Sports Law Blog
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Monday, September 18, 2006
New Developments in Russia's Battle with the NHL
A month ago, I posted a story on Russian hockey phenom Evgeni Malkin, who bolted from his Russian professional hockey league team, the Metallurg Magnitogorsk. At that time, it was widely-believed that Malkin, who was already under contract for this season with the Metallurg, would quickly sign a multi-million dollar contract with the Pittsburgh Penguins, who drafted Malkin with the No. 2 overall pick in the 2004 draft. Well, since my post last month, Malkin signed a contract with the Penguins worth up to $3.8 million. And last Saturday, Jason Cato and Karen Price of the Pittsburgh Tribune-Review reported that a Russian arbitration tribunal issued a court order on Friday prohibiting Malkin "from performing for any other hockey club in the Russian Federation or in any other country." ("Arbitration committee rules against Malkin")
Malkin's agent, J.P. Barry of CAA Sports, says he's not surprised by the decision and that they will review the tribunal's ruling with their lawyers before making a decision about whether to appeal:
"It's a tribunal of the Russian Hockey Federation. Obviously, there's still no transfer agreement (between the NHL and Russia), and they're not going to agree with what's taken place to date. ... We'll have to see what their approach will be on this side of the ocean."I don't think it's any secret what Russia's "approach will be on this side of the ocean." Mettalurg will first probably try to enforce the tribunal's order here in the United States pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. In January, the Moscow Dynamo tried to enforce a Russian arbitration award against Alexander Ovechkin of the Washington Nationals. The United States District Court for the District of Columbia held in favor of Ovechkin because the Russian team was trying to enforce an agreement to arbitrate based upon merely an "exchange of letters" that transpired subsequent to the expiration of Ovechkin's player contract with the Dynamo. Dynamo v. Ovechkin, 412 F.Supp.2d 24. That precedent will not help Malkin because Mettalurg has a signed player contract with Malkin.
According to Cato and Price, the NHL has told its clubs that they are permitted to sign Russian players who give at least two weeks' notice to their Russian teams, relying upon general Russian labor laws. But Alexander Berkovich, a U.S. lawyer retained by Mettalurg, says that contracts of professional athletes in Russia are governed by Russian Federal Sports Law No. 80-FZ, specifically Section 26, which states that athletes may only transfer to another team, either in Russia or abroad, "after the expiration of the term of the Sports Activities Contract and fulfillment of all obligations stipulated in such contract." This would seem like the right result, because as I noted in my post last month, if the law were otherwise, it would make all multi-year terms in Russian professional sports contracts superfluous.
The fact that there is no transfer agreement in place probably hurts Malkin's and the Penguins' position more than it helps them because it essentially means that the Russian Hockey Federation has not consented to the NHL signing its players who are under existing contract with Russian teams. If an NHL team signs a player to a contract with a term that overlaps with the term of a Russian contract, there is plenty of precedent that such conduct constitutes tortious interference with contractual relations, for example when the WFL was competing for players with the NFL and the ABA was competing for players with the NBA within the United States in the late 60's and early 70's. Should the NHL be treated differently under the law because the other league is located in another country?
Mettalurg is probably not the only Russian team willing to fight this one out. The Russian tribunal ruled on Sept. 9 that Andrei Taratukhin, a Calgary prospect, and Alexei Mikhonov, an Edmonton prospect, violated their contracts with the Lokomotiv Yaroslavl as well when they gave notice and left the team following Malkin's departure from Mettalurg. I predict settlement and the entering of a transfer agreement in the very near future.