Reclaiming Economic Legacy: One Legal Strategy for a 2022 Fifa World Cup USA

• Author: Jeff Todd - R. Todd Jewell
• Position: Assistant Professor of Business Law, Department of Finance & Economics, Texas State University. J.D. (University of Texas School of Law); Ph.D. (Texas A&M University); M.A., B.A. (University of South Alabama).
• Pages: 245-302

RECLAIMING ECONOMIC LEGACY: ONE LEGAL

STRATEGY FOR A 2022 FIFA WORLD CUP USA

JEFF TODD* & R. TODD JEWELL**

I. INTRODUCTION

The U.S. Department of Justice recently indicted several top officials of

the Fédération Internationale de Football Association (FIFA) for

racketeering, money laundering, and wire fraud.1 The U.S. Federal Bureau

of Investigation (FBI) and the Swiss Attorney General continue to

investigate corruption in the bidding process for the 2018 and 2022 FIFA

World Cups.2 The 2018 World Cup was awarded to Russia, and the 2022

World Cup was awarded to Qatar.3 The indictments and investigations have

increased the possibility of uncovering hard evidence of corruption,

intensifying speculation that FIFA will strip the 2022 World Cup from Qatar

Copyright © 2016, Jeff Todd & R. Todd Jewell.

* Assistant Professor of Business Law, Department o f Finance & Economics, Texas State

University. J.D. (University of Texas School of Law); Ph.D. (Texas A&M University); M.A.,

B.A. (University of South Alabama).

** Professor of Economics and Department Chair, Department of Finance & Economics,

Texas State University. M.A., Ph.D. (University of California-Santa Barbara); B.A.

(Pepperdine University).

1 Press Release, U.S. Dep’t of Just. Off. of Pub. Aff., Nine FIFA Officials and Five

Corporate Executives Indicted for Racketeering Conspiracy and Corruption (May 27, 2015),

http://www.justice.gov/opa/pr/nine-fifa-officials-and-five-corporate-executives-indicted-

racketeering-conspiracy-and [hereinafter DOJ Press Release]; Press Release, U.S. Dep’t of

Just. Off. of Pub. Aff., Sixteen Additional FIFA Officials Indicted for Racketeering

Conspiracy and Corruption (Dec. 3, 2015), http://www.justice.gov/opa/pr/sixteen-additional-

fifa-officials-indicted-racketeering-conspiracy-and-corruption.

2 See Owen Gibson, Swiss Investigating 53 Cases of Possible Money Laundering at FIFA,

GUARDIAN (June 17, 2015), http://www.theguardian.com/football/2015/jun/17/fifa-

investigation-53-cases-money-laundering-swiss-attorney-general; Mark Hosenball, FBI

Probe Includes 2018, 2022 World Cup Host Awards: U.S. Official, REUTERS (June 3, 2015,

2:38 PM), http://www.reuters.com/article/us-soccer-fifa-fbi-idUSKBN0OJ26X20150603;

Euan McKirdy, Swiss FIFA Corruption Allegations Grow, Cast Hosting of World Cups

Further into Doubt, CNN (July 13, 2015), http://edition.cnn.com/2015/07/13/football/swiss-

fifa-probe-widens.

3 See Scott Davis, FIFA May Not Be Able to Change the Hosts of the 2018 and 2022

World Cups Even if They Want To, BUS. INSIDER (June 10, 2015), http://www.business insider

.com/fifa-russia-qatar-world-cups-2015-6.

246 CAPITAL UNIVERSITY LAW REVIEW [44:245

and the host Qatar Football Association (QFA) and award it instead to the

second-place bidder, the United States Soccer Federation (USSF).4 FIFA,

however, explicitly rejected this possibility when, in response to Compliance

Committee Chief Domenico Scala’s announcement that “the awarding could

be void” if the investigations resulted in evidence of “bought votes,” FIFA

proclaimed that it had “no legal grounds to take away the hosting of the FIFA

World Cup.”5

That claim is true to an extent; FIFA’s regulations and contracts with

national associations mandate resolution of disputes through FIFA’s own

internal mechanisms and substantive rules, neither of which provide the

basis to rescind the award to the QFA.6 The World Cup hosting rights and

responsibilities are contractual, however, so FIFA could award the World

Cup to another bidder or call a re-bid, and no tribunal would enforce the

FIFA–QFA agreements because contracts procured through bribery are void

pursuant to transnational public policy.7 The problem is that unilaterally

voiding any contract means that the QFA will sue, subjecting FIFA to

proceedings before the Court of Arbitration for Sport (CAS) and requiring

FIFA to prove bribery attributable to the QFA by clear and convincing

evidence.8 FIFA does not want to take on the expense of litigation and the

risk of losing.9

4 See Davis, supra note 3; Dan Murphy, FIFA Scandal: Could Host Qatar Forfeit the

2022 World Cup (+Video), CHRISTIAN SCI. MONITOR (May 29, 2015),

http://www.csmonitor.com/layout/set/print/World/Security-Watch/Backchannels/2015/

0528/FIFA-scandal-Could-host-Qatar-forfeit-the-2022-World-Cup-video; James Reevell,

Could FIFA Really Take the World Cup from Russia or Qatar?, BBC NEWS (June 8, 2015),

http://www.bbc.com/news/world-europe-33044898.

5 Mark Morgenstein, FIFA: No Grounds to Strip Russia or Qatar of World Cup, CNN

(June 9, 2015), http://edition.cnn.com/2015/06/08/football/fifa-scandal.

6 See infra Part III.A.

7 See infra Part II.A (explaining the hosting and organizing agreements between FIFA

and the host-nation’s association); World Duty Free Co., Ltd. v. Republic of Kenya, ICSID

Award, Case No. ARB/00/7 (Oct. 4, 2006) (writing that “bribery is contrary to the

international public policy of most, if not all, States or, to use another formula, to

transnational public policy” so that “claims based . . . on contracts obtained by corruption

cannot be upheld by this Arbitral Tribunal”).

8 See infra Part III.A–B (describing FIFA’s internal dispute mechanisms, including

recourse to the CAS for claims based o n commercial interests); Reevell, supra note 4 (“The

Qataris are bullish and will fight any move to take the tournament away from them with every

legal resource at their disposal.”).

9 See, e.g., Hosenball, supra note 2 (citing former FIFA ethics chief stating that FIFA

would have to pay compensation to Qatar if FIFA redid the bids).

2016] RECLAIMING ECONOMIC LEGACY 247

If there is to be a World Cup USA in 2022, then the USSF must attack

the QFA’s award, both to give FIFA legal cover and to force FIFA to act. In

the United States, the party who loses a bid on a transnational contract

because of the unlawful practices of the winning bidder can pursue monetary

and equitable remedies through a common law claim of tortious interference

with prospective economic advantage and through a claim under state unfair

competition statutes.10 These causes of action have analogues in civil law

countries, such as Article 4a of the Swiss Federal Act on Unfair Competition

(FAUC), which makes unlawful corrupt acts that harm economic interests.11

Because FIFA rules already mandate the choice of Swiss law, the USSF

could initiate arbitration to enjoin the QFA from performing its contractual

hosting obligations, thus removing the impediment for FIFA to find another

host.12

The common law “economic advantage” and Swiss requirement for

“damnification with an economic interest”13 highlight an important issue:

whether the USSF has a measurable economic interest in hosting the World

Cup necessary to provide the basis for injunctive relief. In most

transnational contracts for services, the economic injury is clear: the plaintiff

loses profits it could have made had it won the contract.14 The contracts

10 See infra Part III.B.1.

11 Bundesgesetz gegen den Unlauteren Wettbewerb [UWG] [Unfair Competition Act]

Dec. 19, 1986, SR 241, art. 4(a) (Switz.), superseded by Bundesgesetz gegen den Unlauteren

Wettbewerb (status as of July 1, 2012) [UWG] [Unfair Competition Act] Dec. 19, 1986, SR

241, art. 4a (Switz.). An unofficial English translation of the original 1986 Act is available

at the website of the World Intellectual Property Organization (WIPO), from which this

Article draws its quotations to the original and current Act. See Federal Act on Unfair

Competition of December 19, 1986, WIPO, http://www.wipo.int/wipolex/en/text.jsp?

file_id=125647 (last visited Jan. 29, 2016) [hereinafter FAUC 1986]. Moreover, the law was

amended in 2012. Federal Act on Unfair Competition of December 19, 1986 (Status as of

July 1, 2012), WIPO, http://www.wipo.int/wipolex/en/details.jsp?id=11896 (last visited Jan.

29, 2016) [hereinafter FAUC 2012]. Although no English translation is available of the most

current version of the law, a German version is available. See id. The authors refer to this

German version and translate accordingly. See infra Part III.B.1 (explaining the private anti-

corruption provisions of the FAUC and comparing those to similar U.S. laws).

12 See infra Part III.B.2.

13 Michael Ritscher & Stefan J. Schröter, Country Reports: Switzerland, in

INTERNATIONAL HANDBOOK ON UNFAI R COMPETITION 547, 557 (Frauke Henning-Bodewig

ed. 2013).

14 See, e.g., Korea Supply Co. v. Lockheed Martin Corp., 63 P.3d 937, 941–43 (Cal. 2003)

(seeking disgorgement of profits of $30 million that the plaintiff expected to make from