In recent years, the global esports market has seen remarkable growth, expanding audiences, and enhanced investment. However, this rapid growth has led to disputes and regulatory challenges.

In an eye-catching development, Riot Games ("Riot") has launched a new independent court of arbitration, which is intended to provide parties with "a simple, quick and cost-efficient mechanism" to resolve "disputes arising from or related to contracts in the context of any Riot esports competition in the EMEA region" ("ADRM").

The ADRM launched on 7 November 2024, and if it is successful, it may be expanded to other regions. How does the ADRM fit in with the existing dispute resolution mechanisms available to esports stakeholders? And how will the ADRM work in practice?

Current Dispute Resolution Mechanisms in Esports

Unlike most traditional sports, esports does not have a widely recognised international governing body, it does not have a set of standard rules, and it does not have a single forum for resolving disputes. 

Game publishers are usually required to regulate their own leagues, which may include resolving disputes (which Riot acknowledges that it finds difficult to do). This can lead to apparent conflicts of interest for game publishers and inconsistent decision making in disputes. Alternatively, parties might seek to resolve disputes through national courts, which can be more time-consuming and costly than traditional sports dispute resolution mechanisms.

The ADRM will therefore introduce a new mechanism for the neutral resolution of certain esports disputes. That said, the Bahrain Esports Federation recently filed an appeal before the Court of Arbitration for Sport ("CAS") against a refereeing decision at the 2023 Asian Games. It will be interesting to see what CAS decides in that case and whether it considers itself a proper forum to hear esports disputes, which could see CAS becoming an arbitral forum for esports disputes (as it already is for many traditional sports). 

ADRM Process 

The ADRM will be available to players, coaches and teams seeking to resolve contractual and financial issues, but Riot will continue to handle disputes involving tournament operators in regional leagues and disputes between participants and organisers. Further, the ADRM will not have jurisdiction to determine disputes between stakeholders and Riot themselves.

As it stands, the ADRM is voluntary, meaning both parties to the dispute will have to agree to its use. Riot will begin encouraging stakeholders to include ADRM clauses in contracts, and they envision that most contracts will contain the clause in a few years. As with most arbitration rules, the ADRM rules provide a standard arbitration clause to be inserted into contracts. Where the parties to the dispute elect to use the ADRM, their disputes will be resolved by a sole independent arbitrator with expertise in arbitration and sports law. An independent law firm in Germany will administer the ADRM and oversee the appointment of arbitrator. To the extent not covered by the arbitration rules, the arbitrator shall determine in its sole discretion the procedure of the arbitration.

The ADRM has been designed to promote the efficient resolution of disputes. The default process for the ADRM shall involve no hearings. Rather, there will be one round of submissions, followed by a decision of the arbitrator without reason, meaning the parties will only see the decision and not the justification. Therefore, parties' submissions should contain all facts, arguments, evidence and requests on which the relevant party wishes to rely. It should be noted that the arbitrator will make a decision on an ex aequo et bono basis, which means that judgment will be made on what the arbitrator considers a fair outcome, rather than what is necessarily the correct outcome under any particular national or international law. 

The seat of the ADRM shall be Zurich, Switzerland, and arbitrations before the ADRM are governed by Chapter 12 of the Swiss Federal Act on Private International Law, to the exclusion of the Swiss Code of Civil Procedure. The arbitration shall be conducted in English, and unless the arbitrator decides otherwise, documents submitted in a language other than English must be accompanied by a translation.

To access the ADRM, the claimant will have to pay a fee ranging from €500 to €4,000 depending on the value of the claim.[1] In addition, the parties shall equally split the arbitrator's fee of €1,000 to €5,000, again, depending on the value of the claim.[2] Accordingly, whilst the ADRM could cost the parties thousands, this is likely to be significantly cheaper than bringing a claim through a county's national court system, particularly where jurisdictional issues could arise.

Award and Enforcement

Awards shall be final and binding upon receipt of the award by the relevant party. The award shall determine which party shall bear the Arbitrator's fee and in which proportion. The award may also grant the prevailing party a contribution towards any reasonable legal fees and other expenses incurred in connection with the proceedings. If the parties reach a settlement, the arbitrator, upon request, may record the settlement in the form of an award by consent.

Once an award is issued and made public, the losing party will be given a period to pay the award. If they do not pay, then the winning party has two options. Firstly, they can apply to the court to enforce the award, or secondly, and particularly interestingly, they can make a request to Riot to enforce the award. Riot will then consider applying sporting and financial sanctions on the non-paying party until the award is paid.

Legal Aid

Riot has established a Legal Aid Fund to distribute funds to those with insufficient financial means to pay the non-reimbursable handling fee and the arbitrator's fee. Article 20.3 of the arbitration rules sets out the eligibility criteria for the Legal Aid Fund, which inter alia, requires the relevant party to have an annual gross salary of less than €30,000. Riot will allocate a yearly fixed budget which will not be topped-up if spent before the season ends. Nevertheless, the Legal Aid Fund could therefore provide access to justice to those who otherwise would not have the means to bring/defend a claim through a traditional dispute resolution process.

Conclusion

Riot has established the ADRM to provide parties with a simple, quick and cost-efficient mechanism for resolving contractual disputes in the context of their EMEA esports competitions. It will be intriguing to see whether those goals are achieved, and whether other esports organisations might seek to adopt their own dispute resolution rules.  Nevertheless, the establishment of the ADRM is a positive step for the industry, as it continues to bridge the gap to traditional sports. 

For further information, please contact our Chris Morris, Sam Gokarn-Millington and Atacan Aydinli.

The full arbitration rules can be found here.
 

[1] See Article 9.4 of the ADRM arbitration rules.

[2] See Article 13.1 of the ADRM arbitration rules.