British arbitration tribunal ruled Associated Party Transaction (APT) Rule "null and void" as Manchester City wins counter-suit against the Premier League..

The Athletic reported on Saturday that the British arbitration tribunal had opened a trial on Manchester City's counter-suit against the Premier League on the Associated Party Transaction (APT) Rule, and made a verdict which ruled that that the club won the case in the end.

According to reports, Manchester City not only voted against it with Newcastle United, Nottingham Forest and Aston Villa at the end of November 2024 when the Premier League announced that the proposal for the APT revision plan was officially voted and passed through by the participating clubs at the stakeholders' meeting, but also filed a lawsuit with the court, claiming that there were three subsidiary provisions in the rule that were "inhumane proposals that violated the spirit of fair competition."

This lawsuit, which had been prepared for some time, finally started a two-day trial in the British arbitration tribunal last month, when the lawyers representing both parties had already launched a fierce debate on the APT Rule.

In the end, the presiding judge, led by Sir Nigel Teare, Lord Dyson and Christopher Wajda KC, ruled that the Premier League's APT Rule was "null and void", and the League must bear all the millions of litigation costs of the prosecution and defense in this lawsuit.

In response to this ruling, the Premier League argued that this did not mean that the entire APT Rule was completely deemed illegal.

The authorities believe that the only provisions of the subsidiary rules that were ruled illegal by this arbitration tribunal were the three subsidiary rules that Manchester City claimed in this lawsuit as "inhumane proposals that violate the spirit of fair competition", but this does not completely prevent the new APT Rule from being implemented in the future, because this rule aforementioned revised plan proposal has been voted and passed through in the aforementioned revised plan proposal voting at the end of November 2024.

According to the arbitration tribunal's ruling, the authorities have also accepted that the three controversial subsidiary rule will not be included in the newly amended rule.

It is not yet known what impact this ruling will have on Manchester City's pending review of 115 alleged violations of the Financial Fair Play (FFP) regulations, but there is no denying that this victory will definitely give the Cityzens a huge boost of confidence.

About the Associated Party Transaction (APT) Rule

The APT Rule is designed to provide clubs with a robust mechanism to safeguard the financial stability, integrity and fair competition of the League, with the aim of ensuring that clubs cannot benefit from business transactions or cost reductions that do not meet Fair Market Value (FMV) through relationships with Associated Parties.

-The new rules seek to ensure that there is appropriate parity between the treatment of shareholder loans and other APTs going forward, with transitional rules clarifying the treatment of existing shareholder loans within that framework. 

Shareholder loans entered into after 22 November 2024 will be required to be submitted as an APT and subject to an FMV assessment. If the Premier League determines the loan to evidently not be at FMV, the club in question shall be required to terminate or vary the loan to reflect FMV and pay any identified shortfall in interest.

Any Shareholder loan that was entered into before 22 November 2024 and which is replaced with other forms of financing (e.g. by way of conversion to equity or repayment) within 50 days (i.e. by 11 January 2025) will not be required to be submitted as an APT or assessed for FMV. 

Any Shareholder loan that was entered into after 14 December 2021 but before 22 November 2024 and remaining in effect on 11 January 2025 must be submitted as an APT. If the Premier League determines the loan is evidently not at FMV,  the club is permitted to retain the Shareholder loan on its existing terms, though adjustments must be made to its Annual Accounts for 2024/25 onwards as if, from 22 November 2024, the loan was at FMV.

Any Shareholder loan that was entered into prior to 14 December 2021 and remaining in effect on 11 January 2025 must be submitted as an APT and be subject to an FMV Assessment upon any drawdown taking place after the 22 November 2024. If the Premier League determines the loan is evidently not at FMV,  the club is permitted to retain the Shareholder loan on its existing terms, though adjustments must be made to its Annual Accounts for 2024/25 onwards as if any drawdowns made after 22 November 2024 were at FMV.

This is the third time in recent years that the Premier League has made major changes to the previous Financial Fair Play (FFP) regulations. In summer 2023, they have began to implement the Profit and Sustainability Rule (PSR) which is similar to UEFA.