The regional real estate, construction and hospitality sectors have been turned upside down over the last two years, with Covid-19 bringing these sectors to a halt. The impact of the pandemic remains, however, the resurrection of these vital sectors across the region is a welcome relief because they support the development of modern cities, which in turn have attracted commerce and tourism to the Middle East and North Africa.
This latest edition of Law Update, provides vital insights, updates and commentary on the latest trends taking shape across the real estate, construction, hotels and leisure sectors. The articles within this edition cover a broad range of topics, from what’s next for real estate in Dubai, to commentary on Saudi real estate, a market that is set to become the main bedrock of the region for years ahead. You will find articles on reforming real estate laws in Qatar, foreign investment and ownership in Oman, and mitigating risks on hotel construction projects and the lessons learnt from Covid.Read the full report
FIFA removed a system that was primarily based on the qualification, recognition and registration of a certain limited number of agents and replaced it with a system whereby the barriers to entry were lowered but the scrutiny on specific transactions conducted using intermediaries was increased. The new regulation issued a set of guidelines to be implemented at the national level by football associations across the globe. Whilst these regulations proved controversial at the time, it attempted to bring about a uniform set of minimum standards to be applied across the board, with particular focus on disclosure and transparency in transactions and dealing with conflicts of interest.
UAE FA Guidelines
The UAE Football Association (“UAE FA”) adopted the guidelines on 30th June 2015 (“Guidelines”) and a summary of the key points of the Guidelines relating to the UAE are described below:
Article 1 – Definition of an Intermediary
Article 1 broadly defines an intermediary as a person (natural or corporate) who (i) represents players or clubs in negotiations with the goal of signing an employment contract between them, or (ii) represents clubs in relation to discussions with the goal of entering into transfer or loan agreements.
Article 2 – Implementation of the Regulation
The Regulations apply to the clubs and players using the intermediary’s services.
Article 2 goes on the state that the implementation of the Regulations or any amendment shall not prejudice the validity of an employment contract or Transfer or Loan agreement.
Generally, in terms of the employment contract, FIFA’s Professional Football Player Contract Minimum Requirements should be taken into account although these are subject to mandatory local law provisions. In relation to player contracts in the UAE, they are in fact subject to UAE Labour Law.
Article 3 – General Principles
Article 3 of the Regulations sets out general principles which include a requirement that an intermediary must be registered in accordance with the Guidelines and that players and clubs, when choosing their intermediaries must show ‘best effort attempts’, which means that clubs and players must use their best efforts to make sure that the intermediary engaged signs a representation agreement between them.
Article 4 – Registration of Intermediaries
This article states that the intermediary is required to record every transaction and that the clubs or players using intermediaries must submit the intermediary’s registration and any other documents in relation to every transaction carried out using the intermediary. Therefore, the UAE FA is required to implement a registration system for intermediaries, who must be registered for each transaction that they are involved in. This attempts to allow for increased tracking of intermediary activities.
Article 5 – Requirements and Conditions for Registration
Even though no formal qualification is now required for an individual to be an intermediary, there are still minimum conditions in force which need to be met before an intermediary can be registered in the UAE and registration would still be subject to the UAE FA’s approval.
To be registered the applicant must:
Article 6 – Fees
These fees are not set out in FIFAs regulations and are left to national federations to determine.
In relation the UAE, the Regulations deals with fees to be paid to the UAE FA, which states that the intermediary must:
Article 7 – Conditions of the Agreement
This article addresses the minimum conditions relating to the scope of the intermediary’s services and which must be included in the representation agreement between the intermediary and the club or player. These conditions include:
Article 8 – Disclosure of Information
It is interesting to note that there is a requirement that a player and a club using an intermediary report that fact to the UAE FA on a transaction-by-transaction basis, along with all financial details. This attempts to deal with FIFA’s concern regarding transparency of transactions.
Prior to the implementation of the FIFA rules it was believed that at an international level (not necessarily relating to the UAE), there had long been an under-reporting of agent involvement in international transfers. This has occurred for reasons of confidentiality, to disguise side-agreements and incentives, to avoid administrative compliance, to reduce timelines for deal-making and numerous additional reasons.
Article 9 – Payments to Intermediaries
This important article deals with intermediaries’ remuneration. The Regulations state that:
It is interesting to note that when adopting the FIFA guidelines the UAE FA went a step further in relation to commission fees earned by an intermediary. The FIFA guidelines made a recommendation that fees paid to intermediaries are limited to 3% of the player’s basic gross income or of the transfer compensation. The UAE FA’s Regulations however, made it a mandatory requirement to limit intermediaries to 3% commission on the fixed salary of a player. Compliance with the Regulations is at odds with the previous practice (a default 3% unless otherwise specified in the contract) and a broadly accepted international expectation that agents could anticipate a commission between 5%-10% as well as a percentage of transfer fees.
It is important to note that the FIFA guidelines clearly state that any payments made to intermediaries acting on behalf of minor players are strictly prohibited.
Article 10: Conflict of Interest
FIFA had a significant concern that on an international basis there were increased conflict of interest issues with player transfers. The UAE Guidelines state that:
Article 11: Disciplinary Measures
Disciplinary measures can apply to the following offences by an intermediary:
The sanctions against an intermediary include one or a combination of the following:
In addition, each player or club in violation of the Regulations will be disciplined in accordance with the Regulations of the UAE FA. The Regulations provide for a committee to be set up to look into any alleged breaches.
With the Intermediaries Regulations, FIFA has delegated responsibility for managing the regulations and increasing transparency of matters relating to intermediaries to over 200 national associations. FIFA has attempted to implement a uniform set of standards across the different federations, as in the past there were differing standards and qualifications relating to football agents. The range of enthusiasm, resources and motivations for implementing the regulations across those national associations varies widely. While the electronic transfer management system (“TMS”) provides a platform for transparency, only fully declared and disclosed agent activity and documentation is entered and only keen management, oversight and enforcement by national associations can make the system work effectively. By adoption and implementation, the UAE FA has implemented the Regulations but the new system is just a year in process. To date there are only six registered intermediaries on the UAE FA website and the level of reported transfer activity is unclear. It therefore remains to be seen over the next few years how the Regulations are adopted and administered.
Raj Pahuja (email@example.com) is Head of Corporate Commercial in the firm’s Bahrain office (previously working with the firm in the UAE) and a key member of Al Tamimi’s dedicated Sports and Events Management practice. He has previously acted for the Bahrain International Circuit for several years advising on various aspects, including the F1 Grand Prix. Raj has also advised on the inaugural and subsequent Dubai Tours Cycle Race and in relation to a T20 cricket tournament.