The Interjection of European Football and World Politics: The Newcastle United Football Club Takeover Amidst the Saudi Arabia–Qatar IPR Dispute

[Author: Mainak Mukherjee, Third year law student at National Law University and Judicial Academy, Assam]

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The Middle East influence on European football has increasingly become apparent in recent years. One of the significant reasons that these Gulf countries have started investing in football is to increase their soft power in Europe. They usually inject much-needed funds into all these clubs to help them make high-profile signings and thereby get better results in all competitions. Investing in football also helps such authoritarian regimes whitewash their public image, which is stained with human rights abuses and extinguishing freedom of speech. 

Newcastle United’s takeover by the Public Investment Fund (PIF), whose chairman is the Crown Prince of Saudi Arabia—Mohammed bin Salman, is the most recent example of such Gulf-led investment in European football, aimed at sports-washing. The takeover saga was long and initial talks had broken down last year mainly due to media piracy concerns. BeIN sports accused Saudi Arabia, a Doha based broadcasting company, of propping up the network beoutQ and helping them pirate major sporting events, including the English Premier League (EPL) in Saudi Arabia after the Saudis had banned beIN due to national security concerns. Qatar raised a subsequent WTO dispute, and the matter was taken to the panel for discussion. In this article, the author will discuss how the IP dispute acted as the primary legal block in PIF’s attempt to acquire Newcastle United Football Club (NUFC).

QATAR-SAUDI: OIL CLASSICO

One of the largest broadcasting partners of the EPL, beIN sports, was banned by Saudi Arabia in 2017 as a part of a diplomatic and transport blockade of Qatar. Shortly, a new website called beoutQ appeared in Saudi Arabia, which started broadcasting all sports worldwide and was geo-locked for users in Saudi Arabia. After an investigation by significant sports agencies, including the EPL, it was found that beoutQ’s signal traced back to ArabSat—a Riyadh-based satellite provider. 

In 2020, when the proposal to take over NUFC was presented by the Saudi group, beIN sports, to get back at the Saudis, snitched in a letter to all 20 EPL teams mentioning beoutQ’s piracy and how the potential acquirers had caused damage to the Premier League’s commercial revenues. This made the Saudis withdraw their bid. The following section discusses the subsequent WTO dispute and how resolving it meant “green lights“for the takeover.

THE IP DISPUTE

In August 2017, after Saudi Arabia placed a ban on beIN sports, beoutQ started broadcasting beIN sports’ licensed content in Saudi Arabia, including the Premier League. Subsequently, in 2018, Qatar approached the WTO requesting consultations with Saudi Arabia concerning their failure to protect IP rights held by Qatar-based entity, beIN sports. Qatar submitted that Saudi’s acts and omissions resulted in:

1. Qatari nationals being unable to protect their IP rights;
2. Qatari nationals being meted out a less-favourable treatment than that accorded to Saudi’s nationals and the nationals of other countries;
3. The difficulty for Qatari nationals to seek civil judicial remedies; and
4. Failure to criminally prosecute the IP infringement. 

While Saudi Arabia participated before the panel proceeded, it refused to justify the measures taken under the Security Exception clause of Article 73 of the TRIPS Agreement. This raised another question before to panel as to whether actions taken by countries pursuant to their national security interests are subjects of discussion before the dispute settlement body. The United States, a third party to this dispute, supported Saudi’s claim that security interests are non-justiciable and cannot be subject to dispute settlement. While the US’ stance was entirely predictable given their then prevailing trade dispute—now resolved—against the European Commission (EC) concerning steel and aluminium, the other third parties, namely Japan, China, Canada and the EC, rejected this claim.

IS THE “SECURITY EXCEPTION” CLAUSE SELF-JUDGING AND NON-JUSTICIABLE?

Security exceptions have lain dormant in the General Agreement on Tariffs and Trade (GATT 1994) upon the creation of the World Trade Organisation, and then in its subsequent agreements— such as TRIPS, GATS. Member states have often imposed this exception to promote protectionism and evade the WTO panel’s scrutiny on various occasions. Scholars have argued that the self-judging nature of WTO’s security exceptions should be balanced with a well-functioning understanding that these exceptions must only be imposed rarely, wisely and with the exercise of good faith. However, in this era of economic pressures, states have used this provision for pursuing national security agendas, and at the same time, safeguarding these from the scrutiny of the WTO. 

After years of sitting with its hands tied to the chair when a member state-imposed “security exceptions”, the panel finally adopted a definitive ruling in the dispute Russia–Measures Concerning Traffic in Transit (DS512), post the Crimean Crisis in 2014, Russia allegedly imposed restrictions on traffic in transit from Ukraine through the Russian federation to third countries. When a WTO panel was established at the request of Ukraine, Russia claimed that the WTO lacked jurisdiction to adjudicate on matters concerning its security interests. On the other hand, Ukraine claimed that security exceptions were an affirmative defence for measures that would otherwise fail to comply with the obligations of the GATT. 

After hearing both the sides, the WTO panel formulated two necessity parameters for states to comply with when invoking “security exceptions” which are :-

(a) the measures must reasonably fall within the ambit of vital security interest;

(b) there should be a rational and plausible relationship between the measures and the end pursued. With this ruling, the panel successfully cleared all doubts regarding its adjudicating powers concerning “security exceptions” and ruled that Article XXI of the GATT is justiciable—the security exceptions in other WTO Agreements, namely Article XIV bis of the GATS and Article 73 of the TRIPS follow the jurisprudence of Article XXI of the GATT.

Invoking the aforementioned two necessity parameters, the panel in Russia-Traffic in transit concluded that given the heightened political tension between Russia and Ukraine, and further, the United Nations General Assembly recognising the entire situation as an “armed conflict”, the measures were taken during a time of emergency in international relations. Therefore, after analysing the consistency of the measures with Article XXI Security Exceptions of the GATT, the panel ruled that the measures adopted by Russia were justified. Albeit the ruling went against Ukraine, it paved the way for the panel not to allow member states to avoid the WTO’s scrutiny by citing the “security exceptions” clause. 

Moreover, interpreting the “security exception” clause as a “self-judging” provision is inconsistent with the panel’s terms of reference, following Article 7.1 of the DSU. It is inconsistent with Article 7.2 of the DSU, which specifies that “panels shall address the relevant provisions in any covered agreement or agreements cited by the parties to the dispute”. 

THE PANEL’S FINDINGS IN SAUDI ARABIA PROTECTION OF IPRs

The Russia-Traffic in transit ruling played a significant role in this dispute. The panel rejected Saudi Arabia’s argument that it did not have the necessary jurisdiction over the claims of WTO-inconsistency as the matter fell under the purview of “security exceptions”. Further, it was held that the measures taken by Saudi Arabia were inconsistent with Article 42 of the TRIPS (civil and administrative procedures and remedies) as it prevented Qatar from obtaining a local counsel to enforce its IP rights before a Saudi court or tribunal (anti-sympathy measures), and concerning Saudi Arabia’s failure to initiate criminal procedures against beoutQ, it was held by the panel that Saudi Arabia had acted inconsistently with the first sentence of TRIPS Article 61 to “provide for criminal procedures and penalties to be applied”.

After applying the necessary parameters and analysing all the measures concerning Saudi Arabia’s defence of “security exceptions” under Article 73 of the TRIPS, the panel concluded that the “anti-sympathy measures” taken by Saudi Arabia were consistent with Article 73 of the TRIPS because it was taken during heightened political tension between the Saudi and Qatari governments. Thus, it was consistent as it was “taken in the time of war or other emergencies in international relations”. However, the panel concluded that Saudi’s failure to take necessary legal action against the infringer was not justified under Article 73 of the TRIPS, and therefore, was declared as an inconsistent measure. 

THE AFTERMATH OF THE PANEL’S RULING

Initially, Saudi Arabia decided to appeal to the panel’s findings; however, given the growing tension on its takeover dream, Saudi Arabia decided against pursuing its appeal. In January 2021, the GCC signed an agreement with Qatar, which marked the end of Qatar’s three years of diplomatic blockade and the Gulf crisis. Later in October 2021, Saudi announced to unban beIN sports and allow it to conduct operations in the territory of Saudi Arabia. It also resulted in removing the major blockade in Saudi PIF’s attempt to take over Newcastle United Football Club as the Premier League soon approved the takeover deal. Afterwards, in a few days, the Saudi-led consortium finalised the deal to takeover NUFC and enter its name in European football. 

CONCLUSION

There have been a number of political controversies around the deal which led to it taking so much time. Now that it is over, the Magpies are incredibly enthusiastic to see how their bottom-half team performs with the much-needed injection of transfer funds. However, the takeover saga must raise some more serious concerns, one of them being the growing influence of the Gulf in the sport we love. This takeover saga serves as a perfect example of how European football has turned into a battleground for rich Middle Eastern proxy war. We must never forget that this game had promoted peace during the First World War when both sides unofficially stopped fighting to play a game of football: Christmas Truce. Nevertheless, the takeover brings back that age-old argument as to where a line must be drawn between any sport and politics.

*For any query, feedback or discussion, the author can be contacted at [mainak@nluassam.ac.in]

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