Football Governance Bill [HL]

Lord Moynihan Excerpts

Report stage
Tuesday 11th March 2025 Lords Chamber

Moved by

[Lord Moynihan]

16: Clause 7, page 5, line 34, at end insert—
“(f) its duties under section (Protection against trade disputes).”

[Lord Moynihan (Con)]

My Lords, I shall address Amendments 16 and 26, standing in my name on the Marshalled List. In moving this amendment, let me set out a number of legal issues that have been raised outside this House. To set them in context, what we are talking about tonight is the importance of the Premier League. It is watched by 1.9 billion people across 189 countries. It is the most successful domestic league in the world. Its financial support flows down through the football pyramid. It supports £8 billion in gross value added to the economy. It contributes more than £4 billion annually to the Exchequer and supports more than 90,000 jobs. The Championship, which it strongly supports, is the sixth most successful league in Europe. The issues which are central to this amendment reflect the importance of the Premier League, which generates more revenue internationally than domestically. It has attracted substantial foreign investment over recent years and operates within a complex international regulatory framework governed by UEFA, FIFA and numerous international trade and investment arrangements to which the UK is a party—though the FA will no longer play a part.

The establishment of the IFR introduces unique risks of potential legal dispute with international investors and potential complications regarding the UK’s compliance with international obligations. Two significant issues arise. The first is the impact on foreign investors: many Premier League clubs have significant foreign investment, relying on regulatory stability, property rights protections and non-discriminatory treatment. The second is trade agreement compliance: the UK has international obligations, including investment protections within trade agreements and bilateral investment treaties requiring fair and equitable treatment, transparency and non-discrimination towards foreign investors. Non-compliance could trigger diplomatic repercussions and costly arbitration claims.

The key legal risks which exist, are, I believe, threefold. The first, which we will come to discuss on a future occasion, arises from the assiduous work of the noble Lord, Lord Birt. The mechanism of the backstop as it is currently structured—and I will not go into it this evening except in the context of my amendment, to look at its legal implications—allows the regulator to impose financial redistribution without clear or predefined limits, effectively giving it the power to divert private commercial revenues arbitrarily. Such intervention poses a significant risk of constituting what lawyers call indirect expropriation, where regulatory action substantially diminishes the economic value of investments without fair compensation. Foreign investors protected by bilateral investment treaties have reasonable expectations of regulatory stability and fairness. An unlimited or unpredictable redistribution power would likely trigger claims under international investment treaties, arguing violation of their rights to fair and equitable treatment and protection from uncompensated expropriation.

Secondly, as we have discussed earlier this evening, there are risks from new ownership rules retrospectively applied. The Bill proposes potentially retrospective and uncertain changes to the owners’ and directors’ test. These new, undefined ownership criteria could retrospectively affect existing owners, potentially forcing divestment of clubs by foreign investors based on criteria not in place at the time of investment. Such retrospective application could breach fundamental legal principles of fairness, stability and investor protection. It could be interpreted as discriminatory and arbitrary treatment under international investment law, leading to significant litigation risk and investor state arbitration claims, damaging the UK’s international credibility as a reliable investment destination.

Thirdly, there are the risks of discrimination. Linked to the points I have just made, regulatory actions perceived as disproportionately targeting foreign-owned clubs, particularly through retrospective regulatory criteria, risk breaching international obligations of non-discrimination between national treatment and most favoured nation treatment. Investors could legitimately claim discriminatory treatment, triggering significant diplomatic and legal disputes.

If there is validity in law to these concerns, my amendment is carefully designed to seek to mitigate them. It explicitly requires the football regulator to comply fully with the UK’s international trade and investment obligations, thereby avoiding unnecessary litigation or trade disputes. It mandates non-discriminatory and proportionate regulatory interventions, ensuring predictability and stability for international investors. Thirdly, in my second amendment before your Lordships this evening, early consultation between the football regulator, HM Treasury and the Department for Business and Trade to proactively manage compliance with international obligations will avoid regulatory paralysis.

Embedding these protective measures in this Bill, which I see as being as helpful as possible to the Government on this front, clarifies the regulatory framework up front. It pre-empts costly disputes and ensures that the regulator aligns clearly with the UK’s international economic and diplomatic interests from the outset. It is, therefore, a helpful amendment. It is intended to be pragmatic and is necessary for addressing significant international and domestic risks comprehensively. It respects property rights, ensures regulatory proportionality and maintains international investor confidence, which is critical in the Premier League to ensure growth. It thus safeguards the UK’s attractiveness and reputation as the premier destination for global football capital. I beg to move.

[Lord Markham (Con)]

My Lords, I thank my noble friend Lord Moynihan for his vital and very sensible amendments in this group. As he has touched on, there could be some serious unintended consequences unless we introduce his amendments to the Bill. The Premier League, as we have said many times, is the most successful football league in the world. One of the major reasons for that is its openness to global investment and its attractiveness for that. Foreign investors have played a transformational role in modernising clubs, developing world-class infrastructure and cementing English football to an elite global brand. They have helped to create the most competitive and commercially successful football league in the world.

Yet without my noble friend’s amendment, the Government will be introducing a regulatory framework that could unfairly target foreign-owned clubs, placing them at a disadvantage compared with those owned by UK investors. That is not fair, not necessary and not in the best interests of English football. I am sure that this is not intended by the regulator, but it could be one of those unintended consequences as to where some of those decisions might fall. The amendment asking for Treasury advice, for want of a better word, ensures that the IFR is not sleepwalking into some of these difficulties, which I hope will be seen as very sensible and helpful in all of this. As my noble friend mentioned, most important is that any investor has a clear set of rules that they can rely on, and which are guaranteed and completely transparent.

--- Later in debate ---

[Baroness Twycross (Lab)]

I thank the noble Lord, Lord Moynihan, for his amendments. There is much on which we agree, but, unfortunately, I cannot agree that these amendments in this group are required. Good investment, which comes in many forms, has helped make English football the global success it is today, and this Government are absolutely committed to continuing that. Of course, this regulator will not discriminate against foreign investors or act unfairly against anyone else—nothing in this Bill allows it to do so. This amendment is not needed to prevent that. Not only is it unnecessary but, as noble Lords will appreciate, it would be highly unusual to bring a broad range of treaty obligations directly into our domestic law in such a sweeping way.

This Government take our international obligations very seriously and the Bill complies with our treaty commitments. But, if foreign investors have concerns about the regulator’s decisions, there are mechanisms within our treaties to allow them to raise these concerns at the international level and, if necessary, to bring disputes. That is the appropriate forum, not our domestic courts. Let me be clear once more: we are confident that the Bill complies with our international obligations. Nothing in it requires or even allows the regulator to make discriminatory or unfair decisions.

Finally, I was slightly surprised to see the last part of this amendment tabled by the noble Lord, Lord Moynihan. We have carefully ensured the regulator’s independence from government and ensured that UEFA is content with the Bill as drafted, so I was not clear why the noble Lord wants to require the regulator to consult the Treasury and DBT on a wide range of occasions and risk undermining the regulator’s independence. This would be concerning, especially given how much time the noble Lord has spent discussing UEFA and FIFA throughout the passage of the Bill through your Lordships’ House, and I am sure the risk would be highly concerning for many others in this House. That is why I urge the noble Lord to withdraw his amendment.

[Lord Moynihan (Con)]

I am grateful to my noble friend from the Front Bench and the Minister for their contributions, and for the intervention, although I regret that I was not in a position to answer it, because I had already attempted to set the scene before the House managed to resume in full.

My amendment was not about UEFA. The purpose of the amendments this evening was about explicit statutory acknowledgement to reinforce clarity, reduce the legal uncertainties and prevent inadvertent breaches, demonstrating transparency, foresight and collaboration between the relevant government departments. It was to simplify what I anticipate will be, potentially, a legal minefield and to make sure that, if we did that in the legislation, we would avoid many of the issues that were going to, potentially, follow as a result of this legislation.

In parentheses, one of the problems that will follow comes from the intervention from the noble Lord: namely, UEFA is now out of this loop. UEFA is only a stepping stone: the running of football in the United Kingdom is through its member, the FA, and the FA, as we have debated and concluded within the House this evening, has no role within the financial regulation of football in this country. That is the first time that has happened anywhere in Europe. In Spain, it is fully at the heart of the financial regulation of that country, and indeed was party to working with government in order to follow a model that the Premier League has instituted here in the United Kingdom.

It is a dangerous path to move away from the autonomy of world sport. I will not go into this again, but I am trying to do a service to the noble Lord who has intervened this evening, because I know he has been an assiduous attender in Committee. It is a dangerous path: if you legislate to run sport and have financial management of sport and you ignore in practice the role of the governing body, which is the FA, you set up potential legal complexities that would otherwise not arise. That is why I have put forward these proposals: simply to give additional protection to those legal challenges that could arise as a result of this legislation and to move the amendments before the House.