The Saudi Newcastle United takeover & the WTO appeal: What the latest developments mean for £300m deal

The bid to buy the Magpies from Mike Ashley is, for fans, purely about football – not ethics, not religion, not geopolitical armwrestling. But for the majority buyer – Saudi Arabia’s sovereign wealth fund, PIF – and their rivals – namely Qatar – football is only a small piece of the puzzle. This is about soft power, influence and ego.

The latest skirmish was played out on the conference tables of the World Trade Organisation in Geneva, Switzerland, yesterday with Qatar deeply entrenched on one side and the Saudis, defences deployed, the other. The battleground was again the theft of intellectual property rights, the prevention of that and the blocking of the wronged taking action in the kingdom’s courts.

And the question on every Newcastle United fan’s lips was this – what does it all mean for the Magpies?

The meeting & issue – details & background

Case name: WTO dispute settlement DS567: Saudi Arabia — Measures concerning the Protection of Intellectual Property Rights.

According to the WTO website, back in October 2018, Qatar requested consultations with Saudi Arabia concerning Saudi Arabia's alleged failure to provide adequate protection of intellectual property rights held by or applied for entities based in Qatar. Russia stepped in later that month to act as an intermediary in hope of settling the dispute.

They state: “Disputes in the WTO are essentially about broken promises. WTO members have agreed that if they believe fellow-members are violating trade rules, they will use the multilateral system of settling disputes instead of taking action unilaterally. That means abiding by the agreed procedures, and respecting judgements.”

The official report was issued with the WTO conclusions on June 16, 2020, after two years of investigations.

The WTO dispute settlement body met again yesterday with the issue again on the agenda.

What did the original report find?

a number of conclusions can be drawn from the report.

A stand out has to be the passage: “Qatar has established Saudi Arabia has not provided for criminal procedures or penalties to be applied to beoutQ despite evidence establishing prima facie beoutQ operated by individuals/entities under the jurisdiction of Saudi Arabia."

In short that highlights the piracy did take place within the confines of the kingdom. What it stops short of is connecting it directly to the Saudi state.

At no point in this report is Newcastle United or the takeover mentioned. That has to be a positive. Although, the starting of this case predates any talks to buy the Magpies, which can be traced back to March 2019.

The report does conclude the Saudi authorities did not do enough to prevent the piracy taking place on their turf, though – and that had an impact on third parties, including the Premier League.

It states: "non-application of penalties to beoutQ, commercial-scale broadcast pirate, affects not only Qatar and Qatari nationals, but also range of third-parties."

The report notes the Saudi’s justification for their Qatar blockout, telling though, the WTO don't buy that as just for the legal blocks.

"The Panel is unable to discern any basis for concluding application of criminal procedures/penalties to beoutQ would require any entity in KSA to engage in any form of interaction with beIN/Qatari national."

"The Panel notes KSA's position in dispute is that it seeks to protect Saudi from threats of terrorism & extremism. One of the means... is by ending any direct/indirect interaction between... respective populations/institutions."

Also tucked away in the lengthy offering is the confirmation the Premier League "submitted evidence directly to the Saudi authorities" and penned a letter to Arabsat reporting "beoutQ's use of Arabsat satellite frequencies to transmit its pirated content". Arabsat's legal representatives replied saying it "would take into account this in its ongoing investigation."

What happened at yesterday’s meeting?

In a statement, a WTO representative said: "The chair of DSB (dispute settlement body) informed members that Saudi Arabia has filed an appeal regarding the panel report (DS567). As a result, the item requesting adoption of the panel report cannot be considered until appeals proceedings are completed."

Basically, Saudi Arabia appealed the WTO report findings.

At the meeting Qatar described the issue as 'worst case of broadcasting piracy the world has ever seen' and accused KSA of wanting to avoid consequences of ruling. Qatar asked for KSA to use different appeal process for binding decision to be issued.

KSA and the USA said the panel was incorrect in finding that only part of Saudi actions were justified under the WTO’s own national security exception. They claim it should be WTO members, rather than a panel, who should determine when such an exception is justified.

So what happens next?

Well, this is where it gets interesting (if you like this kind of thing)…

WTO report findings cannot be adopted by the organisation’s member states until the appeals process has been completed.

And the WTO cannot, at present, complete said appeal process as it does not have enough judges on Appellate Body (three required).

Since December, the US Trump administration has blocked new judge appointments due to what it views as WTO overreach.

And the Gazette has learned there is absolutely no end in sight for this WTO deadlock, which would need new panel members appointed to see this and any other trade appeals.

Proposals made to end the deadlock, none of which are believed to have come from the US, have been rejected including a set of reforms set out by New Zealand’s ambassador David Walker.

Speaking to the Washington Post, US trade official, Robert Lighthizer, recently said: “I don’t think the appellate body was working well.

"I don’t feel any compulsion to have it ever come back into effect.

“I’m not a fan of the appellate body.”

The EU has reportedly looked to set up an alternative appeals process, mirroring the Appellate Body as a kind of arbitration panel, but both sides in this dispute – Qatar and Saudi Arabia – have not endorsed the initiative.

In short, this means the Saudi appeal means the adopting of the findings by the WTO member states has been shelved indefinitely. No definitive ruling can be made in the dispute. Qatar cannot pursue any WTO enforcement action against KSA for non-compliance.

The report findings cannot be adopted until the appeal is heard, and the appeal cannot be heard due to Donald Trump and his administration refusing to allow new appointments to the WTO dispute board. Follow?

What has been said about the appeal – the BeIN response

In a statement released last night, BeIN responded to the appeal.

They said: “Having spent the past six weeks telling the world how the WTO ruling was a ‘complete vindication’, curiously, Saudi Arabia is now appealing a case they say they emphatically won.

"Rather than positively complying with international law, Saudi Arabia has lied to Governments and rights-holders across world sport about the WTO ruling.

"It has said the Premier League, FIFA and UEFA sent their legal case to the wrong Saudi email address nine times. It has permanently banned the Premier League’s broadcast partner, meaning the only way to watch premium sport is via piracy, and now it is appealing a WTO decision that they said they won.

“All the while, Saudi Arabia is essentially trying to pass an honesty, and an anti-piracy test, under the Premier League’s rules, and gain the trust of the international sports community."

What does this mean for the Newcastle United takeover?

It is not at all clear how much, if at all, the WTO report, it’s findings and the delay will have on the Premier League and their own investigations as part of the owners and directors test.

This is a test, which by fair estimates, has been ongoing since April 9 this year.

There are two distinct trains of thought on what this means.

As predicted, the Saudis have kicked the ongoing piracy issues re the WTO to the long grass. And one way of taking this is that if this was the issues or theme holding up the owners and directors test then the lack of definitive ruling being adopted means it could prove much more difficult for the Premier League to use this as justification for a fail.

Remember, though, this is the Premier League’s own test and their own rules. They are judge and jury when it comes to the O&D test.

The other line of thinking suggests this could prove a bad move for time frames on the Newcastle United takeover – with the Premier League having a vested interest in the report, having given evidence in favour of Qatar re BeoutQ – some think they may well want to wait for the adoption of the findings in order to make a test call on the NUFC takeover.

And as previously mentioned, the is no definite date on when this WTO stalemate may be broken, with the US thought to be standing firm in their hostility towards the organisation.

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