Manchester City have sparked civil war in English football with their unprecedented legal action against the Premier League.

The biggest clubs in the country have been thrown into a bitter dispute after City challenged sponsorship rules and claimed they are victims of “discrimination against Gulf ownership”.

A two-week private arbitration hearing launched by City will start on Monday, with rival clubs set for battle.

The Times obtained full details of the case brought by City against the Premier League, which centres on associated party transaction (APT) rules.

APTs are designed to ensure that sponsorship or revenue deals between a club and entities linked to their owners are done at fair market value.

In February, clubs voted to approve tougher rules regarding how such deals are valued. That has been challenged by City, who have argued it contravenes competition law.

The Premier League’s other 19 clubs have been informed of City’s action and will have the chance to give witness testimony to the hearing. As many as 12 of them are thought to be prepared to support the Premier League’s defence.

The Premier League refused to comment and City did not respond to requests for comment.

The dispute could ultimately undermine the Premier League’s 115 charges against City, because some of the charges relate to alleged attempts to disguise owner funding as sponsorship, in breach of league rules. City deny any wrongdoing.

Premier League clubs who oppose City’s stance are thought to fear a victory for the champions would leave the top-flight body’s financial regulations unworkable.

Sources at rival top-flight clubs are understood to believe that City could struggle to prove their case, but that a win could force the Premier League to dispense with APT rules entirely.

According to The Times, City’s lawyers argue the club is the victim of “discrimination against Gulf ownership” and that the rules make it subject to a “tyranny of the majority”. City are owned by Sheikh Mansour, the deputy prime minister of Abu Dhabi.

City are thought to be seeking financial damages from the Premier League for perceived losses from sponsorship deals that were halted by rule changes in February.

The rules were “deliberately intended to stifle commercial freedoms of particular clubs in particular circumstances, and thus to restrict economic competition”, the claim reportedly says.

City’s action is entirely separate from the 115 charges of disciplinary breaches brought by the Premier League, which is expected to be heard in October or November.

Fears have been raised by rival clubs that the challenge could undermine the top-flight body’s case in that mammoth separate disciplinary matter.

Those who oppose City’s stance believe this could be a strategic move, especially with this hearing taking place before the disciplinary case surrounding the 115 charges.

Legal experts believe City may face a tough battle to win this latest case, but the club has adopted the same bullish approach to this new issue as its existing Premier League concerns.

The Premier League clubs who support the league’s governing body will argue that APT rules are a vital component of maintaining financial balance.

The top-flight sides that do not support City’s case fear that the Financial Fair Play framework itself would have to be entirely revised should the Manchester club win out.

This latest case involving City leaves the Premier League handling the two biggest legal claims in football history — and simultaneously.