E-Sports and Specialised Arbitration Mechanism

Traditionally, the utility of sports was limited to personal entertainment. Steadily, the scope of sports was widened to include broadcasting, endorsements, franchisees, etc, thereby making it a commercially profitable venture. By the late 1990s, another unique integration of online gaming experience – electronic sports or e-Sports began to take shape as high revenue generating competitive sports; and with the advent of the new millennium, e-Sports started attracting significant sponsorship and investment. 

Electronic sports or e-Sports are a form of sports that involve electronic systems as the primary facilitators of the sport with human-computer interfaces mediating the input and output of players and teams. Its distinguishing features include flexibility of location, a vast prize pool and the need for updating the format of the game at quick intervals. With the increasing competitiveness, vast prize pools, and a formalisation of the online gaming industry, e-Sports – Premier leagues and championships, now generate huge revenue and account for about 3% of World trade. 

While the domain of traditional sports has aged well with a definite regulatory framework, the e-Sports industry, being in its nascent stages, is still dependent on contracts. Such contractual relations among the stakeholders and a huge revenue generation attributable to sponsorship and advertisements make the e-Sports industry vulnerable to exploitation and corruption. In the era of continuous growth, a regulatory regime for e-Sports is the need of the hour. 

The resolution of e-Sports disputes is similar to any other commercial and employment disputes. However, owing to the nature of such disputes, they are time-sensitive. The e-Sports industry is fast-paced and a long-drawn lawsuit takes a heavy toll on the career of the players and on the overall revenue generation of the industry. Even in a seemingly trivial contract dispute that is under adjudication, the player is barred from participating in e-Sports events during the pendency of such adjudication. This results in an unfair and disproportionate punishment on the player even if, the result of the adjudication comes in his favour. Moreover, attributable to the locational flexibility, delineation of jurisdiction for the resolution of e-Sports disputes through litigation is not a feasible option. 

In this context, Arbitration provides a quicker, confidential and cost-effective resolution of e-Sports disputes by industry experts/content area specialists acting as Arbitrators.  

The Court of Arbitration for Sports (‘CAS’) has proved to be a specialised arbitration platform for various sports disputes. It has about 300 arbitrators from 87 countries, with specialised knowledge of Arbitration and sports law. Considering the similarity between traditional sports and e-Sports, CAS is often treated as an obvious platform for e-Sports disputes. However, the lack of domain-specific knowledge of e-Sports eliminates CAS as a potential mechanism for the resolution of e-Sports disputes. 

The e-Sports Integrity Coalition (‘ESIC’) was introduced as a suitable platform for specialised dispute resolution, but its subject matter jurisdiction was restricted to disciplinary matters. To cater to the growing need for a specialised Arbitration mechanism in e-Sports, the World e-Sports Association (‘WESA’) launched the Arbitration Court for e-Sports (‘ACES’) with an objective to provide a mechanism similar to CAS but dedicated exclusively to e-Sports. The ACES was also an improvement over ESIC as it provided for the resolution of disciplinary as well as commercial disputes.

The efficiency of an Arbitration institution depends on the proportion of parties in the industry subscribing to the rules of the institution. However, till date, there is no model Arbitration forum for e-Sports. 

Since the process of arbitration by the ACES is regulated by WESA, any affiliation of the WESA with a strong market player is detrimental to the independent image of the Arbitration proceedings and the impartiality of the arbitrators is always at risk. 

Freedom of contract is quintessential to arbitration. However, given the lopsided distribution of resources in the e-Sports industry where the players are mostly young and unaware of their rights and obligations, too much freedom acts to the disadvantage of the parties. 

Being in its formative stages, ACES can draw from other Arbitration platforms and provide such mechanisms, such as the International Chamber of Commerce (‘ICC’). For instance, the ACES’s rules state that an award is final and binding but the rules nowhere mention the steps to pursue an enforcement. In this case, the ACES can adhere to the rules of the ICC with respect to the enforcement of an award. 

Further, the impartiality provisions in the ACES rules are similar to its sports counterpart, CAS. Of late, the credibility of CAS has suffered because the arbitrators could not enforce the principles of impartiality and maintain independence. Drawing from the experience of CAS, the Arbitration Court for e-Sports should develop better provisions to ensure impartiality and independence.

Therefore, the e-Sports tournament organizers must endeavour to create a stakeholder-friendly adjudication mechanism, and in general, the e-Sports industry, as a whole, should ensure that a fair and expedient dispute resolution mechanism is in place.