Partner and Head of Sport at Mishcon de Reya, Simon Leaf, has provided comments on the prospect of Premier League clubs facing legal action from their counterparts in relation to breaching financial rules. He was quoted in The Independent, Goal.com and Caught Offside.
Simon explained: "Whilst most headlines in recent months have focused on the charges levied against Everton, Nottingham Forest and Manchester City, much less has been made of an attempt by a collection of other current and former Premier League clubs, which ironically included Nottingham Forest, to be added as interested parties to the original Everton proceedings.
"In short, it appeared that these "claimant clubs" sought to rely on a relatively obscure regulation within the Premier League's rule book to try to give them a greater say in the sanctions that may be levied against Everton. One suspects they hoped that by being added to the proceedings they would be able to make representations regarding the losses that they had suffered from Everton's purported breach and therefore ultimately be awarded compensation by the Commission. However, a separate Commission rejected this approach as it felt the clubs did not "have the standing to (make such a) request." Nevertheless, when looking at the decision of that Commission itself, it still very much opened the door to future claims by those clubs and it even went as far as saying that it was "satisfied that the applicant clubs have potential claims for compensation" provided some of the other legal conditions were met.
"Going forwards, it seems certain that if charges against breaching clubs are upheld, the floodgates will open and there will be a deluge of related legal claims, as rival clubs that consider that they have suffered losses come out of the woodwork. Such losses could include anything from lost revenue from commercial partners, prize money from the league and even lost titles.
"Nevertheless, lawyers acting for those clubs will need to carefully consider how any such claims are made. It may not be as easy as it first appears as the Premier League's rules run to several hundred pages and require careful navigation. It is not simply a case of retrospectively applying any potential points deduction to a breaching club in the season that the claimant club considers they have lost out in. Instead, a claimant club will need to be able to demonstrate a clear causal link between the relevant breach and the actual loss suffered – often referred to as the 'but for' test by lawyers. In other words, 'but for' the breaching club's actions, the relevant loss would not have been incurred.
"These types of inter-club claims have proven to be much more common in the EFL. In recent years, high-profile actions have been brought by Middlesborough and Wycombe against Derby County, for example, as clubs regularly seek to encourage the EFL to take action against perceived breaches elsewhere. They are less frequently seen in the Premier League, which has, until now, managed to maintain harmony between its member clubs. Retaining the peace going forwards will be a challenge for the Premier League. They have a near impossible job on their hands to keep everyone happy in the face of the myriad of legal claims that could result. Such disharmony could cause wider damage to the Premier League's brand and ultimately its ability to retain and attract commercial partners – so this really is a crucial period in the future of football and even more so with the spectre of an independent regulator looming large."