the sport in question, and that they comply with the provisions of the Code of Sport (Code of Sport, art. L.222-18, par. 1).

 

More precisely, the federations are responsible for performing a yearly control over the activity of sports agents (Code of Sport, art. L.222-7, al. 2).

 

For this purpose, the federations must enact rules relating to (Code of Sport, art. L.222-18, par. 2):

 

–    the disclosure of agency and employment contracts, especially the agency contracts signed by a minor (Code of Sport, art. L.222-5, par. 3); in all cases, all the contracts signed by the agent must be submitted within a month to the competent delegate of the federation (Code of Sport, art. R.222-32);

 

–    the prohibition on using services of a person who does not hold the agency license;

 

–    the payment of the agent’s fees, which can only occur after the submission of the agency contract.

 

As part of the review performed by the relevant federations, the agents must submit their records and accounting information each year, as well as any information relating to their company, if any (Code of Sport, art. R.222-31).

 

Disciplinary sanctions

 

Federations must enact sanctions for the following cases (Code of Sport, art. L.222-19):

 

–    non-disclosure:

•     of employment contracts signed subsequently to the intervention of an agent;

•     of the agency contracts;

 

–    non-compliance with the provisions on:

•     the ban on payment of agents by underage athletes;

•     the ownership of an agency license;

•     the specifications which must be included in any agency contracts;

•     payment of fees.

 

–    non-disclosure of documents needed to monitor agents’ activities.

 

If a lawyer disregards the provisions relating to the content and disclosure of employment and agency contracts, the relevant federation shall inform the Chairman of the Bar where this lawyer is registered. The Chairman then considers the necessity to initiate disciplinary proceedings against him (Code of Sport, art. L.222-19-1).

 

In the case of violation of the provisions of the Code of Sport relating to sports agents, as well as that of the federal regulations of sports agents, the agents’ commission of the federation in question may impose the following sanctions against the agents found to be in default (Code of Sport, art.R.222-38):

 

–    a warning;

 

–    a monetary penalty not exceeding € 1,500, which can be combined with any other sanction;

 

–    temporary suspension of the agent license; and

 

–    withdrawal of the agent license, possibly accompanied with a ban on getting another license in the same discipline or in any other, for a period up to five years.

 

Against nationals of a member State of the EU or of a party State to the EEA who perform sports agency services in France without being officially based and allowed, the sanctions are replaced with disqualification for the exercise of agent activities for a period up to five years.

 

Sanctions may be suspended. A suspension might be revoked if a new infringement occurs within five years from the delivery of the sanction.

 

In accordance with Decree no. 2011-686, issued on 16 June 2011, appeals against these sanctions are brought before the territorially competent administrative Court, after completion of the prior conciliation procedure in front of the French National Olympic and Sports Committee.

 

Criminal sanctions

 

Under article L.222-20 of the Code of Sport, breaches are punishable with two years’ imprisonment and a € 30,000 fine for the pursuit of sports agency activity:

 

–    without holding the license[14] or in breach of a decision to suspend or revoke this license;

 

–    while being paid by an underage athlete;

 

–    by not complying with the list of incompatibilities or incapacities of article L.222-9 of the Code of Sport;

 

–    by not complying with the prohibition on dual warrants[15]; and

 

–    by not complying with the provisions relating to the agents’ remuneration (10% cap).

 

The fines may be increased far beyond € 30,000 up to double any sum improperly received by the agent.

 

In addition, penalties may be accompanied by a temporary or permanent ban on carrying out sports agent business (Code of Sport, art. L.222-21).

 



[1] Partner at Vivien & Associés, Avocat at the Paris Bar. E-mail: delphine.verheyden@va-fr.com.

[2] TGI Paris, 11 September, 2007, D. 2008, 2483, n. J.-P. Karaquillo.

[3] Civ. 1st, 18 July 2000, appeal nb. 98-19.602.

[4] TGI Paris, 11 September 2007, Op. Citât.

[5] CA Metz, 20 March 2002: RJ éco. Sport 2003, nb. 66, 50.

[6] For an instance of an agent held as the de facto leader of a club, see CA Limoges, 1 October 2003, req. 02/01566.

[7] Norway, Iceland and Liechtenstein.

[8] Namely, in 2011: Anguilla, Belize, Brunei, Costa Rica, Dominica, Grenada, Guatemala, Cook Islands, Marshall Islands, Liberia, Montserrat, Nauru, Niue, Panama, Philippines, Saint Vincent and the Grenadines, Oman and Turks Islands and Caicos.

[9] Civ. 1st, 2 April 2009, RJES 91, 2009.33, obs. F. Lagarde.

[10] CA Colmar, 22 November 2005, req. 04/02311.

[11] Civ. 1st, 8 February 2005, RJES, 75, 2005.81, obs. J.-P. Boucheron and F. Lagarde.

[12] CA Montpellier, 4 March 2009, req. nb 08/03182.

[13] CA Pau, 12 February 1997, req. 567/97.

[14] For an instance of a person based outside the EU and exercising agency activities without being licensed or declared, Crim. 24 January 2006, D. 2006.2649, n. J.-P. Karaquillo.

[15] For an instance, Crim. 17 October 2005, n. 04-85.098.

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