UK: Implied Horizontal Contract Prompts Stay Of Proceedings S9 AA 1996

Last Updated: 30 August 2018
Article by Vanessa Naish and Jonas Thierens

In Mercato Sports v Everton1, the English High Court found that two parties were bound by an implied horizontal contract containing an arbitration clause. Accordingly, it granted a stay of proceedings under section 9 of the Arbitration Act 1996 ('S9 AA 1996'). In this case, a football agent (the Claimant) 2 sought payment for bringing a player to the attention of Everton (the Defendant) and by doing so, it enabled them to sign the player. While Claimant and Defendant had no direct contractual relationship, the Court established that both were bound by the Football Association's Rules ('FA Rules'), in particular by the arbitration agreement therein. While the Court emphasized that such arrangements would not always automatically lead to an implied horizontal contract, the parties' dealings in this case did lead to an implied contractual relationship, governed by the FA Rules.

1. Background

The Claimant brought a claim against the Defendant in the English High Court for payment for their services after it had brought AB, a professional football player, to the attention of the Defendant who then entered into an employment contract with AB. The Defendant sought to stay the proceedings pursuant to S9 AA 1996. The Defendant invoked the arbitration clause contained in the FA Rules and claimed that this clause operated as an arbitration agreement between the Claimant and Defendant. The Claimant argued that it was not a FA registered intermediary and thus claimed not to be bound by the FA Rules. However, during the hearing it came to light that the Claimant's invoice bore a FA registered intermediary membership number, giving a strong indication that the Claimant did act as such.

2. Issues

First, the Court followed the approach set out in Joint Stock Company Aeroflot Russian Airlines v Berezovsky3; the burden of proof is with the party that asserts that there is (i) a concluded arbitration agreement, and (ii) that it covers the disputes that are the subject of the court proceedings. This approach was undisputed by the parties. Nor did any of the parties contest the scope or validity of the arbitration agreement. Thus, the Court's judgement was limited to determining whether the parties were bound by the arbitration clause.

For there to be an arbitration agreement, there must be a contract between those parties. An implied contract between two parties who have not engaged directly with each other ("a horizontal contract") can arise where each of those parties has a separate contract ("a vertical contract") with the same third party committing them to abide by particular rules laid down by or stipulated for by that third party.4 Such a vertical contract can arise where a person's actions amount to an accession to the rules laid down by the relevant third party. Whether a series of vertical contracts gives rise to a horizontal contract between particular parties will depend on (i) the facts and circumstances of each alleged party's entry into the vertical contract in question and (ii) the nature of their dealings with the other parties.

Was there a vertical contract between each party and the FA?

The Court noted that whether the parties have entered into a vertical contract is largely a fact based decision. In the context of sports, as in this case, the Court considered that those engaging in a sporting event organised under the auspices of a particular governing body are likely to be held to have agreed to be bound by the rules of that body. However, such a conclusion would less readily be reached the further removed the activity in question is from the actual playing of the sport concerned.

However, while in this case the matters were far removed from the actual playing of football, the Court found that due to the Claimant's registration as an intermediary with the FA, it was bound by the Rules.

Did the vertical contracts give rise to a horizontal contract?

The Court considered both the decision of the House of Lords in Clarke v Earl of Dunraven5 and Bony v Kacou & Others to determine the relevant circumstances that could lead to finding a horizontal contract.

The Court concluded that the facts showed that the Claimant was dealing with the Defendant as an intermediary and it had explicitly made reference to its position as a FA registered intermediary on the invoice sent. Under those compelling circumstances, Judge Eyre QC found that the dealings between the parties were subject to the FA Rules and accordingly gave rise to an implied horizontal contract between the Claimant and Defendant. As such, they fell within the scope of the arbitration agreement constituted by the FA Rules. The Court stayed the proceedings and referred the claim to arbitration under S9 AA 1996.

3. Comment

This judgement is a reminder that under specific circumstances (often in the context of sports), dealings that fall within the scope of a certain governing body might contractually bind the parties, even when they have not directly contracted with each other. In this case, the invoice bearing an FA intermediary registration was key to the Court's determination that an implied horizontal contract bound the Claimant and the Defendant. However, an implied horizontal contract will not automatically arise in all such circumstances and the Court noted that any decision should be based on a 'fact sensitive analysis' in the context of wider contractual interpretation.


1 Mercato Sports (UK) Ltd & Anor v The Everton Football Club Company Ltd [2018] EWHC 1567 (Ch)

2 The claim was brought by two Claimants. However, the second Claimant accepted from the outset to be bound by the FA Rules. Consequently, the legal question in this case was only relevant in regards to the first Claimant. When this blogpost makes reference of 'the Claimant', the author refers to the first Claimant.

3 Joint Stock Company Aeroflot Russian Airlines v Berezovsky & others [2013 ] EWCA Civ 784, [2013] 2 Lloyd's Rep 242

4 Bony v Kacou & others [2017] EWHC 2146 (Ch)

5 Clarke v Earl of Dunraven [1897] AC 59 (The "Satanita")

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions