In this article, Samuel Cuthbert and Charlotte Baker explain the recent decision reached in Alrubie v Chelsea Football Club Ltd & Anor [2025] EWHC 541 (Comm), which found a horizontal contract bound a former director of Chelsea FC and a sports agent to arbitrate under the FA Rules, and they consider its wider consequences in the sporting world.
Kendrah Potts of 4 New Square Chambers and Level Law represented the Second Defendant in her successful application for a stay of these proceedings.
Introduction
In Alrubie v Chelsea Football Club Ltd & Anor, David Quest KC sitting as a Deputy in the High Court granted a stay of proceedings under section 9 of the Arbitration Act 1996 in favour of arbitration under Rule K of the FA Rules. He found that the two relevant parties were each bound by an agreement to arbitrate contained within the Rules of the Football Association Ltd (‘the FA’) (‘the FA Rules’), and that in the circumstances there was also a horizontal contract between the parties agreeing to arbitrate.
Background
The Second Defendant, Marina Granovskaia (‘Ms Granovskaia’), is the former CEO and a former director and employee of Chelsea Football Club (‘Chelsea FC’) who had responsibility for, inter alia, player contracts.
In July 2021, Mr Alrubie contacted Ms Granovskaia offering to introduce to Chelsea FC another club interested in signing Kurt Zouma. Mr Alrubie later claimed that he had a contract with Chelsea FC pursuant to which he was entitled to commission when Kurt Zouma transferred from Chelsea FC to West Ham United Football Club in August 2021. Mr Alrubie brought a breach of contract claim against Chelsea FC and a claim against Ms Granovskaia for allegedly inducing Chelsea FC to breach its contract.
In October 2024, Mr Alrubie discontinued his claim against Chelsea FC. Ms Granovskaia denied the claim against her on the basis that there was no contract between Chelsea FC and Mr Alrubie, there was no breach of contract, or alternatively, she did not induce any breach.
The Application
Ms Granovskaia sought a stay of the High Court proceedings (the “Application”) relying, inter alia, on section 9 of the Arbitration Act 1996 and Rule K of the FA Rules, contending that the subject-matter of the proceedings was a ‘dispute or difference between any two or more Participants’ for the purpose of Rule K1.1 and subject to arbitration.
Decision
The court found that a horizontal contract between Mr Alrubie and Ms Granovskaia could be implied either by virtue of both parties agreeing to adopt the FA rules (and therefore to adopt Rule K), or on account of dealings between the parties.
Horizontal Contracts
The Judge was referred inter alia to three cases specific to a consideration of the horizontal effect of Rule K (Davies v Nottingham Forest FC Ltd [2017] EWHC 2095 (Ch); Bony v Kacou [2017] EWHC 2146 (Ch); and Mercato Sports (UK) Ltd v The Everton FC Co Ltd [2018] EWHC 1567 (Ch)).
Mercato was of particular significance as the issues giving rise to that dispute were very similar to instant case and it had sought to reconcile the positions in Davies and Bony. In brief, Mercato concerned an agency and individual intermediary claiming that they were entitled to commission from the defendant football club for alleged intermediary services in respect of a player transfer, and the defendant sought a stay on the basis the dispute fell within Rule K. The Court granted a stay of the proceedings.
In Mercato, HHJ Eyre QC set out the approach to be taken in relation to the establishment of horizontal contracts [¶26]:
“An implied contract between two persons who have not engaged directly with each other (“a horizontal contract” to adopt the language used by HH Judge Pelling QC in Bony v Kacou & others [2017] EWHC 2146 (Ch)) can arise where each of those persons has a separate contract (“a vertical contract”) with the same third party committing them to abide by particular rules laid down by or stipulated for by that third party. Such a vertical contract can arise where a person’s actions amount to an accession to the rules laid down by the relevant third party. Whether a series of vertical contracts gives rise to a horizontal contract (or a series of such contracts) between particular persons will depend on the facts and circumstances of each alleged party’s entry into the vertical contract in question and the nature of their dealings with the other parties. A careful and fact sensitive analysis of the particular circumstances will be required. Engagement in activities related to a particular sport does not without more and inevitably amount to an agreement to be bound by the rules of the governing body of that sport let alone to horizontal contracts with all others engaged in that sport. However, accession to such rules can in appropriate circumstances give rise to such horizontal contracts with other participants in the sport.”
HHJ Eyre QC then stated that the further removed an activity is from physical participation in the sport, the more care is needed in considering whether persons involved in those activities have acceded to the rules of the governing body [¶42].
Against that backdrop, HHJ Quest KC went on to deduce the following principles in the instant case [¶34]:
“[…] the court will not imply merely from the participation by persons in a sport or related activity that they are bound contractually as between each other by the rules of a governing body, that the implication of such a horizontal contract depends on all the relevant facts and circumstances (including the circumstances of the making of vertical contracts and any subsequent dealings between the parties), and that the implication must be necessary—specifically, it must be necessary “to give business reality to a transaction and to create enforceable obligations between parties who are dealing with one another in circumstances in which one would expect that business reality and those enforceable objects to exist”, per May LJ in Ilyssia Compania Naviera SA v Bamaodah [1985] 1 Lloyd’s Rep 107 at 115.”
Parties to an arbitration agreement?
The Judge found that both Mr Alrubie and Ms Granovskaia had been Participants under the FA Rules who had both expressly agreed with the FA to be bound by the FA Rules (including Rule K) although they had not expressly entered into an agreement between themselves to that effect.
Mr Alrubie had been registered with the FA as an Intermediary / Football Agent in accordance with the FAWIR and FA Agent Regulations in place at the relevant time. Ms Granovskaia had, in her capacity as a director of CFC, submitted to the Premier League a declaration form at the relevant time, in which she expressly agreed that she was a Participant and was bound by the FA Rules.
The secondary question was therefore whether a horizontal contract had effect between the two of them, as well as the vertical contracts which had effect between each of them and the FA [¶24].
The Judge noted that in the present case Mr Alrubie and Ms Granovskaia expressly agreed with the FA to be bound by the FA Rules and that in doing so they “each should be taken as having assumed a contractual obligation to each other Participant making a similar accession agreement with FA, and therefore to each other”. This, he said, was necessary for Rule K to achieve its intended purpose of providing for arbitration between Participants, as anyone agreeing to be bound by Rule K must be taken to understand and intend [see ¶35].
The Judge found that this was sufficient to establish a horizontal contract but, if it was necessary to consider the dealings between the parties (as the court had had regard to in Mercato Sports), he held that it was significant that at the time Mr Alrubie approached Ms Granovskaia both were acting in their capacity as Participants. As the Judge explained: “It is implicit that such dealings between Participants would be conducted subject to the FA Rules” [¶37].
Effect of Ms Granovskaia ceasing to be a Participant
Ms Granovskaia resigned as a director of Chelsea FC on 22 June 2022 and ceased to be an employee on 2 September 2022. At the time of the Application, she was not a Participant. Mr Alrubie argued that as Ms Granovskaia had ceased to be a Participant when she left Chelsea FC she was no longer entitled to refer the dispute to arbitration. Mr Alrubie argued that Rule K is based in the present and future tense, but the Judge disagreed with this interpretation of the FA Rules.
Rule K of the FA Rules provides for arbitration at K1.1 as follows:
“Subject to Rule K1.2, K1.3 and K1.4 below, any dispute or difference between any two or more Participants […] shall be referred to and finally resolved by arbitration under these Rules.”
The Judge found that [¶40]:
“Nothing in the Rules provides or implies that such an accrued right could subsequently be lost by the person ceasing to be a Participant. I would regard that as a surprising and unreasonable consequence, particularly because a person might cease to be a Participant involuntarily, (un)fortuitously, or perhaps even deliberately if one or other party was seeking to avoid having to arbitrate an existing dispute”.
Rather, the Judge held that “[o]n any view, Rule K is limited to a dispute between persons who are Participants when the dispute arises” [¶44].
Comment
The case is of considerable significance as a result of the following two findings:
- That as a result of having agreed to be bound by the FA Rules they had assumed contractual obligations to each other to arbitrate under Rule K, which marks a significant development;
- The fact Ms Granovskaia did not lose the right to arbitrate when she ceased to be a Participant.
As to the first of these, this has the potential to significantly expand the role of implied horizontal agreements to arbitrate as the implication of such a contract is not limited to scenarios in which the dealings between the parties justify it. However, it is notable that the Judge made his findings in the alternative, and it will remain to be seen whether courts are willing to adopt this broader approach.
In relation to the second, whilst HHJ Pelling KC in Bony had held that Rule K7 was “cast in the present tense”, the decision of HHJ Quest KC has instead recalibrated the application of Rule K to effectively ask whether both parties had been Participants when the dispute arises between them. Again, this will likely extend the ambit of Rule K.
The approach in this case may also open the door for similar arguments in disputes in other sports with the effect of further enshrining the primacy of arbitration in sports disputes.
© Samuel Cuthbert and Charlotte Baker, 4 New Square Chambers, July 2025
Disclaimer: this article is not to be relied on as legal advice. The circumstances of each case differ and legal advice specific to the individual case should always be sought.
