Newcastle United have lost a High Court bid to remove a lawyer considering its legal battle with the Premier League following the collapse of a Saudi-backed takeover over claims he could be “biased”.
A proposed £340m takeover of the club by a company ultimately owned by Saudi Arabia’s Public Investment Fund (PIF) fell through last year.
In June, the Premier League wrote to Newcastle and said it had provisionally decided that PIF is “controlled” by the Saudi government, meaning the Kingdom of Saudi Arabia “would become a director” of the club.
The letter to the club stated: “PIF expressly recognises that it will fall within the definition of ‘director’ under (the Premier League’s) rules, even though it would not be formally appointed as a director of (the club). The Premier League agrees.
“Having taken external legal advice, the Premier League is also provisionally minded to conclude that the Kingdom of Saudi Arabia would become a director under the rules as well.”
It added that the Premier League was “provisionally minded to conclude that the Kingdom of Saudi Arabia satisfies both elements in the test for ‘control'” over Newcastle United “through its control over PIF”, which the league said was “state-owned and… manages only state-owned assets”.
The letter said: “PIF’s directors are appointed by royal decree, and its current board is almost exclusively composed of the Kingdom of Saudi Arabia government ministers.”
The Premier League also provisionally decided the PIF was “expressly under the direction of” a Saudi government ministry and “its function is to serve the national interest of the Kingdom of Saudi Arabia”.
The decision prompted Newcastle owner Mike Ashley to take the dispute to an arbitration panel, featuring former Supreme Court president Lord Neuberger and former Master of the Rolls Lord Dyson.
The two former senior judges appointed Michael Beloff QC, a “highly-respected” retired barrister, to chair the arbitration panel – an appointment which was initially accepted by Newcastle.
But after the Premier League’s lawyers disclosed Mr Beloff had previously advised it in relation to a potential change to its owners and directors’ test, Newcastle asked Mr Beloff to step down.
The club argued Mr Beloff’s previous work for the league “gave rise to justifiable doubts as to his impartiality”, and asked the High Court to remove him from the arbitration panel.
At a private hearing in January, Newcastle claimed “the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility” that Mr Beloff was biased.
However in a public ruling on Friday, Judge Mark Pelling QC said: “The fact that (Mr Beloff) had been instructed on behalf of the Premier League and the English Football League to give advice… in excess of three years prior to his appointment would not cause the fair-minded and informed observer, having considered the facts, to conclude that there was a real possibility that (Mr Beloff) was biased.”
The judge said the Premier League’s decision was “concerned exclusively with the question whether the Kingdom of Saudi Arabia would be a ‘director’ under the Premier League’s rules and not with the question (of) whether if Kingdom of Saudi Arabia was a ‘director’ it would be disqualified”.
He added: “The text of the letter makes it abundantly clear that the sole issue that the Premier League had decided – and then only provisionally – was that the Kingdom of Saudi Arabia satisfied the definitions so that it was to be regarded as a director.”
The judge said “the only dispute that can or will be decided in the current arbitration is whether this conclusion is correct”.
Judge Pelling also said Mr Beloff’s advice to the Premier League and the English Football League was only in relation to its rules on disqualifying people from acting as a director of a football club.
He said that if Mr Beloff’s advice had been “concerned with the very issue that arises in this arbitration”, then a “reasonable bystander” might have thought there was a possibility of bias.
But the judge ruled “the fair-minded and informed observer having considered the facts… would have concluded that there was no real risk of bias”.
In a statement, Newcastle United said: “The club is disappointed with the court’s judgment on this issue.
“As noted at the end of the judgment, the club submitted that the judge did not address all of the club’s arguments.
“The club is committed to the speedy and fair determination of its claim so that the proposed takeover can go ahead as soon as possible.
“However, it felt it had to make this application given the need for the dispute to be determined by way of a fair process.
“The club is considering whether or not to pursue an appeal.”