WTO Ruling Against Saudis Clouds Prospects for U.K. Soccer Deal

(Bloomberg) -- A World Trade Organization finding that Saudi Arabia broke intellectual-property rules when it failed to crack down on pirated Qatari television broadcasts could hurt the kingdom’s effort to buy a major U.K. soccer team, and may even have implications for U.S. tariffs.

Qatar, boycotted by a Saudi-led Arab alliance since 2017, brought the case against the kingdom over satellite broadcaster and streaming service beoutQ. The Saudi government denies links to beoutQ, but on Tuesday a WTO panel found the company operated under Saudi jurisdiction and retransmitted content produced by Qatar-based sports broadcaster BeIN Media Group LLC.

“Qatar has established that Saudi Arabia has not provided for criminal procedures and penalties to be applied to beoutQ” despite established evidence that it’s operated by people or entities under Saudi jurisdiction, the Geneva-based body said in its ruling.

Ali Al Kuwari, Qatar’s minister of commerce and industry, called the judgment “a resounding victory,” and Stephen Nathan, a lawyer for BeIN Media, hailed “a historic vindication of intellectual property rights.”

Newcastle Bid

Saudi officials vowed to appeal, but also said they were pleased the panel partly ruled in favor of a WTO exemption, raised by the kingdom, that permits governments to take actions to protect “essential security interests.” Riyadh argues that applies to the claim by Qatar, which it accuses of interfering in Saudi affairs.

“The Saudis think that they have won on every issue that matters to them,” said Daniel Crosby, legal counsel to Saudi Arabia in the case.

An appeal would essentially veto the ruling and block Qatar’s pursuit of redress as the WTO appellate body no longer has sufficient members to sign off on new rulings due to a Trump administration block on nominees.

The dispute has weighed on the pending bid by the Saudi sovereign wealth fund and other investors for Newcastle United. In April, BeIN Chief Executive Officer Yousef Al-Obaidly urged heads of English Premier League clubs to “fully interrogate” the people and money behind the deal.

“Not only has the potential acquirer of Newcastle United caused huge damage to your club’s and the Premier League’s commercial revenues; but the legacy of the illegal service will continue to impact you going forward,” Al-Obaidly wrote, according to a copy of one of the letters seen by Bloomberg. BeIN owns the broadcasting rights for top flight English matches in the Middle East.

In a statement, soccer governing body FIFA said it agreed with the WTO recommendations and demanded Saudi Arabia take immediate steps “to protect legitimate media rights partners, such as BeIN, and also football itself.”

The ruling may also have consequences for U.S. steel and aluminum tariffs. President Donald Trump’s administration invoked an interpretation of a Cold War-era national security law and argued that the WTO cannot mediate national security disputes.

The Qatar-Saudi decision, though, marks the second time the WTO asserted it can rule in a trade case where one side has declared a matter of national security. The other involved a 2019 dispute between Russia and Ukraine.

Rift Allegations

BeoutQ emerged in 2017 after Saudi Arabia, Bahrain, Egypt and the United Arab Emirates severed diplomatic ties with Qatar. The import of BeIN devices was banned in Saudi Arabia, and a now-former royal court adviser, Saud Al-Qahtani, wrote on Twitter promising “alternative solutions” for free or a nominal price.

BeoutQ soon began broadcasting the same games and commentary as the Qatari broadcaster -- interspersed with political content criticizing Qatar. At one point, beoutQ was broadcast in Riyadh sports cafes, at government-sponsored events and on a giant screen on the city’s main boulevard.

Gulf leaders have pointed to fresh attempts to resolve the rift between Qatar and its neighbors. The Saudi-led quartet claims the Qatari government funds terrorism and interferes in their domestic affairs, allegations that Doha denies.

Saudi sports cafes have returned to broadcasting BeIN. BeoutQ boxes are no longer widely available, and some Saudis who bought them earlier said they no longer worked.

“I don’t know why those who are behind beoutQ started beoutQ, and I don’t know why they decided to stop beoutQ,”said Abdulaziz AlSwailem, chief executive of the Saudi Authority for Intellectual Property.

Investigating and fighting the spread of beoutQ in the kingdom had been a priority since the authority’s inception in 2018, he said. Broadcasts of the channel at government events or in public spaces were traced back to contractors cutting corners, “not a governmental decision,” he added.

“Yes we need to find the root causes and continue to improve our work, but I believe what we are doing is similar to other countries,” AlSwailem said.

©2020 Bloomberg L.P.

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