CROATIA Trends and Developments Contributed by: Lovro Badžim, Badžim Law Practice
the prohibition of abuse of rights, which allows courts to look beyond formal legal structures where they are used to circumvent legal obligations. In the context of football, this doctrine may be invoked where a so-called “phoenix club” is created with the clear intention of shedding debts while preserving all economic and sporting benefits. In such cases, credi - tors may attempt to establish liability by demonstrat - ing co- ordinated conduct, continuity of control, and a lack of genuine economic separation. However, Croatian courts apply this doctrine cautious - ly. The burden of proof is high, and the existence of sporting continuity alone is not sufficient. This reflects a broader concern that overuse of abuse-based rea - soning would undermine the predictability of company and insolvency law. Abuse remains an exception, not an alternative route to re-imposing extinguished obli - gations. Sporting succession versus legal succession This cautious approach contrasts with the logic applied in international football regulation. FIFA and CAS distinguish between legal succession, which fol - lows national law, and sporting succession, which is assessed according to regulatory criteria focused on identity, continuity, and public perception. Recent CAS jurisprudence illustrates this divergence particularly clearly. In CAS 2024/A/10308 ( AO Xanthi ), the panel upheld FIFA’s finding of sporting succession based primarily on identity markers such as name, colours, logos, historical narrative, and fan perception. Crucially, the panel emphasised that sporting succes - sion operates independently of national corporate law and serves regulatory, not civil, objectives. At the same time, the award acknowledged an impor - tant limitation: the treatment of insolvency depends on the nature of the procedure involved. The panel drew a distinction between formal bankruptcy proceed - ings governed by national insolvency law and other forms of liquidation or regulatory dissolution. Where a club has undergone a genuine bankruptcy process, CAS jurisprudence has been more reluctant to impose sporting succession, particularly if creditors failed to assert their claims in that process.
Under Croatian law, this distinction is critical. Formal bankruptcy proceedings are accompanied by proce - dural safeguards, creditor participation, and judicial oversight. Treating such proceedings as legally equiv - alent to regulatory or administrative liquidations risks blurring a line that is foundational in domestic law. The importance of creditor conduct An additional point of convergence between Croa - tian insolvency law and CAS jurisprudence lies in the expected conduct of creditors. Both systems empha - sise that creditors must act diligently and proactively. If a player or coach fails to assert their claim in bank - ruptcy proceedings, Croatian law treats this as a for - feiture of the opportunity to recover from the insol - vency estate. Similarly, CAS panels have increasingly considered whether a creditor acted promptly and responsibly when assessing claims against alleged successor clubs. In the AO Xanthi case, particular weight was placed on the fact that the player had actively pursued his claim and could not reasonably have participated in a bankruptcy procedure, as no such procedure existed in the strict sense. This reasoning implicitly confirms that where a formal bankruptcy does exist, creditor inaction may be decisive. This shared emphasis on creditor diligence strength - ens the argument that sporting mechanisms should not be used to compensate for inaction within the insolvency process. Lessons from international sports arbitration Recent CAS case law demonstrates a growing aware - ness of the limits imposed by national legal systems. Panels have increasingly distinguished cases involv - ing formal bankruptcy proceedings from those involv - ing mere sporting continuity without insolvency. This distinction is particularly relevant for Croatia. Where a club has undergone a formal bankruptcy under Croatian law, with clear procedural safeguards and creditor participation, attempts to impose liability on a successor club may face stronger resistance on public policy grounds.
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