Bombay High Court rules against BCCI in IPL media rights issue

“Due to the third wave of the COVID-19 pandemic and other labor needs, there has been a delay in the sentencing,” said Judge BP Colabawala, before overturning and overturning an arbitral award upholding the media rights suspension by the Board of Control for Cricket in India (BCCI) to World Sport Group (India) Pvt. ltd in relation to the Indian Premier League (IPL) for all territories except the Indian subcontinent.

Judge Colabawala had heard the 2021 issue at length and reserved it on March 18, 2021. The entire issue related to a tender by the BCCI in 2007 for a 10-year period from 2008 to 2017 in relation to media rights for IPL. WSGI was the successful bidder, winning IPL’s global media rights for approximately $1 billion.

Since WSGI was not a broadcaster but only a media rights dealer, it entered into pre-negotiations with MSM, which had a broadcasting network in India.

During these negotiations, MSM, for its own commercial reasons, wanted to enter into a direct media rights licensing deal rather than a sublicensing deal with WSGI [MRLA] with the BCCI’s rights to India until 2012 for $275.40 million. Another MRLA was executed between BCCI and WSGI for India rights for a total of US$550 million and Rest of the World rights for US$92 million by 2017.

However, after the first IPL was a resounding success, BCCI terminated MRLA with MSM on March 14, 2009, following which the Indian rights were reassigned from IPL to BCCI. The Board wished to re-auction/resell the Indian rights to the IPL for the entire period 2009-2017 for a higher license fee.

Against this background, BCCI initially entered into a mutually agreed termination agreement (DMAT) with WSGI in 2009. This agreement ended the composite MRLAs entered into by BCCI with WSGI. According to WSGI, it has agreed to a mutual termination of the first MRLA only to allow BCCI to receive an increased royalty on the Indian rights for the 2009-2017 period, on condition that the Indian rights are licensed for the 2009-2017 period would to WSGI or its nominee – WSGM, thereby enabling WSGI to realize a premium for waiving its India rights for the period 2013-2017. The other stipulated condition was that BCCI would restore WSGI’s RoW rights for the 2009-2017 period by entering into a new MRLA with WSGI on the same terms as the first BCCI-WSGI MRLA.

BCCI later claimed that all of the 2009 agreements, including the DMAT, were part of a fraudulent federation transaction that gave it the right to terminate the second MRLA with WSGI. BCCI claimed that all arrangements were made solely for the purpose of diverting funds to WSGM, a sister company of WSGI, showing that both companies were complicit. The fraud alleged by BCCI was that the monies under the Relief Deed were actually owed to BCCI, and because WSGI entities had committed fraud, BCCI was entitled to overturn the MRLA for RoW rights.

The cancellation was challenged by WSGI in arbitration. Of the 3 members of the arbitral tribunal, 2 members upheld BCCI’s decision to terminate the agreement.

This majority decision was challenged by WSGI in the High Court. WSGI claimed that BCCI benefited as a result of the agreements concluded in 2009 in the amount of approximately 1791 million euros. Failure to take into account this tremendous advantage accrued to BCCI and the fact that BCCI retained it was a fundamental error of the arbitral tribunal, according to the WSGI.

Judge BP Colabawalla accepted the submission and held that the benefit BCCI received under the agreements should have been taken into account. “It is a well-worn law that a party cannot be allowed to approve and disapprove at the same time. A party cannot be allowed to blow hot and cold, fast and loose, or cheap and reprehensible. If a party knowingly accepts the benefits of a contract, it will be stopped by denying the validity and binding effect of that contract on it. As soon as a party makes use of an instrument, it must accept everything that is mentioned in the document in question,” the court stressed.

Judge Colabawalla found that failure to address this fundamental issue at the heart of the matter rendered the award voidable as it clearly suffers from manifest illegality and can therefore be annulled on that ground alone.

Judge Colabawala also noted that the majority decision did not explain why BCCI was entitled to the finder’s fee. He also concluded, after reading the Minority Prize, that large chunks of important evidence were omitted from the Majority Prize. “Such an award, with the utmost respect to the arbitrators who passed the majority award, cannot stand,” Judge Colabawala said.

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