The recent case of Illawarra Basketball Club Pty Ltd v National Basketball League Pty Ltd[1] reiterates the importance in the detail of dispute and arbitration clauses in commercial sporting agreements.
Illawarra was a party to a licence agreement providing the terms on which it could field a team in the National Basketball League (NBL). Illawarra’s owner sought financial information and transparency from the NBL in order to consider the commencement of claims relating to improper related party transactions and lack of financial disclosure against the company that operated the league and its owner / director.
The NBL argued that its licence agreements (and a specific clause in its grievance procedure) required all disputes, including this one, to be handled confidentially through private arbitration, ultimately via the Court of Arbitration of Sport (CAS) rather than be played out in public court, so as to protect the integrity of the League.
The licence agreement contained a grievance procedure culminating in referral to arbitration by CAS. The specific clause in question said:
“The parties agree that the [Grievance Procedure] in clause 14.1 shall be followed and that the decision of CAS shall be final and binding. It is further agreed that no party will institute or maintain proceedings regarding a Grievance or any other matter regarding this Agreement or their participation in the NBL in any court or tribunal other than CAS.”
The NSW Supreme Court decided in favour of the NBL, permanently staying the court proceedings and ordering the club to pay the NBL’s costs. This decision forces the clubs into a private arbitration process and rules that their own licence agreement prevents them from litigating in public court.
The club has indicated it intends to appeal.
The decision highlights the importance of understanding the drafting of dispute and arbitration clauses in commercial agreements so both parties are clear on a pre agreed path for if things go wrong and what avenues are and are not available to them. A well drafted clause brings certainty and structure to a dispute resolution process and eliminates ambiguity and unnecessary costs.
[1] Illawarra Basketball Club Pty Ltd v National Basketball League Pty Ltd [2025] NSWSC 1111
