Nothing is foolproof to a sufficiently talented fool.

Saturday, September 09, 2006

Two Week Loophole May Not Apply

Alexei Mikhnov, Edmonton Oilers

Some recent NHL signings of Russian players still under contract with their Russian teams-- using the "two weeks' notice" loophole in Russian Labor Law-- hit a legal snag last week when a Russian Hockey Federation arbitration committee applied Russian Federal Law (rather than Labor Law) in order to make a ruling that the players were still tied to their original contracts (see: Russian arbiter rules against Mikhnov, Taratukhin and Metallurg awaits arbiter's decision on Malkin).

Ruslan Salikhov of Russian Hockey Digest tries to sort out if the two-week loophole does actually exist, and if it can be applied to athletes under contract:

To try to get to the truth I started my own research. I literally spent hours and hours on the Internet looking for an answer, but all I ended up finding was just unsupported claims from different sides and sources: yes, there is a loophole in Russian law or no, there is not. Quite frankly, none of the sources were real specialists in Russian law.

Then I tried to find a case where a high-profile Russian professional player had broken an existing contract. Here is what I found:

Elena Baranova (female basketball player). After a year long process, Russian Court allowed Elena Baranova to break her contract with a Russian club. Elena had to dig deep, and reportedly used Russian Labor Code and assistance from the Russian Labor Ministry to get out of it. Baranova's case is relevant since she was in a position to play in WNBA, but was refused that right by FIBA until the contract obligations were resolved with her club.

Dmitry Sychev (Soccer player). Dmitry Sychev, when he tried to escape Spartak's contract, was disqualified by FIFA from playing soccer for 6 months-- and at the end, Spartak still received 6 million euros for his transfer. Sychev's case is somewhat irrelevent here, since in football all the transfers are regulated by FIFA, a powerful organization that rules the sport.

Ekaterina Gamova (Female volleyball player). Ekaterina Gamova went through a lengthy process to break her 12 year long contract with Uralochka. Interesting enough, she used the Labor Code but never tried the two week notice claim; instead, the contract was broken on the grounds that the maximum length of agreement by the Labour Code can be no longer than 5 years, which she had already served.

All of the above does not give a direct answer to whether the loophole actually exists or not, but it gives an idea that it is not that simple as some thought it would be.

Furthermore, the latest decision of the Russian Court, which ruled that both Yaroslavl players violated their contracts by signing with the NHL clubs, show that the Article 26 of the Russian Federal Sports Law takes priority when dealing with sports contracts. Labor Code states that it will take priority in a case, if there is a conflict between the Code and any Federal Laws. Frankly for the players, Article 26 does not contradict with the Labor Code; a player still can quit his job with the two weeks' notice, he is just not allowed to sign with any other club for the duration of the contract (per Sports Law). The contract is not broken off just by submitting the resignation notice.

It is obvious that the NHL has enough quality legal support, and they will defend their business as well as they can, but it seems to me that they did not do enough homework prior to signing these young talents. Sure, Dynamo lost their case against Ovechkin, but the Russian side never had any chance to begin with. This time it is so much different: players with the valid contracts, and Russian clubs with the deep enough pockets. Somehow this may end up changing the relationship between NHL and Europe for years to come, never mind the fact that it builds an exciting drama.

For more background on some of the players that have made the move (in either direction) between Russia and the NHL this off-season-- including Maxim Kondratiev, Denis Grebeshkov, and Alexander Semin, among others-- check out Russian NHL prospect movements, just posted today on Hockey's Future and written by Evgeny Belashchenko of Russian Prospects.


Blogger Chris said...

Not to be a bit glib about the situation, but so a Russian court ruled against some NHL prospects for breaking their contracts and going to the NHL - who cares? Given that there is no standing agreement the NHL and the Russian federation that would force the NHL to uphold the russian contracts rulings in a Russian court have exactly what effect upon the NHL?

Canada and the United States happen to far outside the jurisdiction of a Russian court and as they don't operate in Russia there aren't any assets for the courts to assess damages against. Seems like a moral victory for the Russian clubs more than anything substantial.

9/11/06, 7:04 AM

Blogger Brushback said...

I think you're right in saying that the Russian arbitration ruling, by lacking any real authority, probably won't add up to much.

The NHL and the individual players may have to play ball and settle this through the proper legal channels, though, if they don't want this to affect any future relationship.

It's like I read somewhere else last week-- if I got a speeding ticket in Montana I could probably just ignore it with no problems, as long as I never planned on driving through Montana again.

9/11/06, 4:30 PM

Blogger Chris said...

Technically no Brushback, if Montana was hell bent on making you pay your speeding ticket they could get a judgment against you and get it enforced in some jurisdictions because their are agreements regarding monetary judgements.

On the other hand, there really is no effect that a Russian court can have in declaring players ineligable to play for a year because of a Russian contract. Technically, the Russian clubs could sue Miknov or Malkin for breach of contract and claim damages and perhaps get some revenge that way. But the judgement really has no effect.

As for it compelling the NHL to settle with the RSL - why? Considering Russia is now a free country if they don't want to take a reasonable transfer fee, there really isn't anything preventing their players from simply picking up and leaving the country to go to the NHL. For some of the marginal prospects this is likely a gamble, but the high end talent stands to lose nothing.

9/12/06, 5:30 PM

Anonymous Anonymous said...

Actually, there is a different between a foreign arbitration award and a speeding ticket in Montana. Under the New York Convention, a treaty signed by Canada, USA and Russia, any "valid" arbitration award is enforceable in each other foreign country as if it were an award rendered by that state's courts.

9/29/06, 12:02 AM

Blogger Brushback said...

I'm aware of that treaty, but it still isn't always enforced in American courts (witness the case involving Ovechkin and Dynamo last year).

9/29/06, 12:33 PM


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