[COURT OF APPEAL]

REEL v. HOLDER AND ANOTHER

[1979 R. No. 236]

Contract - Construction - Rules of unincorporated international federation - Members of federation associations governing athletics in any "country" - Only one member permitted for each country - Taiwan association elected member in 1956 after China association elected - China association withdrawing in protest - China association re-elected as member representing mainland and Taiwan - Whether Taiwan "country" for purposes of rules - Validity of Taiwan's election

The International Amateur Athletic Federation was an unincorporated association whose members comprised duly elected national governing associations which controlled amateur athletics in their respective countries. By rule 1 of the federation's rules "only one member for each country" could be affiliated and the jurisdiction of members of the federation was limited to the "political boundaries of the countries they represent." In 1954 the association controlling athletics on the mainland of China was admitted as a member. In 1956 the association controlling athletics in Taiwan (then Formosa) was also admitted by a majority decision of the federation's congress. Both the mainland government and the government of Taiwan claimed sovereignty over both mainland China and Taiwan, but Taiwan's claim was not recognised in international law. In 1958 the mainland China association withdrew from membership in protest against the Taiwan association's membership. In 1978 a resolution that the mainland association should be re-affiliated as the only member for China with jurisdiction over athletics in Taiwan was carried by 200 votes to 153 in the congress. That resolution amounted to the exclusion of the Taiwan association from the federation. Forbes J. granted the plaintiff, the secretary general of the Taiwan association, declarations against the defendants, the honorary treasurer and president of the federation, that the Taiwan association was and remained a member of the federation.

On appeal by the defendants: -

Held, dismissing the appeal, (1) that the word "country" in the rules delineated the area over which one governing amateur athletic association exercised authority; that membership of the federation was thus not confined to associations representing sovereign or national states; and that the Taiwan association was properly eligible for membership of the federation (post, pp. 1230H, 1232G - 1233A, C).

(2) That there being a contractual relationship between the members of the federation as in a club, questions concerning the application of the rules by a body such as congress or a committee could be decided by a majority and accordingly the decision to admit Taiwan in 1956 had been valid (post, pp. 1231E-F, 1233B-C).

(3) That the resolution in 1978 to make the mainland China association the sole representative for both mainland China and Taiwan, which amounted to a decision to expel the Taiwan association, was beyond any power conferred by the rules and the judge had rightly made a declaration that the Taiwan association was and remained a member of the federation (post, pp. 1231G, 1233B-C).

Decision of Forbes J. [1979] 1 W.L.R. 1252; [1979] 3 All E.R. 1041 affirmed.

The following case is referred to in the judgments:

Shen Fu Chang v. Stellan Mohlin (unreported), July 5, 1977, Robert Goff J.

The following additional cases were referred to in argument:

Buttes Gas and Oil Co. v. Hammer (No. 3) [1981] Q.B. 223; [1980] 3 W.L.R. 668; [1980] 3 All E.R. 475, C.A.

Kawasaki Kisen Kabushiki Kaisha of Kobe v. Bantham Steamship Co. Ltd. [1939] 2 K.B. 544; [1939] 1 All E.R. 819, C.A.

Lee v. Showmen's Guild of Great Britain [1952] 2 Q.B. 239; [1952] 1 All E.R. 1175, C.A.

Luigi Monta of Genoa v. Cechofracht Co. Ltd. [1956] 2 Q.B. 552; [1956] 3 W.L.R. 480; [1956] 2 All E.R. 769.

APPEAL from Forbes J.

By originating summons of January 25, 1979, the plaintiff, Cheng Chi Reel who was secretary general of the Republic of China Track and Field Association ("R.O.C.T.F.A."), suing on behalf of herself and on behalf of and as representing all other members of such association claimed against the defendants, Frederick W. Holder and Adriaan Paulen (the honorary treasurer and the president respectively of the International Amateur Athletic Federation ("the federation") sued on behalf of themselves and on behalf of and as representing all other members of such federation except the plaintiff) declarations (a) that the R.O.C.T.F.A. were and remained members of the federation; (b) that the R.O.C.T.F.A. were and remained entitled to all the rights and privileges of membership of the federation; (c) that the resolution dated October 5, 1978, of the federation in so far as it purported to deprive or to have the effect of depriving the R.O.C.T.F.A. of membership or alternatively of the rights and privileges of such federation was void and of no effect; and an injunction restraining the defendants from doing any act pursuant to or in consequence of the resolution dated October 5, 1978, of the congress of the federation in so far as any such act was inconsistent with the R.O.C.T.F.A. being a member of the federation.

On April 2, 1979, Forbes J. [1979] 1 W.L.R. 1252, 1269, granted the declarations with liberty to apply for an injunction if necessary.

The defendants appealed on the grounds that (1) the judge was wrong in law and/or fact in holding that both mainland China and Taiwan could be described as a country within the meaning of the rules of the federation and ought to have held that there had at no material time been more than one country of China; (2) that the judge was wrong in law and/or fact in holding that the defendants were not entitled to deny the continuing membership of the plaintiff of the federation by reason of some waiver or estoppel; (3) that the judge ought to have held that (a) the rules of the federation provided that there could only be one member for each country; (b) it was common ground between the representatives of mainland China and the representatives of Taiwan that there was only one nation or country of China, alternatively that that was the position in fact; (c) the purported election of the R.O.C.T.F.A. to the federation in 1956 was contrary to their rules and invalid since there was already a member of China; (d) the fact that the R.O.C.T.F.A. was treated as a member of the federation from 1956 to 1978 could not validate the invalid election in 1956 since there had at no material time began unanimity amongst the members of the federation as to the validity of the

election and there had never been fewer than four members of the federation who maintained that the election was in fact invalid; (4) that the decision of the judge was wrong in law and against the weight of the evidence.

The facts are stated in the judgment of Lord Denning M.R. and Forbes J. [1979] 1 W.L.R. 1252.

Konrad Schiemann Q.C. and Stephen Ruttle for the defendants.

Robert Alexander Q.C. and Brian Davenport Q.C. for the plaintiffs.

LORD DENNING M.R. In 1912 there was formed the International Amateur Athletic Federation ("the federation"). The athletic associations of many countries joined together to arrange their activities on an international scale. They took part in the Olympic Games and in competitions between countries, and so forth. For many years the President was the distinguished athlete Lord Burghley, afterwards the Marquis of Exeter.

The question which arises for decision in this case is in what circumstances a "country" can be admitted or expelled from the federation. I use the word "country" because it is the word used in the rules. But it is very ambiguous.

The "China" problem has been with the world since 1949. The government of mainland China - operating from Peking - claimed to have sovereignty over the mainland and also the island of Formosa, now called Taiwan. The Taiwan government claimed to have sovereignty over the island and also over the whole of mainland China. So both governments claimed to have sovereignty over the whole of the two territories.

I put on one side any thought of international politics. In international law Taiwan's claim is not recognised. I will read the statement made by the Foreign and Commonwealth Office in a letter of June 29, 1978, to the federation's solicitors in this case:

"HMG" - Her Majesty's Government - "do not, and have never regarded Taiwan as a state. Nor do we regard the Chinese nationalist authorities in Taiwan as a government and have not done so since 1950, when we ceased to recognise them as the Government of China. "... the Government of the United Kingdom acknowledge the position of the Chinese Government that Taiwan is a province of the People's Republic of China."

That is in the international sphere of statehood and sovereignty so declared by this country as far back as 1950. We are told that in 1971 the United Nations followed suit.

To my mind those considerations have no application whatever to the problem which we have to decide today under the rules of the federation. As long ago as 1954 an application was made by the government in Peking to become a member of the federation. They were accepted only as the representative of mainland China. They were told that if Formosa wished to apply for membership, their application would be considered separately. That decision was set out quite clearly in letters which passed at that time. On November 9, 1954, the Secretary-Treasurer of the federation wrote to the President of the China National A.A.F. in mainland China saying:

"... I must advise you that the application of the All China Atheletic Association for membership of the I.A.A.F. was considered at the congress in August this year and that association was accepted as a new member.

"At the same time it was agreed that an application for membership from the controlling body of athletics in Formosa would receive consideration."

Two years later in 1956 Formosa (now Taiwan) applied to become a member. There was objection from the Eastern bloc - from Russia, Czechoslovakia, Rumania, and mainland China. It is interesting to note what the President, Lord Burghley, said when Taiwan applied for membership:

"The president" - that is, Lord Burghley - "said he himself wished to support this application for affiliation in the same way as he had done for other countries. The young people from a country with a population of 18,000,000" - that is the population of Taiwan - "were involved, and any question of politics should be left out of any discussion for the aim in view was to bring as many young athletes as possible into the family group of the federation. It was impossible for the athletic association in Peking to organise athletic matches for the Taiwan athletes as there was no communication between the two countries and he therefore moved from the chair that the application be accepted."

The minutes went on to say:

"The delegates from the U.S.S.R., Czechoslovakia and Rumania supported the A.A. of the People's Republic of China in their opposition. On a vote being taken it was agreed, with only four dissentients, that the application of the China National Amateur Athletic Federation be accepted on the understanding that they would compete and be known as 'Taiwan'."

From that time onwards Taiwan attended the meetings, paid their subscriptions, and were members of the federation. But mainland China did not approve. Two years later they withdrew their own membership. That was in 1958.

I will now pass on to the critical year in this case. In 1978 there was to be a meeting of the congress of the federation in Puerto Rico. The agenda looked quite innocent. It simply proposed that Taiwan should remain as a member but should be referred to only by the name of "Taiwan" in future. Then on the very morning of the meeting a circular was distributed of a proposed amendment. It was proposed that Taiwan should be excluded from membership: and that mainland China should come in as the sole representative of all the territories. I will read the resolution which was put forward. It is what is in dispute in this case:

"In connection with the request for affiliation of the A.A. of The People's Republic of China" - that is, mainland China - "and (1) having considered I.A.A.F. rule 4 with particular reference to political boundaries; and (2) having heard from the United Nations that the political boundaries of The People's Republic of China include the island of Taiwan; and (3) having received a guarantee that Taiwan athletes may compete in international competitions under I.A.A.F. Rules, under the jurisdiction of the A.A. of The People's Republic of

China, the council recommends the re-affiliation of The People's Republic of China as the only representative in the I.A.A.F. for China."

That resolution was debated at some length. Eventually, after a long discussion, the congress proceeded to vote. The vote was in favour of mainland China by 200 to 153. The final minute said:

"The Athletic Association of The People's Republic of China was, therefore, accepted as an I.A.A.F. member, to have jurisdiction also over that territory where athletics was at present governed by the existing I.A.A.F. member in Taiwan."

It is quite plain that that amounted to the exclusion of Taiwan from the federation. Mainland China was to be admitted, exercising jurisdiction not only over the mainland but also over the island.

That gave rise to much perturbation as to the validity of the resolution. An action has been brought in the High Court in England to resolve the matter. The court has been asked to declare that Taiwan still remains a member of the federation: that they have been wrongly excluded: and that the resolution of 1978 is void and of no effect.

The court was faced with a similar problem in relation to badminton in 1977: Shen Fu Chang v. Stellan Mohlin (unreported), July 5, 1977. The judge, Robert Goff J., took the view, with which I agree, that we are not concerned with international law or with sovereignty. We are simply concerned with the interpretation of the rules of the federation. The rules are in English. The head office of the federation is in England. It is right that, if the rules need to be construed, the matter should come to the English courts to be decided. At the end of his judgment in the badminton case, Robert Goff J. made a declaration that Taiwan could be a member of the International Badminton Federation. He made an injunction to that effect.

We now have to construe the rules of the federation. First, we have to consider whether the application by Taiwan in 1956 was valid: whether Taiwan was eligible for membership. At that time the rules were not as full as they are now. They have been developed in the course of time. Rule 7 of the handbook of the Federation for 1953 said: "7. The national governing body for amateur athletics in any country shall be eligible for membership of the federation." "National" is one of the words which gives rise to trouble. Rule 1 (2) of the 1953 handbook presents another problem: "The jurisdiction of members of the federation shall be limited to the political boundaries of the country they represent."

But some help is to be derived from rule 9 (7). It said that a "colony" can be eligible to be affiliated as a member. That shows a departure from statehood. It shows that places such as Hong Kong and Gibraltar - even though they are under the sovereignty of the United Kingdom - can be affiliated as members.

In my opinion the membership of this international association is not confined to sovereign states in the international sense. Every athletic association in any territory is eligible for membership provided that it is the supreme athletic association for that territory and is not subject to any control by another athletic association. Take, for instance, the United Kingdom. We have the Amateur Athletic Association which governs all amateur athletics in this country - England, Scotland and Wales. So the Amateur Athletic Association is the association to represent the United

Kingdom as a member of the federation. But if Wales formed their own independent Amateur Athletic Association and wanted to be separately represented, it seems to me that Wales would be a "country" eligible for membership under the rules of the federation.

In the rule. "The jurisdiction of members of the federation shall be limited to the political boundaries of the country they represent," the governing word is "country." One "country" is Taiwan. Another "country" is mainland China. The jurisdiction of the Athletic Association of Taiwan is limited to Taiwan. The jurisdiction of the Athletic Association of mainland China is limited to mainland China.

One can argue to and fro on the interpretation of these rules. The people who drew them up could not possibly have envisaged all the problems which would have to be coped with in the future in regard to them. The courts have to reconcile all the various differences as best they can. It is interesting to notice rule 3 of the rules of 1978, which are certainly applicable in this case. It says:

"The objects of the federation shall be: 1. - To establish friendly and loyal co-operation between all members for the benefit of amateur athletics throughout the world. 2. - To strive to ensure that no racial, religious, political or other kind of discrimination be allowed in athletics, and to take all necessary measures to stop such discrimination."

One would hope there would not be any racial discrimination against Taiwan. That is the point in this case. Was Taiwan eligible for membership when it applied - and was accepted - in 1956 with only four dissentients? It seems to me that the decision to accept Taiwan - by a majority - was perfectly rightly made.

We have had discussions as to how far rulings should be unanimous. There was no provision in the rules in 1956 for their being altered in any way. It was a membership of a club. There was a contract between the parties. If the rules are to be altered later, that can only be done by agreement between all the parties. It has to be unanimous. But, when the rules are not to be altered, and the only question is application of the rules by a committee or a body of that kind, then the ordinary rule applies that the decision can be by a majority. In this case the decision in 1956 to admit Taiwan by a majority was perfectly valid.

If that be right, there is no need to go into the question of an estoppel. That would only arise if the admission of Taiwan were wrong. Even if it had been wrong, nevertheless there is a strong case for saying that as everyone - except the People's Republic of China - accepted them as a member for 22 years, it would be too late to say that their admission was not valid. But there is no need to go into that in view of the opinion I have expressed that on the rules they were validly admitted.

That brings me to final point in the case. In 1978 the federation resolved to make mainland China the sole representatives of the whole area including Taiwan. That amounted to a decision to expel Taiwan. That was beyond any power conferred on the congress by the rules. If the federation want to have power to expel, then the rules will have to be altered.

I would agree with the judge that Taiwan was validly elected a member in 1956. It was wrongfully excluded in 1978. It is still a member. These courts can and should make a declaration in favour of Taiwan to

that extent. We do not think this should give rise to any international complications. We are making a declaration on the meaning of the rules according to English law, which is the governing law. We grant no injunction. We simply state what we think the rules mean.

I would therefore agree with the judge, and dismiss the appeal.

EVELEIGH J. I agree. Rule 1 of the rules as they were in 1956 reads:

"The title shall be the International Amateur Athletic Federation. It shall comprise duly elected national governing associations or federations of countries, in control of amateur track and field athletics ... Only one member for each country can be affiliated."

By rule 7 it is provided: "The National Governing Body for amateur athletics in any country shall be eligible for membership of the federation." The question as argued in the court below was whether Taiwan was eligible for membership in 1956.

Reading the rules, one comes clearly to the conclusion that the International Amateur Athletic Federation is an affiliation of athletic governing bodies formed to pursue certain objects. It has been contended in this court that the word "country" in the rules means that which is internationally recognised as a state or at least that the congress of the federation is entitled so to construe it. What would that involve? It would, as I see it, involve a different meaning being attached to the rules depending upon which court decided the matter. It would mean a different meaning attached to the rules depending upon whether reliance was placed upon recognition by this state or that state. For example, in 1950 the United Kingdom recognised Peking but other countries did not, and neither did the United Nations at that time although they now do.

Those who formed the federation were not concerned with international politics; they were concerned to set standards for athletics throughout the world. They were concerned to collect together people who would be in a position to exercise control over athletics in various parts of the world. Unless a governing body of some kind applies for membership, the federation is not concerned to determine if a given place or area is a country. It is only in connection with an application for membership by an applicant who puts himself forward as a governing body for a particular place, district or region that it becomes necessary to consider the meaning of "country" in the rules. One thing that is clear is that there may only be one member for each country. Therefore, in entertaining an application, it has to be seen whether or not there is an existing member who has control, or a measure of control, over the same area as that for which the applicant contends. There must be no doubt who is to speak with authority as the governing body for a particular group of athletes. The word "country" has been used in the rules in order to delineate the area of authority. They do not use the word in the sense of sovereign state. That is clear from rule 9, paragraph 7, which reads:

"In international competitions, members of this federation shall be represented only by native born or naturalised subjects of the country which the affiliated member represents, except in the case of citizens of a colony, when they shall be eligible to represent the mother country if such colony is not represented by membership of the I.A.A.F."

That rule clearly contemplates that there may be an existing member of the federation which is a colony and not itself a sovereign state. I think that the word is used in the rules in the sense of an area or part of the world where the applicant has authority in relation to athletics and an area to which the word "country" is appropriate because the inhabitants share the right to live there in common as one distinct people. This is a question to be answered broadly and not on a political basis alone. Political status may have some relevance. It may perhaps help to see the inhabitants as being one people, but it is not the decisive factor.

For those reasons I agree with the judgment delivered by Lord Denning M.R.

BRANDON L.J. I agree with both the judgments which have been delivered.

Solicitors: Linklaters & Paines; Herbert Smith & Co.

A.H.B.