Commercial Contracts

Posted on 12 April 2021

Whilst many sports organisations or individuals may have reviewed or "future-proofed" their existing contractual arrangements to mitigate Brexit-related risks, there are a number of issues they should still continue to bear in mind when negotiating commercial contracts, alongside IP, Trade in Goods and Services and Data Protection.

Contractual:

  • Those operating in the sports industry should continue to consider how risk is allocated in their contracts. Particularly, any risks relating to regulatory divergence, trade barriers, logistical and compliance costs, currency fluctuations and any other charges or levies that are now more likely to affect such agreements. These are likely to impact the cost and pricing structure, the duration of the contract and overall risk profile between the parties. Given the risks, we have already noticed that our sports organisation clients are more carefully considering what contractual termination rights to include for both themselves and their counterparty as a direct result of the new conditions that they face.
  • UK and EU based sports organisations or individuals are also being increasingly wary of how Brexit may affect the enforcement of contracts in cross-border disputes when entering into commercial arrangements. The rules on jurisdiction and enforcement have changed. As a result, clients are spending more time considering questions such as service of proceedings and whether alternative dispute resolution methods may be more appropriate in light of the potential uncertainties when it comes to enforcing agreements involving international counterparties.

Legal and regulatory changes:

  • There will be increased divergence over time between the UK and EU's legal and regulatory positions. For example, there are a number of EU laws that are incoming in relation to consumer protection and digital trade, which the UK may or may not seek to replicate, and sports businesses selling to consumers in both the UK and the EU should continue to be alive to this over the next 100 days and beyond.
  • Parties should consider the possible impact of this on their existing and future agreements (particularly medium to long-term agreements where there is greater risk that divergence will impact the agreement), and ensure they are satisfied with the allocation of obligations and responsibilities. Additionally, suppliers of sports goods or services may need to review and change standard terms and conditions if previously used for both the UK and EU.

Digital Trade:

  • The UK will no longer participate in the EU's Digital Single Market regime (a series of laws seeking to harmonise areas such as copyright, portability of content, geo-blocking, e-commerce and audio-visual media services). As a result, those in the sports industry should already be considering the following:
  • E-Commerce: if a UK based sports organisation is trading online in the European Economic Area (EEA), they should consider and review their website information requirements as they will need to comply with the legal requirements relating to online activities in each relevant EEA country.
  • Geo-blocking: The EU Geo-Blocking Regulation (which regulates situations where access to a website is blocked based on the consumer's nationality) no longer applies in the UK. This means businesses may discriminate between EU and UK customers in the UK. However, UK businesses operating in the EU will still have to comply with the EU Geo-Blocking Regulation. Whilst copyright is not included in this Regulation, the EU may introduce this in the future. Rights holders, distributors and agents should be wary of this when negotiating licensing agreements with customers and suppliers to ensure compliance with the applicable laws.
  • Portability of Content: As the EU Portability Regulation no longer applies in the UK, UK consumers are no longer legally entitled to benefit from their digital content subscriptions when in the EU. As a result, UK consumers may be unable to view sports content online in the EU (and vice versa). This will affect the licensing arrangements from a technical and operator perspective. Also, for those seeking to exploit rights in the UK and EU (such as sports clubs, governing bodies and sports leagues) it may potentially reduce their value. In particular, VOD platform providers, online TV services, streaming services and online gaming marketplaces are likely to be affected.
  • Audio-visual Media Services Directive (AVMSD): As audio-visual services were excluded from the TCA, UK based broadcasters no longer benefit from the "country of origin" principle under AVMSD (which allows EU based broadcasters to obtain a licence and comply with regulatory standards in one EU member state to provide services in other EU states without any additional requirements). Although the European Convention on Transfrontier Television applies, it offers an incomplete solution as not all EU states have signed up to it and how it applies depends on local national law. We may also see changes to the listed events regime for sports events held in the UK and broadcast to the EU, which could impact on commercial value and exploitation opportunities.  Rights holders and their agents seeking to exploit their rights should consider existing and future licensing agreements – particularly in relation to the territorial scope of the licence for UK-based broadcasters suppling EU customers (and vice versa).

For further details, see our Brexit hub on Commercial Contracts and Digital Trade.

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