Nigeria: From Bosman To Perchstein – The Finality Of The Arbitral Awards Of The Court Of Arbitration For Sports Examined

Last Updated: 5 December 2017
Article by Steve Austine Nwabueze

In Search of a harmonious Sports Dispute Resolution Platform

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The issue of the appropriate dispute resolution mechanism to adopt in resolving disputes has bedeviled International Sports for ages. The consensus has always been to ensure a common dispute resolution platform shorn of the characteristic red tapes and delays associated therewith. Even post-judgment, the challenges of enforcement stares the victorious litigant in the face. Little wonder then why international sports bodies like FIFA, IAAF, IOC & FIBA adopted ADR as the known dispute resolution mechanisms between member countries, players and associations. It is cost-effective, fast and is devoid of the rancorous underpinnings that follow litigation upon determination of the rights of the parties.

Without a competent means of internal dispute resolution, more and more cases would have to be referred to the courts and portends a grave danger to the concept of self-regulation that sports governing bodies thrive on1.

The various International Sports Associations have therefore ensured a self-regulated process that ensured that final decisions are left with the Court of Arbitration for
Sports (CAS).  Typically, member associations enact rules guiding dispute resolution generally. It is only where they fail in the first instance that recourse is had to the appellate and supervisory jurisdiction of the CAS. The crux of this article is the "finality" of the decisions of the CAS.

With litigation, litigants face a daunting task enforcing the judgment of the Court. However, as far as enforceability of arbitral awards is concerned, sports arbitration does not face the challenge of enforcement in the manner that commercial arbitration does. This is best illustrated through the example of a Swiss football club, FC Sion which disregarded a CAS ruling which cut off the club's eligibility to sign transfer players. After FC Sion signed the players, the Federation Internationale de Football Association ("FIFA"), the international governing body for football, demanded that the Swiss Football Association ("Swiss FA"), the domestic governing body, punish FC Sion. Because of the relationship between FIFA and Swiss FA, Swiss FA was compelled to comply with FIFA's demands or face severe sanctions, thus creating a system where compliance with arbitral awards is honored. This power though a lack of resistance to arbitral award enforcement is a central aspect of both international and global sports law.

 

The Court of Arbitration for Sports- CAS

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The name, "Court of Arbitration for Sports" gives the erroneous impression that it is an International Court of law. The position is however, quite the contrary as it is merely but an arbitral tribunal. The CAS was created in 1983 by the IOC as a court with specialized knowledge in the field of sports. CAS is also known by its French name, Tribunal Arbitral du Sport (TAS). Disputes concerning game rules, disqualifications, and other technical questions are settled by the relevant sport body (IAAF, IOC, national sport organization, for example). Non-technical issues (such as sponsorships, suspension, etc.) are settled by the CAS. Its jurisdiction to determine sporting disputes derives from various sporting rules and regulations. For example, the Olympic Charter and the World Anti-Doping Code confer jurisdiction on the CAS to determine certain disputes.

The CAS was therefore created as a fast and cost-effective forum for resolving international sporting disputes.

Appellate/ Supervisory Jurisdiction of the CAS

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The appellate/supervisory jurisdiction of the CAS is best illustrated through Oscar Pistorius' Olympic eligibility battle with the International Association of Athletics Federation2 ("IAAF"). Oscar Pistorius won gold medals in the 100, 200 and 400-meter class-43 events at the 2006 Athletics World Championships using his prosthetic legs while competing against athletes without disabilities. Pistorius then sought to be considered for selection in South Africa's 2008 Olympic team in the 400-meter and the 4x400meter relay. Shortly after his Athletics World Championships success, however, the IAAF changed its rules on "technical aids" specifically to prohibit the use of devices that use springs, wheels, "or any other element that provides the user with an advantage over another athlete not using such a device." Following the rule change, Pistorius completed several tests for the IAAF to further perform research on his situation. Based on these tests, the IAAF Council ruled that Pistorius was ineligible for Olympic selection because his prosthetic legs permitted him to exert less energy than able bodied athletes and constituted an advantage over them. Thereafter, Pistorius appealed the IAAF decision to the CAS, asking the arbitrators to vacate the IAAF decision and rule that he could participate in IAAF sanctioned events. The CAS declared that Pistorius was eligible to compete in IAAF sanctioned events because he was not in violation of the new IAAF rule relating to technical aids on several grounds. The need for oversight and review of sporting bodies' decisions was further proven as necessary by the IAAF's actions following the CAS ruling. The IAAF remained very hostile toward Pistorius as evidenced by IAAF officials stating that "[they] prefer that (South Africa) do(es)n't select him for reasons of athletes' safety" without advancing any evidence in support of that argument. Without the oversight of the CAS, sporting entities would be left to their own devices, possibly to the detriment of athletes like Pistorius.

Is The CAS Decision Truly Final?

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Questions have therefore been asked regarding the validity, enforceability and indeed, the finality of the International arbitral awards rendered by the CAS as well as the recognition thereof. International arbitral awards by the CAS are typically recognized and enforced by national courts under the New York Convention 1958. This issue was addressed in the recent case of Pechstein v International Skating Union OLG Munchen3 With its "seat" in Switzerland, any proceedings to set aside a CAS award must be brought before the Swiss Federal Tribunal4 .

Notwithstanding this, national courts may (pursuant to S. 8 (7) -(7A) IAA 1974) refuse to enforce CAS awards if to do so would be contrary to "public policy". This is what occurred in Pechstein.

Given the felt-need for self-regulation in football, the general consensus was usually to recognize the decisions of the CAS as final and binding. However, one of the earliest recorded act of petulance and challenge of the CAS was recorded in what is known as the "Bosman ruling".  Marc-Jean Bosman5, a Belgian footballer, played for Belgian First Division team R.F.C. de Liege. Upon the expiration of his contract, his intended move to French club, Dunkerque failed because the French club failed to meet the transfer fee demanded by his Belgian club. With the football rules then allowing clubs to obtain a transfer fee for players despite expired contracts, Bosman approached the court arguing that those rules amounted to restraint of trade and violated the principle of free movement of workers established in the European Union (EU).

After five years and appeals against each ruling, the case reached the European Court of Justice, where the Court agreed with this argument and issued the landmark ruling, the basic significance of which is that EU players may now move to another club without a transfer fee, upon the expiration of their contract. For Bosman, the length of time involved in finally settling the case was injurious to his professional career. Having played in the Belgian First Division prior to the trial, he moved to playing in the French lower leagues during the period of the trial, ending up at Belgian Third Division team C.S. Vise after the trial. For the football governing body, the ruling amounted to an encroachment into its sphere of regulation and resulted in a shake-up of its rules.

The German case of Pechstein v ISU has cast a serious doubt over the validity and enforceability of arbitral awards rendered by the Court of Arbitration for Sport, the arbitral tribunal established to determine international sporting disputes. Pechstein may provide a future avenue for challenging sports arbitral awards globally.

Pechstein V Isu- Background Facts

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In 2009, Olympic Gold medallist skater Claudia Pechstein tested positive for a banned substance. The International Skating Union ("ISU") banned her from competing for two years.

Pursuant to an arbitration clause in her athlete agreement, appeals against ISU decisions must be brought before the CAS. In two CAS appeals, she was unsuccessful, the CAS upholding her two-year suspension (see CAS 2009/A/1912 & 1913 and CAS OG 10/04).

Pechstein applied for judicial review to the Swiss Federal Tribunal, but those appeals were dismissed (see Case 4A_612/2009 and Case 4A_144/2010).

Subsequently, Pechstein brought a damages proceeding against the ISU in a German civil court – the Landesgericht of Munich. The Landesgericht held that the arbitration clause was invalid, however Pechstein was precluded (res judicata) from challenging the CAS' jurisdiction.

Pechstein appealed to the Oberlandesgericht of Munich. Here, however, the Court allowed the appeal, determining that the CAS awards were invalid on public policy grounds under Article V (2) New York Convention. The Court's reasons were as follows:

The Decision

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The Court held that the ISU is a monopolist in the market for organizing speed-skating competitions worldwide, and therefore holds a dominant position in that market. It noted that professional skaters must compete in all ISU-organized competitions to earn a living; By sporting associations offering their services in the sports competition market, this constitutes an undertaking in the provision of goods and services from a dominant position. However, the imposition of a CAS arbitration clause by the ISU is not, per se, an abuse of the ISU's dominant position. To the contrary, there are "sound and weighty" reasons for allowing international disputes between athletes and international sporting federations to be determined by a sporting tribunal rather than national courts. Those reasons include harmonization and uniformity of global sports dispute decision making and procedure.

The CAS was not a, however, "neutral arbitral tribunal", but rather there was a "one-sided designation of the potential arbitrators which favour the sporting associations". It noted that, under the CAS rules, sporting associations had a "decisive influence" over the selection, composition and nomination of CAS arbitrators. Those factors embedded a "structural imbalance" that threatened the CAS' neutrality, which created a risk that such arbitrators "predominantly or even entirely favour" the sporting associations over athletes in determining their disputes.

Therefore, the imposition of a CAS arbitration clause in the circumstances, was an abuse of the ISU's dominant position, violated antitrust law, and therefore was invalid under Article V(2) New York Convention 1958.

Pechstein was decided on a breach of German (and possibly European) competition law regarding abuse of market power. So what relevance does it have for us?

Jurisprudential posers raised by the decision

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In the first place, the element of party autonomy and/ or freedom of contract that ordinarily pervades international commercial arbitration and makes it an attractive dispute resolution option is eroded by the mode of appointment of the arbitrators. The writer notes that the doctrine of freedom of contract or party autonomy is exercisable to the extent of statutory restriction or intervention6. As most of the CAS powers and scope of operation are amply provided under the enabling statute, the only option left to the ordinary Courts would be to strictly construe the statutory provisions strictly against the enacting bodies/associations.

Secondly, the most quintessential element of international arbitration is an impartial, independent and neutral tribunal. Where impartiality and independence of the arbitrators is equated with direct relation to or bias towards one of the parties, neutrality becomes highly doubtful.

Third, as professional athletes are often required to sign mandatory arbitration agreements, to either the CAS or another sporting arbitral tribunal, Pechstein serves as a timely reminder to consider the composition of any such arbitral body to determine whether or not the members hearing the dispute are sufficiently neutral and impartial to provide a fair hearing to the athlete.

From a global sport dispute resolution perspective, this decision potentially undermines the standing of the CAS as the "Supreme Court for World Sport". While the author notes that the rules for nomination and addition to the CAS list of arbitrators have been amended in recent years, this might not be sufficient in itself to prevent a future landmark decision of the regular Courts overturning an international sports arbitral award.

Footnotes

1 Article 68(2) of FIFA Statutes generally prohibits recourse to ordinary courts of law as a means of

resolving football-related disputes, providing as follows: Recourse to ordinary courts of law is prohibited unless specifically provided for in the FIFA. Regulations. Recourse to ordinary courts of law for all types of provisional measures is also Prohibited.

2 See Oscar Pistorius v The IAAF- CAS/2008/A/1480

3 Pechstein v International Skating Union OLG Munchen, U 1110/14 Kart (15 January 2015)

4 See, eg, Raguz v Sullivan [2000] NSWCA 240

5 Union Royale Belge des Sociétés de Football Association ASBL v. Jean-Marc Bosman [1995] ECR I-4921.

6 See the case of M.V. Panormos Bay v. Plam Nig. Plc (2004) 5 NWLR (Part 855) 1 at 14; Tawa Petroleum v. M.V. Sea Winner 3 NSC 25.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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