What do the WTO report conclusions mean for Newcastle United's Saudi-financed takeover?

The question on everyone’s lips on Tyneside is whether the World Trade Organisation report into the protection of intellectual property rights will have an impact on the Public Investment Fund of Saudi Arabia’s takeover of Newcastle United?

Here we take a look at the issues, the report and what it means for the PIF-led £300million deal, which remains at the mercy of the Premier League’s owners and directors test.

What is the issue?

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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.

A photo taken on May 28, 2020 in Geneva shows the World Trade Organization (WTO) headquarters at sunrise. - Candidates to succeed Roberto Azevedo as head of the WTO will have one month from June 8 to submit their nominations, the global trade body said following the Brazilian's surprise resignation. (Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images)

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, released at 3pm today, issued the WTO conclusions after two years of investigations.

Why does this matter for Newcastle United?

One of the biggest issues facing the proposed Saudi takeover of United is with regards piracy in the MENA region.

Current rights holder BeIN Sports are based in Qatar, while the broadcast of these channels is banned in Saudi Arabia.

If a link can be established between PIF and the use of BeoutQ boxes and piracy in the region then that undermines the Premier League product, sale of the rights and the rights holders in the region. Could an organisation linked to piracy be allowed to be an owner without some major concessions?

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Whether this turns out to be a big day or not in NUFC takeover remains to be seen, but ultimately this decision on future ownership lies firmly with the PL.

A sticking point with Premier League could come with regards providing ‘misleading’ information, as per one of the fail criteria for their O&D test. If the Saudis have taken the stance they have nothing to do with piracy and have worked hard to prevent it, then the WTO say not so, the PL could have the smoking gun some believe they are looking for.

The devil will be in the detail – and without forensic knowledge of the confidential PL process, it is genuinely impossible to say what this means for the ownership of United.

What did the report say?

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On initial reading 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 penaltiess 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.

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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."

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"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 has been said about the ruling?

FIFA Statement

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“FIFA acknowledges the final panel report published by the World Trade Organization (WTO) in relation to the activity of the pirate broadcaster known as ‘beoutQ’ and the active involvement and support that has been provided by Saudi Arabia (KSA) in the past three years.

“FIFA agrees with the WTO panel’s recommendations and demands that KSA takes the necessary steps in order that it conforms to its obligations under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement with immediate effect in order to protect legitimate media rights partners, such as BeIN, and also football itself. The WTO panel’s recommendations are clear and piracy of football matches is an illegal activity and will not be tolerated on any level.”

Saudi government statement

“A World Trade Organization (WTO) dispute panel released its Report ruling against Qatar, and finding that Saudi Arabia’s national security defence was justified under WTO rules. The WTO Panel acknowledged that Saudi Arabia "seeks to protect Saudi citizens and the Saudi population, Saudi government institutions, and the territory of Saudi Arabia from the threats of terrorism and extremism" raised by Qatar in the region.“The Kingdom of Saudi Arabia will spare no effort to overcome the threats of terrorism and extremism, and Saudi Arabia is pleased that the Panel recognised its sovereign rights in this regard.”

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BeIN Sports reaction

David Sugden, director of corporate affairs at beIN Media, said: “The next cycle of rights we will not bid anything near what we currently pay.” Adding it was like “letting the fox into the henhouse”.

"These are not allegations,” said Sophie Jordan, general counsel at beIN Media Group. “This is a decision from one of the most important international tribunals."

UEFA statement

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“UEFA welcomes the World Trade Organisation report and its conclusions. What is clear is that beoutQ’s broadcasts constitute piracy of UEFA’s matches and as such, are illegal.“BeoutQ was hosted on frequencies transmitted by Arabsat and was promoted and carried out by individuals and entities subject to Saudi Arabia’s territorial jurisdiction.“Those seeking to follow beoutQ’s example should be in no doubt that UEFA will go to great lengths to protect its property and support its partners, whose investment in football helps it to remain the world’s most popular sport from grassroots to elite level. Piracy not only threatens that investment but also the existence of professional sport as we know it.“Today’s ruling shows clearly that no-one involved in audio-visual piracy should consider themselves above the rule of law."

What next?

Just to complicate, both sides, if unhappy with the ruling, can appeal. This is not a short process and could take more than a year to reach a conclusion which can be adopted by member states.

WTO dispute procedures aims to sort things out – they want consensus not divides. With that in mind the Saudis can sort this – but will they? Doing so would take a whole lot of healing in a geo-political struggle which crosses the boundaries of support for terrorism, religion, ideology, gas and oil.

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One way forward from a PL perspective would be to allow BeIN to be shown in Saudi again, effectively relaxing the blockade which has stood since 2017.

The WTO website states: “Either side can appeal a panel’s ruling. Sometimes both sides do so. Appeals have to be based on points of law such as legal interpretation — they cannot reexamine existing evidence or examine new issues.

Each appeal is heard by three members of a permanent seven-member Appellate Body set up by the Dispute Settlement Body and broadly representing the range of WTO membership. Members of the Appellate Body have four-year terms. They have to be individuals with recognized standing in the field of law and international trade, not affiliated with any government.

The appeal can uphold, modify or reverse the panel’s legal findings and conclusions. Normally appeals should not last more than 60 days, with an absolute maximum of 90 days.

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The Dispute Settlement Body has to accept or reject the appeals report within 30 days — and rejection is only possible by consensus.”

Only when this process is complete can the ruling be adopted in WTO member states.

If no appeal is lodged the report can be adopted within 30 days.

Making a stance?

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As has been reported previously, while the rejection of directors or ownership would not be new to English football, should the Premier League choose that option, they would be setting a precedent of sorts.

The league is not known to have turned down a prospective buyer of a club, when said buyer has the resources to do so.

So turning down majority shareholders PIF, with hundreds of billions of assets and reserves at their disposal, would be a big change from their approach of the past.

We've talked trade, what about human rights?

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Human rights groups and Hatice Cengiz have taken a stand in the takeover process, calling on fans to make themselves aware of abuses and wrongs in KSA. Cengiz has even called for the Premier League to block said deal.

The most vociferous critic of the deal has been Amnesty International, an independent, non-governmental worldwide movement.

Reports in the national press have suggested human rights groups have been contacted by the UK government with regards the Newcastle United takeover. In reaching out the Premier League are reported to have

But at time of writing, the organisation had not been contacted. Read into this what you will, but it doesn't make a whole lot of sense, all considered.