By Shayan Dasgupta
On October 3 in Dubai, a three-member dispute resolution panel of the International Cricket Council (ICC) finally heard the claim made by Pakistan Cricket Board (PCB) that the Board of Control for Cricket in India (BCCI) reneged on a 2014 Memorandum of Understanding (MoU) to play six bilateral series between 2015 and 2023. The PCB is seeking monetary compensation to the tune of $70 million (about Rs 500 crore).
The BCCI and PCB signed an MoU in 2014 to play six bilateral cricket series between 2015 and 2023. It was also agreed that to restore bilateral series (which had not been held for 11 years), the PCB would have to cast a vote in favour of the Big Three, under which the cricket boards of India, England and Australia were to get a greater share of ICC funds. The PCB cast the vote in favour of the Big Three and the MoU was subsequently signed.
With the BCCI reneging on the MoU—ostensibly because the Indian government did not give permission for the team to play in Pakistan—the PCB filed an official complaint seeing monetary compensation for losses incurred.
Although the PCB wanted to invoke the arbitration clause of the MoU, the BCCI refused this saying the agreement was non-binding. It is then that the ICC stepped in and offered to resolve the dispute between the two cricketing bodies.
BCCI’s grounds for dismissal
According to the BCCI, the PCB’s claims are invalid for the following reasons: first, the MoU is not binding as the agreement was subject to necessary government approvals; and second, the government of India did not grant approvals on grounds of safety and security due to the increasing aggressive domestic situation in Pakistan.
India’s former foreign minister Salman Khurshid was cross-examined during the ICC hearing and he furnished reasons for India not honouring the MoU. India had cut ties with Pakistan after the 2008 terror attacks, and when it refused the team permission to travel to the neighbouring country for a bilateral series, the Indian government chose to protect and safeguard the interest its citizens by “acting on various world intelligence reports on threats perception for playing cricket in Pakistan”. Khurshid also clearly said that “time and again the Indian government had made it clear that unless cross-border terrorism stopped, it would be difficult to resume bilateral cricketing ties.”
ICC chairman Shashank Manohar and former BCCI secretary Sanjay Patel were also examined at the hearing. Both stated that the PCB’s contention is frivolous as it based on “a one-page email which doesn’t count as MoU. It was an email sent by Patel as a part of quid pro quo deal with PCB. They didn’t support our revenue model and the deal to play six bilateral fell through.”
Is the MoU legally binding on parties?
A MoU is a preliminary understanding between the parties to a contract, prior to the execution of a formal agreement. It highlights the intention of the contracting parties to create consensus between the parties for future contracts and is usually not intended to have created any obligations upon the parties. An MoU is non-binding and legally non-enforceable and is a mere pact to agree to bind themselves by executing a formal contract, unless the MoU clauses state its binding nature.
In Jyoti Brothers vs. Shree Durga Mining Co., the Calcutta High Court held that “a contract to enter in a contract is bad and not valid from the point of view of law. However, the court will rely upon the degree of importance of such understanding to the parties and to the fact that whether any of them has acted in reliance on such understanding”.
Contradicting this legal standing, the Delhi High Court, in M/s. Nanak Builders and Investors Pvt. Ltd. v Vinod Kumar Alag, held that where the essential substantial terms have been agreed upon and reduced into writing, and the agreement so entered into does not mention that another formal agreement will be executed, the court would not consider the agreement as an incomplete agreement. It was further stated by the court that the mere heading or title of the document would not decide its legality. The legality will depend on the nature and contents of the agreement.
The Supreme Court also held that “if the conditions to the MOU are otherwise acted upon, the parties to the MOU will get the benefit arising out of the MOU”.
In international public law, MoUs are more commonly seen as formal agreements because they can be put into effect in most countries without requiring parliamentary ratification.
Who will win?
Considering international public law, a MoU can be enforced without ratification from government. Thus the BCCI’s defence may not hold any value before the ICC panel. But security and protecting citizens from violent threats supersedes such international law principles, and here is where the BCCI’s defence may hold true. However, the PCB has rebutted this contention by stating that it has regularly insisted on a neutral venue (Dubai) to conduct the matches. The scales could swing either way.
Importantly, the enforceability and binding nature of a MOU depends upon the content, nature of agreement, language and intention of the parties to it. Intention—the intention of the parties while executing the MoU and their conduct post execution—is the major factor to decide whether a MoU is binding. Thus, based on Patel’s statement that the MoU was a mere email in response to a quid pro quo deal that later failed due to disagreement as to the revenue model, it can be safely concluded that the MoU, the PCB’s main contention, holds no validity and its claim for monetary compensation should be negated.
Thus, the ICC may very well decide in favour of the BCCI. The ICC’s decision, likely to be pronounced by the end of October, could set a landmark precedent for sports and politics in India and Pakistan.
Shayan Dasgupta is an advocate and legal consultant based in UAE and India.
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