Watson v Prager and Another

Reference: [1991] 1 WLR 726

Court: Chancery Division

Judge: Scott J

Date of judgment: 15 Mar 1991

Summary: Sport - boxing - management contract - manager also promoter - restraint of trade - whether terms reasonable - arbitration clause - application to stay - impartiality of arbitrator - revocation of authority

Appearances: Adrienne Page QC - Leading Counsel (Claimant) 

Instructing Solicitors: Wright Webb Syrett; Henri Brandman & Co.

Facts

The Claimant signed a management deal with the First Defendant, a boxing manager who also, through a company he controlled (the Second Defendant), promoted nearly all of the fights that the Claimant took part in. The First Defendant agreed to arrange a suitable programme of contests and media engagements whilst the Claimant undertook to participate in such events and not to enter into any agreement with another manager. The agreement was for an initial three years, but there was a option for the First Defendant to extend it for another three years if the Claimant became a British, European, Commonwealth or World Champion. The Claimant became Commonwealth Champion within the initial term and the First Defendant exercised his option. The Claimant sued for declarations that he was not bound by the agreement, and other relief. The First Defendant sought a stay based on an arbitration clause within the agreement. Certain issues fell to be tried as preliminary issues.

Issue

(1) Whether the agreement was non-binding on the grounds that it was an unreasonable restraint of trade.
(2) Whether the arbitration clause should be annulled on the grounds that it appointed as arbitrator a person (the British Boxing Board of Control) which might not be impartial and/or the claim involved allegations of fraud (s24 Arbitration Act 1950).

Held

(1) Although the terms of the agreement were prescribed by the British Boxing Board of Control as the only terms a licensed boxer and manager could enter into, the manager was also a promoter with a conflict between his financial interests as promoter and his duty as manager. The option to renew for a period as long as three years was unreasonable as was the requirement that the Claimant fight under the terms imposed upon him by the Defendants. The contract was unenforceable.
(2) It followed that the First Defendant could not rely on the arbitration clause. His application for a stay was dismissed. The Claimant’s application to annul the arbitration clause did not arise. However, the court would have granted that relief if necessary; although the claim did not involve fraud within the meaning of s24(2) of the 1950 Act, the BBBC might not be impartial in a dispute which involved an attack on its licensing system and its authority to act as arbitrator would have been revoked.

Comment

The BBBC’s standard form management contract compelled a boxer to fight on any terms ‘negotiated’ on his behalf by his manager. The court made clear that this was not necessarily unlawful in itself. But the key deals which a boxing manager has to make are with promoters. If the manager is effectively the promoter too, the notion of a ‘negotiated’ bargain becomes unreal and it seems unsurprising that this contract was held unenforceable.