LitArb
The Arbitration Turn in the Activision Blizzard Call of Duty League Monopoly Dispute
The legal confrontation involving Hector “H3CZ” Rodriguez and Seth “Scump” Abner against Activision Blizzard over claims related to the Call of Duty League (CDL) has transitioned from a public courtroom battle to a private arbitration process. This case brings to light the intricacies of resolving disputes in the esports industry, emphasizing the impact of contractual arbitration clauses on the legal strategies of parties involved.

Table of Contents
The Shift to Arbitration: A New Path for Resolution
In a notable pivot from the courtroom to the arbitration table, the lawsuit filed by H3CZ and Scump seeking substantial damages from Activision Blizzard has been dismissed, with the parties agreeing to arbitration and thereby ending the litigation. This move underscores a reevaluation of legal tactics, likely influenced by the arbitration clause embedded within the CDL agreements, demonstrating the power such clauses hold in determining the forum and nature of dispute resolution.
The Essence of Arbitration
Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court.
Its principal characteristics are:
Arbitration is consensual
Arbitration can only take place if both parties have agreed to it. In the case of future disputes arising under a contract, the parties insert an arbitration clause in the relevant contract. An existing dispute can be referred to arbitration by means of a submission agreement between the parties. In contrast to mediation, a party cannot unilaterally withdraw from arbitration.
The parties choose the arbitrator(s)
Under e.g. the JAMS Comprehensive Arbitration Rules, the parties can select a sole arbitrator or a tribunal of three arbitrators together. If they choose to have a three-member arbitral tribunal, each party appoints one of the arbitrators; those two persons then agree on the presiding arbitrator. Alternatively, potential arbitrators with relevant expertise can be suggested or directly appointed by the arbitral institutions. For example, the WIPO maintains an extensive roster of arbitrators ranging from seasoned dispute-resolution generalists to highly specialized practitioners and experts covering the entire legal and technical spectrum of intellectual property.
Arbitration is neutral
In addition to their selection of neutrals of appropriate nationality, parties are able to choose such important elements as the applicable law, language and venue of the arbitration. This allows them to ensure that no party enjoys a home court advantage.
Arbitration is a confidential procedure
The chosen arbitration rules usually ensure the secrecy of the arbitration’s existence, any information revealed during the process, and the final decision. In specific scenarios, the JAMS Rules permit a party to limit the exposure of trade secrets or confidential data shared with the arbitration panel or a confidentiality consultant to the panel.
The decision of the arbitral tribunal is final and easy to enforce
According to the WIPO Rules, the involved parties commit to executing the panel’s verdict promptly. Global judgments are recognized and enforced by domestic courts under the New York Convention, which only allows for their annulment in exceptionally rare situations. Over 165 countries are signatories to this Convention.
The Arbitration Clause in Depth
The arbitration clause at the heart of this dispute lays out a detailed process for resolving disputes, beginning with an attempt at informal resolution through negotiation and consultation. It states:
. BINDING ARBITRATION AND CLASS ACTION WAIVER:
READ THIS SECTION CAREFULLY. IT MAY SIGNIFICANTLY AFFECT YOUR LEGAL RIGHTS, INCLUDING YOUR RIGHT TO FILE A LAWSUIT IN COURT.
These BINDING ARBITRATION AND CLASS ACTION WAIVER provisions apply to you if you are domiciled in and/or use the CDL Service in the United States. These provisions may also apply to you if you are domiciled in and/or use the CDL Service from outside the United States. See JURISDICTION AND APPLICABLE LAW below for details.
Initial Dispute Resolution: CDL’s Customer Support department is available to address any concerns you may have regarding the CDL Service. Most concerns are quickly resolved in this manner to our customers’ satisfaction. The parties shall use their best efforts to settle any dispute, claim, question, or disagreement directly through consultation and good faith negotiations which shall be a precondition to either party initiating a lawsuit or arbitration.
Binding Arbitration: If the parties do not reach an agreed upon solution within a period of 30 days from the time informal dispute resolution is pursued pursuant to the paragraph above, then either party may initiate binding arbitration as the sole means to formally resolve claims, subject to the terms set forth below. Specifically, all claims arising out of or relating to this Agreement (including its interpretation, formation, performance and breach), the parties’ relationship with each other and/or your use of the CDL Service shall be finally settled by binding arbitration administered by JAMS in accordance with the provisions of its Comprehensive Arbitration Rules or Streamlined Arbitrations Rules, as appropriate, excluding any rules or procedures governing or permitting class actions. This arbitration provision is made pursuant to a transaction involving interstate commerce, and the Federal Arbitration Act (the “FAA“) shall apply to the interpretation, applicability, enforceability and formation of this Agreement notwithstanding any other choice of law provision contained in this Agreement. The arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve all disputes arising out of or relating to the interpretation, applicability, enforceability, or formation of this Agreement, including without limitation any claim that all or any part of this Agreement is void or voidable, or whether a claim is subject to arbitration. The arbitrator shall be empowered to grant whatever relief would be available in a court under law or in equity. The arbitrator’s award shall be binding on the parties and may be entered as a judgment in any court of competent jurisdiction.
The JAMS Rules governing the arbitration may be accessed at http://www.jamsadr.com/ or by calling JAMS at (800) 352-5267. Your arbitration fees and your share of arbitrator compensation shall be governed by the JAMS Comprehensive Arbitration Rules and, to the extent applicable, the Consumer Minimum Standards, including the then-current limit on arbitration filing fees. To the extent the filing fee for the arbitration exceeds the cost of filing a lawsuit, CDL will pay the additional cost. The parties understand that, absent this mandatory provision, they would have the right to sue in court and have a jury trial. They further understand that, in some instances, the costs of arbitration could exceed the costs of litigation and the right to discovery may be more limited in arbitration than in court.
Location: If you are a resident of the United States, arbitration will take place at any reasonable location within the United States convenient for you. For residents outside the United States, arbitration shall be initiated in Los Angeles County, California, and you and CDL agree to submit to the personal jurisdiction of any federal or state court in Los Angeles County, California, in order to compel arbitration, to stay proceedings pending arbitration, or to confirm, modify, vacate, or enter judgment on the award entered by the arbitrator.
Class Action Waiver: The parties further agree that any arbitration shall be conducted in their individual capacities only and not as a class action or other representative action, and the parties expressly waive their right to file a class action or seek relief on a class basis. YOU AND CDL AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN YOUR OR ITS INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. If any court or arbitrator determines that the class action waiver set forth in this paragraph is void or unenforceable for any reason or that an arbitration can proceed on a class basis, then the arbitration provision set forth above shall be deemed null and void in its entirety and the parties shall be deemed to have not agreed to arbitrate disputes.
Exception – Litigation of Intellectual Property and Small Claims Court Claims: Notwithstanding the parties’ decision to resolve all disputes through arbitration, either party may bring an action in state or federal court that only asserts claims for patent infringement or invalidity, copyright infringement, moral rights violations, trademark infringement, and/or trade secret misappropriation, but not, for clarity, claims related to the license granted to you for the CDL Service under this Agreement. Either party may also seek relief in a small claims court for disputes or claims within the scope of that court’s jurisdiction.
30 Day Right to Opt Out: You have the right to opt-out and not be bound by the arbitration and class action waiver provisions set forth in the “Binding Arbitration,” “Location,” and “Class Action Waiver” paragraphs above by sending written notice of your decision to opt-out to the following address: The Call of Duty League, LLC, Attention: Legal, 3100 Ocean Park Blvd., Santa Monica, CA 90405. The notice must be sent within 30 days of purchasing the CDL Service (or if no purchase was made, then within 30 days of the date on which you first access or use the CDL Service and agree to these terms); otherwise you shall be bound to arbitrate disputes in accordance with the terms of those paragraphs. If you opt-out of these arbitration provisions, CDL also will not be bound by them.
Changes to this Section: CDL will provide 60-days’ notice of any changes to this Section. Changes will become effective on the 60th day and will apply prospectively only to any claims arising after the 60th day.”
The Arbitration Clause: A Closer Look
The arbitration clause involved in this lawsuit outlines a detailed process beginning with an initial attempt at dispute resolution through negotiation. Failing this, the parties are bound to engage in binding arbitration, governed by the JAMS Comprehensive Arbitration Rules. This clause clearly specifies arbitration as the sole means for formal dispute resolution, highlighting its mandatory nature and the intention to avoid litigation costs.
Additionally, the clause contains a class action waiver, significantly limiting the ability to pursue collective legal action. This aspect of the arbitration agreement underscores the individual nature of arbitration and the parties’ agreement to resolve disputes outside of a class or representative action.
Implications of the Legal Strategy Shift
The movement towards arbitration after initiating a lawsuit indicates a reconsideration of legal tactics, possibly recognizing the enforceability of the arbitration clause or aiming for a resolution that balances privacy, speed, and cost-effectiveness. This strategic shift also reflects the broader legal landscape in esports, where arbitration clauses are increasingly common, guiding how disputes are resolved within the industry.
The Role of Arbitration in Esports Disputes
The case of H3CZ and Scump versus Activision Blizzard serves as great example of the legal intricacies and strategic decisions underlying disputes in the esports arena, and the necessity to read the Terms & Conditions. The move from court to arbitration demonstrates that the Claimants might have chosen the wrong forum and also highlights the broader trend towards using arbitration to resolve disputes in the esports industry. As the sector continues to grow, understanding and navigating these legal frameworks will be crucial for stakeholders at all levels.
Case Information for Rodriguez v. Activision Blizzard Inc.
Court: U.S. District Court for the Central District of California
Case Number: Rodriguez v. Activision Blizzard Inc., No. 2:24-cv-01287
Filing Date: 15 February 2024
Counsel Information:
For Plaintiffs (Hector Rodriguez, Seth Abner, HECZ LLC):
- Firm: Dynamis LLP and Aaron Katz Law LLC
- Eric Rosen, Constantine P. Economides, Brianna K. Pierce
- Aaron M. Katz
- Locations: Not specified in the provided information
For Defendant (Activision Blizzard Inc.):
- Counsel information not provided in the available documentation.
Image source: Drift0r on Youtube
With material from WIPO
LitArb
Riot Games Introduces Arbitration Mechanism for EMEA Esports Disputes – What about Art. 101 and 102 TFEU?
Riot Games recently launched a new arbitration mechanism to address disputes within its EMEA esports ecosystem, including unpaid salaries, bonuses, prize money, and transfer disputes for League of Legends and VALORANT players and teams. The Dispute Resolution mechanism, created with Martens Rechtsanwälte, serves as an independent arbitration forum for financial and contractual issues, focusing on Tier 1 and Tier 2 teams in the EMEA region. According to Alberto Guerrero, Riot’s Head of Esports for EMEA, the initiative is intended to bring a “whole new level of professionalism, contractual stability, and integrity” to Riot’s esports ecosystem, aligning with structures seen in traditional sports organizations such as FIFA and FIBA.

Table of Contents
Introduction
Riot Games has launched a new arbitration mechanism for resolving disputes within the competitive ecosystems of League of Legends and VALORANT in the EMEA region. The system, developed with Martens Rechtsanwälte, is intended to address financial and contractual conflicts among players, teams, and coaches, promising a cost-effective, streamlined approach. Notably, while the mechanism is voluntary, it uses a closed list of arbitrators, and details of its rules have not been published yet—Esports Legal News (ELN) plans to inquire further and publish a detailed analysis once they are available.
Starting today, players, coaches and teams in Tier 1 and 2 Valorant/League of Legends can access the Dispute Resolution for Riot Games’ Esports in EMEA for a variety of issues they are experiencing, including those related to unpaid salaries, bonuses, prize money and transfer disputes.
However, the mechanism’s introduction raises important questions concerning its compatibility with EU competition law, particularly Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU). Analyzing this mechanism under the Court of Justice of the European Union’s (CJEU) findings in the recent ISU (International Skating Union) case helps us examine if Riot’s approach might restrict competition or abuse a dominant market position.
The arbitration framework introduced by Riot includes distinctive features meant to streamline resolution while ensuring cost-accessibility for participants:
- Closed Arbitrator Pool: Only 14 arbitrators, chosen for their expertise in sports law and arbitration, are eligible to preside over cases. Martens Rechtsanwälte will oversee the arbitration, with responsibility for selecting arbitrators and managing independence from Riot. As David Menz from Martens explained, “The arbitration body will be a completely separate body from Riot… [Martens will] handle both team vs. team disputes and team vs. player disputes.”
- Cost Structure and Financial Aid: The system imposes a handling fee ranging from EUR 500 to EUR 4,000, depending on the dispute’s value, as well as an arbitrator’s fee between EUR 1,000 and EUR 5,000, split equally between claimant and respondent. Recognizing financial constraints that may impact Tier 2 participants, Riot has set up a Legal Aid Fund to cover costs for those unable to afford arbitration. However, the fund’s size and eligibility criteria remain unclear, and Esports News UK has sought clarification from Riot on these specifics.
- Process and Equity-Based Decisions: The arbitration allows only one written submission per party, with no hearing, aiming to expedite proceedings. Decisions are rendered ex aequo et bono—“according to equity”—prioritizing fairness over strict legal interpretations. Menz highlighted this equity-based focus, explaining, “If the arbitrator finds that the strict enforcement of the contractual terms would lead to an unjust and unfair result, the arbitrator may apply general principles of equity and fairness to come to a better solution.”
Given these design choices, the arbitration mechanism presents several potential benefits but also opens the door to legal scrutiny, particularly with respect to EU competition laws governing market dominance and anti-competitive practices.
The ISU Case and Its Implications for Riot’s Arbitration System
The recent ISU v. Commission case (C-124/21 P), decidedby the CJEU, provides a crucial precedent for examining Riot’s arbitration approach. The ISU case involved the International Skating Union’s rules requiring prior authorization for non-ISU events and imposing eligibility restrictions on athletes who participated in unapproved competitions. The European Commission found ISU’s rules anti-competitive, concluding they effectively limited athletes’ choices and reinforced the ISU’s dominant position. The CJEU upheld this view, emphasizing that rules which restrict participation in alternative events could distort market competition under Article 101 TFEU.
Applying this precedent to Riot’s arbitration system, three key concerns arise:
- Article 101 TFEU: Potential Anti-Competitive Agreements: The ISU case underscored the impact of restrictive rules that prevent athletes from freely choosing between competitions. Riot’s arbitration mechanism, while nominally voluntary, might exert indirect pressure on stakeholders to use this system. Guerrero noted that Riot intends to standardize arbitration across the ecosystem, with a goal of integrating arbitration clauses in over 80% of employment contracts within a few years. Although Riot’s mechanism does not explicitly restrict access to other forums, such a goal could limit alternatives, particularly given Riot’s market influence and provision of financial aid for arbitration. A closed arbitrator pool could further reinforce the perception that Riot’s system is the default or preferred forum for resolving disputes, subtly limiting the choice of alternative venues.If Riot’s arbitration mechanism were to become a de facto standard, it might risk contravening Article 101 by limiting competition between dispute resolution systems.
- Article 102 TFEU: Dominance and Market Power: Article 102 TFEU prohibits the abuse of dominant positions. In the ISU case, the CJEU found that ISU’s eligibility restrictions hindered athletes’ freedom to compete, an abuse of ISU’s significant control over the skating market. Riot’s arbitration system could similarly raise concerns under Article 102, given Riot’s leading role in the esports market. The closed arbitrator pool, combined with financial incentives, might create a perception that Riot is using its influence to channel disputes through its preferred mechanism. While not a direct abuse, the limited choice in arbitrator selection may lead stakeholders to question the independence and fairness of outcomes. Thus, Riot’s control over both the arbitrator pool and the terms of financial support warrants scrutiny to ensure it does not disproportionately disadvantage those who prefer to use other arbitration or litigation avenues.
- Transparency Concerns and the Lack of Published Rules: A lack of transparency can exacerbate concerns about competitive fairness. The rules governing Riot’s arbitration mechanism have not yet been published, making it difficult for stakeholders to assess the system’s procedural safeguards and potential biases. The closed list of arbitrators, combined with unpublished procedural details, could contribute to skepticism regarding the system’s impartiality and reliability. Given Riot’s influence, full transparency about how disputes are handled and how arbitrators are selected is essential to mitigate competitive concerns and ensure trust in the system.
Financial and Procedural Concerns
The arbitration system’s variable cost structure is designed to make it accessible, especially to smaller teams or less financially resourced participants. However, reliance on Riot’s financial assistance could create an indirect economic pressure for stakeholders to use Riot’s system. While Riot’s financial aid may enhance accessibility, it could also lead participants to perceive this as a subtle form of encouragement, potentially reinforcing Riot’s influence in EMEA esports dispute resolution.
This indirect influence on stakeholders’ choices raises concerns that the system might subtly limit access to other dispute resolution venues. Moreover, the CJEU emphasized in ISU that any attempt to constrain freedom of choice or impose exclusivity indirectly could amount to a breach of Articles 101 and 102 TFEU. Riot’s arbitration mechanism, while not explicitly exclusive, could risk a similar interpretation if it is seen to influence participants toward its system rather than leaving them free to select from a competitive array of dispute resolution options.
Enforcement of Awards and the New York Convention
Enforcement of arbitration awards is a critical factor in any dispute resolution mechanism, particularly in international contexts. Riot’s arbitration awards could potentially be enforced under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The Convention, to which most EMEA countries are signatories, allows for cross-border enforcement of arbitral awards, provided they meet certain criteria, such as being issued in a recognized seat of arbitration.
However, it remains unclear if Riot’s mechanism allows parties to choose the seat of arbitration, which could affect the applicability and ease of enforcement under the New York Convention. Without clarity on the seat of arbitration, stakeholders may face challenges in enforcing awards, particularly if the seat is defaulted to a jurisdiction with complex enforcement barriers.
Horyna addressed concerns over enforceability within Riot’s ecosystem, explaining, “If [a party] does not pay… [the winning party] has two options. They can either go to ordinary court… or [request Riot to enforce it]. We can then apply sporting and financial sanctions on the party, if that’s a player, coach, or team.” This internal enforcement mechanism could help ensure compliance but does not replace the need for enforceability under broader legal frameworks like the New York Convention, especially for awards that might involve stakeholders outside Riot’s ecosystem.
The Broader Impact on the Esports Industry
Riot’s arbitration initiative introduces a significant level of professionalization in EMEA esports, with potential to create contractual stability and more efficient dispute resolution. As Whalen Rozelle, Riot’s Chief Operating Officer for Esports, stated, “This initiative will better serve our players, coaches, and teams across EMEA, providing them access to legal support should they need it.” Riot’s emphasis on arbitration in player contracts also reflects a push for long-term stability, as noted by Audrey Cech, Riot’s Global Esports Rules & Compliance representative: “We want to incentivize that when someone is signing a new contract, there is this new arbitration clause… This arbitration clause is a massive advantage, in my opinion, it’s really beneficial to teams.”
Despite these positive intentions, the system’s closed arbitrator pool, lack of published rules, and ambiguity over the seat of arbitration raise potential competitive and procedural concerns. Drawing on the CJEU’s ISU precedent, Riot must ensure that its arbitration mechanism does not inadvertently restrict stakeholders’ freedom to pursue alternative dispute forums. Transparent rules, a diversified arbitrator pool, and flexibility in choosing the seat of arbitration could address these concerns and align the initiative more closely with EU competition principles.
Conclusion: Riot’s Arbitration System and EU Competition Law Compliance
Riot’s arbitration mechanism presents a promising development in esports governance but also poses several competition law considerations. Drawing on the CJEU’s findings in the ISU case, a voluntary arbitration mechanism with a closed arbitrator pool and financial incentives could indirectly limit competitive freedom, especially if it discourages stakeholders from pursuing alternatives. As long as Riot maintains the non-exclusive nature of its system and takes steps to increase transparency—particularly by publishing its rules and expanding the arbitrator pool—it may align more closely with Articles 101 and 102 TFEU.
Esports Legal News will continue to monitor developments regarding the rules governing Riot’s arbitration system and will publish a detailed analysis once these rules become available. Meanwhile, Riot’s future modifications and oversight mechanisms will play a critical role in ensuring the arbitration system serves as a fair, impartial, and competitive model for esports dispute resolution.
Source: Esports Insider
Labor&Immigration
Moist Esports’ Legal Battle with U.S. Immigration over B1-Visas
The esports industry has recently been thrust into a legal spotlight due to Moist Esports’ initiation of a lawsuit against the U.S. Department of Immigration. This action follows a series of visa denials for the Australian contingent of their Apex Legends team, a pivotal challenge given the team’s qualifications and the implications of their participation in critical esports tournaments. This article offers an in-depth analysis of the legal and procedural aspects of the case, referring to foundational visa policies as discussed in our previous coverage on esports and U.S. immigration law.

Table of Contents
Case Background
Charles ‘MoistCr1TiKaL’ White Jr., the founder of Moist Esports, has publicized the organization’s struggles with obtaining U.S. visas for its players. Despite qualifying for a major tournament in Los Angeles, the team faced repeated visa rejections. The U.S. immigration authorities challenged the veracity of the team’s professional status and ranking, leading to initial visa applications being denied. Subsequently, the players were compelled to abandon their team visas and individually apply for B-1 business visitor visas instead of P-1 or O-1 visas, which are typically issued for attending conferences or consulting with business associates. The last-minute approval of these visas allowed the players minimal preparation time for the tournament.
Legal Foundations of the Dispute
The lawsuit is built on allegations of procedural mishaps and the potential misinterpretation of eligibility criteria under U.S. immigration laws concerning professional esports players. As detailed in “An Overview of Esports and United States Immigration Law,” the specific visa requirements and criteria for esports athletes are intricate and often subject to the discretionary powers of immigration officials. The denial of P-1A visas, intended for internationally recognized athletes, to Moist Esports players suggests a significant disconnect between the recognition of esports in legal versus operational realms of immigration policy.
Challenges in Legal Proceedings
The case unfolds under the shadow of sovereign immunity, which may limit the scope of recoverable damages against a government agency, as hinted by MoistCr1TiKaL’s commentary on constitutional constraints. The discretionary nature of visa issuance, particularly under the P-1A category, often leaves substantial room for subjective decision-making by immigration officers. This aspect makes legal challenges arduous and sets a high bar for proving any claims of improper handling or bias in visa processing.
Economic Impact and Organizational Disruption
The visa denials and subsequent legal battles have wrought considerable financial strain on Moist Esports. The inability to compete under the organization’s banner not only resulted in direct financial losses but also diminished potential sponsorship and earnings from the tournament. These disruptions underline the significant stakes that immigration decisions hold over esports organizations, which operate in a rapidly globalizing competitive field.
Concluding Observations
This lawsuit may serve as a critical juncture for the recognition and handling of esports professionals within U.S. immigration frameworks. It challenges the consistency of the application of immigration laws to esports athletes, a relatively new area where traditional sports and modern digital competitions intersect. Whether or not Moist Esports succeeds in its legal claims, the outcome will likely influence future policy considerations and the operational practices of immigration authorities dealing with similar cases.
Image source: VisaService.de
Labor&Immigration
Tribunal Judiciaire de Paris: Rethinking the Esports Employment Contract
The Paris Tribunal Judiciaire issued a landmark ruling on 27 March 2024, that has significant implications for the contractual relationships within esports. This decision, which reclassified an esports player’s service contract as an employment contract, marks a pivotal shift in how employment relationships are perceived and regulated in the rapidly growing esports sector. The ruling not only emphasizes the need for a clearer understanding of employment laws in new-age digital and entertainment industries but also potentially sets a precedent for future contractual disputes in esports across jurisdictions.

Table of Contents
Statement of Facts
The case, TJ Paris, ps ctx protection soc. 3, 27 mars 2024, n° 22/02668, involved an esports player who had entered into a contractual agreement with an American esports club to participate in Counter-Strike competitions from 2016 to 2017. The employment contract in question was titled a “self-employed worker contract,” under which the player was ostensibly hired as an independent contractor. This classification has significant legal and financial implications, primarily regarding tax and social security liabilities.
The French URSSAF Caisse Nationale, responsible for the collection of social security and family benefit contributions, challenged the contractual classification. URSSAF initiated a recovery action claiming that the income derived by the player under this contract should be subject to contributions as “non-commercial profits,” according to Article L131-6 of the French Social Security Act. The agency’s position was that the player’s engagement bore all the hallmarks of traditional employment rather than those of an independent contractor.
The player contested URSSAF’s assessment, arguing that despite the contractual designation as a self-employed worker, the actual terms and conditions of his engagement demonstrated a dependency and subordination typical of an employment relationship. This challenge led to judicial scrutiny of the nature of the contractual relationship between the player and the esports club.
Legal Framework and Tribunal’s Analysis of the Employment Contract
The tribunal’s analysis centered on distinguishing between self-employed status and employment based on the degree of subordination to the employer, as characterized by French labor law. Article L.8221-6-1 of the French Labour Code defines independent contractors as follows:
“is presumed to be an independent contractor, any individual whose working conditions are defined exclusively by himself or in a contract, in conjunction with his customer”.
The French Labour Code stipulates that individuals registered as self-employed service providers are generally assumed not to have an employment contract with their clients while carrying out their activities. Nevertheless, this assumption can be challenged. The same legal provision notes that an employment contract may still be recognized if the registered individual delivers services in circumstances that create a continuous subordinate relationship with the client.
The judges meticulously reviewed the contractual obligations and daily activities imposed by the esports club on the player, which included:
- Mandatory participation in specific competitions as directed by the club.
- A set schedule for training and streaming that the player was required to follow.
- Requirements to wear the club’s uniform during official events and partake in promotional activities.
These conditions, alongside regular monthly payments and the provision of accommodations and travel arrangements by the club, clearly illustrated an employer-employee relationship, as the club exerted substantial control over the player’s professional activities.
Analysis of the Tribunal’s Ruling
The judges’ assessment focused on various aspects of the player’s contract and daily work engagements that pointed toward an employment relationship. The following elements were particularly influential in the tribunal’s decision:
- Subordination and Control: The club required the player to participate in specific competitions, adhere to a strict training schedule of 15 hours per week, and engage in a minimum of 20 hours of streaming per month. Such requirements are indicative of an employer’s control over the employee’s work activities.
- Contractual Obligations: The contract stipulated that the player wear the team uniform during competitions and participate in marketing activities dictated by the club. These obligations demonstrate the club’s control over the player’s professional image and public engagements, further evidencing an employment relationship.
- Economic Dependency: The regular payment between EUR 4,000 and EUR 5,000, alongside provisions for accommodation and travel for competitions, indicated an economic dependency typical of an employment relationship rather than freelance or self-employed arrangements.
- Termination Conditions: The contract allowed the club to terminate the agreement if the player failed to meet the set obligations or was unable to provide services for at least 30 consecutive days. This level of control and the potential for penalization align with the characteristics of an employee-employer relationship.
Implications of the Ruling
For Esports Clubs: The reclassification of service contracts to employment contracts suggests that esports clubs need to meticulously review and possibly revise their contractual practices. Clubs may face increased financial liabilities due to obligations to pay social security contributions and potential penalties for previously undeclared work, as outlined in articles L8223-1 and L8211-1 of the French Labour Code. This ruling may compel clubs to establish clearer, more structured employment agreements, potentially increasing operational costs but providing more stability and clarity for both parties involved.
For Players: Esports players may find this ruling beneficial as it provides a clearer path to securing employment benefits, including social security, health insurance, and guaranteed wages. This could also empower players to challenge unfavorable contractual terms and seek reclassification as employees to gain the protections and benefits that employment status confers.
For the Esports Industry: The decision may prompt a broader reevaluation of how esports professionals are classified across the industry. It challenges the current contractual norms and may lead to more standardized employment practices. While this could increase costs for esports organizations, it also has the potential to professionalize the industry further, attracting more stable investments and improving the overall working conditions for players.
Conclusion
The Paris Tribunal Judiciaire’s decision of 27 March 2024 is a very important one for the esports industry. As the sector continues to grow and professionalize, the legal definitions and frameworks that govern these professional relationships will be crucial. Esports organizations and players must take these changes carefully into account, balancing competitive interests with legal compliance and fair labor practices.
Via: Victoire-Avocats